Wichita Rescues Redevelopment by Paying for Toxic Cleanup : Banks had balked at financing the rebuilding of downtown because of liability fears. Now a smaller plan is moving ahead.

After decades of stagnation and decline, downtown Wichita was poised for rebirth last year. Then, a six-square-mile lake of underground pollution was discovered beneath the business center.

That effectively squashed development plans and threatened the future viability of downtown as banks abruptly stopped lending.

“It was like a switch,” said Mark Glaser, who helped deal with the problem as a special assistant to the city manager. “Things just basically go on hold. They just shut down. You can’t buy or sell or get a loan on properties if it’s in a contaminated area.”

Wichita needed help. But unlike other local governments, it opted not to wait for federal aid. That may have been the critical step in keeping the development plan alive, city officials and business leaders say now.

The Development Plan

The threatened development plan had been astoundingly ambitious, as grand as anything ever seen in Kansas. As laid out by flamboyant millionaire developer Jack DeBoer, the point man for the revitalization campaign, the rebuilt downtown would have included a new sports arena, an outdoor amphitheater, an amusement park, apartment buildings, restaurants, a marina, a major new hotel and expansion of the city’s museum district.

And crowning it all: A 299-foot statue--one foot shorter than the Statue of Liberty--would become the beacon, the easily identifiable symbol, of Kansas’ largest city.

The only thing that stopped the Keeper of the Plains statue from dwarfing Lady Liberty was patriotism. As DeBoer explained: “We are Americans first and Kansans and Midwesterners next.”

Then the toxic waste was discovered and the dream of a downtown wonderland grew troubled.

“Kansas Bankers Run from the Blob,” read the headline in the American Banker newspaper. And it was true. The “blob” of underground waste that had been left behind by manufacturers lay beneath only a small part of the redevelopment area--an old warehouse district--but it was the part that was slated to be rebuilt first. And the blob was moving at a rate of a foot per day. No one knew where the pollution might wind up.

The discovery had a chilling effect on all of downtown as banks stopped making loans, fearful that they would be held liable for environmental damages on properties they financed.

Possible Solutions

The city looked for solutions in the experiences of other municipalities.

“We tried to figure out what other cities were doing in this situation,” Glaser said. “We didn’t find much in the way of a model that we could copy. In most cases we found that they’re not doing anything.”

Doing nothing was not an option in Wichita. Downtown--and its huge tax base--was at stake.

Underground pollution had recently been discovered at another site in the city. The Environmental Protection Agency took charge of the cleanup, putting the site on the federal Superfund list. Glaser said cleanup costs soared over original estimates and property values dropped 40%. “In some cases you probably can’t give the land away,” he said.

City officials determined that the only way to save downtown was for the city to assume responsibility for the latest cleanup. The cleanup is expected to cost $20 million over 20 years, but, as Glaser noted: “The annual property taxes at risk were worth that much.”

Reacting quickly, the city earlier this year created a tax increment financing district. Part of the property taxes levied from the affected area will be used to pay cleanup costs that cannot be recovered from manufacturers found to be responsible for the pollution.

The Effect

The move not only eliminated the fear of federal government red tape and foot-dragging, but it also relieved banks and innocent property owners of liability for the pollution cleanup.

“It was the first time a local government put itself between the EPA and state regulators and the property owners,” said Marvin L. Wynn, chief operating officer of the Wichita/Sedgwick County Partnership for Growth, an organization of business leaders that sponsored the development plan.

“If they hadn’t done what they did, it would’ve been tied up in litigation and development would have been stopped for years and years, maybe decades,” said David Burke, one of the developers in a plan to turn a dilapidated downtown warehouse district into a vibrant residential, retail and entertainment area called Old Town Marketplace.

“The city coming up with an innovative approach really has solved the problem. You’re seeing property change hands again and there is lending in the area. Property values will start going back up again.”

Losing Momentum

Ironically, while the city was able to solve the toxic waste problem, it ultimately faltered in selling the grand overall redevelopment plan to the public. The $375-million plan originally had been conceived as an all-or-nothing deal. As hatched by business leaders during a year of behind-the-scenes study, only a grand approach to downtown revitalization would succeed.

According to the DeBoer plan, the city and county would allocate $174 million for such things as road and bridge improvements. Another $54 million would come from private donors for public portions of the redevelopment, and $147 million would come from private investors.

The new downtown would have been built up over a 10-year period on the banks of the Arkansas River, which would have been made navigable for tourist barges. In addition, the plan called for creation of a $40-million endowment for city museums so that they would no longer have to be engaged in constant fund raising.

Anything less ambitious, or approaching the project in a piecemeal fashion, would mean that the plan would fail to ignite the explosion of enthusiasm necessary to make it succeed, DeBoer warned. But in September, a scaled-back, piecemeal plan is exactly what the City Council approved.

“We had the momentum and then we lost it,” Burke said. Although the pollution threat undoubtedly had some effect on the project, Burke attributed the failure of the more ambitious plan mostly to a public perception that the grandiose proposal was being “shoved down their throats” by an elite group of business people.

New Efforts

Among components severed from the project was the 299-foot Keeper of the Plains statue, which would have been a colossal version of a 44-foot statue that already graces this prairie city, paying tribute to the region’s American Indian heritage.

Also gone is the sports arena, a lock system to open the Arkansas River to tourist boats and plans for commercial development along the west bank of the river, where the amusement park and apartments were supposed to go.

That last excision is what hurt the plan the most, business leaders say. Without the waterfront to build on, wooing private investors will be difficult. The bulk of the development project could die.

“That is a possibility,” Wynn said, “but most of us are optimistic.” He said the revised plan is undergoing evaluation by his organization, which will make its position public this month.

There still is hope. The state of Kansas is studying a proposal to relocate 1,000 state workers in a now-shuttered building downtown. That might jump-start the development plan and get it moving again, Wynn said. “That might be the catalyst to bring things together again.”

He said, however, that if the city had not taken the steps it did to battle the toxic waste problem, the project would not have reached this point.