Market Feasibility

MARKET FEASIBILITY AND MISSOURI NET NEW SALES STUDY LEES SUMMIT EAST TAX INCREMENT FINANCING PLAN
INTERSTATE 470 & U.S. HIGHWAY 50 LEES SUMMIT, MISSOURI

April 2007
CANYON RESEARCH SOUTHWEST, INC.

COMMERCIAL REAL ESTATE RESEARCH AND ANALYSIS
MARKET FEASIBILITY AND MISSOURI NET NEW SALES STUDY LEES SUMMIT EAST TAX INCREMENT FINANCING PLAN INTERSTATE 470 & U.S. HIGHWAY 50 LEES SUMMIT, MISSOURI
April 2007
Prepared for: City of Lees Summit, Missouri 220 SE Green Lees Summit, MO 64063 Prepared by: Canyon Research Southwest, Inc. 651 Delaware Avenue, Suite 139 Buffalo, NY 14202 PR# 07-04-01
651 DELAWARE AVENUE, SUITE 139 / BUFFALO, NY 14202 / (716) 362-1203
CANYON RESEARCH SOUTHWEST, INC.

COMMERCIAL REAL ESTATE RESEARCH AND ANALYSIS
April 10, 2007 Steven Lewis, City Administrator City of Lees Summit, Missouri 220 SE Green Lees Summit, MO 64063 RE: Market Feasibility and Missouri State Net New Sales Study First Amendment of the Lees Summit East TIF Plan; Lees Summit, Missouri
Dear Mr. Lewis: The attached report represents our findings relating to the Market Feasibility and Missouri Net New Sales Study prepared for the First Amendment Lees Summit East Tax Increment Financing (TIF) Plan located southeast of Interstate 470 and U.S. Highway 50 in Lees Summit, Missouri. The Lees Summit East TIF Plan calls for the development of a 548,186 square foot lifestyle center, 650,705 square foot power center, 85,000 square feet of festival retail and restaurants, Legoland Missouri theme park and 250-room hotel, Sea Life Aquarium and 850,000 square feet of office space. The First Amendment Lees Summit East Tax Increment Financing Plan is seeking a variety of public revenues sources including TIF revenues, City Super TIF revenues and State Supplemental TIF revenues. The City Super TIF and State Supplemental TIF allows for a portion of the new local and state taxes created by a project to be used to fund eligible public infrastructure and related costs for a period of up to 23 years. The purpose of the report is to evaluate the market viability of developing the Lees Summit East TIF Plans retail, hotel and office components as well as forecast net new retail sales generated for the State of Missouri by the project. Upon review of the report, should any questions arise or additional information requested I could be reached at (716) 362-1203. Respectfully submitted, CANYON RESEARCH SOUTHWEST, INC. Eric S. Lander, Principal Enclosure
651 DELAWARE AVENUE, SUITE 139 / BUFFALO, NY 14202 / (716) 362-1203
TABLE OF CONTENTS
Page #
SUMMARY OF MAJOR FINDINGS INTRODUCTION .............................................................................................

Study Objective and Organization .................................................................... Lees Summit East Redevelopment Plan ..........................................................
ii 1 1 2 4 4 6 6 7 8 9 10 21 23 27 28 28 28 35 36 37 38 38 38 42 43 45 46 46 55
RETAIL MARKETABILITY ANALYSIS ..............................................

Shopping Center Concepts ............................................................................... Lees Summit Retail Market ............................................................................ Construction Trends ................................................................................ Retail Sales .............................................................................................. Shopping Center Survey .......................................................................... Retail Space Demand Forecasts .............................................................. Kansas City Area Lifestyle Centers .................................................................. Independence Center Retail Destination .......................................................... Shopping Center Site Evaluation ..................................................................... Conclusions ......................................................................................................
HOTEL MARKETABILITY ANALYSIS ...............................................

Competitive Hotel Market ................................................................................ Hotel Properties ...................................................................................... Hotel Room Demand Forecasts .............................................................. Hotel Site Evaluation ....................................................................................... Conclusions ......................................................................................................
OFFICE MARKETABILITY ANALYSIS ..............................................

Lees Summit Office Market............................................................................. Existing Inventory of Space .................................................................... Forecast Office Space Demand ............................................................... Office Site Evaluation Criteria ......................................................................... Conclusions ......................................................................................................
FORECAST NET NEW STATE REVENUE .........................................

Gross Retail Sales.............................................................................................. Net New Retail Sales.........................................................................................
Canyon Research Southwest, Inc.
SUMMARY OF MAJOR FINDINGS

RED Development and Merlin Investments are seeking approval for the First Amendment to the Lees Summit East Tax Increment Financing Plan located at Interstate 470 and U.S. Highway 50 in Lees Summit, Missouri. The Redevelopment Area is planned for the development of a 548,186 square foot lifestyle center, 650,705 square foot power center, 85,000 square feet of festival retail shops and restaurants, Legoland Missouri theme park and 250-room full-service hotel, Sea Life Aquarium and 850,000 square feet of office space. The First Amendment Lees Summit East Tax Increment Financing Plan is seeking public revenues to fund eligible project costs. The City Super TIF and State Supplemental TIF allows for a portion of the new local and state taxes created by a project to be used to fund eligible public infrastructure and related costs for a period of up to 23 years. The purpose of the report is to evaluate the market viability of developing the Lees Summit East TIF Plans retail, hotel and office components as well as forecast net new retail sales generated for the State of Missouri by the project. The reports major findings are summarized in the text below.
Feasibility of Retail Development

The Lees Summit East Redevelopment Area is planned for development of lifestyle, power and festival centers. In recent years Lees Summit has experienced accelerated retail construction activity as several national big-box retailers opened stores in an attempt to capitalize on the communitys growing population, high-income levels and modest retail competition. From 1997 to 2006 nearly 3.0 million square feet of retail space was constructed in Lees Summit. New retail construction peaked in 2000 at 1.24 million square feet. Taxable retail sales in Lees Summit escalated from $752 million in 2000 to $1.2 billion by 2006, an increase of nearly 60 percent. Like so many rapidly growing suburban communities, despite a recent surge in new retail construction Lees Summit remains severely under-retailed and continues to suffer from considerable retail sales leakage. Retail leakage during 2006 was estimated at $177 million, sufficient to support approximately 785,000 square feet of retail space. By the year 2011, Lees Summit is forecast to support an additional $438 million in retail sales and 1.72 million square feet of retail space. Of this future demand for retail space upscale retail is forecast to account for approximately 600,000 square feet. Therefore, sufficient demand exists to warrant near-term construction of all three shopping center concepts totaling approximately 1.3 million square feet planned for the Lees Summit East Redevelopment Area. Four destination lifestyle centers/districts currently operate within the metropolitan Kansas City area. Zona Rosa, Country Club Plaza, and Town Center Plaza maintain a similar tenant mix highlighted by boutique clothing and apparel stores, eating and drinking establishments, and entertainment venues. The Legends at Village West has created a distinctive retail environment through the tenancy of one-of-a-kind retailers, theme restaurants, and entertainment venues not currently operating in the Kansas City market. These lifestyle centers occupy the central, north, west and southwest quadrants of the Kansas City area and their distance apart allows for the operation of sister stores. The Lees Summit East Redevelopment Area is located within eastern Jackson County that doesnt possess a lifestyle center.
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While the Independence Center retail hub located approximately eleven miles northeast of the Lees Summit East Redevelopment Area maintains a large inventory of big-box retailers, it lacks a major concentration of specialty retailers, restaurants, nightclubs and one-of-a-kind destination retailers. Lees Summit is the fastest growing community in eastern Jackson County and best suited to support a lifestyle center. These market dynamics bode well for the ability of the Lees Summit East Redevelopment Area to support feasible lifestyle center development. Lees Summits favorable demographics and lengthy list of absent big-box retailers also bodes well for the opportunity to facilitate feasible power center development. The Lees Summit East Redevelopment Area possesses the necessary site characteristics and trade area demographics to support feasible development of a lifestyle center, power center and festival retail. The location of the Independence Center retail hub outside of the primary and secondary trade area allows for the potential to attract sister stores and strong tenant interest reported by RED Development affirms the sites desirability as a premiere big-box retailer and large-scale shopping center location. In combination with the neighboring 719,639 square foot SummitWoods Crossing, development of the approximately 1.3 million square feet of retail space planned by the Lees Summit East TIF Plan will create a dynamic retail destination supporting the second largest concentration of retail space in eastern Jackson County. Given Lees Summits narrow retail market, considerable pent-up demand for retail space and market positioning, short-term development of the Redevelopment Areas three retail components appears reasonable and achievable. Scheduled opening dates are the fourth quarter 2008 for the lifestyle center and the fourth quarter 2009 to first quarter 2010 for the power center and festival retail. Based on actual lease rates for comparable power and lifestyle center in the Kansas City area achievable lease rates for both the lifestyle and power centers range from $23.00 to $32.00 per square foot triple-net for the small shops and $12.00 to $16.00 per square foot triple-net for the junior anchors. The two department store sites are virtual giveaways. Market lease rates for the shop and restaurant space within the festival retail center range from $28.00 to $35.00 per square foot. Lease rates for the small shops within the power center, power center and festival retail will fluctuate based on the spaces size, location and level of tenant improvements.
Feasibility of Hotel Development

The Redevelopment Area is designed for a 250-room Legoland-theme full-service hotel. Direct competition is minimal with just seven hotel properties totaling 493 rooms currently operating in Lees Summit. No full-service hotels operating in Lees Summit and just the 201-room Hilton Garden Inn and the 121-room Courtyard by Marriott located are within eastern Jackson County. The Lees Summit hotel industry supports a narrow mix of economy and mid-price properties catering primarily to leisure and business travelers. Two-thirds of Lees Summits inventory of hotel rooms was constructed from 1998 to 2001. Since mid-2001 no new hotels have opened in Lees Summit. During 2006, the seven hotels in Lees Summit operated at a cumulative occupancy rate of 56.2 percent. No hotel properties are currently under construction and scheduled for completion by year-end 2007. By 2010, the occupancy rate of the seven hotels in Lees Summit is forecast to improve to 61.5 percent. Demand for the 250-room hotel planned
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for the Redevelopment Area will primarily originate from visitors to Legoland and the aquarium; therefore, feasible development wont be dictated by competitive hotel market conditions. A Market Report published by Smith Travel Research identified competitive area historical hotel operating trends that include six hotels totaling 430 rooms operating in Lees Summit as well as the 201-room Hilton Garden Inn in Independence and 121-room Courtyard by Marriott in Blue Springs. Concurrent with national hospitality trends, the competitive hotel market suffered from the adverse economic impact originating from 9/11. Recent operating trends suggest that the competitive hotel market is well on its way to recovery, posting strong gains in room demand, average daily rates (ADR), revenue per available room (RevPAR) and total lodging revenue over the past three years. The newer chain hotels outperform the overall market. With no short-term hotel development planned in Lees Summit competitive hotel market conditions are forecast to continue to recover. The Redevelopment Area possesses the necessary location and site requirements to support future development of a full-service hotel. The site offers convenient freeway access, necessary land area and infrastructure, and proximity to the Legoland theme park and aquarium that are forecast to generate annual attendance of approximately 1.45 million. Direct competition is minimal with no full-service hotels operating in Lees Summit and just two properties located within eastern Jackson County. The Legoland theme park is scheduled to open by spring 2009. To support the Legoland theme park operations the 250-room Legoland-theme hotel is expected to open soon after by fall 2009 to spring 2010. Based on directly competitive hotel market conditions and the ability of a fullservice hotel to capture room night demand generated by the approximately 1.45 million annual visitors to Legoland and the aquarium, the developers anticipated opening date for the 250-room Legoland-theme hotel appears reasonable and achievable. Daily room rates were forecast for the 250-room Legoland-theme hotel based on reported rates for full-service hotels in both eastern Jackson County and Overland Park, Kansas (i.e., Embassy Suites, Courtyard by Marriott and Sheraton Overland Park). Stabilized occupancy for the 250room hotel is forecast to require three years from opening. Year 1 operating results are forecast at a 60 percent occupancy rate, an ADR of $150 per night and a RevPAR of $90 per night. By stabilization in Year 3 the hotel is forecast to operate at an average occupancy rate of 70 percent, an ADR of $156 per night and a RevPAR of $109.25 per night.
Feasibility of Office Development

The Lees Summit East TIF Plan designates approximately 850,000 square feet of office space. Over the past decade the level of new office construction in Lees Summit has accelerated with approximately 2.6 million square feet of space constructed. Recent development has raised the bar in terms of product type. The Lees Summit office market has historically consisted of Class B and C garden office product. In the past several years Class B+ buildings have accounted for much of the new office construction commanding lease rates much higher than historically supportable. The highest quality Class B+ product is located at the Interstate 470 interchanges at Woods Chapel Road and Douglas Street. Annual lease rates for speculative office space in Lees Summit range from $13.00 to $24.00 per square foot full-service with the highest quality buildings garnering $19.00 to $24.00 per square foot.
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Lees Summit is anticipated to continue to emerge as an office location. The future of Lees Summit as a professional office location hinges on such competitive assets as excellent freeway access and exposure, the availability of freeway interchange building sites, ample inventory of executive housing, excellent quality of life including a highly rated school district, continued growth of high-income households (similar to South Johnson County, Kansas) and increased commute drive times into Kansas Citys Central Business District. Lees Summit is estimated to absorb 1.87 to 2.1 million square feet of professional office space through the year 2020, requiring the development of an estimated 153 to 172 acres of commercial land. The Lees Summit East Redevelopment Area is an excellent location for future professional office development. Location benefits include a Lees Summit address, high concentration of well-educated professionals, direct freeway access, the availability of executive housing and location within the Summit Technology Campus. Favorable site characteristics include major arterial street visibility, favorable adjacent land uses and sufficient parcel size to facilitate a wide mix of professional office product (i.e., single-tenant, garden, low-rise and mid-rise buildings) within a master planned environment and convenient freeway access. These favorable location and site characteristics are expected to support the Redevelopment Areas position as one of the premiere business locations in Lees Summit. At a 50 percent capture rate of city-wide office space absorption the Redevelopment Area is forecast to absorb approximately 75,000 square feet of office space annually, resulting in an 11- to 12-year project build-out. Current market conditions suggest that the initiate phase of office space within the Redevelopment Area is capable of entering the market by 2009. Given the Redevelopment Areas premiere office location, the development of Class B+ and A office space is supportable. Achievable rents in current dollars range from $20.00 to $24.00 per square foot full-service.
Forecast Net New Sales

Net new retail sales for Missouri generated by the Lees Summit East TIF Plan include sales originating from 1) recapturing retail sales now going out-of-state and generation of new retail sales; 2) sales originating from out-of-state; and 3) sales resulting from market growth. Annual net new sales estimates for the Lees Summit East TIF Plan from 2008 to 2032 are outlined in the table on the following page. Total retail sales for the Lees Summit East TIF Plan are forecast at $19.8 million in 2008, increasing to $718.1 million by 2032. Throughout the 25-year projection period total retail sales are estimated at $12.9 billion. Net new retail sales for Missouri generated by the Lees Summit East TIF Plan are forecast at $18.4 million in 2008, increasing to $622.5 million by 2032. Throughout the 25-year projection period total net new retail sales generated by the Lees Summit East TIF Plan are estimated at $11.2 billion, translating to approximately 86.7 percent of total gross sales.
Estimated Net New Sales Generated by Lees Summit East TIF Plan
Net New Incremental Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $682,325,738 $665,309,209 $648,718,623 $213,587,189 $218,926,869 $224,400,041 $632,543,274 $208,377,746 $616,772,726 $203,295,362 $601,396,806 $198,336,938 $586,405,598 $193,499,452 $571,789,437 $188,779,953 $218,095,859 $223,548,255 $229,136,962 $234,865,386 $240,737,020 $246,755,446 $252,924,332 $259,247,440 $557,538,901 $184,175,564 $212,776,448 $543,644,806 $179,683,477 $207,586,778 $530,098,202 $175,300,953 $202,523,686 $516,890,360 $171,025,320 $197,584,084 $504,012,777 $166,853,971 $192,764,960 $55,452,860 $57,116,446 $58,829,939 $60,594,837 $62,412,682 $64,285,063 $66,213,615 $68,200,023 $70,246,024 $72,353,404 $74,524,007 $76,759,727 $79,062,519 $491,457,159 $162,784,362 $188,063,376 $53,837,728 $479,215,425 $158,814,012 $183,476,464 $52,269,639 $467,279,697 $154,940,499 $179,001,428 $50,747,223 $454,410,565 $151,161,462 $174,635,540 $48,037,419 $31,869,824 $32,666,570 $33,483,234 $34,320,315 $35,178,323 $36,057,781 $36,959,226 $37,883,206 $38,830,286 $39,801,044 $40,796,070 $41,815,971 $42,861,371 $43,932,905 $45,031,228 $46,157,008 $47,310,934 $443,099,877 $147,474,598 $170,376,136 $46,638,271 $31,092,512 $430,910,663 $143,877,656 $166,220,621 $44,118,853 $30,334,158 $420,191,702 $140,368,445 $162,166,459 $42,833,838 $29,594,300 $409,302,513 $136,944,824 $158,211,180 $41,148,500 $28,872,488 $398,487,147 $133,604,707 $154,352,371 $39,312,500 $28,168,281 $5,253,125 $5,384,453 $5,519,064 $5,657,041 $5,798,467 $5,943,429 $6,092,014 $6,244,315 $6,400,423 $6,560,433 $6,724,444 $6,892,555 $7,064,869 $7,241,491 $7,422,528 $7,608,091 $7,798,294 $7,993,251 $8,193,082 $8,397,909 $8,607,857 $8,823,053 $376,809,158 $125,425,026 $147,835,514 $38,250,000 $25,532,277 $5,125,000 $199,482,325 $111,950,500 $24,294,291 $42,500,000 $3,565,993 $5,000,000 $18,358,728 $18,358,728 $0 $0 $0 $0 $0 $1,802,774 $1,992,032 $2,187,379 $2,242,063 $2,298,115 $2,355,568 $2,414,457 $2,474,819 $2,536,689 $2,600,106 $2,665,109 $2,731,737 $2,800,030 $2,870,031 $2,941,782 $3,015,326 $3,090,709 $3,167,977 $3,247,176 $3,328,356 $3,411,565 $3,496,854 $3,584,275 $3,673,882 Summit Fair Power Center Legoland Festival Retail Aquarium Hotel F&B Sales Total Net New Sales $18,358,728 $189,113,558 $344,159,849 $362,878,362 $372,803,509 $382,780,222 $392,563,897 $403,794,441 $414,122,493 $425,984,424 $436,887,770 $448,071,312 $459,542,284 $471,308,105 $483,376,390 $495,754,949 $508,451,797 $521,475,156 $534,833,460 $548,535,364 $562,589,749 $577,005,722 $591,792,632 $606,960,068 $622,517,869
Gross
Base Year
Year
Sales
Sales
2008
$18,358,728
2009
$199,482,325
2010
$376,809,158
2011
$398,487,147
2012
$409,302,513
2013
$420,191,702
2014
$430,910,663
2015
$443,099,877
2016
$454,410,565
2017
$467,279,697
2018
$479,215,425
2019
$491,457,159
2020
$504,012,777
2021
$516,890,360
2022
$530,098,202
2023
$543,644,806
2024
$557,538,901
2025
$571,789,437
2026
$586,405,598
2027
$601,396,806
2028
$616,772,726
2029
$632,543,274
2030
$648,718,623
2031
$665,309,209
2032
$682,325,738
Totals
$12,246,451,416
$4,111,947,653
$4,627,180,034
$1,365,745,116
$842,115,306
$161,745,190
$66,928,811
$11,175,662,109
Source: Canyon Research Southwest, Inc.
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INTRODUCTION Study Objective and Organization

