Klausman, partners in discussions for $40 million downtown residential project

Topeka developer Jim Klausman said successful downtowns “have a cool factor” that attract both young people and retirees. (Thad Allton/The Capital-Journal)

Jim Klausman and Butch Eaton launched Midwest Health Inc. in the 1970s, with just one assisted living facility. Today, the pair own more than 50 facilities in multiple states.

 

But it was about 20 years ago they began to invest in developments outside of the assisted living field, including projects in the downtown area but also throughout the city and in other communities.

“We got involved with the downtown Barley’s,” Klausman said. “It didn’t do so well, but we saw what worked and didn’t work.”

Barley’s Brewhaus opened in 1995 at 805 S. Kansas Ave. Klausman owns the building today.

That venture spawned others, and right now, Klausman, usually with various partners, owns more than 15 buildings downtown. The projects have been many and varied, from renovating the Dibbles building in 2008 to the tune of $600,000 to purchasing the Kansan Towers at 830 S. Kansas. He bought the commercial and residential building in 2015 with Eaton and Mike Tryon.

Klausman and his partners are taking their time to find appropriate tenants for their multiple buildings.

“Right now we’re just exploring all the possibilities in the buildings we do own,” Klausman said. “We have the building that’s behind CoreFirst building, which is at 923 Quincy, that we are in discussions with a large multi-family operator out of Kansas City to do a joint venture on.”

The former AT&T headquarters building is 10 stories, he said, and the renovation project there will be in the range of $40 to $50 million.

“There are several ones that are like this in Kansas City that we’re looking at, built on that same kind of format,” Klausman said. “We’re exploring those right now and hope to be able to start that either later this year or early next year.”

As he looks at increasing residential living opportunities downtown, Klausman said his team also has talked with grocers and other businesses that would make the area more hospitable for residents.

”I think that where we’ve lacked before is having all the different services and the residential down there to promote the rest of the entertainment,” he said. “You really have to bring all of those together to make the whole thing successful.”

As he looks at uses for the buildings he and partners own, Klausman said creating a “cool factor” is an important part of revitalization. He sees that occurring in projects like the downtown plaza.

The whole downtown area, he said, is just in the beginning of the process.

”I think we’ve set the table, and now we just need to go ahead and work out the rest of it,” he said. “It’s not going to be an overnight type of process. You have to have buy-in from a lot of different businesses that haven’t really thought about being downtown before, and we’re working on those types.”

Most successful cities that Klausman visits in his travels have strong downtowns.

“They have walkability factor, and they have a cool factor, and that’s where a lot of the young people would like to live, as well as people who are retired that are looking to down to downsize. They want to be in an area where you can walk out your door and walk to a coffee shop or walk to a grocery store. It makes a big difference.”

Klausman said when he talks to potential tenants, he uses other successful downtowns as examples, such as Manhattan and Lawrence. Manhattan, in particular, has done “a tremendous job” on its downtown.

“I think they did it right, not only with the mall down there, but then the Discovery Center,” he said. “They actually passed a STAR bond that helped them tremendously in bringing a lot of new business downtown. I think those are things we need to think about for our downtown, as well as how to bring public and private partnership together to make it successful.”

STAR bonds are Sales Tax Revenue Bonds.

What’s missing to move the downtown forward?

“I think that anything the city and the county can do to help developers down there. It is a risk right now. It hasn’t been in the past, in the immediate past, very successful,” Klausman said. “I think anything that would be helpful to both the developers and the city in the long-term would be beneficial to both.”

Klausman has used a TIF program, or Tax Increment Financing, in several cities where he’s developed projects, including a $386 million development in Osage Beach, Mo. There, he and partners are building a 226-acre development that includes assisted living facilities.

“The city stepped up and did a large TIF program, about a $60 million TIF program, down there for us,” Klausman said, adding that programs like that or industrial revenue bond issues can make or break an investment decision.

”A lot of cities have been very aggressive in terms of trying to attract people to grow their cities,” he said. “It just doesn’t happen without interaction between the city and the county and the developer.”

The Cyrus Hotel is a catalyst project for the downtown, and Klausman hopes to see more growth from that. His residential project, too, is one he’s excited about. But overall, he said, quality of life is critical as the city moves forward.

“Whether it’s downtown or anywhere else, the city really needs to be concerned about the quality of life,” Klausman said. “It’s the quality of life that pulls people in.”

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