The City of Edgerton, Kansas, in the southwest corner of the Kansas City metropolitan area, is the home of BNSF Railway’s newest rail/freight intermodal facility, a key node along its Transcontinental Corridor.
Surrounding the 450-acre intermodal port is Logistics Park Kansas City (LPKC), a 3000+ acre master planned distribution and warehousing logistics park anticipated to house 30 million square feet of buildings, including three million square feet of rail-served warehousing. Total public and private development for this inland port is expected to exceed $2 billion at build-out. LPKC’s development is governed by a unique three-party agreement including a master private developer (Northpoint), BNSF Railway and the City of Edgerton. LPKC is home to such household names as Amazon, Jet.com, Kubota Tractors and Flexsteel.
Although the Kansas Department of Transportation developed a key connection between LPKC and Interstate 35, more than $100 million of adjacent and interior infrastructure to this formerly greenfield site is anticipated to be financed from local sources. Working together, the parties have created a financing strategy that produces a variety of revenue streams from new development within LPKC. The linchpin of the infrastructure financing is an Industrial Revenue Bond (IRB) program that provides property tax abatement to owners within LPKC but requires the payment of annual IRB-related fees which are aggregated by the City and directed to infrastructure financing within the development.
Because of Edgerton’s small population and limited borrowing capacity, the City had to explore a variety of approaches to finance public improvements supporting the intermodal facility. The intended financing approach, an intermodal revolving loan facility administered by the State’s DOT, has not come to fruition, and the City’s governing body is committed not to use the City’s credit to finance intermodal-related infrastructure.
Working within these constraints, Columbia coordinated closely with City staff and legal counsel to develop a public-private partnership with Northpoint where it provides the initial financing for projects, evidenced by a note secured under a master revenue bond indenture issued by the City. The master indenture provides that the security for repayment of these financings comes solely from the half-dozen project-related revenue streams administered and captured by the City.
With more than 12 million square feet of development in place by 2020, LPKC supported City-issued refunding revenue bonds via bank direct purchase, refunding a portion of the Northpoint infrastructure notes, recapitalizing Northpoint to undertake additional projects. Columbia Capital advised on this financing which also converted City state revolving loans for its wastewater treatment plant to intermodal refunding bonds.
Columbia Capital developed and maintains a complex, dynamic financial model identifying the timing and scale of the development’s revenue streams. Using this model, Columbia Capital worked with the finance team and the developer to construct an availability payment-type structure to provide public-private financing for the bulk of the project’s infrastructure needs.
Columbia Capital Management, LLC is a registered with the US Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) as a municipal advisor. The firm is also registered with the SEC as a registered investment adviser. Columbia Capital has a statutory duty to serve its governmental clients as a fiduciary.