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Future of Schlitterbahn Water Park, where boy died on slide, uncertain amid criminal investigation

Public and private money at stake
Posted: 3:51 PM, Oct 01, 2018
Updated: 2018-10-02 15:20:54Z

KANSAS CITY, Kansas  Schlitterbahn Water Park faces an uncertain future with multiple co-defendants connected to the company facing criminal charges following the 2016 death of a boy on the Verruckt water slide.

At stake are public and private funds used to invest in the park itself and the surrounding area.

Rick Worner, who's worked in finance in the Kansas City area for decades, said he convinced Schlitterbahn owners Jeff and Gary Henry to venture out of Texas for the first time and open a water slide business in Kansas City, Kansas.

The Unified Government of Kansas City, Kansas has been a Schlitterbahn advocate since 2005.

"I want to say immediately that Schlitterbahn Vacation Village is more than any kind of water park, it's more, much, much more," then KCK Mayor Joe Reardon said in 2005.

Reardon's enthusiastic assessment came at a time when plans for Schlitterbahn included a resort hotel, river canals, a river walk, a marine park featuring live animals, boat rides, waterfront cabins and restaurants.

There were also plans for a Scheel's sporting goods store near what was billed as Schlitterbahn Vacation Village.

Reardon and Schlitterbahn co-owner Jeff Henry predicted big business.

"This thing is huge and it will attract people from a long, long way away," Henry said in 2005.

"What we're going to see is people will come to the Kansas City area. Quite frankly, instead of staying one or two days, we're going to see them stay maybe for a week," Reardon said in 2005.

The state of Kansas approved $225 million dollars in sales tax revenue or STAR bonds for the KCK Unified Government for the Schlitterbahn project in 2005.

The way STAR bonds work is the government borrows the money to develop commercial, entertainment and tourism areas.

STAR bond money can be used to buy land and improve roads and infrastructure like power and sewer lines.

Then the government pays the money back over time from sales tax collected from businesses in those areas.

While the water park was ultimately built using private financing, most of the other proposed parts of Schlitterbahn Vacation Village were not.

Scheel's went to Overland Park.

And the original $225 million in bonds were never issued.

"Through the recession, it caused a lot of changes to the plan they had put together, so they've had to evolve it," said Doug Bach, Wyandotte County Administrator.

Despite the recession setback, the Unified Government did not give up on Schlitterbahn and in fact, doubled down on public financing.

In March 2013, records exclusively obtained by the 41 Action News Investigators show UG Commissioners approved another tax plan called a Community Improvement District or CID.

 

The UG and other localities can set up a CID without state approval.

Water park customers pay an additional 2 percent sales tax for the CID.

That extra sales tax expires July 1, 2035.

The original list of 12 approved projects from the CID money include Schlitterbahn concessions, kiddie pools, a lodge and a couple of restaurants.

 

A permanent traffic signal at State Avenue at the Schlitterbahn turn off is also listed as a possible project, but it hasn't been done.

The lodge, which calls for the renovation of the Farm Bureau, also hasn't been done.

Neither have the two restaurants which state they would be built at the renovated county garage and renovated KDOT building.

According to the UG, the CID tax money collected has been turned over to Schlitterbahn and the UG can't disclose those payments because there are less than five businesses in the CID.

Schlitterbahn spokeswoman Winter Prosapio said the $750,000 sewer project on that list was completed some time ago but didn't say any other project was completed.

She also said that original CID list of approved projects is now an out of date list and no longer in effect.

Prosapio also points out, under Kansas law, the Schlitterbahn Vacation Village Board for the CID has to submit reimbursement requests to the Unified Government for approved projects on a pay as you go basis.

Despite multiple requests, the UG has failed to provide the 41 Action News Investigators with any list of approved and completed projects with CID tax money.

In 2015, the state of Kansas also approved up to $164 million in STAR bond money for various parts of the multi-part project.

The project has been modified several times.

Kansas state records the 41 Action News Investigators obtained from the Department of Revenue show about $85 million in STAR bonds have been issued for parts of the Schlitterbahn development area and another $65 million in STAR bonds for the U.S. Soccer Training Complex.

UG Spokesman Mike Taylor said a good chunk of the STAR bond money has been used to rebuild and re-align 98th Street but provided no other details.

When the 41 Action News Investigators recently asked current KCK Mayor David Alvey if Schlitterbahn has been a good investment for the community, Alvey replied, "Well uh, I guess. I think so. Yes."

With no major resort hotel as originally planned, no other businesses or attractions on the water park site, the Unified Government has had to rely on the sales taxes of other businesses to repay its STAR bond debt.

Several businesses have opened west of the water park, including multiple car dealerships.

Eric Gentry owns three of the four dealerships.

He said that part of the Schlitterbahn STAR bond area has been a major positive for the community and his businesses are growing.

Other businesses in the STAR bond area include Frontier Justice, which sells guns and other accessories. There's also a car wash and Pinnacle Sports Medicine. All of those businesses have opened within the last couple of years.

The U.S. Soccer complex is a separate part of the deal.

"All those bonds are on track and a little bit ahead of schedule from where they're supposed to be," Bach said.

"We have a place that generates revenues for our citizens and that provides for our residents. So long as we continue on that trajectory, I think it's a good thing for us," Mayor Alvey said. 

After buying property from Schlitterbahn, Menards has applied for a building permit for a new store near the water park. 

A statement from a Menards spokesman to KSHB television station investigators states the hope is construction will begin before the end of the year with the store opening next summer.

"We worked for that because it's a source of revenue for our community, provides needed services to the people of our community," Alvey said.

Still, there are questions about the Schlitterbahn Water Park's future following the death of 10-year-old Caleb Schwab in 2016.

Jeff Henry, the same co-owner who was so bullish on the park's future in 2005, is charged with multiple felonies along with several other co-defendants.

"I believe the water park will continue to operate. How they do it or what will be the makeup of ownership in the future, I don't know," Bach said.

Verruckt is now scheduled to be torn down and the park did operate other water slides this past summer.

Schlitterbahn Spokeswoman Winter Prosapio said highlights of this past season, which ended after Labor Day, include three lifeguard safety awards as well as "hundreds of thousands in community charitable contributions and strong support from our fans".

The company, however, declined to release attendance numbers.

While Schlitterbahn paints a rosy picture of its KCK operation, a major company lender does not.

In a federal report filed in April 2018, Kansas City-based investment firm EPR Properties  expressed doubts about recovering more than $174 million dollars in private loans for the Schlitterbahn project.

 

 

EPR cites the criminal cases and negative publicity for its concerns.

The documents also state Schlitterbahn used its New Braunfels, Texas and South Padre Island, Texas parks as collateral for the EPR loans.

Multiple calls to EPR for comment were not returned.

"If General Motors has a fatality, would we say that was a bad investment?," Alvey said.

But uncertainty caused by the pending criminal case against Schlitterbahn's KCK water park isn't the company's only problem.

Earlier this year, a bank bought the company's Corpus Christi park at a foreclosure auction.

The company still operates the park after creditors cited expansive plans for the Corpus Christi park which never happened.

Former KCK Mayor Mark Holland, who was in office for some of the more recent Schlitterbahn decisions, declined comment.

KSHB investigative reporters reached out to former Mayor Joe Reardon for recent comment.

Reardon, who's now the President and CEO of the Kansas City Chamber of Commerce, never returned calls or messages.

KSHB television station investigators also made multiple attempts to reach George Brajkovic for comment. Brajkovic was Kansas City, Kansas' Economic Development Director when the CID was approved in 2013. Brajkovic, who's now Tonganoxie City Manager, has never returned calls or messages.