RED Development and Merlin Investments are seeking approval for the First Amendment to the Lees Summit East Tax Increment Financing Plan located southeast of Interstate 470 and U.S. Highway 50 in Lees Summit, Missouri. The amended plan calls for the development of a 548,186 square foot lifestyle center, 650,705 square foot power center, 85,000 square feet of festival retail shops and restaurants, Legoland Missouri theme park and 250-room full-service hotel, Sea Life Aquarium and 850,000 square feet of office space. The First Amendment Lees Summit East Tax Increment Financing Plan is seeking a variety of public revenues sources including TIF, City Super TIF and State Supplemental TIF. The City Super TIF and State Supplemental TIF allows for a portion of the new local and state taxes created by a project to be used to fund eligible public infrastructure and related costs for a period of up to 23 years. The purpose of the report is to evaluate the market viability of developing the Lees Summit East TIF Plans retail, hotel and office components as well as forecast net new retail sales generated for the State of Missouri by the project. The Retail Marketability Analysis section of the report evaluates current competitive retail market trends impacting the nearly 1.3 million square feet of retail space planned by the Lees Summit East TIF Plan, including trade area retail sales activity, historical retail construction trends, a survey of comparable lifestyle centers and retail space demand projections. A site evaluation determines the suitability of the site for lifestyle center, power center and festival retail development. Based on the study findings, the market viability of retail development at Lees Summit East is determined, addressing development timing, phasing, base rents and achievable retail sales. A 250-room full-service hotel is planned immediately adjacent to the Legoland Missouri theme park. The Hotel Marketability Analysis section of the report evaluates current competitive hotel market trends impacting the planned hotel. An overview of the Lees Summit and eastern Jackson County hotel market provides a survey of directly competitive hotel properties and short-term hotel room demand forecasts. A site analysis evaluates the market viability of the Redevelopment Area to support hotel development. Based on the study findings, the market viability of the planned 250-room full-service hotel is determined, addressing development timing and occupancy and room rate levels through stabilized occupancy. The Office Marketability Analysis evaluates current competitive speculative office market trends impacting the approximately 850,000 square feet of office space planned by the Lees Summit East TIF Plan. The study commences with a competitive market area speculative office market overview addressing historical trends in new construction in Lees Summit and prepares a survey of directly competitive speculative office buildings. Short-term professional office space demand is forecast for Lees Summit. The Retail Sales Analysis section of the report forecasts gross and net new retail sales to Missouri generated by the Lees Summit East TIF Plan.
Lees Summit East Redevelopment Plan

RED Development and Merlin Investments have submitted plans to the City of Lees Summit seeking approval for the First Amendment to the Lees Summit East Tax Increment Financing Plan located southeast of Interstate 470 and U.S. Highway 50 in Lees Summit, Missouri. The purpose of the First Amendment to the Lees Summit East Tax Increment Financing Plan is to change the Lees Summit East Tax Increment Financing Plan as approved by Ordinance No. 6263 on August 24, 2006. The original TIF Plan approved for development of a 548,186 square foot lifestyle center. The First Amendment alters the plan by adding five new Project Areas designed for the development of a 650,705 square foot power center, 85,000 square feet of festival retail shops and restaurants, Legoland Missouri theme park and 250-room Lego-theme hotel, Sea Life Aquarium and approximately 850,000 square feet of office space. The developments retail component is designed to capitalize on Lees Summits under serviced retail market and reverse the current retail leakage by capturing sales by city residents now being spent in surrounding communities. Furthermore, Legoland and associated commercial development will substantially increase tourism counts in the Kansas City area and retail sales volumes in Lees Summit. Project Areas 1 and 5 encompass the original Lees Summit East Tax Increment Financing Plan. Project Area 1 located at the northeast corner of U.S. Highway 50 and Chipman Road was originally approved for Summit Fair, a 548,186 square foot lifestyle center designed with one department store, 15 junior anchors and five out parcels. The revised site plan dated March 5, 2007 calls for a 468,437 square foot lifestyle center featuring two department stores of 104,000 and 120,000 square feet accompanied by 244,437 square feet of retail shops. Five out parcels totaling 33,900 square feet of building area are designed for sit-down restaurants and freestanding retailers. Meanwhile, Project Area 5 consists of 12 parcels occupying the southeast corner of Chipman Road and Blue Parkway. Existing uses include a car dealership, convenience store, vacant liquor store and bar, and other commercial establishments. Project Area 2 located on the north side of Ward Road is proposed for a 650,705 square foot power center designed with a combination of big-box retailers, junior anchors, small shops and five out lots. The shopping center would be similar in orientation to the neighboring 719,639 square foot SummitWoods Crossing, also built by RED Development. The Legoland theme park will occupy Project Area 3. The theme park will be just the fifth Legoland in the world and the second in the United States. Project Area 4 is planned for an aquarium attraction, 85,000 square feet of festival retail and restaurants, and overflow parking for Legoland. Project Area 6 is designed for a 250-room Lego-theme hotel. The full-service hotel will feature food and beverage operations.
Project Area 7 located at the northeast corner of Chipman and Ward Roads is planned for the development of approximately 850,000 square feet of office space. The submitted First Amendment TIF application does not contemplate activation of Project Area 7 or dedication of incremental TIF revenues. The First Amendment to the Lees Summit East Tax Increment Financing Plan creates a dynamic mixed-use development leveraging off of the sites excellent freeway exposure, efficient regional access, Kansas Citys status as a regional tourism destination and eastern Jackson Countys strong population and employment growth. The Legoland component is well positioned to both capitalize on the 11.2 million annual visitors to the Kansas City area as well as generate additional visitation. The retail components are designed to recapture retail sales from Lees Summit residents and generate new sales to the community.
RETAIL MARKETABILITY ANALYSIS

This section of the report focuses on evaluating the development potential for the retail components planned by the amended Lees Summit East TIF Plan. The project site plan calls for development of a lifestyle center, power center and festival retail totaling 1.3 million square feet.
Shopping Center Concepts

The amended Lees Summit East TIF Plan is designed to support development of a lifestyle center, power center and festival retail. These three shopping center concepts are defined based on information provided by the Urban Land Institute and International Council of Shopping Centers.
Lifestyle Center
Lifestyle centers represent the latest evolution of the regional mall. During the past several years, the lifestyle center has provided a new type of business locale for fashion department stores, high-end specialty retailers and restaurants that traditionally operated the majority of their stores in regional malls. Lifestyle centers generally occupy 150,000 to 1.0 million square feet of retail space in an outdoor setting. Components of a lifestyle center include one or more fashion department stores or large specialty retailers and a large number of high-end specialty stores, restaurants and entertainment venues. Lifestyle centers maintain several clusters of similar retail categories such as entertainment (i.e., movie theatre and theme restaurants); home furnishings (i.e., furniture and linens); and fashion (i.e., apparel and cosmetics). Lifestyle centers have increasingly evolved into entertainment destinations, incorporating theme restaurant and nightclub clusters, cinemas, amusement centers, fun places, and entertainment spaces and streets. Lifestyle centers possess the following characteristics: Lifestyle centers have an open-air configuration and include at least 150,000 square feet of shop space occupied by department stores, high-end national chain specialty stores and theme restaurants. Retail categories most commonly represented are apparel, home goods, and books and music. Entertainment retailers such as a multiplex cinema and a large concentration of table-service restaurants are common; and Design ambience is critically important. Lifestyle centers invariably have amenities such as fountains and street furniture conducive to leisure-time visits and casual browsing. The retail layout and street pattern often reflect a Main Street type ambience, allowing parking directly in front of the stores.
Because of the unique market positioning lifestyle and entertainment centers/districts create a major retail destination catering to local residents, visitors and tourists. The trade area boundaries of destination lifestyle and entertainment centers/districts are influenced by a variety of factors, including: The size of the center and its tenant mix; The number and size of the anchor stores; The size and location of the nearest sister unit of the anchor store(s); 4
The areas transportation system; Site accessibility and travel times; Size and draw of the local tourism market; and The surrounding areas population density and demographic characteristics.
Power Center
Power centers generally contain 250,000 to 600,000 square feet of building area anchored by at least one major anchor store of 100,000+ square feet of and at least four smaller category specific junior anchor tenants each having 20,000 to 25,000 square feet or more. Power centers also contain a small inventory of in-line shops that constitute no more than 10 to 15 percent of the centers total building area. The major anchor may be a discount department store, a warehouse club or a home improvement store. The smaller category specific junior anchor tenants typically have a narrow merchandising focus but a deep selection in specific merchandise lines, such as consumer electronics, off-price apparel, sporting goods, books, computer hardware and software, bulk foods, records and tapes or building materials and home improvement products. Power centers typically occupy a 25- to 80-acre parcel, gravitate to super regional mall and freeway interchange locations, and maintain a primary trade area of a 5- to 10-mile radius.
Theme/Festival Center
Theme/festival centers typically employ a unifying theme that is carried out by the individual shops in their architectural design and, to an extent, in their merchandise. These centers are located within major tourist destinations and are anchored by restaurants, entertainment facilities and other tourist-oriented businesses. Theme/festival centers typically range in size from 80,000 to 250,000 square feet of shop space. Examples of theme/festival centers include Horton Plaza and Seaport Village in San Diego; Faneuil Hall Marketplace in Boston; and Harborplace in Baltimore.
Competitive Retail Market Conditions

This section of the report addresses competitive retail market conditions impacting the Lees Summit East TIF Plan. Lees Summit, Missouri is defined as the competitive market area. Competitive retail market factors evaluated include historical construction trends and retail sales volumes, a survey of anchored shopping centers and forecast retail space demand.
Construction Trends
Due to its status as a rapidly growing suburban community, in recent years Lees Summit has experienced accelerated retail development activity as several national big-box retailers opened stores in an attempt to capitalize on an emerging new market. From 1997 to 2006 approximately 3.0 million square feet of retail space (includes freestanding, strip and anchored centers) was constructed in Lees Summit. New retail construction peaked in 2000 at 1.24 million square feet with the development of the 719,639 square foot SummitWoods Crossing. The power center is anchored by Super Target, Lowes Home Improvement Warehouse, and Kohls and now serves as Lees Summit primary retail destination. Despite the recent construction boom, Lees Summits retail vacancy rate has remained healthy, ranging between 1.09 to 3.27 percent from January 2002 through January 2006.
Lee's Summit Retail Market Historical Construction Trends (Sq. Ft.)

1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Retail Sales
In response to a growing population and heightened new retail construction activity, taxable retail sales in Lees Summit, Missouri escalated from $752 million in 2000 to $1.2 billion by 2006, an increase of nearly 60 percent.
Lee's Summit Trends in Annual Taxable Sales

$1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 2000 2001 2002 2003 2004 2005 2006
Despite the recent construction boom and strong growth in retail sales, Lees Summit remains under retailed. According to the RMP Opportunity Gap Retail Stores Report published by Claritas, Inc. retail leakage in the City of Lees Summit provides the greatest opportunities for capturing additional retail sales for department and super stores, building materials and garden supplies, clothing and accessories stores, health and personal care, furniture and home furnishings, and electronics and appliance stores. These retail deficiencies suggest the opportunity to support continued shopping center development in Lees Summit.
RMP Opportunity Gap by Retail Category (2006) - Lees Summit, Missouri

Retail Categories Furniture and Home Furnishings Electronics and Appliances Building Materials and Garden Supplies Grocery Stores Health and Personal Care Clothing and Accessories Sporting Goods Books and Music Department and Super Stores Office Supplies Drinking Places Gasoline Stations
Source: Claritas, Inc.
Potential Retail Expenditures $43,137,183 $36,828,361 $178,559,438 $144,554,775 $65,779,679 $75,005,763 $11,037,314 $9,131,965 $182,103,933 $16,493,877 $6,511,232 $139,004,929
Actual Retail Sales $22,767,645 $20,932,735 $122,390,870 $1153,604,684 $43,578,217 $25,866,140 $7,303,218 $3,923,382 $88,398,710 $7,164,684 $2,606,229 $134,491,170
Opportunity Gap/Surplus $20,369,538 $15,895,626 $56,168,568 ($9,049,909) $22,201,462 $50,139,623 $3,734,096 $5,208,583 $93,705,223 $9,329,193 $3,905,003 $4,513,759
Shopping Center Survey

According to the Kansas City Metropolitan Shopping Center Report 2006 published by R.H. Johnson Company, by January 2006, Lees Summit maintained 1.74 million square feet of shopping center space or 21.4 percent of the eastern Jackson County total. The primary concentrations of retail development are located along U.S. Highway 50 and MO 291. As illustrated in the table below, nine anchored shopping centers in Lees Summit maintain a total inventory of approximately 1.67 million square feet of retail space. Approximately 30,000 square feet of shop space is unoccupied translating into a healthy vacancy rate of 1.8 percent. The healthy occupancy levels are impressive given the high volume of new retail construction in recent years and suggest additional new construction is feasible and supportable. The only directly competitive shopping center to the Lees Summit East TIF Plan is the neighboring SummitWoods Crossing. Built in 2001, SummitWoods Crossing represents Lees Summits primary shopping destination reporting total sales of over $200 million in 2006.
Lees Summit Anchored Shopping Centers

Center Name Location SummitWoods Crossing NWC Chipman Road & U.S. 50 Summit Shopping Center NWC O'Brien Road & U.S. 50 Cedar Creek Mall SWC 3rd Street & Ward Road Summit Springs Shopping Center NEC 3rd Street & Rt. 291 Pinetree Plaza NWC U.S. 50 & Jefferson Street Hen House Marketplace SEC Tudor Road & Rt. 291 Raintree Shopping Center SWC Hwy 150 & Market Street Chapel Woods Center SWC I-470 & Woods Chapel Road Total Shopping Center Space
Center Classification Power Center
Space Sq. Ft. 719,639
Anchor Tenants Lowe's, Target & Kohl's
Community Center
260,000
CVS Pharmacy Summit Fitness Hy-Vee Food Store Osco Drug / Ace Hardware Westlake Ace Hardware Hobby Lobby Price Chopper
Community Center
149,892
Community Center
121,674
Neighborhood Center
133,137
Neighborhood Center
108,000
Hen House Market Party America Price Chopper
Neighborhood Center
89,748
Neighborhood Center
88,273
Price Chopper
1,670,363
Forecast Retail Space Demand

Retail space demand from 2007 to 2011 is forecast for the City of Lees Summit, Missouri to quantify future development opportunities for the Lees Summit East TIF Plan. Net demand for retail floor space is a direct function of consumer population and income levels. The January 1, 2007 population for Lees Summit is estimated at 90,785 residents. Assuming an average of 1,200 new residential dwelling units per year and an average household size of 2.68 persons, by year-end 2011 the citys population is forecast to reach 106,865 residents. Claritas, Inc. forecasts the current per capita income level for Lees Summit of $33,113 to escalate to $37,238 by 2011. During 2006, retail expenditures (exclusive of automobile sales) for Lees Summit amounted to 39.1 percent of total per capita income. By comparison, retail expenditures for Missouri, exclusive of automobile sales, amounted to approximately 45 percent of total household income. This disparity suggests that Lees Summit is suffering from considerable retail leakage. Assuming Lees Summit achieves a retail trade pull factor of 1.0, the statewide average for retail sales as a percentage of household income was utilized to forecast total potential non-automobile retail sales. The retail pull factor measures a communitys or trade areas capture of potential retail sales with a rating of 1.0 signifying the baseline average. A pull factor below 1.0 equates to below average capture and retail sales leakage and a factor above 1.0 means retail sales from outside of the community or trade area are being captured. An average retail sales rate of $245 per square foot was used to quantify future demand for retail space. Based on these marketdriven assumptions, the table below provides retail sales and space demand forecasts for Lees Summit through 2011.
Projected Retail Space Demand Lees Summit; 2007 2011

