On Thursday evening, June 2, the Lee’s Summit City Council voted to override a veto by Mayor Randy Rhoads on Wednesday, May 25th by a margin of 6 to 1. All Councilmembers present, with the exception of Mayor Pro Tem Rob Binney, voted in favor of the override. Councilmember Trish Carlyle was absent for the session.

Mayor Rhoads had vetoed the action the Council had taken on May 19th when they voted 5 to 1 in favor of assignment of a development agreement between the City of Lee’s Summit, Exergonix, Inc. and Wescott Investment Group to develop a business park on an 83-acre tract of land southeast of the intersection of Missouri 291 South and US 50 Highway.

Thursday night’s override of a mayoral veto was similar to the Council’s vote on May 19th when all Council members present−with the exception of Councilmember Rob Binney−voted in support of the business park development by Exergonix and Wescott Investment Group. Councilmembers Dave Mosby and Craig Faith were absent for the Council session on May 19th.

Binney, as the lone dissenting voice on the Council, repeated his opposition to the plan. “I saw we got the letter from an 86-year-old lawyer whose address goes to the back of a strip center next to a highway that says he’s got $50 million dollars in a trust fund, but he didn’t submit any proof of that and the forms he filed with the SEC showed he requested $5 million on shareholder information, and, by the way, none of those shares have sold.”

Councilmember Chris Moreno, referring to exhibits he had projected in the Council Chamber and through questioning City Manager Steve Arbo, countered Binney’s opposition. “I just want to be transparent for the taxpayers, because it’s my understanding in the veto and obviously with the Mayor Pro Tem’s comments there’s some concerns about the stability of the individuals involved.”
Moreno referenced a contractor qualification document for a potential contractor that the Exergonix and Westcott Investment Group provided for the development. He cited the total work in progress by that contractor is worth over $89 million and that they have averaged projects totaling about $50 million per year for the last five years.

“We have received more than a letter from an 86-year-old man in the back of strip mall.” Moreno cited a letter received by the City in early May, verifying that $96 million would be immediately available for the project. Moreno also referenced a letter received by the City on May 11th from the Tenet Financial group that is said to reference a letter of credit for $176 million and that that the assets of the financial backers of the development exceed $2.5 billion.

Throughout Moreno’s questioning of City Manager, Steve Arbo, and Assistant City Manager, Mark Dunning, the confidence of the City in the developer’s financial ability to fund and perform according to the terms of the agreement was clear.

Arbo said that “We have not represented anything negative about the organization or its financial wherewithal, so what we did is we found a solution that would achieve our goals of assuring that things would be built on a timely basis.”

Councilmember Diane Forte commented on the project, acknowledging the City would not have all the financial assurances from the developers until the City passed the assignment for the development agreement, which the City Council approved by a 5 to 1 vote on May 19th before the Mayor’s veto on May 25th.

Both Forte and Arbo compared the process to the analogy of the “chicken and the egg.” Arbo said, “The structure doesn’t exist, we have a lot of great people with lots of money who want to invest in this, but the financial structure doesn’t exist.”

Arbo reference the agreement, saying “one of the things we require is that they show us that structure as a part of the agreement. And again, chicken and egg, they said ‘we’ll be happy to show you that structure as soon as we know that we have a project that we can have people make commitments to it.’”

He then repeated reference to the three types of financial surety the investment group for the development has offered to guarantee the project and reduce risk for the City and taxpayers.

“So, not only are you getting the escrow in cash, the performance bond, but then you’ll have structural statements of where the funding is coming from and what are the contractual commitments of these sources,” Arbo said. “Even though we didn’t get that structure at this time, it is a requirement for the continuation of this project.”

Forte replied, “When I see and look at that, I see going forward as long as all the T’s are crossed and I’s are dotted.”

Mayor Rhoads said, “I will make just one final comment. It is interesting how much new information we have received since the memo,” referring to his veto on May 25th. “That tells me this Council made some decisions based on some very limited, poor information and we got a lot more information since that memo was published May 25th.”

Rhoads closed by saying, “I still have some discomfort,” and called for a vote. Voting in favor of the override were Councilmembers Edson, Faith, Forte, Moreno, Mosby and Seif. The lone vote against the override was Councilmember Binney.

Overrides of a veto require a two-thirds majority. With the 6 to 1 vote to override the Mayor’s veto, the assignment of the development agreement by and between the City, Exergonix and Westcott Investment Group can now move forward.

The project, named The Grove At Lee’s Summit, calls for the construction of a business park for office, warehouse and light industrial use. The intial phase, if approved, is to include 200,000 square feet. Phase two is a planned expansion to 500,000 square feet. Phase three calls for possible acquisition of additional land and expansion to 1 to 1.2 million square feet. Construction is to begin in the summer of 2017, with completion of the first 200,000 square feet by the summer of 2019.