Construction is under way on the Prairiefire Museum and a 300-unit apartment project, the Residences at Prairiefire.
The team that put together development financing for the $427 million Prairiefire mixed-use project in Overland Park has been recognized with a national award for bond financing.
The award was presented during the Council of Development Finance Agencies' National Summit earlier this month in Washington, D.C. Presented as construction of Prairiefire's first retail stores was wrapping up, the CDFA award was accepted by Fred Merrill Jr. and Richard Napper of the Merrill Cos., which is developing the project; Overland Park Deputy City Manager Kristy Stallings; and Jim Lahay, a senior vice president of Stifel Nicolaus & Co. Inc.
"As America's Great Recession took hold in 2007, commercial and retail development projects nationwide halted or fell off the drawing board completely," the CDFA said in a release. "Despite risks and the financial environment, Stifel and Merrill Cos. LLC, with city approval for bonds, pushed forward to devise and implement a first-of-its-kind financing arrangement."
Anchored by the $28 million Prairiefire Museum, the nation's first location for hosting traveling exhibitions of New York's American Museum of Natural History, Prariefire qualified for $81 million in sales tax revenue - or STAR - bond financing from the state. Applications for STAR Bonds, which are repaid with sales tax revenue generated by tourism-related projects, must come through a local jurisdiction and obtain approval from the Kansas commerce secretary.
Prairiefire is being developed along the south side of 135th Street between Nall and Lamar avenues. Fred Merrill Jr., president of Merrill Cos., put the 60-acre site under contract in December 2006, with the idea that its development should include a significant civic attraction.
During master planning for the project the next year, Merrill learned from one of his designers that the American Museum of Natural History was considering expansion via a satellite location. Merrill, who reached a 2008 agreement for Prairiefire to be that location, originally planned to finance the attraction solely through private donations. But he said sources with Overland Park and Stifel Nicolaus quickly pointed out that a museum-anchored mixed-use development was just the type of project that Kansas STAR bond legislation was designed to support.
In 2009, the commerce secretary approved $66.1 million in STAR bond authority for Prairiefire, and in June 2011 the secretary approved an increase in authorization to $81 million.
In addition, the Overland Park City Council last year approved community improvement district financing, which will generate $30 million over 20 years from a 1.5 percent sales tax surcharge to be paid for by Prairiefire shoppers. The city also agreed to issue CID bonds, which will be repaid with the CID tax revenue while generating upfront financing for development. The net CID bond proceeds will total $23.4 million.
Remaining financing for the project will include about $322 million in private debt and equity. Two development partnerships Merrill formed to develop the two commercial phases of the project will cover about $250 million of that total through debt, equity and museum donations. The remaining $72 million will come from private equity and debt provided by two developers who have purchased residential tracts in the development.
Jim Lambie of Lambie Custom Homes of Overland Park has purchased lots for 18 villas on the south side of 137th Street that will back up to the Lionsgate golf course. Jim Thomas of Hearthview Residential in Indianapolis has acquired sites for the 300-unit Residences at Prairiefire apartment project now under construction on the east side of Prairiefire and the 128-unit Cityscape apartment project planned for the west side.
Prairiefire's first retail phase, which is 95 percent committed, will include 209,000 square feet of stores.
On Sept. 4, The Fresh Market at 6261 W. 135th St. will become the first to open. In addition, a new REI outdoor clothing and gear store will open in late September and the first American Museum of Natural History traveling exhibit will open on Oct. 8.
The museum exhibit, "The World's Largest Dinosaurs," will be housed in temporary space - a 9,000-square-foot retail building near the corner of 135th Street and Lamar Avenue.
The Prairiefire Museum is scheduled to be completed in time for the April 15 opening of the next traveling exhibit, "Water."
Merrill said it was exciting to see Prairiefire finally coming together after being scaled back from an original development cost of $580 million and delayed by recession.
The project never would have happened, he said, if it hadn't been for the "monumental, creative financing structure" that the Prairiefire team was honored for this month.
He said the team included bond lawyers, city lawyers, development lawyers and bank lawyers who spent six months negotiating financing details.
"There were 20 people around that table and more participating through conference call," Merrill said. "This project was only accomplished because so many people wanted it to happen, and this (CDFA) award was a great way to thank all of them."