By David Wallace
Special to The Globe
During the summer of 2012, the Joplin City Council and the Joplin Redevelopment Corporation (JRC) completed negotiations on the master development and land assemblage agreements with the city’s master developer, Wallace Bajjali Development Partners, of which I am chief executive officer.
In the days shortly after the execution of the agreements, many people started to ask questions: “When will we see the cranes?” “Where are the bulldozers?” “When will the rebuilding of the disaster zone begin?”
The answer: Measure twice and cut once. We are almost there.
As is the case with any successful development, a great deal of planning, design and public input is required. These happen first — before any dirt gets scraped, before steel beams get planted and before foundations are poured.
Joplin is no different. In fact, during the past six months, representatives of Wallace Bajjali, the city of Joplin and the JRC board have been preparing for the onslaught of developmental activity, alongside countless local architects, engineers, economists, land planners, brokers, title companies, bankers and others.
In our company’s role as master developer, Wallace Bajjali has spent much of its time quietly contracting to assemble land and ensuring that the developments are well-capitalized, so that they can be rooted in sound economics. This includes land price negotiations using local independent appraisers to verify the best price options and market value. It’s a premise that all of us must demand, because failure is not an option.
During the past week, I had the opportunity to address a few hundred citizens and receive their input. It was very gratifying to be able to announce that of the first $800 million in projects, the vast majority of the capital has been secured through numerous private and public sources. In short, the cranes and bulldozers are on their way. Progress will soon be visible as we evolve from the planning stage to the development stage on a number of initial projects.
As we assemble the capital, Wallace Bajjali will continue to use a myriad funding tools and think outside the box to secure capital. In the 20th Street and Connecticut Avenue mixed-use development, which includes a library, a theater, a grocery store and lofts over retail, we have blended cash equity, federal grants, tax-increment financing bonds, revenue bonds, Community Development Block Grant funds, new legislative tools, ground lease and conventional debt to provide the funding for the project. Complex? Yes. But we are always looking out for the best interest of residents.
When Wallace Bajjali was faced with a landowner who did not wish to sell, we quickly moved to a ground lease in an effort to provide the annual returns that the landowner was seeking. Then we secured the necessary parcels of land to advance the project and fulfill all requirements to apply for the $20 million Economic Development Agency grant funding. As part of the transaction, we secured the option to purchase the land while creating a funding mechanism to prepay the rent on the ground lease. Simply put, we have a lease/purchase option on the real estate. If EDA grant funding is secured, the first 15 years of the lease is paid for by the grant, and the city will have the option to purchase the land at that time by utilizing TIF revenue. The revenue sources to pay for the lease and purchase the land come without an increase in taxes to Joplin residents.
Using the land across the street (for the new Casey’s General Store) as a comparable value, this means the project can lease (borrow) the land, pay an annual rent payment (interest) at the rate of roughly 4 percent per year, and then, when we so choose, purchase the property (pay off the loan) at the then fair market value. I wish I could borrow all of my money at 4 percent a year.
In the end, the Joplin community will have the redevelopment that it was seeking. We can soon ignite the economic development engine as we advance to yet another gear.
David Wallace is chief executive officer for Wallace Bajjali Development Partners, the master developer for the city of Joplin.