Platte County Commission takes notice of Zona Rosa financing issue

The Platte County Commission has put Zona Rosa on notice.

During the Monday, Dec. 4 regular administrative session, Platte County second district commissioner John Elliott read aloud a statement from the commission, stating Zona Rosa needed to reinstate a half million dollar letter of credit to cover its debts. At issue is the lack of a cash payment this year, although a deadline to reimburse its trustee doesn’t hit until next year.

During its initial development and 2007 expansion, road work in and around Zona Rosa was funded through a Transportation Development District (TDD). The financing structure is similar to Tax Increment Financing, providing bonds to build roads and parking garages.

Zona Rosa was first proposed in the late 1990s as a new type of retail experience that would create a town center, including residential units. In the early 2000s, capacity was increased on roadways in and around the Interstate 29 and Barry Road interchange to accommodate Zona Rosa, which opened in 2004.

“Historically, revenue generated by the Zona Rosa TDD has not been sufficient to cover the bond payment,” the commission’s statement read. “However, under the terms of the bond documents, Zona Rosa is required to provide and maintain a $500,000 letter of credit to cover all or part of a shortfall. In addition, historically the owners of Zona Rosa have covered the revenue shortage by making a cash payment to the TDD. As a result, the trustee has never drawn on the letter of credit for the shortage since the funds from the TDD tax and the cash payment from Zona Rosa were sufficient to cover the payment.

“However, this year Zona Rosa did not make a cash payment. Therefore, the trustee requested and received the draw on the letter of credit to cover the entire 2017 payment.”

UMB Bank, the trustee for the Zona Rosa TDD, is now seeking replacement of that $500,000 letter of credit, with a replacement deadline looming later this week.

Zona Rosa is owned by Olshan Properties, based in New York, N.Y. The Citizen was told Olshan declines comment on the matter, via its public relations firm Rubenstein Communications. Aside from the statement made Monday, the commissioners are also remaining silent on the details, announcing they would not share information concerning legal matters, as is permitted under the Missouri Sunshine Law.

Platte County first district commissioner Dagmar Wood said the commission was prompted to issue its statement because this was the first time in its history that Zona Rosa had failed to make up any revenue shortfalls to make its TDD bond payments.

The original TDD funding was created through an agreement with the City of Kansas City, but in 2007, Platte County joined in as well.

“Because the county taxpayers have been the backstop on this TDD for the past 10 years, and will continue to be for the next 15 if something doesn’t change, the commission is now in the position of needing to figure out how to fund an extra $600,000-plus in the 2018 budget if Zona does not make up for another shortfall on Dec. 1, 2018,” Wood said. “That’s a pretty hefty hit to our county budget and for taxpayers, so we are doing everything we can to protect the taxpayers’ interests and have secured independent legal counsel.”

In 2018, the payment due to the TDD is more than $2.1 million. The payment made earlier this month on Friday, Dec. 1 was a little over $2 million.