Retail Space Demand Methodology Population Per Capita Income Total Personal Income % Income Spent on Goods & Services (excluding automobiles) Retail Pull Factor Total Potential Non-Automobile Retail Sales Less: 2006 Non-Automotive Retail Sales Potential Capture of Additional Non-Automotive Retail Sales Average Retail Sales Per Square Foot Supportable Additional Retail Space (Sq. Ft.)
Source: Canyon Research Southwest, Inc.; April 2007.
2007 90,785 $33,113 $3,006,163,705 45% 1.0 $1,352,773,667 $1,176,184,466 $176,589,201 $225 784,841
2011 106,865 $37,238 $3,979,438,870 45% 1.0 $1,790,747,492 $1,176,184,466 $614,563,026 $245 2,508,421
According to Claritas, Inc. during 2006, total retail sales for Lees Summit, exclusive of automobile sales, were estimated at nearly $1.2 million. Assuming Lees Summit achieves a retail trade pull factor of 1.0 potential retail sales generated by city residents amount to $1.35 billion. The estimated retail leakage of approximately $177 million is sufficient to support approximately 785,000 square feet of retail space today. By the year 2011, Lees Summit is forecast to capture an additional $438 million in retail sales, sufficient to support development of 1.72 million square feet of retail space. Of this future demand for retail space upscale retail is forecast to account for approximately 600,000 square feet. Therefore, it appears sufficient demand exists to warrant near-term construction of all three shopping center concepts totaling approximately 1.3 million square feet planned for by the Lees Summit East TIF Plan. To conclude, from 2007 through 2011, residents of Lees Summit, Missouri are forecast to generate retail sales sufficient to support feasible development of over 2.5 million square feet of retail space. This retail space demand forecast does not account for the capture of retail sales originating from outside of the community. With the presence of Wal-Mart, Home Depot and SummitWood Crossing, Lees Summit is drawing non-resident shoppers from Kansas City and Raytown to the north and unincorporated areas to the east. Development of the Lees Summit East TIF Plans retail components will substantially improve Lees Summits retail draw from outside of the community.
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Kansas City Area Lifestyle Centers

The Lees Summit East TIF Plan is designed to support the development of Summit Fair, a 548,186 square foot lifestyle center. Four lifestyle and entertainment centers/districts operate within the metropolitan Kansas City area, including Country Club Plaza, Town Center Plaza, Zona Rosa and The Legends at Village West. These retail centers/districts create unique shopping, dining and entertainment destinations. In addition, the Kansas City Power & Light District is under construction in downtown Kansas City, Missouri adjacent to the 18,000-seat Sprint Center Arena also under construction. A brief description of each comparable/competitive destination lifestyle and entertainment center/district is provided in the text below.
Country Club Plaza

Built in 1922, the Country Club Plaza serves as the Kansas City areas premier specialty shopping, dining and entertainment destination. Given its extensive roster of fine dining and upscale shopping Country Club Plaza attracts both residents and is a major tourist attraction. Programmed events through out the year, including the lighting of Christmas lights, are a major draw. Occupying 55 acres at 47th Street west of Main Street, in Kansas City, Missouri, Country Club Plaza is designed as a pedestrian-friendly Town Center featuring a mixed of retail, office, lodging, and residential uses. Retail space totals approximately 900,000 square feet. Design elements include landscaped boulevards, public art, outdoor cafes, a wide mix of building facades, and 14 parking garages occupying 7,100 spaces. Anchor tenants include Mark Shale, Halls, Restoration Hardware, and Cinemark Palace. Dining (38 restaurants), womens and mens apparel (37 businesses), gifts/specialty shops (14 businesses) and home/art/antiques (10 businesses) dominate the retail tenant mix. Recent store openings at Country Club Plaza include Aldo, American Eagle Outfitters, Balsanos Gelato Caf, Blonde, Brio Tuscan Grille, Brookstone, Burberry, Cold Stone Creamery, LOccitane, Max Studio, M&S Grill, Sony Style and Urban Outfitters. Notable upscale retailers operating within the Country Club Plaza are listed in the table on page 11. The comprehensive mix of upscale retailers makes Country Club Plaza the metropolitan areas premiere shopping district and a must see destination for Kansas Citys tourism and convention industries. The Country Club Plazas distance from the proposed Summit Fair will minimize its direct competition.
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Country Club Plaza Tenant Mix (Kansas City, Missouri)

Restaurants Baja 600 Bo Ling's Chinese Restaurant Brio Tuscan Grill Buca di Beppo California Pizza Kitchen Cheesecake Factory Houston's Kona Grill McCormick & Schmick's O'Dowd's Little Dublin P.F. Chang's China Bistro Plaza III The Steakhouse Ruth's Chris Steakhouse Starker's Reserve Restaurant The Capital Grill The Melting Pot The Raphael Restaurant Tomfooleries Uno Chicago Bar & Grill Home/Art/Antiques Pottery Barn Restoration Hardware Scandia Down Williams-Sonoma Z Gallerie Women's Apparel Adrienne Vittadini American Eagle Outfitters Ann Taylor & Ann Taylor Loft Anthropologie A/X Armani Exchange Banana Republic BCBG Max Azria bebe Chico's Express Gap Guess J. Crew J. Jill Luck Brand Jeans Talbots Tommy Bahama Victoria's Secret White House / Black Market Shoes Aldo Cole Haan E.G. Geller Johnstone & Murphy Marmi Shoes Renners Street Scene Shoes The Walking Co. Beauty Aveda Bath & Body Works Beauty Brands The Body Shop MAC Cosmetics Origins Men's Apparel Brooks Brothers Harold's Jack Henry N. Valentino Pinstrips Urban Outfitters
Gifts & Specialty Shops Apple Computers Bang & Olufsen Barnes & Noble Discovery Channel EB Games Paper Source Sharper Image Sony Style Fine Jewelry Helzberg Diamonds Swirk Jewelry Tiffany & Co. Tivol Vinca Fine Jewelry
Specialty Foods Balsano's Gelato Cafe The Better Ceddar Cold Stone Creamery LatteLand Expresso Panache Chocolatier Scooters Coffeehouse Starbucks Coffee
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Town Center Plaza

Town Center Plaza is a 610,287 square foot upscale retail center located at 119th Street and Nall Avenue within southern Johnson County, Kansas. Demographics within a 10-mile radius are impressive, including a population of 646,208 people and an average household income of $77,124. Town Center Plaza houses nearly 90 national and specialty shops, 15 restaurants, and the AMC 20 Theatres. Anchor tenants include Macys (121,233 square feet), Dicks Sporting Goods (100,000 sq. ft.), Barnes & Noble (30,000 sq. ft.), Pottery Barn (12,000 sq. ft.), Gap/Gap Body (10,000 sq. ft.), Restoration Hardware and Williams-Sonoma. Town Center Plaza and Country Club Plaza operate several sister stores. A partial tenant list is outlined in the table below.
Town Center Plaza Tenant Mix (Leawood, Kansas)

Restaurants 810 Sports Zone Blue Chips Cookies Bravo Cucina Italiana Bristol Bar & Grill Cold Stone Creamery Dean & Deluca Han Shin Japanese Steakhouse Hereford House Houlihan's On the Border Mexican Caf Panera Bread Bakery & Caf Sushi House Starbuck's Caf Apparel & Accessories American Eagle Outfitters Ann Taylor & Ann Taylor Loft Banana Republic Cache' Chico's Claire's Coldwater Creek Express Gap/Gap Body/Gap Kids/Baby Gap Harold's J. Jill Jessica McCormick Limited & Limited Too New York & Company The Buckle Victoria's Secret Beauty Wet Seal White House / Black Market Anchors & Specialty Retailers AMC Town Center 20 Theatres Barnes Noble Dick's Sporting Goods Macy's Bath & Body Works Bose Brighton Collectibles EB Games Gymboree Omaha Steaks PacSun Pottery Barn Restoration Hardware Sharper Image The Body Shop Things Remembered Williams-Sonoma
Hawthorne Plaza is located immediately south of Town Center Plaza and houses such upscale retailers as Tivol Fine Jewelers, Talbots, Jos. A. Bank Clothiers, Steves Shoes, Casa Bonita Home, Rumors Salon, and 40 Sardines Restaurant. Together, Town Center Plaza and Hawthorne Plaza form southern Johnson Countys premiere upscale retail destination. The Town Center Plazas distance from the planned Summit Fair greatly minimizes its competitive impact.
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Zona Rosa
Zona Rosa is a 93-acre mixed-use project located at the intersection of Interstate 29 and Barry Road within the northern region of Kansas City, Missouri. Zona Rosa is designed as an urban village with pedestrian promenades and public plazas supporting nearly 900,000 square feet of specialty shops, restaurants and entertainment venues. Office space, residential housing and lodging are integrated within the lifestyle center. The mix of commercial and residential uses has created a dynamic urban environment not found anywhere in northern Kansas City. Zona Rosa Phase 1 is designed for 506,792 square feet of specialty retail and restaurant space. The initial phase opened in mid-2004 with 485,119 square feet of specialty retail space constructed to date. Anchor tenants include Dicks Sporting Goods, Marshalls Megastore, Barnes & Noble, DSW Shoes, and Majestic Theatre and Comedy Club. Dining (18 restaurants), apparel & accessories (23 stores) and entertainment venues highlight Zona Rosas tenant mix. The current tenant mix for Zona Rosa Phase 1 is outlined in the table on page 14. Zona Rosa Phase 1 is currently 92 percent occupied. Signed tenants not yet open include Charlotte Russe (7,200 square feet), Marshmellow Kisses (5,000 square feet), Healthy Home Store (1,381 square feet) and GNC (1,090 square feet). Just 21,673 square feet of shop space remains to be constructed at Zona Rosa Phase 1. Zona Rosa Phase 2 is now under construction located immediately north of Phase 1 adjacent to both Interstate 29 and MO 152. A 200,000 square foot Dillards store will anchor Phase 2, accompanied by ten commercial buildings housing 185,000 square feet of specialty shops and restaurants, 44,000 square feet of office space and 54 residential units. A 100-room hotel is planned for the western portion of Phase 2 at the southeast corner of North Congress Avenue and MO 152. Site work on Zona Rosa Phase 2 is currently underway with the 185,000 square feet of shops scheduled to open by August 4, 2008 and the 200,000 square foot Dillards store opening by September 3, 2008. Zona Rosas suburban location, trade area demographics, project design and tenant mix makes it the most comparable Kansas City area lifestyle center to Summit Fair. However, its distance approximately 31 miles to the nortwest greatly minimizes its competitive impact.
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Zona Rosa Phase 1 Tenant Mix (Kansas City, Missouri)

Restaurants Abuelos Mexican Food Auntie Annes Pretzels Bo Lings Chinese Please Bravo Cucina Italiana Cold Stone Creamery Granite City Food & Brewery Hereford House Latte Land The Majestic Caf Mimis Caf ODowds Irish Pub Quiznos Subs Rib Crib Smokehouse Barbeque Swagat Fine Indian Cuisine Sweet Teds Montana Grill Tomfooleries Apparel & Accessories Abercrombie & Fitch Aeropostale After Hours Formal American Eagle Ann Taylor Loft The Buckle Cache Claires Dress Barn Express Forever 21 Gap Health & Beauty Avalon Salon & Spa Bath & Body Works Beauty Express Nail EnVogue Optical Lenscrafters Sunglass Hut Gap Kids/baby Gap Hollister Co. Hot Topic Lane Bryant Lids Limited Too Mens Wearhouse New York & Company Pacific Sunwear Perfume Pizazz Victorias Secret Jewelry Balano Jewelry Helzberg Diamonds Kay Jewelers Zales Jewelers Childrens Build-a-Bear Workshop The Children's Place Disney Store
Entertainment GameStop The Majestic Theatres The Improv Comedy Club
Anchor Tenants Marshalls MegaStore Dick's Sporting Goods Barnes & Noble
Home Furnishings Ethan Allen Norwalk Furniture The Sharper Image DSW Stride Rite
Shoes
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Legends at Village West

RED Development is underway on The Legends at Village West, a 949,524 square foot destination lifestyle and entertainment center located within the 400-acre Village West Tourism District. The Unified Government of Wyandotte County and Kansas City, Kansas is developing The Village West Tourism District which is designed as a retail and entertainment destination supporting retail, entertainment, and hotel development. A 712,000 square foot Nebraska Furniture Mart and 186,000 square foot Cabelas anchor the Village West Tourism District. These one-of-kind retail concepts and exceptional regional transportation access allows the Village West Tourism District to penetrate a trade area consisting of over 8.7 million people within a 4-hour drive time. Attracted by the expanded regional draw and customer volumes, such complementary retail and entertainment venues as the Community America Ballpark, The Legends at Village West, four hotels totaling 515 rooms, and 20 restaurants have opened at the Village West Tourism District. Development at The Legends at Village West has progressed in phases. The 14-screen, 86,916 square foot Legends 14 Theatres opened in November 2005. Grand opening for the balance of the destination development occurred on April 22, 2006. The tenant mix at the Legends at Village West consists primarily of one-of-a-kind entertainment oriented retailers, theme restaurants, specialty foods, mens and womens apparel and home furnishings. A list of retailers now operating within the Legends at Village West is provided by the table on page 17. Major retailers now open for business include Dave & Busters, TJ Maxx, Linens N Things, T-Rex, Off Broadway Shoes, Home Decorators Collection, Books-a-Million and Old Navy. Specialty retailers include Aeropostale, American Eagle Outfitters, Banana Republic, BCBG Max Azria, Brooks Bros., H & M, Tommy Hilfiger an Aminis Galleria. A 126,800 square foot Target and 97,440 square feet JC Penney occupy out lots. The strength of the Legends at Village West is the large number of one-of-a-kind entertainment oriented retailers such as Dave & Busters, T-Rex, STIX and Pin-Up Bowl. Completion of The Legends at Village West will further strengthen the position of the Village West Tourism District as a regional shopping and entertainment destination. The market positioning and tenant mix achieved by the Legends at Village West will not compete directly with the Lees Summit TIF Plans lifestyle center component. The one-of-a-kind entertainment oriented retailers, theme restaurants and specialty shops create a regional shopping and entertainment destination. The Legends at Village West capitalizes on the regional trade area and customer volumes generated by the Tourism Districts major anchors (Nebraska Furniture Mart, Cabelas and Kansas Speedway) while Summit Fairs will draw from visitors to Legoland Missouri.
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The Legends at Village West Tenant Mix (Kansas City, Kansas)

Restaurants Entertainment Specialty Foods Cold Stone Creamery Harry & David Mema's Specialty Bakery Palmer's Candies & Ice Cream Pride of Kansas City Rocky Mountain Chocolate Factory Scooter's Coffeehouse Sheridan's Frozen Custard Whole Life Healing Center Department Stores JC Penney Target
Men's & Women's Fashions Applebee's Arthur Bryant's Bob Evans Chili's Bar & Grill Chipotle Culver's Gimme Sum Hash House a Go Go IHOP Johnny Carino's Longhorn Steakhouse McDonalds Nick-N-Willy's Pizza Outback Steakhouse Panera Bread Planet Sub Sonic Taco Bueno Ted's Montana Grill Caliente Cuban Restaurant Cantina #1 Corona Cheeseburger in Paradise Claddagh Irish Pub Dave & Buster's Granite City Food & Brewery Hooter's Margarita Mama's Pin-Up Bowl Saddle Ranch Chop House STIX T-Rex The Legends 14 Theatres Wildfish Yard House
Aeropostale American Eagle Outfitters Ann Taylor Banana Republic BCBG Max Azria Brooks Bros. Carters Cavender's Forever 21 Gap Outlet H&M Hot Topic Jockey Maurices Motherhood Maternity Old Navy Oshkosh B'Gosh Pacific Sunwear Sports Nutz T.J. Maxx The Buckle Tommy Hilfiger Home Furnishings & Electronics Amini's Galleria Cingular Wireless Curtains of Kansas City GameStop Home Decorator's Collection Le Creuset Linens 'N Things Verizon Wireless Shoes & Athletic Apparel Adidas Clarks Converse Finish Line Nike Off Broadway Shoes Rack Room Shoes Timberline Cards/Books/Gifts Books-a-Million Build-a-Bear Hallmark T-Bones Team Shop Wyldewood Cellars Winery
Specialty Shops
Beauty Brands Claire's Helzberg Diamonds Nails So Happy Sunglass Hut The Cosmetics Company Store Ultra Diamonds Wilson's Leather Zale's
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Kansas City Power & Light District

