Plug pulled on multimillion-dollar “Intersections” project for South Omaha

Developers have scrapped an ambitious plan that had aimed to turn a largely industrial 25-acre tract south of downtown into a multimillion-dollar wellness and sports complex. 

A spokesman for Community Health Development Partners told the Nebraska Examiner that there’s a chance the “Intersections” campus could move on, perhaps in some smaller form, elsewhere in Omaha.

“We swung for the fences with this one and it didn’t work out,” said David Lutz, an Omaha attorney and managing partner behind the effort.

Costs exceeded projections

What started out as a $100 million-plus estimated price tag grew at least threefold in cost, he said, with high construction expenses and site preparation costs that he said had more to do with land topography than any environmental concern.

Now the turnabout leaves in limbo what the developer said are about 20 houses and lots the group bought in the old Sheelytown ethnic enclave. A few of those residences still are occupied, but most are vacated and boarded or locked up.

A few are littered with debris and have open windows.

That alarms Jenny Synowiecki, who grew up in the area and has been the most vocal opponent. She said she’d heard rumors, but did not know for certain that the effort had ended when she reached out recently to Habitat for Humanity for help.

Synowiecki said she and homeowners around the project site who hadn’t sold their properties to the developer feared that out-of-state investors who “don’t actually care about the community” would swoop in to buy the empty houses. 

Because Community Health partners had planned to demolish the houses it bought along 28th Avenue and 27th Street, to create a blank slate for construction, Lutz said departing residents were allowed to strip the interiors. 

Lutz said that his development group has been talking with groups to figure out how best to restore the properties and return them to residential use. He said he is disheartened at the misinformation that has dogged the project.

Good intentions

“The neighborhood will be left in as good, probably better, shape than when we got there,” Lutz said. “We always had good intentions.” 

Lutz said the investors spent “millions” to get to this point, including paying higher than market value prices for the houses. He said the group likely will sell the houses at a loss, and wants to act “quickly” to get them back in homeowner hands. 

By the time the group revealed its vision last year, it had already started buying properties and negotiating with the largest owner, A&R Salvage & Recycling.

The plan called for turning a little-known swath near 28th and Martha Streets into a health and recreational campus containing five buildings, including a competitive video and gaming arena.

More specifically, the project site was bounded generally by Martha, Deer Park Boulevard, Interstate 480 and Union Pacific Railroad tracks.

Lutz said at the time that the location provided access to North and South Omaha but that the amenities also were expected to draw people from across the region.

Underserved populations

The model was to charge fees for programs, services and events, yet be accessible to underserved populations by offering nonprofit groups discounted rates to practice or operate out of the complex.

The project site included the A&R salvage and recycling yard and concrete-crushing business, but Lutz said his investor group, after much deliberation and examination, decided not to seal the pending purchase deal. 

The for-profit Community Health was about two years old when it revealed the plan last November. By then, the group had already started buying the properties.

Described as a “mission-focused” real estate developer, which has an office in Omaha, Community Health was going to own and manage the complex.

Lutz said then that fee-charging components — say big tournaments or health care services — would help cover some program expenses to be offered to nonprofit sports organizations serving low-income kids.

Community Health and a developer of a separate but neighboring housing proposal worked with the city to designate their project sites as blighted, a step necessary before they could be eligible for a tax-increment financing subsidy.

From the beginning, the Intersections project raised questions among some, including Synowiecki, who feared residents would be “forced out” to expand the project boundaries.

‘Smaller bites’

Synowiecki said Tuesday she remains concerned about the timeline to resell the houses and hopes the developer keeps neighbors in the loop.

“It’s been confusing,” she said, likening the latest news to “whiplash.”

City Councilman Vinny Palermo of South Omaha said he has been monitoring the neighborhood, and even walked the area recently with Synowiecki. The city’s power, he said, is to enforce any code violations, and city workers already have cleaned up some graffiti at the project site.

He called it “textbook” city involvement with private development. The Intersections group, he said, pursued its project appropriately and had won support of many in city government for the attempt to bring economic development to an aging pocket. 

Lutz said his development group, which is working on projects elsewhere in the U.S., remains interested in a future Omaha project that likely would not be as large.

“We’ll take smaller bites,” he said.

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