By LESLIE EIKLEBERRY
Salina Post
With a housing crisis looming, Salina's efforts to increase the number of places for people to live has had a setback.
The Magnolia Pointe apartment complex that was to be built at the southwest corner of Interstate 135 and W. Magnolia Road appears to be on hold according to information provided at Monday's Salina City Commission meeting.
The facility was to provide 168 apartments spread across six 11,158-square-foot, three-story buildings. A 3,691-square-foot clubhouse with an outdoor swimming pool also was to be included. According to the site plan, there would be 96 fully enclosed parking spaces and 192 open parking lot spaces.
Early in the meeting, Mayor Melissa Hodges asked that a discussion of the Magnolia Pointe issue be added to the commission agenda. That request was approved by the commission.
When it came time to talk about the matter, Hodges asked that staff provide an update. Hodges said she was not aware of any issues with the Magnolia Pointe project until she received from former city commissioner Jon Blanchard, an email that included a video clip from the Nov. 2 City Planning Commission meeting that indicated the Magnolia Pointe development was not going forward.
What was said at the planning commission meeting
Toward the end of the planning commission meeting, Planning Commissioner Derik Bernhardt asks whether the permit process had started for the Magnolia Pointe project and for the hotel project just to the south of the Central Mall.
Dean Andrew, city zoning and floodplain administrator, replied concerning Magnolia Pointe, "They have not. There is within that subdivision what are called reciprocal easement agreements and those reciprocal easement agreements, which are not unusual in developments like that, usually give the major anchor tenant veto power over uses within that area, and a committee representing Menards, Inc., approved that use and then a second committee did not approve that use. So at this point, they're unable to move forward because Menards does not approve their use of the property."
Mayor asks for city commission to be brought up to speed
During Monday's city commission meeting, Hodges said, "We've had a lot of discussions about housing shortages in Salina. I know it was a big election issue topic about what we are doing to address that and what we're going to be doing to address that in the future, and I thought it was worthy of being placed on the agenda so that we can all get up to speed on what happened and where we see the process going from here."
City Manager Mike Schrage replied, "I don't know that I'm prepared to say that it is not going forward, although there has been a snag that we're trying to see whether we can work through."
Schrage said a private agreement between the developer of the Menards land and Menards established prior to Menards opening gave Menards the right to decide how the rest of the land would be used. The agreement, he said, was not something that the City of Salina was a party to.
Schrage noted that while conversations were ongoing between the developer of the Menards land and Perry Reid Construction, the developer of the proposed Magnolia Pointe complex, the two called to the city's attention that they needed to get Menards consent.
"Subsequently, we were advised that they had reached an agreement amongst them in terms of agreeing to purchase material and give Menards and opportunity to bid on the project, and that second civil agreement between the two parties had been agreed to and that Menards had consented, was my understanding," Schrage said.
Schrage later noted that the city did not obtain any sort of official document that stated Menards had consented to the use of the land for the Magnolia Pointe project.
The city then went through the approval process for the Magnolia Pointe project (platting and industrial revenue bonds), and was then told that Menards had an additional procedural step - a real estate committee process - before the project could move forward.
"They are apparently the final arbiter of whether they consent or not," Schrage said of the real estate committee.
Menards real estate committee decided to hold out for retail development on the property that was to be used for the Magnolia Point project, he said.
"At that point, communications ramped up. I was drawn into the middle of that conversation, asking 'what can we do to help?'" Schrage said, "I was out of the office for a week, but I reached out to that point of contact (with Menards) that I had who kind of was the staff liaison for the whole process. Had a conversation with them. Tried to kind of convey not only is it just a real estate deal in terms of the two parties, but Salina has a unique housing need in terms of responding to our economic development successes recently."
Schrage said he had the draft of a letter he intended to send to the owner of Menards and to the staff person of the Menards real estate committee that would reiterate the importance of the project.
Developer looking at other properties
Lauren Driscoll, Community and Development Services Department director, told the commissioners that Perry Reid was also looking to build on other properties in Salina.
"Perry Reid has also noted that they are willing and very much want to build additional units here in Salina, so have already started to look at other properties if this doesn't work out," Driscoll said.
She continued, "You know, in the development world, you kind of look at some of this as who's leading the effort, right? There was equal effort on Perry Reid's part. I mean, they were developing the documents. They were preparing those types of things and they had risk on the line. Typically, they don't want to be in this position. In fact, they held out for weeks not wanting to be in front of you and having this happen. So I think we were all very surprised when Menards noted that they had this additional executive level to make the decision."
Lesson learned
Driscoll said that city staff learned a lesson from the situation: to ask about restrictions on property.
"It's not usually something that comes up in our purview. It's usually something that come up in title. Hopefully a good realtor shares that, but if there are those types of agreements between property owners, I think before we pursue anything further, we would ask for that agreement to be in writing. And I think it's probably the best lesson we can learn from this," Driscoll said.
Mayor asks when staff knew project was in trouble
Hodges asked when city staff heard about "the deal falling through."
"I heard about two weeks ago that there was concerns that Menards had this additional process and they were not sure how they were going to go. We kind of set back a little bit, kind of waiting 'cause what was relayed to us, both from the property owner and from Perry Reid was, you know, there was additional process, then found out there was a denial. And then this, you know, an effort to try and reconvene that board to have additional conversations with them," Driscoll said.
"I guess, my question is, at what point if, you know, a planning commissioner hadn't asked for an update, at what point was the commission going to be brought into the loop, first of all that this project was running into some difficulties, and, ultimately that it didn't look like those difficulties were going to be resolved," Hodges asked.
Schrage said that he was not aware that the information had come up in the planning commission meeting. He said he had intended to share the information as a part of the update he sent to commissioners on Monday.
"I had also asked Perry Reid when they felt like the project was truely dead. I guess I hadn't felt, I hadn't really thought to convey in writing that things were going sideways. It can all change in the blink of an eye in development. So, Perry Reid asked to have some more conversations with Menards, and we said when they kind of were ready to give up the ghost, to let us know, and I had suggested that they do a press release and then something formal to the commission to identify what their next course of action would be," Driscoll said.
"I think staff was looking at not kind of over-communicating anything at this point because there are other properties that they may be looking at, so we were not trying to affect any of their decisions," Driscoll added.
Schrage said his "conversations were right up to the end of the day on Friday and then email through the weekend in terms of still trying to piece together who had spoken with representatives of Menards, what feedback had they gotten, and what was the suggested path forward."
"I will admit, I feel like a prize idiot, because I had a member of the community come to me two weeks ago and say, 'hey, hey, hey, this deal's in trouble.' And I was like, 'nah. This deal is solid. This deal is going through. You know, we've already done x, y, z. If there were an issue with, you know, catching something that is not a permitted use or that Menards has to sign off on, we would have caught that months ago,'" Hodges said.
She continued, "I guess what I'm saying is that I feel like the conversation has been out there in the community, and I can't speak for other members of the governing body, but the first time I heard about it, was when, you know, just through an email that was forwarded to me with a planning commission question. That's just, I don't know, that sits wrong."
Schrage said he would take responsibility for the communication issue about the project.
"I didn't anticipate it taking on a life of its own like it did. I was trying to work on it like we do many other deals in terms of trying to bring all the parties together," Schrage said. "With respect to the housing situation, I've praised Lauren multiple times, that I feel like we are trying to be on the leading edge of this issue as much as we can."
He noted, however, that city staff are merely facilitators in such projects.