The Baltimore-based Cordish Company is now under construction in downtown Kansas City, Missouri on the Kansas City Power & Light District. Located between the Bartle Hall Convention Center expansion and the $250 million Sprint Center Arena now under construction, the Kansas City Power & Light District will cover nine city blocks. The $850 million mixed-use development is planned for over 3.0 million square feet of destination entertainment and shopping, office, and residential space. The Kansas City Power & Light District will feature 450,000 square feet of upscale shopping and entertainment, including boutiques, art galleries, bookstores, unique concept shops, a health club, a gourmet supermarket, restaurants, clubs, lounges, live music venues, comedy clubs, cafes, and one-of-kind entertainment attractions. The heart of the District will be Power & Light Live, a collection of nighttime venues focused around a covered outdoor plaza designed for major concerts. The District will also include 1.3 million square feet of office space in three buildings. To create a 24-hour environment, the District will incorporate 1,500 residential units. AMC Entertainment, Inc. has agreed to revitalize the historic Midland and Empire Theaters located within the Kansas City Power & Light District. The Midland Theater will be revitalized into a live performance theater, restaurant and bar, and will anchor the northwest corner of the Kansas City Power & Light District. The Empire Theater will serve as the Districts southwest corner anchor and will be restored to operate as a unique AMC movie theater complex. The first phase of the Kansas City Power & Light District is scheduled to open by fall 2007 consisting of approximately 450,000 square feet of retail and entertainment space. Phase 2 is planned for 1,500 residential units and approximately 1.0 million square feet of office space. A major component of the Power & Light District will be the world headquarters for H&R Block now under construction. The 19-story, 700,000 square foot office tower is designed with a 2story glass lobby featuring a 20-foot tall natural stone water wall and a European-inspired piazza. Announced tenants of the Kansas City Power & Light District include Cosentinos Downtown Gourmet Market, AMC Theatres, Bristol Seafood Grill, ChinaBar, Vivino V, Gordon Biersch Brewery & Restaurant, Mosaic Lounge, Famous Daves Barbecue, Chipotle Mexican Grill and Jos. A. Bank. While designed as an intensive mixed-use development, the Kansas City Power & Light Districts downtown location, emphasis on entertainment uses and reliance on the draw of the Sprint Arena greatly reduces its competitive impact on the Lees Summit East TIF Plan.
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The table on pages 19 and 20 provides a matrix comparing the tenant mix of the four comparable destination lifestyle centers/districts operating in the metropolitan Kansas City area. The purpose of this comparative analysis is to identify a potential market niche and retail tenant mix for Summit Fair. Zona Rosa Phase 1 and Town Center Plaza are suburban lifestyle and entertainment centers maintaining a similar tenant mix highlighted by apparel stores, dining establishments, specialty stores, and entertainment venues. In fact, these destination lifestyle and entertainment centers share many of the same national retailers (i.e., American Eagle Outfitters, Ann Taylor, Express, The Gap, Barnes & Noble, and Sharper Image) due to similar market positioning, high trade area income levels, and their distance apart which allows for the operating of sister stores. Both Zona Rosa Phase 1 and Town Center Plaza service primarily the local market and illustrate the potential of Summit Fair to attract national and regional retailers. Examples of retailers operating stores at both Town Center Plaza and Zona Rosa include American Eagle Outfitter, Buckle, Cache, Express, Gap, Limited, Victorias Secret, Barnes & Noble, Dicks Sporting Goods, Sharper Image and The Childrens Place. Country Club Plaza and the Village West Tourism District illustrate the ability of lifestyle centers/districts to support a regional trade area through a unique tenant mix and association with major attractions. Country Club Plaza benefits from its prestigious image, large inventory of specialty retailers and restaurants, and urban mixed-use environment while the Village West Tourism District benefits from the regional draw of Nebraska Furniture Mart, Cabelas and the Kansas Speedway. The Legends at Village West has created a distinctive retail environment through the tenancy of one-of-a-kind retailers, theme restaurants, and entertainment venues not currently operating in the Kansas City market. The market positioning of both lifestyle and entertainment centers/districts attracts local residents, tourists and area visitors as well as generated above-average retail sales volumes. National lifestyle retailers operating in eastern Jackson are limited to Independence Center. Clothing and accessories stores operating within the Independence Center retail hub include Abercrombie & Fitch, Aeropostale, American Eagle Outfitters, Ann Taylor Loft, Buckle, C.J. Banks, Charlotte Russe, Chicos, Chistopher Banks, Coldwater Creek, Gap, Hollister & Co., J. Jill, New York & Company, The Limited Too and Victorias Secret. Major national clothing and accessories chains not operating a store at the Independence Center hub include Banana Republic, Forever 21, J. Crew, Lane Bryant, Talbots and White House/Black Market. To conclude, given the modest inventory of national lifestyle retailers operating stores within the Independence Center a large number of national upscale clothing, accessories and specialty retailers are candidates for Summit Fair. Summit Fair is also located outside of Independence Centers primary trade area allowing the opportunity to support sister stores. Despite high income levels only a modest number of national restaurant chains operate in Lees Summit. Potential restaurant chains include Bravo Italiana, California Pizza Kitchen, Cheesecake Factory, Houstons, Kona Grill, P.F. Changs China Bistro, Red Lobster and Teds Montana Grill.
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Kansas City Area Lifestyle Centers Tenant Mix

Retailer Restaurants Abuelo's Mexican Food Embassy Applebee's Arthur Bryants Bo Ling's Chinese Restaurant Bravo Italiana Bristol Buca di Beppo California Pizza Kitchen The Capital Grill The Cheesecake Factory Caliente Cuban Cantina Corona Johnny Carino's Cheeseburger in Paradise Chili's Claddagh Irish Pub Coyote Ugly Bob Evans Granite City Hereford House Hooters Houlihan's Houston's IHOP Kona Grill Margarita Mama's McCormick & Schmick's O'Dowd's Little Dublin Outback Steakhouse P.F. Chang's China Bistro Red Lobster Ruth's Chris Steakhouse Ted's Montana Grill Tomfooleries Restaurant & Bar Yardhouse Apparel & Accessories Adidas Aeropostale Abercrombie & Fitch American Eagle Outfitters Ann Taylor/ Ann Taylor Loft Banana Republic bebe Brooks Brothers Buckle Canyon Research Southwest, Inc. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Country Club Plaza Town Center Zona Rosa Legends at Village West Independence Center
X X X
X X
X X X X
X X X
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Kansas City Area Lifestyle Centers (Continued)

Retailer Cache Charlotte Russe Chico's Coldwater Creek Express Forever 21 Gap H&M Harolds Hollister & Co. J. Crew J. Jill Lucky Brand Jeans Lane Bryant Limited Off Broadway Shoes Old Navy Orvis Rack Room Talbots Tommy Bahama Victoria's Secret White House/Black Market Specialty Retailers Book-A-Million Barnes & Noble Booksellers Border's Books Cold Stone Creamery Dick's Sporting Goods Discovery Channel Godiva Chocolates Home Decorators Collection Pottery Barn Restoration Hardware Sharper Image The Children's Place Williams-Sonoma Entertainment Cinemark Theaters Majestic Theatres & Comedy Club AMC Theaters Dave & Buster's Legends 14 Theatres Pin-Up Bowl T-Rex Canyon Research Southwest, Inc. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Country Club Plaza Town Center X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Zona Rosa X X Legends at Village West Independence Center
X X X
X X X X X X X X
X X
X X
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Independence Center Retail Destination

The Lees Summit East TIF Plan is designed to support the development of an approximately 650,705 square foot power center. The only comparable power center operating in Lees Summit is SummitWoods Crossing located at the northwest corner of U.S. Highway 50 and Chipman Road. The closest major concentration of competing big-box retailers and power centers is located approximately eleven miles north at the intersection of Interstate 70 and MO 291 in Independence, Missouri. The 850,000 square foot Independence Center regional mall is the focal point of this major retail destination. Since 1999, over 1.0 million square feet of shopping center space has been constructed surrounding Independence Center. The Independence Center retail hub now maintains the largest concentration of shopping center space in eastern Jackson County with the 2.7 million square feet of space accounting for approximately 38 percent of the total inventory. Most bigbox retailers and national restaurant chains operate a store within the Independence Center retail hub. Over the past several years, with the opening of the Eastland Center and Hartman Heritage Center, the Independence Center retail hub has evolved into a mixed-use urban center now supporting retail, office, hotel and high-density residential uses. The recent construction boom within the Independence Center retail hub has produced strong gains in retail sales. Taxable sales have risen from approximately $388 million in 1999 to $700 million in 2005, an increase of over 80 percent. Nine anchored shopping centers surround Independence Center. The total inventory of 1.8 million square feet of shop space is operating at a healthy 95.5 percent occupancy rate. No destination lifestyle centers are present within the Independence Center retail hub. The presence of six power centers creates eastern Jackson Countys largest concentration of big-box retailers. The primary trade area for most big-box retailers encompasses a 3- to 5-mile radius. The table on page 22 provides a list of discount department store, warehouse club, home improvement and other big-box retailers operating within the Independence Center retail hub. Recent retailer closings include Brandsmart, Garden Ridge, Rhodes Furniture and Ultimate Electronics. To conclude, with 1.8 million square feet of peripheral retail space the Independence Center retail hub now serves as eastern Jackson Countys primary retail destination. Power centers and big-box retailers account for the bulk of peripheral retail space. Pending completion of the 160,000 square foot Bass Pro Shops Outdoor World store and 537,000 square foot Falls at Crackerneck will broaden the retail base of the Independence Center shopping destination. The Lees Summit East Redevelopment Area is located outside of the Independence Center retail hubs primary trade area; therefore, is capable of attracting sister big-box stores allowing for feasible power center development.
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Independence Center Retail Hub Big-Box Retailers

Discount Department Store Target Greatland Wal-Mart Supercenter Kohl's Warehouse Club Stores Costco Sam's Club Home Improvement Lowe's Home Electronics Best Buy Circuit City Comp USA Movie Theatre AMC 20 Theatres Clothing & Accessories Dress Barn Marshalls SteinMart Housewares & Linens Bed Bath & Beyond Linens 'N Things Other Big-Box Retailers Barnes & Noble Dick's Sporting Goods Office Max JC Penney Petsmart NEC 39th Street & Crackerneck Road SWC 39th Street & MO 291 NEC 39th Street & Arrowhead Avenue
NEC I-470 & Hwy 40 SWC 39th Street & MO 291
NEC I-470 & Hwy 40
NEC 39th Street & Arrowhead Avenue SEC 39th Street & MO 291 NEC I-470 & Hwy 40
NEC 39th Street & Arrowhead Avenue
NWC Jackson Drive & Little Blue Parkway NEC 39th Street & Arrowhead Avenue NWC Jackson Drive & Little Blue Parkway
NEC 39th Street & Arrowhead Avenue NWC Jackson Drive & Little Blue Parkway
NEC 39th Street & Arrowhead Avenue NWC 39th Street & Crackerneck Road NEC 39th Street & Arrowhead Avenue NEC 39th Street & Crackerneck Road SWC 39th Street & MO 291
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Shopping Center Site Evaluation

The Lees Summit East TIF Plan was evaluated for the ability to support lifestyle center, power center and festival retail development based on the following site selection criteria: visibility, accessibility, traffic volumes, parcel size requirements, trade area demographics, level of direct competition and proximity to a tourism destination.
Visibility
Visibility and exposure have a significant influence on a shopping centers achievable retail sales volumes. All shopping center types should possess major arterial frontage with lifestyle centers preferring a freeway or highway location. National and regional big-box retailer, restaurant, convenience store and bank chains also require major arterial frontage. The Lees Summit East Redevelopment Area possesses extensive frontage onto both Interstate 470 and U.S. Highway 50, satisfying the exposure requirement of big-box retailer, lifestyle center and power center sites.
Accessibility
Lifestyle and power centers rely on an efficient regional transportation network that typically includes a mix of major arterial streets and freeways. The Lees Summit East Redevelopment Area is located adjacent to Interstate 470 and U.S. Highway 50 providing the necessary regional access to support big-box retailer, lifestyle center and power development.
Traffic Counts
The vehicular traffic counts on arterial streets that flow past the site are important when evaluating a potential lifestyle center site. Average daily traffic counts past the Lees Summit East Redevelopment Area were reported by the Missouri Department of Transportation in 2005 at 54,955 vehicles on Interstate and 55,692 vehicles on U.S. Highway 50. These high traffic volumes provide sufficient exposure for big-box retailers, specialty shops and restaurants.
Parcel Size Requirements

The Lees Summit East Redevelopment Area is designed for a 548,186 square foot lifestyle center, 650,705 square foot power center and 85,000 square feet of festival retail. Shopping center sizes as defined by ICSC are 150,000 to 500,000 square feet for lifestyle center, 250,000 to 600,000 square feet for power centers and 80,000 to 250,000 square feet for festival centers. Therefore, the Lees Summit East Redevelopment Area possesses the necessary acreage to facilitate development of a lifestyle, power and festival centers.
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Direct Competition
Department stores and category-specific big-box retailers anchor lifestyle centers. National retailers operating stores in an 8-mile radius of the Lees Summit East Redevelopment Area are listed in the table below.
Primary and Secondary Trade Area Big-Box Retailers

Retail Category Warehouse Clubs Discount Department Stores None Wal-Mart Supercenter Sears Grand Target Lowes Home Improvement Warehouse Home Depot EastGlen 16 Theaters Dicks Sporting Goods Michaels Old Navy Kohls Best Buy Office Depot Office Max Petco None Borders Books Music Retailer
Home Improvement
Movie Theatre Sporting Goods Hobby & Crafts Clothing & Accessories
Home Electronics Office Supplies
Pet Supplies Bed & Bath Books & Music
Notable big-box retailers absent from the primary and secondary trade area include Dillards, Macys, Costco, Sams Club, AMC Theatres, Marshalls, Mervyns, Ross, Steinmart, Gordmans, Petsmart, Barnes & Noble Booksellers, Comp USA, Bed Bath & Beyond and Linens N Things. This lengthy list of absent big-box retailers bodes well for the Lees Summit East Redevelopment Area to attract a sufficient number of big-box retailers to facilitate feasible lifestyle and power center development.
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Trade Area Demographics

The primary and secondary trade area for the Lees Summit East Redevelopment Area is defined as an 8-mile radius. Demographic characteristics and trends for the primary and secondary trade area population provided by Claritas, Inc. are summarized in the table on page 26. The primary trade area supports a current population of 162,992 sufficient to support a diverse retail base. The large adolescent and young adult population supports the sales of apparel and accessories; groceries; sporting goods; music; home electronics; eating and drinking places; and general merchandise. The large population ages 25 to 44 are in their principal consumer years, favors hardware; furniture and home furnishings; home electronics; department stores; and eating and drinking places. These retail consumption patterns and a large number of households earning $50,000 to $150,000 per year favor big-box retailers, specialty retailers and eating and drinking places. These trade area demographic trends are favorable for supporting feasible lifestyle and power center development.
Tourism Market
Feasible festival retail development requires access to a large tourism market and close proximity to a major tourism attraction. The Kansas City area serves as a regional tourism destination supporting upscale shopping, professional sports franchises and a host of tourism attractions. During 2006, visitors to the metropolitan Kansas City area were estimated 11.2 million. First-year attendance is estimated at approximately 1.0 million for Legoland and 450,000 for the aquarium. The strong local tourism market and location adjacent to Legoland Missouri and aquarium provides an ideal setting for the Lees Summit East Redevelopment Area to support festival retail development.
Conclusions
Based on standard site evaluation criteria, it has been determined that the Lees Summit East Redevelopment Area possesses the necessary site characteristics and trade area demographics to support feasible development of a lifestyle center, power center and festival retail. The location of the Independence Center retail hub outside of the primary and secondary trade area allows for the potential to attract sister stores and strong tenant interest reported by RED Development affirms the sites desirability as a premiere big-box retailer and large-scale shopping center location. In combination with the neighboring 719,639 square foot SummitWoods Crossing, development of the approximately 1.3 million square feet of retail space within the Lees Summit East Redevelopment Area will create a dynamic retail destination and the second largest concentration of retail space in eastern Jackson County.
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8-Mile Radius Demographic Trends

Demographic Characteristic Population Households Income Per Capita Average Household Median Household Household Income Distribution Less than $15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000+ Population Age Distribution 0-4 Years 5-9 Years 10-17 Years 18-24 Years 25-34 Years 35-44 Years 45-54 Years 55-64 Years 65+ Years Median Age Average Age
Source: Claritas, Inc.
2000 Census 153,217 57,778
2005 Estimate 162,992 61,385
2010 Forecast 172,054 64,519
$24,089 $63,462 $53,330
$28,223 $74,589 $60,903
$32,467 $86,221 $68,448
8.49% 9.30% 12.08% 16.92% 24.10% 14.17% 10.61% 3.47% 0.66% 0.19%
7.07% 7.78% 9.98% 15.49% 22.20% 15.11% 15.26% 5.43% 1.25% 0.43%
6.09% 6.68% 8.28% 14.04% 20.21% 15.46% 18.31% 8.04% 2.09% 0.81%
11,225 12,137 19,713 11,183 20,916 26,949 21,110 12,980 17,002 35.53 35.62
12,433 11,882 20,393 14,065 18,399 25,065 24,906 16,504 18,494 36.67 36.44
12,614 12,825 20,194 15,975 18,030 23,613 27,065 20,481 21,257 37.71 37.37
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Conclusions
The Lees Summit East Redevelopment Area is planned for development of lifestyle, power and festival centers totaling approximately 1.3 million square feet. In recent years Lees Summit has experienced accelerated retail construction activity as several national big-box retailers opened stores in an attempt to capitalize on the communitys growing population, high-income levels and narrow retail market. From 1997 to 2006 nearly 3.0 million square feet of retail space was constructed in Lees Summit. New retail construction peaked in 2000 at 1.24 million square feet. Taxable retail sales in Lees Summit escalated from $752 million in 2000 to $1.2 billion by 2006, an increase of nearly 60 percent. Like so many rapidly growing suburban communities, despite a recent surge in new retail construction Lees Summit remains severely under-retailed and continues to suffer from considerable retail sales leakage. Retail leakage during 2006 was estimated at $177 million, sufficient to support approximately 785,000 square feet of retail space. By the year 2011, Lees Summit is forecast to support an additional $438 million in retail sales and 1.72 million square feet of retail space. Of this future demand for retail space upscale retail is forecast to account for approximately 600,000 square feet. Therefore, sufficient demand exists to warrant near-term construction of all three shopping center concepts totaling approximately 1.3 million square feet planned for the Lees Summit East Redevelopment Area. Four destination lifestyle centers/districts currently operate within the central, north, west and southwest quadrants of the metropolitan Kansas City area. Their distance apart allows for the operation of sister stores. The Lees Summit East Redevelopment Area is located within eastern Jackson County that doesnt possess a lifestyle center. While the Independence Center retail hub approximately eleven miles northeast of the Lees Summit East Redevelopment Area maintains a large inventory of big-box retailers, it lacks a major concentration of specialty retailers, restaurants, nightclubs and one-of-a-kind destination retailers. Lees Summit is the fastest growing community in eastern Jackson County and best suited to support a lifestyle center. These market dynamics bode well for the ability of the Lees Summit East Redevelopment Area to support feasible lifestyle center development. Lees Summits favorable demographics and lengthy list of absent big-box retailers also bodes well for the opportunity to facilitate feasible power center development. The Lees Summit East Redevelopment Area possesses the necessary site characteristics and trade area demographics to support feasible development of a lifestyle center, power center and festival retail. The location of the Independence Center retail hub outside of the primary and secondary trade area allows for the potential to attract sister stores and strong tenant interest reported by RED Development affirms the sites desirability as a premiere big-box retailer and large-scale shopping center location. In combination with the neighboring 719,639 square foot SummitWoods Crossing, development of the approximately 1.3 million square feet of retail space planned by the Lees Summit East TIF Plan will create a dynamic retail destination supporting the second largest concentration of retail space in eastern Jackson County.
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HOTEL MARKETABILITY ANALYSIS

