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Empty Farmer's Field in Kansas May be Transformed into a
 Mega Tourism Attraction;  $787 million Proposal Would
 Include Legoland Theme Park and Resort Hotel
By Kevin Collison, The Kansas City Star, Mo.McClatchy-Tribune Business News

Aug. 15, 2006 - An empty farmer's field near Kansas 10 in Olathe may be transformed by 2009 into a mega-tourism attraction anchored by a colorful Legoland theme park.

The $787 million proposal would not only include the second Legoland theme park to be built in the U.S., but also a resort-style hotel; arena; soccer complex; indoor ski slope; private aquarium, and a half-million square feet of retail.

"This would bring tourism in Kansas City to a whole new level," said Steve Graham, RED vice president for destination development, which is proposing the massive project. "The focus is more on the resort-type experience and tourism-generating attractions."

The pre-development agreement for the O-Zone project -- short for Olathe Zone -- is scheduled to be introduced today to the Olathe City Council.

"These are some exciting things we're working on," Olathe Mayor Michael Copeland said Monday.

"We're excited about the potential, but our final responsibility is to our taxpayers. We want to make sure it enhances our area and improves our quality of life.

"We need to make sure there's proper public-private balance."

The proposed 300-acre site, currently farmland, is one mile west of the interchange of Kansas 10 and Interstate 435, south of Kansas 10 at Ridgeview Road. If successful in obtaining the hefty state and city tax incentives and subsidies required, primarily STAR bonds, RED would like to open the project in 2009.

"The proposal we've made is significant. There's actually real numbers on the table and a financing plan being contemplated. It's not final, but the city and developer have agreed to it at a high level," said Dan Lowe, a partner at RED, the company that also developed the $230 million The Legends in the Village West shopping and entertainment district near Kansas Speedway.

RED and other private investment sources would contribute $313 million. The total price tag for the project, including $202 million in financing costs and debt service reserve, is $986.2 million.

Two-thirds of the estimated cost of the proposed project would come from state and city tax incentives and direct subsidies from Olathe. The breakdown of the public financing:

-- tax-increment financing bonds, $5.9 million.

-- transportation development district bonds, $47 million.

-- city-issued bonds, $64.3 million.

-- STAR bonds, $556 million.

The STAR bond program allows municipalities to issue bonds to finance major entertainment and tourism projects and use the sales tax revenues generated to repay the bonds. It was instrumental in building Kansas Speedway, Nebraska Furniture Mart, Cabela's and The Legends developments in western Wyandotte County.

In comparison, Kansas City issued $300 million in bonds to subsidize the $800 million Power & Light District project now being built downtown by the Cordish Co. of Baltimore.

Steve Kelly, Kansas deputy secretary of commerce and director of business development, said that while his department has not been briefed on all the elements of the O-Zone proposal, the potential involvement of Legoland appears to meet the criteria of the STAR bond program.

"They'll have to go through the process like anyone else, but on the surface something like Lego would be a positive development," he said.

"Right now, it's a shiny thing on the horizon. We don't have anything to evaluate, but it looks promising. It's something intriguing and would seem to fit with the development of destination attractions in the state of Kansas."

The Kansas City Star first reported in April that RED and Legoland were scouting sites in Johnson County. Tourism experts said a Legoland would be capable of drawing visitors from as far away as Minneapolis, Denver, Dallas and Chicago.

The 128-acre Legoland California near San Diego, the only one in the U.S., drew 1.5 million people last year. The target market is children ages 2 to 13, and their parents.

John Ussher, development executive for London-based Legoland, said his firm was "extremely enthusiastic" now that a pre-development agreement has been negotiated.

"It will trigger our board process," he said. "We'll put together the due diligence we need to do to move forward and take to the board."

With the planned addition of a variety of other attractions and destination stores, RED thinks the entire development could result in 12 million to 14 million visits annually.

Ussher described the proposed site as being "fabulous" in terms of visibility and access, and said the other attractions proposed by RED would complement a Legoland.

RED officials say they have obtained letters of intent –– tentative agreements –– or are negotiating such letters with all the potential tenants.

The application for STAR bonds must come from Olathe. RED would like to win state approval for the financing tool by mid-November.

Kelly said the November timetable may be overly optimistic.

"A lot of steps locally have to be in place," he said. "A feasibility analysis needs to be done. They may be in the position to submit an application by mid-November, but I don't see all the pieces being in place."

The Lego Group opened its first theme park in 1968 outside what was then its company headquarters and manufacturing plant in Billund, Denmark. It expanded to England in 1996, and then California in 1999. The last Legoland to open was in Germany in 2002.

Talks between Legoland and RED began about two years ago. Before the proposed Olathe site being chosen, RED officials also had discussions about a site near Gardner but officials there found the size of the incentives sought to be unfeasible for the community of 15,000.

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To reach Kevin Collison, call (816) 234-4289 or send e-mail to kcollison@kcstar.com.

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Copyright (c) 2006, The Kansas City Star, Mo.

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