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The city of Goddard wants to use a new state incentive program to give a developer $1.2 million in taxpayer money to buy 7.57 acres from Rodney Steven II and Brandon Steven.
The land would be the site for 100 garden-style apartments beside the Genesis Sports Complex in Goddard. The Wichita suburb plans to use a $2 million federal grant and $3.5 million in Reinvestment Housing Incentive District, or RHID, funds to subsidize the estimated $17.3 million project.
Rodney Steven II has a role in both the company selling the land — Goddard Sports LLC, which he co-owns with his brother — and the company buying it, Goddard Housing LLC.
No one will say who owns Goddard Housing. It was incorporated in Delaware under a law that allows owners of LLCs to remain anonymous.
Steven’s role in the company is unclear. He electronically signed a Kansas state business filing on behalf of Goddard Housing LLC three days after Goddard approved the deal, changing the company’s office address to the same Wichita address as Goddard Sports LLC and Genesis Health Clubs on East Central.
The RHID incentive program had been confined to rural areas but was recently expanded by the Kansas Legislature to allow its use in urban and suburban housing projects. Much of Wichita and its suburbs are now eligible for the housing incentive.
The Goddard apartment project is the first RHID project approved by a local government in Sedgwick County. The agreement will take effect unless the Sedgwick County Commission or local school board nullifies it within 30 days. The commission is expected to vote on the incentive before May 15.
The county can veto any RHID project that commissioners determine would have “adverse effects” on Sedgwick County. Commissioners have cited concerns that RHIDs in Sedgwick County could create an unfair playing field that rewards developers while placing the property tax burden on everyone else.
“First of all, I don’t think we should be using other people’s tax money to buy land for developers,” Commissioner David Dennis said. “Then there’s the not paying taxes for 25 years, but the government services will continue. That means for the next 25 years any services (related to the apartments) are covered by everyone else in the county. There’s fire service. There’s 911. There’s EMS. That doesn’t go away.”
Similar to tax increment financing, RHIDs divert local property taxes within the district to reimburse developers for eligible costs such as land acquisition and public improvements. The RHIDs can last up to 25 years — five years longer than TIF districts — meaning properties in reinvestment housing districts this year would not return to the tax rolls until 2049.
The Goddard City Council unanimously approved the incentive package on April 15.
Paperwork for the incentive package labels Goddard Housing LLC as an affiliate of Goddard Sports LLC and directs a copy of the agreement be sent “to the developer” — with a line saying “Attn: Rodney Steven.”
Steven did not return phone calls or answer written questions about who owns Goddard Housing LLC. Asked whether Goddard is using RHID to pay one of his LLCs $1.2 million to buy land from another of his LLCs, he wrote, “This is Not accurate.” He did not elaborate or respond to follow up questions seeking clarification.
The Kansas Department of Commerce declined to say whether it knows who is behind the Delaware company. Goddard City Administrator Craig Crossette stopped short of confirming Steven owns it.
“All I know is what’s in the paperwork, so I’ll refer you to that,” Crossette said.
Goddard city officials say there’s nothing in the RHID law that prohibits cities from using the incentive to pay developers to buy land from themselves using two LLCs.
“Yes, RHID allows reimbursement for land costs including in the manner with which you have suggested,” Crossette said. “No, this would not be a concern to the City as we are supportive of providing incentives to motivate investment for certain types of housing where we have severe deficiencies such as Class A Apartment complexes.”
Kansas law requires cities to disclose the “names, addresses and specific interests in real estate in the proposed district of developers” in RHID districts. Goddard listed “Goddard Housing LLC” as the owner and developer in the district. The RHID law requires less transparency than other incentive programs, such as STAR bonds, which require cities to disclose the principals and partners in development companies.
Goddard’s application says: “Developer is an affiliate of Goddard Sports, LLC – current owner of all property in the District. Following establishment of the District, the current owner will convey all property in the District to Developer, who will develop the Project.”
Second time incentives have paid for this land
This would be the second time Goddard has used state economic development incentives to buy the land in question for a developer.
In 2014, Goddard used STAR bonds to reimburse Rick Worner’s Goddard Destination Development $2.5 million for more than 100 acres between 183rd and 199th streets south of Kellogg, where the Goddard Sports Complex is now located. It included 7.57 acres where the apartments are planned.