This section of the report focuses on evaluating the development potential for the hotel component planned by the amended Lees Summit East TIF Plan. The project site plan calls for development of a 250-room Legoland-theme hotel.
Competitive Hotel Market

Hotel Properties
The table on page 29 provides a survey of hotel properties in Lees Summit. Seven hotel properties totaling 493 rooms are currently operating in Lees Summit, all of which are located adjacent to Interstate 470, U.S. Highway 50 or Missouri Highway 291. Individual properties range in size from 52 to 109 rooms. No major concentration of hotels exists with properties scattered throughout the city. The Lees Summit hotel industry supports a narrow mix of hotel products, including one economy property and six limited-service properties. National hotel chains operating properties including Hampton Inn, Marriott, Holiday Inn, Comfort Inn and Super 8. The hotels cater primarily to leisure and business travelers. The hotel properties maintaining meeting space also market to small groups and conferences. Approximately two-thirds of Lees Summits inventory of hotel rooms was constructed from 1998 to 2001. Since mid-2001 no new hotels have opened in Lees Summit. Six limited-service hotels operating within Lees Summit account for approximately 88 percent of the total competitive inventory. Property amenities are generally limited to a swimming pool, fitness center and a continental breakfast. Current room rates range from $59.00 to $109.00 for a standard room and $69.99 to $159.00 for suites. The 61-room Super 8 is the only budget/economy hotel operating in Lees Summit. The hotel caters primarily to price sensitive leisure and business travelers. Daily room rates range from $59.88 to $89.88 for standard rooms and $78.88 to $134.88 for suites.
Lees Summit Hotels Inventory by Product Type

Hotel Product Luxury Full-Service Limited-Service Budget/Economy Totals
# of Hotels 0 0 6 1 7
Room Inventory 0 0 432 61 493
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Survey of Lees Summit Hotel Properties

# of Date Opened Rooms Pool Fitness Center Meeting Space Daily Room Rate
Hotel Property / Address
1999
61
$59.88 - $89.88 $79.88 - $134.88 Suites X
1998 2001 2000 1992 1998 1994 57 X 63 X 52 X 109 X X X 76 X X
Budget / Economy Hotels Super 8 963 SE Oldham Parkway Limited-Service Hotels Holiday Inn Express 4825 NE Lakewood Parkway Comfort Inn & Suites 3701 Ralph Powell Road Hampton Inn 1751 NE Douglas Street Comfort Inn 607 SE Oldham Parkway Lee's Summit Inn 1020 SE Blue Parkway Fairfield by Marriott 1301 NE Windsor Drive 75 X X
$69.95 $78.95 - $109.99 Suites $75.99-$80.99 Standard $82.99 - $119.99 Suite $99-$109 Standard $159 King Jacuzzi $64.99 Standard $69.99 Suites $59 - $69 Standard $99 Suites $79.99 Standard $84.99-89.99 King Room
Source: Canyon Research; April 2007
Daily rates are spring 2007
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The City of Lees Summit levies a sales tax equivalent to 5.0 percent of gross daily rental receipts derived from transient guests for hotels and motels. Since FY 1999-2000 transient lodging tax revenue collected by the City of Lees Summit has grown by approximately 46 percent. From November 1999 through June 2001 three new hotel properties totaling 246 rooms opened in Lees Summit. The large gains in transient lodging tax receipts during fiscal years 2000-01 and 2001-02 are reflective of the new inventory in hotel rooms. Consistent with local and national lodging industry trends, lodging demand and revenues declined in FY 2002-03 and remained depressed for the following two years. Transient lodging receipts reported by the City of Lees summit grew by a healthy 5.8 percent in FY 2005-06.
Lee's Summit Transient Lodging Tax Receipts

$400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
The 250-room Legoland-theme hotel is designed as a full-service property featuring upscale room design and amenities, including food and beverage operations, swimming pool, fitness center, meeting space and business services. Because no comparable full-service hotels currently operate in Lees Summit the competitive market analysis expanded the survey to include fullservice hotels operating in eastern Jackson County. The survey identified two comparable hotel properties including the 201-room Hilton Garden Inn in Independence and 121-room Courtyard by Marriott in Blue Springs. Opened in October 2001, the Hilton Garden Inn is the most comparable full-service hotel operating in eastern Jackson County. Located at Interstate 70 and Little Blue Parkway approximately 12 miles northeast of the Redevelopment Area, the Hilton Garden Inn features an 11,322 square foot ballroom with a seating capacity of up to 1,400, two on-site restaurants (Great American Grill and Hereford House), business center, swimming pool, jacuzzi and fitness center. The 20,000 square foot Hartman Conference Center is located adjacent to the Hilton Garden Inn. The daily room rate for the Hilton Garden Inn is currently $119.
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The Courtyard by Marriott in Blue Springs, Missouri opened in April 2000. The 4-floor, 121room hotel (118 standard rooms and 3 suites) is located at Interstate 70 and Adams Dairy Parkway adjacent to the Adams Pointe Golf Club. The hotel caters to business travelers and groups due to its association with the Adams Pointe Conference Center that offers ten meeting rooms totaling 25,000 square feet of conference space seating 12 to 1,200 people. Hotel amenities include an indoor swimming pool and whirlpool, fitness center, business services and the Courtyard Caf. Current daily room rates range from $99 to $119 for standard rooms and $139 for suites. Golf packages are also available. A customized Market Report was purchased from Smith Travel Research identifying competitive area historical hotel operating trends. Smith Travel Research is an independent research firm that compiles data on the lodging industry. As depicted by the table below, Market Report includes six hotels totaling 430 rooms operating in Lees Summit as well as the 201-room Hilton Garden Inn in Independence and 121-room Courtyard by Marriott in Blue Springs. The Market Report published supply and demand data from 2000 to 2006.
Market Report Competitive Set Hotels

Hotel Property Lee's Summit Hotels Comfort Inn Comfort Inn & Suites Fairfield Inn by Marriott Hampton Inn Holiday Inn Express Super 8 Easter Jackson County Full-Service Hotels Hilton Garden Inn; Independence Courtyard by Marriott; Blue Springs Total Room Inventory
Source: Smith Travel Research.
Year Opened
# of Rooms
Meeting Space Sq. Ft.
1992 2001 1994 2000 1998 1999
52 76 57 109 75 61
0 0 0 900 0 0
2001 2000
201 121 752
11,322 8,272
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According to the data published by Smith Travel Research, from 2001 to 2003 the average annual occupancy levels for the eight competitive hotel properties declined considerably due to the ill effects of 9/11 on the national tourism industry as well as the opening of four hotels generated a strong spike in hotel room supply. With the absence of new hotel supply and an improving local economy hotel occupancies improved to 52.9 percent during 2004. Hotel demand continued to strengthen in 2005 and 2006 as the average occupancy reached 58.3 percent. During 2006, the cumulative occupancy level among the six properties operating in Lees Summit was approximately 56.2 percent.
Competitive Hotel Occupancy Rate Trends

60.0% 58.0% 56.0% 54.0% 52.0% 50.0% 48.0% 46.0% 2000 2001 2002 2003 2004 2005 2006
From 2000 to 2006, the peak season for the eight competitive hotels ran during the summer months of June through August with monthly hotel occupancy rates averaging 59.2 to 65.7 percent. The winter months of November through January represent the off season with monthly occupancy rates averaging 39.9 to 46.4 percent since 2000.
Competitive Hotel Market; 2000-2006 Average Occupancy by Month

70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Jan Feb March April May June July Aug Sept Oct Nov Dec
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During 2006, the days of the week capturing the highest room demand among the eight competitive hotel properties were from Monday through Wednesday marked by business travel with reported average occupancy levels of 57.9 to 67.7 percent. Friday and Saturday also reported strong room demand concentrating on leisure travelers with occupancies averaging 63.3 to and 67.3 percent, respectively.
Competitive Hotel Average Occupancy Rate by Day - 2006

80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Sun Mon Tues Wed Thu Fri Sat
From 2001 to 2003 the eight competitive hotel properties reported relatively flat average daily rates (ADR), reflecting large gains in room inventory and declining occupancy levels. ADR escalations have improved over the past three years with annual gains of 2.02 to 5.79 percent. By 2006, the ADR reached $75.32, up from $67.17 in 2003. Revenue per available room (RevPAR) also improved from $33.94 in 2003 to $43.89 in 2006, an average annual increase of 8.9 percent. In the past three years room demand escalated by 3.79 to 6.08 percent per year from 138,666 room nights in 2003 to 159,949 room nights in 2006.
Competitive Market Operating Results; 2001-2006

Year 2001 2002 2003 2004 2005 2006 ADR $65.60 $67.83 $67.17 $68.53 $71.20 $75.32 % Change RevPAR $33.08 $34.26 $33.94 $36.27 $39.98 $43.89 % Change Room Demand 104,964 138,629 138,666 145,284 154,112 159,949 % Change Total Revenue $6,885,531 $9,403,780 $9,314,751 $9,956,388 $10,973,221 $12,046,873 % Change
3.40% -0.97% 2.02% 3.90% 5.79%
3.57% -0.93% 6.87% 10.23% 9.78%
32.07% 0.03% 4.77% 6.08% 3.79%
36.57% -0.95% 6.89% 10.21% 9.78%
Source: Smith Travel Research.
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Over the past three years the significant gains in occupancy and ADR levels among the eight surveyed hotel properties has produced improving lodging revenues. As illustrated by the bar chart below, total lodging revenues grew from $9.3 million in 2003 to $12.0 million in 2006, an increase of 29.3 percent.
Competitive Hotel Revenue Trends

$14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 2001 2002 2003 2004 2005 2006
To conclude, the Lees Summit hotel market experienced strong expansion from 1998 to 2001 with the bulk of the new inventory concentrating on mid-price limited-service properties. Existing hotel properties cater to both business and leisure travelers. Group travel demand is modest due to the absence of a full-service hotel with meeting space. Only two full-service hotels operate in eastern Jackson County that are considered comparable to the Legoland-theme hotel planned for the Redevelopment Area. Concurrent with national hospitality trends, the competitive hotel market suffered from the adverse economic impact originating from 9/11. Recent operating trends suggest that the competitive hotel market is well on its way to recovery, posting strong gains in room demand, ADR, RevPAR and total revenue over the past three years. The newer chain hotels outperform the overall market. In recent years the competitive hotel properties have reported increased room demand during mid-week by business travelers and weekends by leisure travelers. With no short-term hotel development planned in Lees Summit competitive hotel market conditions are forecast to continue recovery.
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Forecast Hotel Room Demand

Supply and demand conditions through 2010 for the Lees Summit hotel market are forecast in an effort to quantify the future market trends impacting the Legoland hotel. During 2006, the Lees Summit hotel market operated at a cumulative occupancy rate of 56.2 percent. No hotel properties are currently under construction and scheduled for completion by year-end 2007.
Forecast Lees Summit Hotel Market Conditions; 2007-2010

Room Inventory 493 493 493 493 493 Annual Available Room Nights 179,945 179,945 179,945 179,945 179,945 Forecast Annual Room Demand 101,100 103,500 106,200 108,325 110,700 Occupancy Rate 56.2% 57.5% 59.0% 60.2% 61.5%
Year 2006 - Actual 2007 2008 2009 2010
Average occupancy levels and revenue per available room are presently insufficient to support economically feasible new hotel construction within Lees Summit. However, as the existing properties achieve stabilized occupancies and the local business community and population continues to grow, the short-term demand for additional hotel rooms will materialize. The most appropriate location for future hotel development is within the Interstate 470 corridor. Demand for the 250-room hotel planned for the Redevelopment Area will primarily originate from visitors to Legoland and the aquarium; therefore, feasible development wont be dictated by competitive hotel market conditions.
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Hotel Site Evaluation

The planned 250-room Legoland hotel is scheduled to open by fall 2009 to spring 2010. The competitive market strengths and weaknesses of the Legoland hotel site have been examined to determine the probability of supporting near-term development. A. Is the site accessible from major highways and arterial roadways? Freeway and/or major arterial street access is particularly important for budget, economy and limited-service hotels, providing for convenient access and visibility by guests and the ability to capture drive-by traffic. Access is less critical for full-service and luxury hotels as they tend to be destination locations. The Legoland hotel site offers the necessary freeway access to accommodate a hotel use via the Douglas Road interchange at Interstate 470 and Chipman Road interchange at U.S. Highway 50. B. Is the potential hotel site near and accessible to hotel room demand generators? A feasible hotel site is located in close proximity to room demand generators. Potential room demand generators include Interstate freeways, employment centers, sporting venues, tourist destinations and recreational facilities. The primary sources of hotel room demand for existing properties in Lees Summit include leisure travelers and business travelers. The planned Legoland hotel site is positioned to capture the 1.45 million annual visitors to Legoland and the aquarium, business travelers affiliated with the adjacent Summit Technology Campus and group/convention travelers. C. Is the potential hotel site in close proximity to existing hotel properties? Seven hotels totaling 493 guest rooms operate in Lees Summit scattered throughout the community along Interstate 470, U.S. 50 and MO 291. The Lees Summit hotel industry supports a narrow mix of hotel products, including one economy property and six limited-service properties. No comparable full-service hotels currently operate in Lees Summit, with the closest properties including the 201-room Hilton Garden Inn located approximately 12 miles to the northeast in Independence and the 121-room Courtyard by Marriott located approximately 17 miles to the northeast in Blue Springs. D. Are the sites physical characteristics suitable for hotel development? Site requirements for a full-service hotel include freeway and/or major arterial street location and a 3.0- to 7.0-acre parcel fully-serviced with roads and utilities. The Legoland hotel site consists of approximately 7 acres including 3.4 acres of surface parking. The TIF Plan will fund the street and infrastructure improvements to the site necessary to facilitate hotel development. The sites lack of visibility via Interstate 470 is minimized by its proximity adjacent to the Legoland theme park.
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The Legoland hotel is designed as a full-service property. Based on lodging industry site selection criteria the Legoland site possesses the necessary location and site requirements to support future development of a full-service hotel. The site offers convenient freeway access, necessary land area and infrastructure and proximity to the Legoland theme park and aquarium that are forecast to generate annual attendance of approximately 1.45 million. Direct competition is minimal with no full-service hotels operating in Lees Summit and just the 201room Hilton Garden Inn and the 121-room Courtyard by Marriott located within eastern Jackson County.
Conclusions
The Redevelopment Area is designed for a 250-room Legoland-theme full-service hotel. Direct competition is minimal with just seven hotel properties totaling 493 rooms currently operating in Lees Summit. No full-service hotels operating in Lees Summit and just the 201-room Hilton Garden Inn and the 121-room Courtyard by Marriott located within eastern Jackson County. The Lees Summit hotel industry supports a narrow mix of economy and mid-price properties catering primarily to leisure and business travelers. Approximately two-thirds of Lees Summits inventory of hotel rooms was constructed from 1998 to 2001. Since mid-2001 no new hotels have opened in Lees Summit. During 2006, the seven hotels in Lees Summit operated at a cumulative occupancy rate of 56.2 percent. No hotel properties are currently under construction and scheduled for completion by year-end 2007. By 2010, the occupancy rate of the seven hotels in Lees Summit is forecast to improve to 61.5 percent. Demand for the 250room hotel planned for the Redevelopment Area will primarily originate from visitors to Legoland and the aquarium; therefore, feasible development wont be dictated by competitive hotel market conditions. A Market Report published by Smith Travel Research identified competitive area historical hotel operating trends that include six hotels totaling 430 rooms operating in Lees Summit as well as the 201-room Hilton Garden Inn in Independence and 121-room Courtyard by Marriott in Blue Springs. Concurrent with national hospitality trends, the competitive hotel market suffered from the adverse economic impact originating from 9/11. Recent operating trends suggest that the competitive hotel market is well on its way to recovery, posting strong gains in room demand, ADR, RevPAR and total revenue over the past three years. The newer chain hotels outperform the overall market. With no short-term hotel development planned in Lees Summit competitive hotel market conditions are forecast to continue recovery. The Legoland site possesses the necessary location and site requirements to support future development of a full-service hotel. The site offers convenient freeway access, necessary land area and infrastructure and proximity to the Legoland theme park and aquarium that are forecast to generate annual attendance of approximately 1.45 million. Direct competition is minimal with no full-service hotels operating in Lees Summit and just two properties located within eastern Jackson County.
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OFFICE MARKETABILITY ANALYSIS

This section of the report focuses on evaluating the development potential for the office component planned by the amended Lees Summit East TIF Plan. The project site plan calls for development of approximately 850,000 square feet of office space.
Lees Summit Office Market

Existing Inventory of Space
Lees Summit is situated within eastern Jackson County that includes the eastern portion of Kansas City, Missouri and the suburban communities of Independence and Lees Summit. According to Kansas City Office MarketView published by CB Richard Ellis, by the first quarter 2007, eastern Jackson County maintained approximately 4.0 million square feet of speculative office space operating at a 17.05 percent vacancy rate. Class A product accounts for just 11.5 percent of total space. Lees Summit supports the bulk of office space in eastern Jackson County with approximately 2.6 million square feet of space constructed from 1995 through 2006. Lees Summits growing affluent population, freeway access, large inventory of available development sites and high quality of life is fueling the recent boom in new office construction. The largest concentration of office space in Lees Summit is located within business parks along Interstate 470. Prominent business parks in Lees Summit include the Summit Technology Campus (300 acres), Rollins Meadows Business Park (73 acres), Chapel Ridge Business Park (70 acres) and Douglas Square Center (34 acres).
Lee's Summit Office Market Historical Construction Trends (Sq. Ft.)

