Traditional brick-and-mortar stores took another hit this week when it was revealed that the North Kansas City retail shopping center Zona Rosa is in default of its mortgage. The massive shopping and dining facility opened in 2004 to much fanfare. Troubling news to many Platte County residents is the revelation that they may be required to cover the debts incurred by the default.
New York-based private real estate firm Olshan Properties owns Zona Rosa Development. This financial news is not a surprise to those familiar with the company and its economic difficulties the last few years. Zona Rosa expanded in 2007, just a few years after its opening. At that time, a deal was brokered with the Platte County Commission and the Platte County Industrial Development Authority both agreeing to cover debt payment shortfalls should the Zona Rosa Development not be able to generate sufficient funds on its own.
Signs of Zona Rosa’s troubles have been apparent since 2014 when occupancy levels begin to drop dramatically as shoppers have continued to gravitate toward more nontraditional online retail options. In 2004, Zona Rosa’s occupancy rate sat at a relatively healthy 85.9%, however, that rate has dropped to 60% currently. In late 2017, investors were informed that Zona Rosa Development had depleted its last letter of credit and efforts to receive a new $500,000 in funds had failed.
Foreseeing this development, the Platte County Commission had previously set aside $500,000 to assist in covering these debts. These payments are scheduled to be paid in December 2018. Should this money need to be tapped into, it will deplete the funds previously set aside for the county jail expansion and improvements.