Airport Land Deal Announced

. October 14, 2008

By Rick Alm

The Kansas City Star, Mo.

KANSAS CITY, MO, November 18, 2005. A Chicago industrial developer has agreed to buy the former Richards-Gebaur Airport from Kansas City for $5.6 million. The developer, CenterPoint Realty Services Corp., also plans to spend at least $250 million redeveloping the 1,400-acre former military airfield into "a world call inland port," said Paul S. Fisher, president and chief financial officer of CenterPoint Properties.

The project aims to recruit new manufacturing, warehouse and shipping industry tenants attracted by Kansas City Southern Railways' existing regional and international rail cargo operations at the site. The improved "intermodal" hub for transferring rail and truck cargo would become the centerpiece and main selling point of the proposed International Freight Gateway at Richards-Gebaur. Though many details remain to be worked out, CenterPoint Vice President Fred D. Reynolds said the first phases of the project could open in 2007.

At a news conference Thursday to announce the sale, 6th District City Councilman Chuck Eddy said: "This is an extremely exciting day for Kansas City. We've worked for six years to get to this point." The Air Force base closed in 1976 and was replaced by a general-use city airport. But the airport eventually was losing more than $1 million a year, and the city's decision to close it led to fights in the late 1990s with local business interests and others who wanted to keep it open. "Any time you close an airport it's a challenge," Eddy said. "But we couldn't continue."

Under the terms of the deal announced Thursday, the city would sell the airport land through the Kansas City Port Authority, its public manager. City Manager Wayne Cauthen said proceeds from the purchase price already were earmarked for runway work and other improvements at Wheeler Downtown Airport. Port Authority counsel Mike Burke stressed in an interview Thursday that the sale and redevelopment were not a done deal. He said a sale closing was probably nine months to a year away -- and then only if both sides were satisfied with progress and financing agreements on several issues, including:

-- An estimated $17.4 million worth of environmental hazard cleanup work at the site, including two long-closed Air Force landfills, asbestos and lead paint removal from buildings, and cleanup of lead and other materials from a city-owned skeet-shooting range.

Cauthen said he would travel to Washington next week to meet with Sen. Kit Bond and Rep. Emanuel Cleaver, both of Missouri, and others to apply pressure to the Air Force and other federal agencies to fully fund the government's share of cleanup work.

-- CenterPoint's preliminary marketing of the project to gauge interest among industrial companies in leasing facilities there.

-- City approval of zoning and development plans, including publicly financed upgrades for roads and for other infrastructure that serves the site.

-- City approval of financial incentives for the project, including a likely tax increment financing deal that would recycle increased tax dollars generated by the project back into the project's construction cost.

CenterPoint and city officials said Thursday that it was too early to predict how many businesses and jobs could be created or how much public financing might be poured into the project. A City Council committee is expected to open debate Monday on an ordinance introduced Thursday by Eddy that would authorize Cauthen and others to begin working out those details and others. "I'm looking at this as a significant jobs program," Cauthen said, "an economic opportunity. I think we're on the road to prosperity in this part of the city."

Over the past two years, city officials have pegged the number of new jobs at 3,000 to 4,000, but Reynolds said the company was putting no limits on the scope of the project. "Kansas City is in the top 10, if not the top five cities, in terms of rail, air and highway access" for cargo operations, he said. "This is a golden opportunity ... to put Kansas City on the map nationally and internationally."

City officials said seven companies currently leased facilities at Richards-Gebaur. CenterPoint officials said some of the dozens of buildings in the complex could be redeveloped for industrial use, while others were likely to be razed. A Kansas City Southern spokesman for the Richards-Gebaur project could not be reached Thursday.

The company has railroad investments in the United States, Mexico and Panama, including The Kansas City Southern Railway Co. and the Texas Mexican Railway Co., which together serve the south-central United States and northeastern and central Mexico and three port cities. The company also has a 50 percent interest in the Panama Canal Railway Co., which provides ocean-to-ocean freight and passenger service along the Panama Canal.

CenterPoint Realty Services is an affiliate of CenterPoint Properties Trust, a real estate investment trust traded on the New York Stock Exchange. CenterPoint Realty bills itself as the largest industrial developer in the Chicago market, with ownership of an estimated 82 million square feet of developed and developable space under its control.

The company owns the 2,200-acre CenterPoint Intermodal Center in Elwood, Ill., one of North America's largest truck-rail transfer facilities. In 2000, it converted a former Army arsenal property in Joliet, Ill., to a 1,800-acre industrial park and intermodal facility in partnership with more than 100 companies. The company also recently opened a 3 million-square-foot warehouse and distribution space in Chicago that is to be leased to Wal-Mart. Reynolds said Kansas City's geographic advantages should attract industrial users from a 500-mile ring around the city. "We jumped on the opportunity" to own and manage the site, he said. "We know Wal-Mart and other shippers will find this site attractive."

One local company has already shown an interest in opening a branch operation at Richards-Gebaur. "We're always looking to develop and grow our business," said Diane Hersch, vice president of the Lane Blueprint Co. "We want a presence all over the city ... this is a very interesting site." Kansas-City based Hunt Midwest Enterprises is actively negotiating with the Port Authority for development rights beneath the airport.

Unlike Hunt Midwest's SubTropolis in Kansas City, the Richards-Gebaur site has no known natural caves. Hunt officials and Burke said this week that they expected to announce a deal before the end of the year for Hunt to lease up to 100 acres and then mine the site, carving several million underground square feet into warehouse and industrial space. When completed, the intermodal operation at Richards-Gebaur is expected to emerge as a big Midwestern player in the movement of NAFTA commerce among Canada, Mexico and the United States.

Federal officials are considering the site for a Mexican customs office that would clear and seal cargo for rail transport to Mexico and Mexican ports for sea shipments.

To see more of The Kansas City Star, or to subscribe to the newspaper, go to http://www.kansascity.com.

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