250,000
200,000
150,000
100,000
50,000
0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
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The Lees Summit office market has historically consisted of Class B and C garden office product. In the past several years much of the new office construction has included larger Class B+ buildings located within business parks along Interstate 470. A list of office buildings constructed during 2005 and 2006 is summarized in the table below.
Lees Summit New Office Construction; 2005 & 2006

2005 Office Buildings Development Lee's Summit Baptist Office Union Bank at Cheddington Bank Midwest Reed Health Care Building Gale Communities Office Kastle Grinding Ivy League Preschool Mazuma Credit Union 651-661 SE Bailey Rd Eyecare Associates Executive Lakes II Fischer Development Chapal Ridge II Building D Office/Warehouse Douglas Square Medical Office King's Common Midwestern General Agency Building HSM & Co Building MJB CEAH Realtors Legacy Ridge Arborwalk Office Building Total New Office Space - 2005 2006 Office Buildings Development RMJC Office Building Moehle Office Building Park 4 Plastic Surgery Center Macnamara Office Building Chapel Ridge Corporate Center Chapel Ridge Corporate Center Kansas City Cardiology Clinic Shops of Raintree Building Dermatology and Skin Cancer Center Total New Office Space - 2006
Source: City of Lee's Summit.
Address 2618 A NW Chipman Rd 3700 SW Cheddington Dr 1205 NE Douglas St 601 NW Obrien Rd 251 SW View High Dr 1110 SE Broadway Dr 1905 SE Langsford Rd 1155 NE Douglas St Bailey Center Building 221 NW McNary Ct 4880 NE Goodview Cr 100 NE Tudor Rd 3540 NE Ralph Powell Rd 340 NE Capital Dr 100 NE Missouri Rd 3171 NE Carnegie Dr 255 NW Blue Py 3550 NE Ralph Powell Rd 3350 NE Ralph Powell Rd 3215 NE Carnegie Dr 301 NE Mulberry St 1301 NW Arborwalk Bv
Building Area Sq Ft 2,500 3,081 3,406 4,327 4,431 5,400 5,404 6,180 7,855 8,332 8,525 8,900 12,925 13,650 14,658 14,880 16,250 17,167 18,260 18,480 43,062 9,600 247,273 Building Area Sq Ft 3,636 5,440 8,913 8,970 9,000 12,050 12,327 20,067 21,316 101,719
Address 821 NE Columbus St 410 D SE 3rd St 3151 NE Carnegie Dr 915 SW Lemans Ln 3170 NE Carnegie Dr 3570 NE Ralph Powell Rd 3200 NE Ralph Powell Rd 3735 SW Raintree Dr 3265 NE Ralph Powell Rd
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Over the past several years the bar has been raised in the Lees Summit speculative office market with several Class B+ buildings entering the market commanding lease rates much higher than historically supportable. The highest quality Class B+ product is located within new buildings at the Interstate 470 interchanges at Woods Chapel Road and Douglas Street. Despite this upward trend, office space in Lees Summit doesnt command the high rents supported by Overland Park, Kansas. According to Colliers Turley Martin Tucker, the annual lease rate for speculative office space in eastern Jackson County averages $16.98 per square foot full-service. Class A office space leases for $19.64 per square foot with Class B space leasing for $15.34 per square foot. A survey of speculative office buildings in Lees Summit was conducted in an effort to gauge current lease rates. As the table on page 41 indicates, 31 speculative office buildings were surveyed totaling 386,988 square feet of net leasable space. Annual lease rates range from $13.00 to $24.00 per square foot full-service with the highest quality buildings garnering $19.00 to $24.00 per square foot. Two actively developing business parks in Lees Summit will pose as the principal competitors to the designated office land within the Lees Summit East TIF Plan. Rollins Meadows is located at the southeast corner of Interstate 470 and Douglas Street and is approved for the development of 414,757 square feet of office. Existing office development includes Legacy Ridge Corporate Centre I-IV totaling 106,842 square feet of leasable space, 45,258 square foot Southwestern Bell Call Center and freestanding buildings occupied by Geha and MBPI. Rollins Meadows is complemented by the neighboring 109-room Hampton Inn, Outback Steakhouse and 119,585 square foot Douglas Square Shops. The Chapel Ridge Office Park at the southwest corner of Interstate 470 and Woods Chapel Road rates as Lees Summits premier office park, featuring freeway visibility, presence adjacent to the Chapel Ridge Golf Course and close proximity to executive housing. Several single-tenant and speculative office buildings have been constructed along the Interstate 470 frontage and backing onto the golf course. The Lees Summit speculative office market is dominated by Class B and C garden office space. Recent new office development has been particularly active along the North Interstate 470 Corridor consisting of higher quality Class B+ product. The future of Lees Summit as a professional office location hinges on such competitive assets as excellent freeway access and exposure, the availability of freeway interchange building sites, amply inventory of executive housing, excellent quality of life including a highly rated school district, continued growth of high-income households (similar to South Johnson County, Kansas) and increased commute drive times into Kansas Citys Central Business District.
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Lees Summit Speculative Office Buildings

Name Bayberry Business Center Bayberry Point Professional Building Chapel Ridge Center The Business Exchange Unknown Chapel Ridge Corporate Center West Side Plaza Executive Way Office Center Unknown TARMAC Industries, Inc. Unknown NRCCUA Building Heartland Financial Group Lee's Summit Medical Plaza Unknown Windsor Commons, Bldg B Arborwalk Office Building Building A Executive Lakes at Lakewood Jefferson Commons Legacy Ridge Corp. Center, Bldg III Legacy Ridge Corp. Centre, Bldg II Legacy Ridge Corp. Centre, Bldg I Lakewood Plaza Unknown Chapel Woods Executive Lakes Unknown Midwest Gastroenterology New Longview, Bldg 12, Phase 1 Jefferson Commons Total Square Feet Address 669 SE Bayberry Lane 620 SE 291 Hwy 831-839 NE Woods Chapel Road 200 NE Missouri Road 4141 Lakewood Way 3600 NE Ralph Powell Road 455-471 SW Ward Road 251 NW Executive Way 1009DW NE Jib Court 1850 NE 40 Hwy 229 NW Blue Parkway 900 SW Oldham Parkway 751 NE Anderson Way 2 NE Sycamore Street 3350 NE Ralph Powell Road 1300-1332 NE Windsor Drive 1301 SW Arborwalk Blvd NE Windsor Drive at NE Deerbrook St 4967 NE Goodview Circle 600 SW Jefferson St 1650 NE Grand Ave 200 NE Mulberry St 250 NE Mulberry St 755 Anderson Way 255 NW Blue Parkway 3370 NE Ralph Powell Road 4880 NE Goodview Circle 3250 NE Carnegie Dr 3601 NE Ralph Powell Road 3rd Street at View High Drive 600 SW Jefferson Street Total Sq Ft 47,990 2,250 2,795 45,000 13,000 18,375 3,521 8,000 1,300 11,085 7,056 8,400 5,700 4,000 5,760 12,000 9,600 2,800 5,000 30,000 20,487 22,455 23,688 17,370 6,741 21,000 8,665 6,250 5,200 4,000 7,500 386,988 Lease Rate Sq Ft $14.00 $13.00 $13.50 $14.00 $15.00 $15.00 $15.25 $16.00 $16.00 $15.00-$16.00 $16.00 $17.50 $18.00 $18.00 $18.50 $18.50 $18.50 $19.50 $19.50 $20.50 $20.50 $20.50 $21.00 $21.00 $22.00 $22.50 $24.00 $24.00 $19.00-$23.00 $22.00-$23.00
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Office Space Demand Forecasts

Professional office space demand projections for the Lees Summit market through the year 2020 provide an understanding of future market conditions directly impacting the Lees Summit East TIF Plan Redevelopment Area. Demand projections for professional office space for the Lees Summit market were calculated utilizing an occupational employment-driven model. This model was designed using the variables of office-related employment growth forecasts published by the Mid-America Regional Council and average space requirements ranging from 200 to 225 square feet per employee. Average annual employment in 2006 for Lees Summit was estimated at 38,925. Based on employment forecasts published by the Mid-America Regional Council, total employment for eastern Jackson County is forecast at 128,430 for 2010 and 150,747 by 2020. Computer, finance, architectural, engineering and other professions currently account for approximately 38 percent of all employment in Lees Summit. Therefore, employment growth associated with the occupancy of office space is forecast at 2,600 jobs from 2007 to 2010 and 6,750 jobs from 2011 to 2020. Lees Summit is estimated to absorb 1.87 to 2.1 million square feet of professional office space through the year 2020.
Office Space Demand Projections Lees Summit; 2007-2020

Timeframe 2007-2010 2011-2020 Totals Annual Average
Employment Growth - Office 2,600 6,750 9,350 668
Space Conservative 520,000 1,350,000 1,870,000 133,571
Demand Optimistic 585,000 1,518,750 2,103,750 150,268
At an average FAR on 0.30 and a market equilibrium vacancy rate of 7.0 percent, through the year 2020 the Lees Summit speculative and owner-occupied office market is forecast to absorb an estimated 153 to 172 acres of commercial land. Based on freeway access and exposure; convenient access to Kansas Citys CBD; ability to support a mixed-use campus environment and proximity to executive housing, the Interstate 470 Corridor will remain as Lees Summits premier professional office location. Through the year 2020 the Interstate 470 Corridor is anticipated to capture 75 to 80 percent of all city-wide office space absorption.
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Office Site Evaluation Criteria

A feasible office building site possesses the following characteristics: excellent location and access; proximity to a large and diverse labor pool; appropriate parcel size and shape and compatibility with adjacent land uses. The bulk of suburban office space within the U.S. is located within a freeway corridor. The feasibility of the Lees Summit East Redevelopment Area as a future office location was evaluated using these industry-endorsed criteria.
Location
Lees Summit is an affluent bedroom community with a good reputation for a high quality of life and convenient freeway access. Existing office space demand within Lees Summit has stemmed from the high concentrations of professionals living in the community. Future office space demand will result from continued population growth and influx of educated professionals. As an office location the Lees Summit East Redevelopment Area benefits from excellent freeway access, ability to support a mixed-use campus environment, the availability of executive housing and convenient access to a wide variety of on-site retail facilities. The Redevelopment Areas presence within the Summit Technology Campus will also provide for a prestigious business address. The 328-acre Summit Technology Campus was originally constructed in 1961 to house Bell Labs. The campus consists of three connected buildings totaling 1.3 million square feet of office space occupied by AT&T, General Services Administration, LabOne, Caremark, St. Lukes, Fabtech, Inc., eScout.com; Questcor Pharmaceuticals, and Central Missouri State University. A total a 200 acres of vacant land remains available for development within the Summit Technology Campus, designed for a mix of office and retail uses.
Proximity to Labor Pool

Studies have proven that firms are most successful in attracting and retaining office workers if the commute time to place of work is less than 30 minutes. Close proximity to executive housing is also important because top management and/or ownership typically decide on where to locate the office. Lees Summit possesses a large inventory of executive housing which has helped fuel office demand by small, independent companies which are locally owned. The Lees Summit labor force maintains above average levels of employment in managerial, business and financial (19.1%); computer and mathematical (4.9%); architectural and engineering (3.0%); legal (1.4%) and other professions (9.2%) which is favorable in generating office space demand.
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Parcel Size and Shape

Most existing office space in eastern Jackson County consists of 1- to 3-story garden or single tenant office product. The Redevelopment Area is designed for approximately 850,000 square feet of office space providing the opportunity to facilitate a wide mix of professional office product (i.e., single-tenant, garden, low-rise and mid-rise buildings) within a master planned environment.
Surrounding Land Uses

Existing and/or proposed land uses should have the ability to enhance an adjacent sites potential as a professional office location. The Redevelopment Areas office component is located on the Summit Technology Campus with 1.3 million square feet of existing office space and approximately 200 acres available for development planned for 1.3 million square feet of retail space and 850,000 square feet of office space. The integrated master plan for the Summit Technology Campus creates an ideal environment for professional office uses.
Conclusions
It has been concluded that the Lees Summit East Redevelopment Area is an excellent location for future professional office development. Location benefits include a Lees Summit address; high concentration of well-educated professionals; direct freeway access; the availability of executive housing and location within the Summit Technology Campus. Favorable site characteristics include major arterial street visibility, convenient freeway access and exposure, favorable adjacent land uses and sufficient parcel size to facilitate a wide mix of professional office product (i.e., single-tenant, garden, low-rise and mid-rise buildings) within a master planned environment.
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Conclusions
The Lees Summit East TIF Plan designates approximately 850,000 square feet of office space. Over the past decade the level of new office construction in Lees Summit has accelerated with approximately 2.6 million square feet of space constructed from 1995 through 2006. Recent development has raised the bar in terms of product type. The Lees Summit office market has historically consisted of Class B and C garden office product. In the past several years Class B+ buildings have accounted for much of the new office construction commanding lease rates much higher than historically supportable. The highest quality Class B+ product is located at the Interstate 470 interchanges at Woods Chapel Road and Douglas Street. Annual lease rates for speculative office space in Lees Summit range from $13.00 to $24.00 per square foot fullservice with the highest quality buildings garnering $19.00 to $24.00 per square foot. Lees Summit is anticipated to continue to emerge as an office location. The future of Lees Summit as a professional office location hinges on such competitive assets as excellent freeway access and exposure, the availability of freeway interchange building sites, ample inventory of executive housing, excellent quality of life including a highly rated school district, continued growth of high-income households (similar to South Johnson County, Kansas) and increased commute drive times into Kansas Citys Central Business District. Lees Summit is estimated to absorb 1.87 to 2.1 million square feet of professional office space through the year 2020, requiring the development of an estimated 153 to 172 acres of commercial land. The Lees Summit East Redevelopment Area is an excellent location for future professional office development. Location benefits include a Lees Summit address, high concentration of well-educated professionals, direct freeway access, the availability of executive housing and location within the Summit Technology Campus. Favorable site characteristics include major arterial street visibility, convenient freeway access, favorable adjacent land uses and sufficient parcel size to facilitate a wide mix of professional office product (i.e., single-tenant, garden, lowrise and mid-rise buildings) within a master planned environment. These favorable location and site characteristics are expected to support the Redevelopment Areas position as one of the premiere business locations in Lees Summit. At a 50 percent capture rate of city-wide office space absorption the Redevelopment Area is forecast to absorb approximately 75,000 square feet of office space annually, resulting in an 11- to 12-year project build-out. Current market conditions suggest that initiate phase of office space within the Redevelopment Area is capable of entering the market by 2009.
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FORECAST NET NEW STATE REVENUE

This section of the report forecasts net new retail sales generated by the Lees Summit East TIF Plan. The Lees Summit East Project Area 1 is approved for a 548,186 square foot lifestyle center. The amended TIF Plan calls for the development of a 650,705 square foot power center, 85,000 square feet of festival retail shops and restaurants, Legoland Missouri theme park and 250-room full-service hotel, Sea Life Aquarium and 850,000 square feet of office space. The revised site plan for the lifestyle center dated March 5, 2007 reduces the building area to 468,437 square feet including two department stores of 104,000 and 120,000 square feet accompanied by 244,437 square feet of retail shops. Six out parcels totaling 33,900 square feet of building area are designed for sit-down restaurants. This report forecast gross retail sales for the lifestyle centers revised site plan, referred to as Summit Fair. State Supplemental TIF funding is being sought to assist in development of Lees Summit East. In an effort to quantify net new retail sales for the State of Missouri this report commences by forecasting gross retail sales generated by the Lees Summit East TIF Plan. The report measures three components of net new retail sales including 1) recaptured retail sales now going out-of-state, 2) sales originating from out-of-state and 3) new sales resulting from market growth.
Gross Retail Sales

This section of the report focused on estimating gross retail sales generated by development of the Lees Summit East Redevelopment Area with a 502,337 square foot lifestyle center, 650,705 square foot power center, 85,000 square feet of festival retail, Legoland Missouri theme park and 250-room full-service hotel. Retail sales were estimated based on several sources, including: Dollars & Cents of Shopping Centers 2006 published by the Urban Land Institute; Retail sales data published by the International Council of Shopping Centers (ICSC); Financial data published by publicly-traded department stores, specialty retailers and national restaurant chains; Reports by the consultants that estimated retail sales for new and redeveloped shopping centers in the metropolitan Kansas City area such as the Blue Ridge Mall, The Falls at Crackerneck, Legends at Village West and Zona Rosa; Reported retail sales from such comparable lifestyle and power centers as Legends at Village West, Zona Rosa, The Shoppes at Boardwalk and SummitWoods Crossing; Admission, food and beverage and merchandise sales forecast for the Legoland theme park were provide by JB Research Company; and 46
Lodging and food and beverage revenue forecasts for the 250-room Legoland-theme hotel were based on a survey of comparable full-service hotel in the metropolitan Kansas City area as well as lodging industry data published by Smith Travel Research.
Project Area 1: Summit Fair

