October 18, 2002
The investment group which has purchased the 31 acre tract at 159th and Metcalf have been complaining that they are losing money because of the delays in approving their rezoning application. Their rezoning application, if approved, would convert land Master Planned as residential to PRB-3, the most intense retail commercial zoning available in Johnson County.
Citizens are fighting the re-zoning as hard as they can.
Some of us began looking into how much this group might have invested and how much profit they could make just by re-selling their land if it were rezoned. We could not find out the exact sale price [the sales price is available to County Commissioners and the County Appraiser, not to citizens], but even with rough estimates it was an eye-opener to find out how much wealth the County Commissioners can transfer to an investment group by a single decision.
HOW MUCH COULD YOU BUY THIS LAND FOR
The original buyer's agreement was signed in early fall of 2001. The land was bought on August 28, 2002. At that point it looks like a mortgage was taken out by the investment group for $1.2 million. The land was and is Master Planned as residential. The land was purchased and the deal closed before there was any assurance of a re-zoning from residential to commercial.
Residential land in this area sells for roughly $40,000 to $100,000 an acre. That would be $1.2 to $3.1 million for a 31 acre tract. You might have to pay a premium because of the potential to convert to commercial.
HOW MUCH COULD YOU SELL THIS LAND FOR
The investment group submitted documentation to the County that the land would be valued at $10 million if it were used for PRB-3 development. The land planner for this group, when trying to convince residents on an earlier project near this one not to sign a protest petition, claimed their land could sell as commercial for over $10 a square foot, which works out to over $12 million for 31 acres. A more realistic figure for commercial land might be $7 a square foot, which works out to over $9 million for 31 acres.
Think about that: a single re-zoning decision instantly creates $6 million dollars or more of profit. Of course, this is only true if you can actually sell the land for the $9 to $10 million.
HOW TO MAKE THE LAND MORE ATTRACTIVE TO THE NEXT BUYER
This re-zoning by the Johnson County Commissioners would be based on a specific development plan with all of its constraints. Would that make it harder to find a buyer and reap the profits? Perhaps. But there is an easy solution.
It turns out this land abuts Overland Park. An owner of such land, for instance the next buyer, can submit forms to Overland Park and be annexed in a matter of days, literally. There are no public hearings, no notifications to adjacent neighbors.
It also turns out that when you get your land annexed and ask for Overland Park zoning, what matters is what zoning was in place from the County and what the total square footage of the planned buildings are.
So the investment group can first get Johnson County to approve PRB-3 zoning on their land and get approval for a specific plan that calls for 210,000 square feet of retail space. Then they can tell a prospective buyer that he can go straight to Overland Park, get annexed, and ask for the equivalent zoning in Overland Park. The equivalent zoning is CP-3 and has fewer restrictions that PRB-3. The new buyer can submit a completely new plan, perhaps a single box store of 210,000 square feet instead of the 9 stores in the original plan.
The land is located in the midst of Johnson County residential neighborhoods. Development is sweeping into south Johnson County. And there is a simple way to get rid of the encumbrances of the development plan
How hard would it be to find a buyer for this unencumbered, 31 acre tract of prime commercial land?
PROFIT: DOUBLE OR TRIPLE YOUR MONEY
A piece of land has gone from $3 million, maybe as much $4 million, as residential to $8 million or $10 million as commercial.
What a fabulous return on investment.
Actually, it gets even better. Suppose you paid $4 million (a very, very generous amount for residential land), but got a 90% mortgage and actually put up only $400,000 of your own money. Then sold it for $8 million (a low price for commercial) and paid back you mortgage.
You just converted $400,000 to $4 million.
10 times your money back! The County Commissioners could really do you a favor here.
DOES MONEY TALK?
All of us have heard that money talks. But talking only matters if someone is listening.
Five County Commmissioners are listening both to the investment group with their get rich scheme, and the citizens, who want the Master Plan followed. Residents, the school system, and others depended on its promises when they bought their homes, built their schools, and made their investments in the community.
These millions of dollars of profit will not be created out of whole cloth. Someone pays. Nearby residents will pay by a diminished quality of life, more dangerous traffic, etc. Someone will have to pay for the road infrastructure. Ultimately, that will be the Johnson County tax payer.
Three of the Commissioners have made it pretty clear they are listening to the investors.
Fortunately, citizens submitted a valid legal petition against this project. So it takes 4, not just 3, County Commissioners to approve this project. Otherwise it fails.
DOES DEMOCRACY WORK?
Commissioner Annabeth Surbaugh, running for Commission Chair, has made it clear she believes this re-zoning is a bad idea. She points out it has been rejected twice by the County Planners and twice by the Zoning Board (unanimously both times) and that Overland Park Planning has voiced its opposition - twice. She persuaded the County Commissioners that after all the months of consideration of this proposal, it should not be delayed for 30 more days. She also voted against it being delayed for 2 weeks.
Commissioner Doug Wood, who is up for re-election and is running against Dick Holdman in District 5 (includes Edgerton, Gardner, and Olathe), has voiced strong support for overturning the Master Plan and rezoning this as commercial. On Thursday at the Commissioner's hearing he argued the vote on this project should be postponed for 30 days. This would be after the election. He complained about people playing "political football" with the issue.
Dick Holdman has expressed strong support for upholding the Master Plan in a case like this. I personally hope that Mr. Holdman can "make a touchdown" and win the election against Doug Wood.
We hope that the voices of the County residents can talk louder than the millions of dollars at stake in this land speculation scheme. We hope that the years long planning process that produces the Master Plan is not just a shell game to distract citizens while millions of dollars are transferred to a few.
We hope that Commissioners vote with their constituents and the Master Plan.
And we hope Johnson County voters elect Commissioners who stand up for residents.
Not Commissioners who use their position of public trust to transfer millions to land speculators.