Steven bought the 100-plus acres from Worner for an undisclosed price in 2018. Sedgwick County records show Steven took out a $1.2 million mortgage to pay for it.
STAR bonds, which divert hotel and sales tax revenue for major entertainment, tourism or commercial projects, have brought to life the Genesis Sports Complex in Goddard, which includes a Genesis Health Clubs fitness center, a Blast Off Bay water park, a hotel, a 6S Sports bar and grill, and several baseball and softball fields. The complex is a 20-minute drive from downtown Wichita.
The Kansas Department of Commerce, which gave a letter of approval for the RHID district boundaries in October, did not respond to questions for this story. A spokesperson said the department is reviewing the land sale.
“We are currently reviewing the proposed transfer of land, which is located in the STAR Bond District and was initially acquired with STAR bond proceeds,” Patrick Lowry, spokesman for Commerce, said in a statement. “We anticipate that due diligence to take some time, most likely several weeks.”
Goddard city documents and a Kansas secretary of state business filing initially linked Worner to Goddard Housing LLC.
Worner — who announced earlier this month that he is partnering with Steven on another Wichita suburban STAR Bonds project , Derby Shores — identified himself as the manager of Goddard Housing LLC in a May 2023 letter to former Goddard Mayor Hunter Larkin.
But he told The Eagle he’s not involved in the RHID incentive process and that he doesn’t know who owns Goddard Housing LLC.
“I have no long term ownership interest in the proposed apartments,” Worner said. “I was involved in applying for multiple grants for the city. Some efforts were successful — some were not. I don’t know who the members are of the (Goddard) Housing LLC.”
Joe Oaks, a Kansas City-area real estate attorney who has represented Worner’s companies in the past, has represented Goddard Housing LLC at local government meetings. He did not respond to written questions from The Eagle. In a brief phone interview, Oaks said he was “not equipped to answer” who owns Goddard Housing LLC and hung up on a reporter.
Goddard’s mayor and city council members did not respond to written questions about the land sale.
Sedgwick County to consider plan
The Goddard City Council approved the land sale as part of an incentives package for Goddard Housing LLC at its April 15 meeting after fewer than 10 minutes of discussion.
The incentives package included $3.5 million in RHID funds and a $2 million federal grant from the Kansas Housing Resources Corporation. Goddard had already approved a letter of intent to issue $17.35 million in industrial revenue bonds to finance the project on April 1. IRBs offer a tax abatement on construction materials and typically provide developers with lower interest rates.
The Sedgwick County Commission is expected to consider Goddard’s application for RHID funding this month..
Commissioner Jim Howell said he worries that approval of the Goddard RHID would set a bad precedent that would be copied throughout the state.
“Why wouldn’t every developer who wants to build an apartment complex or a housing project just set up an LLC and sell the land they already own to themselves and then get reimbursed through RHID?” Howell said. “Pick your own price. Why not, if the law allows it? And if we (the County Commission) say that’s OK, I worry how that’s going to play out.”
Howell said he could support an RHID project if the incentives were necessary, “but there has to be a but-for,” meaning the project could not be completed without the incentives.
“If this incentive is used to reimburse developers for land they already own, how can a city claim a project wouldn’t happen ‘but for’ the incentive? I think that’s a hard case to make,” he said.
“How can we be mad at a developer for doing something that’s allowed by law to maximize their profits?” Howell said. “Take Rodney Steven out of this. It’s not about the developer. It’s about what I think is a bad law that would allow something like this.”
Crossette said Goddard is willing to offer the RHID incentives because it has tried and failed to land apartment projects in the past. He said the $1.2 million for the land sale is needed because the developer won’t build without it. Goddard did not order an appraisal of the property and Crossette said he feels $1.2 million is a fair-market value.
“These incentives are necessary because we would not have Class A apartments ‘but-for’ the necessary incentive,” Crossette said.
The proposed garden-style apartments would include amenities such as granite countertops, luxury vinyl tile flooring and stainless steel appliances along with tenant common space.
Crossette said the apartments are important in Goddard because it has few renting options for recent graduates.
“We would like to give our Goddard graduates an opportunity to live in our community after they graduate,” Crossette said at a recent council meeting. “I know oftentimes we always want to say, ‘let’s send them off to go see the world.’ That’s great, but we’d love them to be able to come back and have a place that they can afford to stay. Not a lot of folks at that point in their life are able to afford a brand new house or even a duplex, so this would give those folks an opportunity.”
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