The revised site plan for Summit Fair dated March 5, 2007 calls for a 502,337 square foot lifestyle center. Summit Fair is scheduled to open by the fourth quarter 2008. Summit Fair will be anchored by two department stores of 104,000 and 120,000 square feet. According to Dollars & Cents of Shopping Center 2006, full-line national department stores reported median sales of $152.67 per square foot with the top 10 percent achieving $195.12 per square foot. During 2006 sales for such department stores chains as JC Penneys, Dillards, Nordstrom and Saks averaged $18.4 to $41.3 million per store. The two department stores planned at Summit Fair are anticipated to experience a 3-year ramp up in sales to stabilization. Sales for the 104,000 square foot department store are forecast at $17.0 million in Year 1, $19.0 million in Year 2 and $20.0 million in Year 3. Meanwhile, sales for the 120,000 square foot department store are forecast at $21.0 million in Year 1, $23.0 million in Year 2 and $24.0 million in Year 3. Summit Fair is designed with 244,437 square feet of junior anchors and retail shops. Based on competitive retail market conditions and the actual lease-up experienced by Zona Rosa Phase 1 and The Legends at Village West, the 244,437 square feet of shops are forecast to achieve 85 percent occupancy at opening and stabilized occupancy of 95 percent by the third year of operation. First-year sales for the junior anchors and small shops were forecast based on sales reported by such national retailers as Barnes & Noble, DSW, Forever 21, Pottery Barn, Stein Mart, Kirklands, Talbots, Abercrombie & Fitch, American Eagle, Ann Taylor Loft, Banana Republic, Buckle, Chicos, Coach, Coldwater Creek, Gap, Hollister & Co., Limited Too and Victorias Secret. The historical performance of comparable lifestyle centers was also considered. Based on these sources, first-year retail sales for the junior anchors and small shops were estimated at $350 per square foot. Five out lots totaling 33,900 square feet of building area are designed for sit-down restaurants. Three out lots will open with the shopping center during the fourth quarter 2008 with the remaining two out lots opening by year-end 2009. Restaurant sales were forecast based on the performance of national chains. Given reported sales of such chains as Applebees, Bravo Italiana, California Pizza Kitchen, Cheesecake Factory, Chilis, Granite City, Outback Steakhouse, Olive Garden, P.F. Changs China Bistro, Romanos Macaroni Grill and Red Lobster, the freestanding sit-down restaurants are forecast to generate first-year retail sales averaging $400 to $450 per square foot. As depicted by the table on page 48, through stabilization taxable gross sales for Summit Fair are forecast at $19.8 million in 2008, $120.8 million in 2009, $135.4 million in 2010 and $144.2 million in 2011. The retail sales forecast account for a 5.0 percent vacancy allowance. Following stabilization retail sales for Summit Fair are forecast to escalate at an average annual rate of 2.5 percent.
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Lees Summit TIF Plan - Summit Fair Forecast Retail Sales through Stabilization
Project Component Department Store Department Store Junior Anchors & Shops Out Lot 1 Out Lot 3 Out Lot 4 Out Lot 5 Out Lot 6 Totals Size Sq. Ft. 104,000 120,000 244,437 4,500 6,600 7,400 9,400 6,000 502,337 Sales Per Sq. Ft. $164 $175 $350 $450 $425 $400 $400 $425 2008 $2,850,455 $3,509,589 $12,153,207 $338,425 $468,781 $494,685 $0 $0 $19,815,141 2009 $17,000,000 $21,000,000 $72,720,008 $2,025,000 $2,805,000 $2,960,000 $1,895,452 $426,164 $120,831,624 2010 $19,000,000 $23,000,000 $78,922,596 $2,075,625 $2,875,125 $3,034,000 $3,854,000 $2,613,750 $135,375,096 2011 $20,000,000 $24,000,000 $85,389,865 $2,127,516 $2,947,003 $3,109,850 $3,950,350 $2,679,094 $144,203,677
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Project Area 2: Power Center

The Lees Summit East Project Area 2 is planned for a 650,705 square foot power center designed with big-box retailers, junior anchors, small shops and five out lots. The power center and three out lots are scheduled to open by the fourth quarter 2009. The remaining two out lots will open by year-end 2010. The shop space is anticipated to open at a 90 percent occupancy rate, reaching stabilization in Year 2 of 95 percent. Dollars & Cents of Shopping Center 2006 reported median sales for super community centers operating in the Midwest of $257.62 per square foot with the top 10 percent achieving $472.27 per square foot. Retail sales over the past two years for the neighboring SummitWoods Crossing were reported at approximately $270 to $285 per square foot. First-year sales for the Lees Summit East TIF Plans power center were forecast at $175 to $525 per square foot for the two major anchors (i.e., warehouse club, discount department store or department store), $150 to $500 per square foot for the junior anchors (i.e., home electronics, home furnishings, pet supplies, office supplies and clothing and accessories) and $275 per square foot for the small shops. Five out lots totaling 50,000 square feet of building area are designed for sit-down restaurants. Restaurant sales were forecast based on the performance of national chains. Given reported sales of such chains as Applebees, Bob Evans, Carrabbas, IHOP, Longhorn Steakhouse, On the Border Mexican Cantina, Panera Bread, Red Robin and Ruby Tuesday, the freestanding sit-down restaurants are forecast to generate first-year retail sales of $350 to $375 per square foot. As depicted by the table on page 50, through stabilization taxable gross sales for the Lees Summit East TIF Plans power center are forecast at $31.6 million in 2009, $192.2 million in 2010 and $200.7 million in 2011. The retail sales forecast account for a 5.0 percent vacancy allowance for the major anchors, juniors and shops. Following stabilization retail sales for the power center are forecast to escalate at an average annual rate of 2.5 percent.
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Lees Summit East TIF Plan - Power Center Forecast Retail Sales through Stabilization
Project Component Anchor 1 Anchor 2 Junior Anchor Junior Anchor Junior Anchor Junior Anchor Junior Anchor Junior Anchor Shops Out Lot 1 Out Lot 2 Out Lot 3 Out Lot 4 Out Lot 5 Totals Size Sq. Ft. 135,000 97,440 54,500 42,250 35,000 50,000 50,000 35,000 101,515 14,200 14,200 7,200 7,200 7,200 650,705 Sales Per Sq. Ft. $525 $175 $200 $275 $200 $150 $175 $500 $275 $350 $350 $375 $375 $375 2009 $11,844,863 $2,849,786 $1,821,644 $1,941,764 $1,169,863 $1,253,425 $1,462,329 $2,924,658 $4,198,966 $830,603 $830,603 $451,233 $0 $0 $31,579,736 2010 $70,875,000 $17,052,000 $10,900,000 $11,618,750 $7,000,000 $7,500,000 $8,750,000 $17,500,000 $26,520,794 $4,970,000 $4,970,000 $2,700,000 $1,361,096 $451,233 $192,168,873 2011 $72,646,875 $17,478,300 $11,172,500 $11,909,219 $7,175,000 $7,687,500 $8,968,750 $17,937,500 $27,183,814 $5,094,250 $5,094,250 $2,767,500 $2,767,500 $2,767,500 $200,650,457
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Project Area 3: Legoland Theme Park

The Attendance and Revenue Outlook for the Proposed Legoland Missouri in Lees Summit prepared in April 2007 by the JB Research Company provided revenue estimates for the Legoland theme park. The forecasts incorporated four revenue sources, including admissions, food and beverages, merchandise and parking. First-year sales on a per capita basis were estimated at $24.35 for admissions, $7.00 for food and beverages, $9.25 for merchandise and $1.90 for parking. Annual attendance for the initial ten years of operation ranges from 940,000 to 1.0 million. Gross theme park revenues are forecast at $42.5 million in 2009. The 10-year revenue forecasts are summarized in the table below.
Legoland Missouri Gross Revenue Projections

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Admissions $24.35 $24.35 $24.35 $25.08 $25.83 $26.61 $27.41 $28.23 $29.08 $29.95 $30.85 Per Capita F&B $7.00 $7.00 $7.00 $7.21 $7.43 $7.65 $7.88 $8.11 $8.36 $8.61 $8.87 Revenue Merchandise $9.25 $9.25 $9.25 $9.53 $9.81 $10.11 $10.41 $10.72 $11.04 $11.38 $11.72 Parking $1.90 $1.90 $1.90 $1.96 $2.02 $2.08 $2.14 $2.20 $2.27 $2.34 $2.41 Total Attendance 1,000,000 900,000 925,000 940,000 950,000 950,000 975,000 975,000 1,000,000 1,000,000 1,000,000 Gross Revenue $42,500,000 $38,250,000 $39,312,500 $41,148,500 $42,833,838 $44,118,853 $46,638,271 $48,037,419 $50,747,223 $52,269,639 $53,837,728
Source: JB Research Company.
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Project Area 4: Festival Retail and Aquarium

Project Area 4 is planned for an aquarium attraction, 85,000 square feet of festival retail and restaurants, and overflow parking for Legoland. Both Legoland and the aquarium will be operated by Merlin Investments. The First Amendment to the Lees Summit East TIF Plan forecasts first-year sales for the aquarium of $5.0 million. Throughout the remainder of the 25-year projection period aquarium sales were escalated at an average annual rate of 2.5 percent. The festival retail component is planned for 55,000 square feet of shop space designed primarily for eating and drinking establishments and four out lots totaling 30,000 square feet of space designed for sit-down restaurants. The shop space and two out lots are scheduled to open during the fourth quarter of 2009 with the remaining out lots opening by mid-2010. The 55,000 square feet of shops are forecast to achieve 90 percent occupancy at opening and stabilized occupancy of 95 percent by the first year of operation. Sales for the shop space and out lots were forecast based on the performance of national restaurant chains. Given reported sales of such chains as Applebees, Bob Evans, Carrabbas, Cold Stone Creamery, Longhorn Steakhouse, On the Border Mexican Cantina, Panera Bread, Red Robin, Ruby Tuesday, Subway and Quiznos Subs, the shop space and out lots are forecast to generate first-year retail sales of $325 and $350 per square foot, respectively. Through stabilization taxable gross sales for festival retail are forecast at $3.6 million in 2009, $25.5 million in 2010 and $28.2 million in 2011. The retail sales forecast account for a 5.0 percent vacancy allowance for the shops. Following stabilization retail sales for the festival retail are forecast to escalate at an average annual rate of 2.5 percent.
Festival Retail Forecast Retail Sales through Stabilization

Project Component Shops Out Lot 1 Out Lot 2 Out Lot 3 Out Lot 4 Totals Size Sq. Ft. 55,000 7,500 7,500 7,500 7,500 85,000 Sales Per Sq. Ft. $325 $350 $350 $350 $350 2009 $2,688,596 $438,699 $438,699 $0 $0 $3,565,993 2010 $16,981,250 $2,625,000 $2,625,000 $1,761,986 $1,539,041 $25,532,277 2011 $17,405,781 $2,690,625 $2,690,625 $2,690,625 $2,690,625 $28,168,281
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Project Area 6: Legoland-theme Hotel

Project Area 6 is designed for a 250-room Lego-theme hotel scheduled to open in late 2009 or early 2010. The full-service hotel will feature food and beverage operations. The lodging revenues are not TIF-eligible while the food and beverage sales are TIF-eligible. Stabilized occupancy for the 250-room Legoland-theme hotel is forecast to require three years from opening. Year 1 operating results are forecast at a 60 percent occupancy rate, an ADR of $150 per night and a RevPAR of $90 per night. By stabilization in Year 3 the hotel is forecast to operate at an average occupancy rate of 70 percent, an ADR of $156 per night and a RevPAR of $109.25 per night. These operating assumptions yield total lodging revenues of approximately $8.2 million in 2010, $9.1 million in 2011 and $10.0 million in 2012. Following stabilization lodging revenues are escalated at an average annual rate of 2.5 percent. These lodging revenues are not TIF-eligible. Food and beverage sales are forecast at 18 percent of total hotel revenues, translating to approximately $1.8 million in 2010, $2.0 million in 2011 and $2.2 million in 2012. Following stabilization of the hotel operations food and beverage sales are escalated at an average annual rate of 2.5 percent. These food and beverage sales are TIF-eligible.
Redevelopment Area: Total Gross Taxable Sales

As outlined by the table on page 54, taxable retail sales for the Lees Summit East TIF Plan were forecast for a 25-year period. For the purpose of this report the base year is 2008. Gross sales for the Lees Summit East TIF Plan are estimated at approximately $19.8 million in 2008, $205.3 million in 2010, $398.4 million in 2011 and $419.8 million in 2012. Throughout the 25-year projection period total retail sales for the Lees Summit East TIF Plan are estimated at approximately $12.9 billion.
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Forecast Gross Taxable Retail Sales Lees Summit East Tax Increment Financing Plan
RPA 2 Power Center $0 $31,579,736 $192,168,873 $200,650,457 $205,666,718 $210,808,386 $216,078,596 $221,480,561 $227,017,575 $232,693,014 $238,510,340 $244,473,098 $250,584,926 $256,849,549 $263,270,788 $269,852,557 $276,598,871 $283,513,843 $290,601,689 $297,866,731 $305,313,399 $312,946,234 $320,769,890 $328,789,138 $337,008,866 $6,015,093,836 $1,365,745,116 $842,115,306 $161,745,190 $66,928,811 $0 $42,500,000 $38,250,000 $39,312,500 $41,148,500 $42,833,838 $44,118,853 $46,638,271 $48,037,419 $50,747,223 $52,269,639 $53,837,728 $55,452,860 $57,116,446 $58,829,939 $60,594,837 $62,412,682 $64,285,063 $66,213,615 $68,200,023 $70,246,024 $72,353,404 $74,524,007 $76,759,727 $79,062,519 $0 $3,565,993 $25,532,277 $28,168,281 $28,872,488 $29,594,300 $30,334,158 $31,092,512 $31,869,824 $32,666,570 $33,483,234 $34,320,315 $35,178,323 $36,057,781 $36,959,226 $37,883,206 $38,830,286 $39,801,044 $40,796,070 $41,815,971 $42,861,371 $43,932,905 $45,031,228 $46,157,008 $47,310,934 $0 $5,000,000 $5,125,000 $5,253,125 $5,384,453 $5,519,064 $5,657,041 $5,798,467 $5,943,429 $6,092,014 $6,244,315 $6,400,423 $6,560,433 $6,724,444 $6,892,555 $7,064,869 $7,241,491 $7,422,528 $7,608,091 $7,798,294 $7,993,251 $8,193,082 $8,397,909 $8,607,857 $8,823,053 $0 $1,802,774 $1,992,032 $2,187,379 $2,242,063 $2,298,115 $2,355,568 $2,414,457 $2,474,819 $2,536,689 $2,600,106 $2,665,109 $2,731,737 $2,800,030 $2,870,031 $2,941,782 $3,015,326 $3,090,709 $3,167,977 $3,247,176 $3,328,356 $3,411,565 $3,496,854 $3,584,275 $3,673,882 $19,815,141 $205,280,127 $398,443,278 $419,775,419 $431,122,992 $442,557,692 $453,835,804 $466,598,145 $478,496,290 $491,967,566 $504,520,491 $517,394,851 $530,598,911 $544,141,148 $558,030,259 $572,275,165 $586,885,018 $601,869,207 $617,237,363 $632,999,365 $649,165,349 $665,745,713 $682,751,123 $700,192,521 $718,081,132 $12,889,780,069 RPA 3 Legoland RPA 4 Festival Retail RPA 4 Aquarium RPA 6 Hotel F&B Total Taxable Sales
Year
RPA 1 Summit Fair
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
$19,815,141 $120,831,624 $135,375,096 $144,203,677 $147,808,769 $151,503,988 $155,291,588 $159,173,878 $163,153,224 $167,232,055 $171,412,856 $175,698,178 $180,090,632 $184,592,898 $189,207,721 $193,937,914 $198,786,361 $203,756,020 $208,849,921 $214,071,169 $219,422,948 $224,908,522 $230,531,235 $236,294,516 $242,201,879
Totals
$4,438,151,811
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Net New Retail Sales

The First Amendment Lees Summit East Tax Increment Financing Plan is seeking a variety of public revenues sources including TIF, City Super TIF and State Supplemental TIF. The City Super TIF and State Supplemental TIF allows for a portion of the new local and state taxes created by a project to be used to fund eligible public infrastructure and related costs for a period of up to 23 years. This section of the report forecasts net new taxable retail sales generated for the State of Missouri by the project. Components of the Lees Summit East TIF Plan that are generators of retail sales include a 502,337 square foot lifestyle center, 650,705 square foot power center, 85,000 square feet of festival retail shops and restaurants, Legoland Missouri theme park, 250-room full-service hotel and Sea Life Aquarium. For a period of 25 years this report measured three components of net new retail sales generated by the Lees Summit East TIF Plan for the State of Missouri, including 1) recapturing retail sales by Missouri residents now going out-of-state and generation of new retail sales; 2) sales originating from out-of-state; and 3) sales resulting from market growth.
Summit Fair Net New Retail Sales

