‘Painful history’: Overland Park could terminate tax incentives for apartment complex

The city of Overland Park could terminate its tax incentive agreement with the developers of the long-troubled Market Lofts project downtown.

The city’s Finance, Administration and Economic Development Committee on Wednesday unanimously agreed to end the tax increment financing deal after the developer sold the project without the City Council’s approval — putting it in default of the agreement. The council will make the final decision once the required documents are prepared, spokesman Sean Reilly said.

The Market Lofts multifamily development, at the northwest corner of 80th and Marty streets, was among the first mixed-use apartment complexes to be planned in the heart of downtown, which is now home to several projects of the sort.

The downtown has been revitalized with hundreds of luxury apartments and several modern office spaces in recent years, as well as Strang Hall, a food hall aimed at helping start-up restaurants get off the ground, at the new Edison District, West 80th and Marty streets.

But over the years, Market Lofts had endured several delays, leading to tax incentives being slashed and several lawsuits.

“This project has a long and somewhat painful history,” attorney Todd LaSala, who advises the council, said on Wednesday.

LaSala said that the city learned the original developer, Paul Goehausen, was planning to sell the project to 19 Grand LLC, apparently one day before the deal closed. He said the council is within its rights to terminate the agreement.

Goehausen told The Star on Thursday that “it was just time” to sell the project.

The developer stood to receive $1.1 million in tax increment financing, or TIF, reimbursements under the agreement, but that dropped to $694,000 as the council stripped away incentives over the years. LaSala said if the deal is terminated, the project will not receive any of that money.

The developer has not received any reimbursements yet, both LaSala and Goehausen said. And the TIF funding that had been collected for the project so far would be redistributed to taxing jurisdictions, such as the city, county and Shawnee Mission school district.

Overland Park City Council created the Market Lofts redevelopment district in 2007, and approved a tax incentive package with the developer the following year. But the recession stalled the project.

Construction started in late 2016 but new delays arose over the burying of utility lines and other issues. And residents, business owners and customers complained about disruptions to traffic and pedestrians along 80th Street.

Market Lofts, which was planned to have 36 units and commercial space, at a cost of $10 million, was supposed to be done by December 2017. But when that deadline passed, the City Council reduced the maximum TIF payments the developer could receive.

Goehausen fired the general contractor on the project, 2 Point Construction Co., which later sued the developer. Market Lofts then filed its own lawsuit against the company.

The developer hired a new contractor, and the project began taking shape, though it still lagged behind construction deadlines. And TIF funding was reduced again in 2019.

The project was completed in February 2020, Goehausen said, adding that the retail space is leased and he had been marketing the apartment units.

LaSala said he does not believe terminating the development agreement will hurt the downtown.

“The developer did complete (the project), so all the money they would invest, they have invested. They have now turned and sold the project for money to a new buyer who has stepped in,” he said. “I do not think terminating the TIF has any adverse impact on the project going forward.”