Through stabilization taxable gross sales for Summit Fair are forecast at $19.8 million in 2008, $120.8 million in 2009, $135.4 million in 2010 and $144.2 million in 2011. Throughout the 25year projection period Summit Fair is forecast to generate total taxable sales of approximately $4.4 billion. Summit Fair is designed to house retailers and restaurants currently not operating in eastern Jackson County such as Pottery Barn, Restoration Hardware, White House Black Market, Sharper Image, Williams-Sonoma and PF Changs China Bistro. Currently, to patronize such upscale retailers residents of eastern Jackson County must travel to Leawood and Overland Park, Kansas or the Country Club Plaza. Summit Fairs upscale tenant mix will recapture Missouri sales currently being captured by out-of-state retailers. The tenant mix for Summit Fair is expected to consist primarily of national retailers not currently operating stores within the immediate trade area, including major anchors, junior anchors, specialty shops and restaurants. These new retailers, combined with significant trade area retail opportunities identified by the RMP Opportunity Gap Retail Stores Report, are anticipated to generate new retail sales. Summit Fairs primary retail trade area is defined as the geographic area within a 10-mile radius of the site. According to the RMP Opportunity Gap Retail Stores Report, exclusive of automobile sales, during 2005 total retail sales within the primary trade area were reported at approximately $3.1 billion. The retail gap was estimated at approximately $469 million.
55
Given its positioning as an upscale lifestyle center Summit Fair is anticipated to re-capture Missouri resident sales currently spent out-of-state as well as generate new sales. The upscale retail sector accounts for an estimated 10 percent of Kansas City areas total retail sales. With only a modest number of upscale retailers housed at Independence Center and no lifestyle centers operating in the primary trade area all but a fraction of upscale retail sales are being captured elsewhere. Based on the inventory of lifestyle centers and upscale regional malls in the Kansas City area, an estimated 53 percent of the primary trade areas upscale retail sales are being spent in Kansas. The study assumed that Summit Fair would garner 65 percent of the primary trade areas sales currently captured by Kansas and 32.5 percent of all new upscale retail sales (10% of total retail sales). At build-out Summit Fair is forecast to capture $136.2 million in sales by Missouri residents now spent out-of-state and new sales. The JB Research Company forecast first-year attendance at Legoland of approximately 1.0 million visitors, consisting of 399,000 visitors within a 100-mile radius, 460,000 leisure tourists and induced visitation of 145,000. Assuming out-of-state rates of 50 percent for the local and induced visitation and 70 percent for leisure tourists, an estimated 594,000 visitors to Legoland will be from outside Missouri. According to D.K. Shifflet Associates the top activities of overnight leisure visitors to Kansas City are dining (32%), Shopping (32%) and entertainment (27%). Summit Fairs prospective tenant mix is ideal for catering to these tourist activities. The Travel Industry Association of America estimates daily retail expenditures by tourists at approximately $60. Assuming Summit Fair captures 35 percent of potential retail sales annual out-of-state spending is forecast at approximately $12.5 million. As summarized by the table on page 57, at stabilization Summit Fair is forecast to generate net new taxable sales of $133.6 million. At stabilization Summit Fair is forecast to generate total retail sales of approximately $144.2 million. Therefore, net new sales amount to approximately 92.65 percent of total sales. Net new sales to Missouri generated by Summit Fair will also be realized from the growth in retail sales over time. Throughout the 25-year projection period this report estimated overall growth in retail sales for Summit Fair at an average annual rate of 2.5 percent.
56
Summit Fair Forecast Net New Sales

Net New Sales Formula Re-capture of Missouri Resident Sales Now Spent Out-of-State Total Primary Trade Area Upscale Retail Sales - 10% Current Out-of-State Capture - 53% Summit Fair Capture Rate Re-captured Missouri Resident Sales New Retail Sales Total Primary Trade Area Retail Gap Primary Trade Area Upscale Retail Sales - 10% Summit Fair Capture Rate Capture of New Retail sales Spending by Out-of-State Visitors Estimated Annual Out-of-State Visitors to Legoland Average Retail Spending Per Visitor Annual Out-of-State Visitor Retail Sales Summit Fair Capture Rate of Visitor Retail Spending Capture of Out-of-State Visitor Retail Sales Summit Fair Retail Sales Capture Summit Fair Annual Sales at Stabilization Re-captured Missouri Resident Sales Capture of New Retail sales Capture of Out-of-State Visitor Retail Sales Summit Fair Total Net New Sales Net New Sales as Percentage of Total Sales
$307,343,774 $162,892,200 65.0% $105,879,930
$469,255,932 $46,925,593 32.50% $15,250,818
$594,000 $60 $35,640,000 35.00% $12,474,000
$144,203,677 $105,879,930 $15,250,818 $12,474,000 $133,604,748 92.65%
57
Power Center Net New Retail Sales

Through stabilization taxable gross sales for the planned power center are forecast at $31.6 million in 2009, $192.2 million in 2010 and $200.7 million in 2011. Throughout the 25-year projection period the power center is forecast to generate total taxable sales of approximately $6.0 billion. The power center is positioned to garner net new retail sales from by recapturing retail sales by Missouri residents now going out-of-state and generation of new retail sales, out-of-state sales from Kansas residents living in the metropolitan Kansas City area as well as the estimated 594,000 out-of-state visitors to Legoland, and sales resulting from market growth. Independence Center approximately eleven miles northeast of the Lees Summit East Redevelopment Area serves as Jackson Countys primary shopping destination housing a regional mall and a large inventory of major and junior anchors. For much of Jackson Countys population the 119th Street corridor in Overland Park and Leawood, Kansas that houses upscale retailers and a large inventory of major and junior anchors is a more convenient and preferred shopping destination. This report estimates that conservatively the retail sales leakage by the primary trade area residents to Kansas amounts to 5.0 percent of total sales, or approximately $153.7 million annually. Assuming that power center garners 50 percent of this retail sales leakage at build-out it is forecast to capture $76.8 million in sales by Missouri residents now spent out-of-state. According to the RMP Opportunity Gap Retail Stores Report, exclusive of automobile sales, the primary trade area is experiencing a retail gap estimated at approximately $469 million annually. Those retail categories most under retailed and likely occupants of the planned power center include clothing and accessories ($84 million), home furnishings ($45.2 million), eating and drinking establishments ($29.1 million), electronics and appliances ($25.1 million), computers and software ($16 million) and sporting goods ($15.6 million). The study assumed that power center garners 15 percent of the primary trade areas retail sales gap, or $70.4 million in the stabilized year. The Travel Industry Association of America estimates daily retail expenditures by tourists at approximately $60. Assuming the power center captures 20 percent of potential retail sales from the estimated 594,000 out-of-state visitors to Legoland annual out-of-state spending is forecast at approximately $7.1 million in the stabilized year. As summarized by the table on page 59, at stabilization power center is forecast to generate net new taxable sales of $154.4 million. At stabilization power center is forecast to generate total retail sales of approximately $200.7 million. Therefore, net new sales amount to approximately 76.93 percent of total sales. Net new sales to Missouri will also be realized from the growth in retail sales over time. Throughout the 25-year projection period this report estimated overall growth in retail sales for the power center at an average annual rate of 2.5 percent.
58
Power Center Forecast Net New Sales

Net New Sales Formula Re-capture of Missouri Resident Sales Now Spent Out-of-State Total Primary Trade Area Retail Sales Current Out-of-State Capture - 5% Power Center Capture Rate Re-captured Missouri Resident Sales New Retail Sales Total Primary Trade Area Retail Gap Power Center Capture Rate Capture of New Retail sales Spending by Out-of-State Visitors Estimated Annual Out-of-State Visitors to Legoland Average Retail Spending Per Visitor Annual Out-of-State Visitor Retail Sales Power Center Capture Rate of Visitor Retail Spending Capture of Out-of-State Visitor Retail Sales Summit Fair Retail Sales Capture Power Center Annual Sales at Stabilization Re-captured Missouri Resident Sales Capture of New Retail sales Capture of Out-of-State Visitor Retail Sales Summit Fair Total Net New Sales Net New Sales as Percentage of Total Sales
$3,073,437,740 $153,671,887 50.0% $76,835,944
$469,255,932 15.00% $70,388,390
$594,000 $60 $35,640,000 20.00% $7,128,000
$200,650,457 $76,835,944 $70,388,390 $7,128,000 $154,352,333 76.93%
59
Legoland Theme Park Net New Retail Sales

The Legoland theme park will occupy Project Area 3. Gross theme park revenues are forecast at $42.5 million in 2009. Throughout the 25-year projection period Legoland is forecast to generate total taxable sales of approximately $1.4 billion. Legoland will be a one-of-a-kind tourism destination not presently available in Missouri. Therefore, total gross sales also represent the net new sales. Out-of-state visitors are anticipated to account for nearly 60 percent of Legolands net new sales.
Festival Retail and Aquarium Net New Retail Sales

Project Area 4 is proposed to consist of an aquarium attraction, 85,000 square feet of festival retail and restaurants, and overflow parking for Legoland. Merlin Investments forecasts first-year sales for the aquarium of $5.0 million. Throughout the 25-year projection period the aquarium is forecast to generate total taxable sales of approximately $161.7 million. Similar to Legoland, the aquarium will be a one-of-a-kind tourism destination not presently available in Missouri. Therefore, total gross sales also represent the net new sales. Out-of-state visitors are anticipated to account for nearly 60 percent of the aquariums net new sales. Through stabilization taxable gross sales for festival retail are forecast at $3.6 million in 2009, $25.5 million in 2010 and $28.2 million in 2011. Throughout the 25-year projection period the festival retail is forecast to generate total taxable sales of approximately $842.1 million. Therefore, total gross sales also represent the net new sales. Out-of-state visitors are anticipated to account for nearly 60 percent of the festival retails net new sales.
Legoland-theme Hotel Net New Retail Sales

Project Area 6 is designed for a 250-room Lego-theme hotel scheduled to open in late 2009 or early 2010. The full-service hotel will feature food and beverage operations. The lodging revenues are not TIF-eligible while the food and beverage sales are TIF-eligible. Food and beverage sales are forecast at 18 percent of total hotel revenues, translating to approximately $1.8 million in 2010, $2.0 million in 2011 and $2.2 million in 2012. Throughout the 25-year projection period total taxable food and beverage sales generated by the hotel are forecast at approximately $1.4 billion. Total gross sales also represent the net new sales. Outof-state visitors are anticipated to account for nearly 60 percent of the aquariums net new sales.
60
Total Net New Taxable Retail Sales Forecasts

Net new retail sales for Missouri include sales originating from 1) recapturing retail sales now going out-of-state and generation of new retail sales; 2) sales originating from out-of-state; and 3) sales resulting from market growth. Annual net new sales estimates for the Lees Summit East TIF Plan from 2008 to 2032 are outlined in the table on page 62. The base year sales for calculating the incremental increase are set at $0. Total retail sales for the Lees Summit East Redevelopment Area are forecast at $19.8 million in 2008, increasing to $718.1 million by 2032. Throughout the 25-year projection period total retail sales are estimated at $12.9 billion. Net new retail sales for Missouri generated by the Lees Summit East TIF Plan are forecast at $18.4 million in 2008, increasing to $622.5 million by 2032. Throughout the 25-year projection period total net new retail sales generated by the Lees Summit East Redevelopment Area are estimated at $11.2 billion, translating into approximately 86.7 percent of total gross sales.
61
Estimated Net New Sales Generated by Lees Summit East

Net New Incremental Sales Summit Fair Power Center Legoland Festival Retail Aquarium Hotel F&B Sales Total Net New Sales
Gross
Base Year
Year
Sales
Sales
2008 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $682,325,738 $665,309,209 $218,926,869 $224,400,041

$4,111,947,653
$18,358,728 $199,482,325 $376,809,158 $398,487,147 $409,302,513 $420,191,702 $430,910,663 $443,099,877 $454,410,565 $467,279,697 $479,215,425 $491,457,159 $504,012,777 $516,890,360 $530,098,202 $543,644,806 $557,538,901 $571,789,437 $586,405,598 $601,396,806 $616,772,726 $632,543,274 $648,718,623 $213,587,189 $208,377,746 $203,295,362 $198,336,938 $193,499,452 $223,548,255 $229,136,962 $234,865,386 $240,737,020 $246,755,446 $252,924,332 $259,247,440
$4,627,180,034
$0 $111,950,500 $125,425,026 $133,604,707 $136,944,824 $140,368,445 $143,877,656 $147,474,598 $151,161,462 $154,940,499 $158,814,012 $162,784,362 $166,853,971 $171,025,320 $175,300,953 $179,683,477 $184,175,564 $188,779,953 $218,095,859 $212,776,448 $207,586,778 $202,523,686 $197,584,084 $57,116,446 $58,829,939 $60,594,837 $62,412,682 $64,285,063 $66,213,615 $68,200,023 $70,246,024 $72,353,404 $74,524,007 $76,759,727 $79,062,519
$1,365,745,116
$18,358,728 $24,294,291 $147,835,514 $154,352,371 $158,211,180 $162,166,459 $166,220,621 $170,376,136 $174,635,540 $179,001,428 $183,476,464 $188,063,376 $192,764,960 $55,452,860 $53,837,728 $52,269,639 $50,747,223 $32,666,570 $33,483,234 $34,320,315 $35,178,323 $36,057,781 $36,959,226 $37,883,206 $38,830,286 $39,801,044 $40,796,070 $41,815,971 $42,861,371 $43,932,905 $45,031,228 $46,157,008 $47,310,934
$842,115,306
$18,358,728 $42,500,000 $38,250,000 $39,312,500 $41,148,500 $42,833,838 $44,118,853 $46,638,271 $48,037,419 $31,869,824 $31,092,512 $30,334,158 $29,594,300 $28,872,488 $5,384,453 $5,519,064 $5,657,041 $5,798,467 $5,943,429 $6,092,014 $6,244,315 $6,400,423 $6,560,433 $6,724,444 $6,892,555 $7,064,869 $7,241,491 $7,422,528 $7,608,091 $7,798,294 $7,993,251 $8,193,082 $8,397,909 $8,607,857 $8,823,053
$161,745,190
$0 $3,565,993 $25,532,277 $28,168,281 $5,253,125 $5,125,000 $5,000,000
$0
$0
$0
$0 $1,802,774 $1,992,032 $2,187,379 $2,242,063 $2,298,115 $2,355,568 $2,414,457 $2,474,819 $2,536,689 $2,600,106 $2,665,109 $2,731,737 $2,800,030 $2,870,031 $2,941,782 $3,015,326 $3,090,709 $3,167,977 $3,247,176 $3,328,356 $3,411,565 $3,496,854 $3,584,275 $3,673,882
$66,928,811
$18,358,728 $189,113,558 $344,159,849 $362,878,362 $372,803,509 $382,780,222 $392,563,897 $403,794,441 $414,122,493 $425,984,424 $436,887,770 $448,071,312 $459,542,284 $471,308,105 $483,376,390 $495,754,949 $508,451,797 $521,475,156 $534,833,460 $548,535,364 $562,589,749 $577,005,722 $591,792,632 $606,960,068 $622,517,869
$11,175,662,109
2009
$199,482,325
2010
$376,809,158
2011
$398,487,147
2012
$409,302,513
2013
$420,191,702
2014
$430,910,663
2015
$443,099,877
2016
$454,410,565
2017
$467,279,697
2018
$479,215,425
2019
$491,457,159
2020
$504,012,777
2021
$516,890,360
2022
$530,098,202
2023
$543,644,806
2024
$557,538,901
2025
$571,789,437
2026
$586,405,598
2027
$601,396,806
2028
$616,772,726
2029
$632,543,274
2030
$648,718,623
2031
$665,309,209
2032
$682,325,738
Totals
$12,246,451,416
62
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Market Feasibility

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MARKET FEASIBILITY AND MISSOURI NET NEW SALES STUDY LEES SUMMIT EAST TAX INCREMENT FINANCING PLAN

INTERSTATE 470 & U.S. HIGHWAY 50 LEES SUMMIT, MISSOURI

CANYON RESEARCH SOUTHWEST, INC.

CANYON RESEARCH SOUTHWEST, INC.

651 DELAWARE AVENUE, SUITE 139 / BUFFALO, NY 14202 / (716) 362-1203

SUMMARY OF MAJOR FINDINGS INTRODUCTION .............................................................................................

RETAIL MARKETABILITY ANALYSIS ..............................................

HOTEL MARKETABILITY ANALYSIS ...............................................

OFFICE MARKETABILITY ANALYSIS ..............................................

FORECAST NET NEW STATE REVENUE .........................................

Canyon Research Southwest, Inc.

SUMMARY OF MAJOR FINDINGS

Feasibility of Retail Development

Feasibility of Hotel Development

Feasibility of Office Development

Forecast Net New Sales

Canyon Research Southwest, Inc.

Source: Canyon Research Southwest, Inc.

Canyon Research Southwest, Inc.

INTRODUCTION Study Objective and Organization

Lees Summit East Redevelopment Plan

Canyon Research Southwest, Inc.

Canyon Research Southwest, Inc.

RETAIL MARKETABILITY ANALYSIS

Shopping Center Concepts

Canyon Research Southwest, Inc.

Canyon Research Southwest, Inc.

Competitive Retail Market Conditions

Lee's Summit Retail Market Historical Construction Trends (Sq. Ft.)

Canyon Research Southwest, Inc.

Lee's Summit Trends in Annual Taxable Sales

RMP Opportunity Gap by Retail Category (2006) - Lees Summit, Missouri

Canyon Research Southwest, Inc.

Shopping Center Survey

Lees Summit Anchored Shopping Centers

Center Classification Power Center

Space Sq. Ft. 719,639

Anchor Tenants Lowe's, Target & Kohl's

Hen House Market Party America Price Chopper

Canyon Research Southwest, Inc.

Forecast Retail Space Demand

Projected Retail Space Demand Lees Summit; 2007 2011

Canyon Research Southwest, Inc.

Canyon Research Southwest, Inc.

Kansas City Area Lifestyle Centers

Country Club Plaza

Canyon Research Southwest, Inc.

Country Club Plaza Tenant Mix (Kansas City, Missouri)

Canyon Research Southwest, Inc.

Town Center Plaza

Town Center Plaza Tenant Mix (Leawood, Kansas)

Canyon Research Southwest, Inc.

Canyon Research Southwest, Inc.

Zona Rosa Phase 1 Tenant Mix (Kansas City, Missouri)

Entertainment GameStop The Majestic Theatres The Improv Comedy Club

Canyon Research Southwest, Inc.

Legends at Village West

Canyon Research Southwest, Inc.

The Legends at Village West Tenant Mix (Kansas City, Kansas)

Canyon Research Southwest, Inc.