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Bank on KC – Jon Stephens of Port KC

Bank on KC – Jon Stephens of Port KC

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Kelly Scanlon:

Welcome to Banking on KC. I'm your host, Kelly Scanlon. Thank you for joining us. With us on this episode is Jon Stephens, president and CEO of Port KC. Welcome, Jon.

Jon Stephens:

Hey, Kelly. Glad to be here.

Kelly Scanlon:

It's great to be talking with you again. I want to start here. It might seem obvious, but some of our listeners might be surprised that in a landlocked Midwestern city like Kansas City, we actually have a port. Let's just start there. Tell us about what Port KC does.

Jon Stephens:

I think a lot of people think of ports as being what in the trade is called blue ports, so the big ocean ports, but actually, Missouri has 14 port authorities. Kansas City is the largest and probably most diverse in the work we do. And I like to say that, of course, we are born of the river, and we are based in river transit, but we are really a holistic transportation, redevelopment, and jobs organization for Kansas City.

Kelly Scanlon:

And you do. You have the three big buckets, development, transportation, commerce. And I want to drill down on each one of those just a bit. You're involved in so many different things. We won't be able to cover them all. But let's start with the transportation focus. You've got the Woodswether Terminal. It's currently operating. And I believe that just came back online, though, several years ago. And you're also working on a second terminal right now, the Missouri River Terminal. What purpose will that serve, and how will it complement the Woodswether Terminal?

Jon Stephens:

The Woodswether Terminal is in the West Bottoms, and it is a hundred-plus-year-old port terminal that had been decommissioned. It's now entering year six of being reactivated. And it is what is referred to as a bulk goods terminal, so you think fertilizer and grains and various ... Like actually now we have a lot of salts are on the roads in the winter. Thank goodness the weather is nice-

Kelly Scanlon:

Yes-

Jon Stephens:

And you don't have to worry about that right now. But it has grown by double digits every year in the last five years and is now 200,000 tons transited on pace for 2021. And it's a wonderful bulk goods terminal that serves eastern Kansas, western Missouri, and a lot. But the MRT, the Missouri River Terminal, which is near Independence ... It's in the far eastern side of Kansas City at the Blue River. It is an area ... We talk about reclamation, so it was AK Steel, and that land was cleaned up and remediated. And we are now in year three of bringing that back as a true intermodal port terminal, so that would be all of the rail, all of the trucking. If you visit Tampa or Savannah or Long Beach or these places, think of a smaller version of the big ports. It's cranes. It's TEUs, which are containers, shipping containers, coming on and off of vessels on the river.

Jon Stephens:

And really, it is a piece of infrastructure that I like to think of, for goods, it is similar to building a new KCI terminal. It is the place where goods come in and the place where goods go out, and it is a catalyst for major manufacturing, everything from vehicles to agriculture to assembly and everything in between. So it's a very different model, and it's something that has been proven throughout Europe, proven throughout the world, but with the Panama Canal expanding and the Mississippi River growing so much and goods and services growing so much. And as we saw in COVID, in 2019, the movement of goods being disrupted in one part of the world can really put a wrench in all of the economic transportation life cycle, so this is a project that we think is going to be an incredible addition and be one of the largest inland ports in North America when it comes online.

Kelly Scanlon:

Yeah, right here in Kansas City. When do you think that will be coming online? Do you have a timetable?

Jon Stephens:

We're going through all the due diligence. We were given, awarded a MARAD federal maritime grant for the study of it. And we believe that late this year, early next year, we'll be going to a design-build-finance global search, and we think probably within 18 to 24 months, the initial components would be under construction.

Kelly Scanlon:

Okay, so not too far off before we'll start seeing a lot of-

Jon Stephens:

Not too far off-

Kelly Scanlon:

Activity there. Want to go back for a minute to the existing terminal, the Woodswether Terminal. You mentioned that it has doubled, I think you said, in growth every year in the last ... What's causing that growth? What's behind that?

Jon Stephens:

It is two factors. I think, one, really people had sort of forgotten the energy efficiency, the cost efficiency of using barges along the lower Missouri River. And so a lot of these facilities had been decommissioned. And by bringing it back, we started with 10,000 tons in year one, and that was basically telling companies like ADM and others to give it a shot and try it. And now, you're seeing St. Louis and Cape Girardeau and all of these places ... Iowa just opened a major new port ... That it's really reestablishing the Missouri River as a major water highway, basically.

Kelly Scanlon:

Mm-hmm (affirmative). Yeah.

Jon Stephens:

That's number one. And then number two is the growth of the Kansas City metro and the needs of these businesses, particularly as they start looking at the carbon efficiency. One of the things that people don't realize is how big each barge pushed by a tug is, and the fact that by tonnage, those are 80% more energy efficient than a semi. And so the idea is not to take, to move goods, instead of semis or instead of rail, but if you can bring tens of thousands of tons to the West Bottoms and then offload it onto trucks for shorter hauls, it's better on our highways, it's better on fuel efficiency, and it's more affordable to the businesses.

Kelly Scanlon:

Talk to us a little bit about the economic impact of that terminal on the Kansas City metro area. I know a lot of these goods aren't going to stay here. They're going to, like you say, be put on a truck, or they're going to continue down the river. But there is an economic impact. Talk to us about that.

Jon Stephens:

One of the biggest economic impacts, probably the most obvious, as anyone who drives outside of Kansas City is the fertilizer. Fertilizer for all of the agriculture. We are still the bread basket. I am really happy to say that the tonnage there has grown so much that we've added a second fertilizer dome for distribution. And really, there are hundreds of counties throughout this region that the agricultural fertilizer is distributed to, so the economics there is obvious. It makes things more cost-efficient for our farmers and for our agricultural producers.

Jon Stephens:

And then, as you said, we're able to bring in salt. We're able to bring in light aggregate and a lot of these goods. And then some of the things that go out are things that previously were dumped in landfills. Coal slag, which is actually really fascinating to me about ... I'm a nerd, but to me it's really fascinating. Coal slag is remnants of the burning of coal that previously was buried. And now, due to the efficiency of being able to ship it out to manufacturers, it is utilized as an abrasive on industrial sandpaper and abrasives, and it is utilized on roofing materials.

Kelly Scanlon:

Huh.

Jon Stephens:

It's actually proves to be a very cost-effective environmental component. And then finally, steel scrap. There aren't many forges and foundries in this region, so being able to cost-effectively take steel scrap and send it to places in west Memphis and others that utilize and recycle steel scrap and reforge steel scrap into new materials, finding a cost-effective way to do that has only added dollars that previously were never in the economy here and added jobs. And we estimate that the indirect benefit of the continued growth is around 500 full-time jobs in Kansas City alone, just by continuing to move more and more goods out of this one little four-acre plot of land.

Kelly Scanlon:

That's pretty amazing, the economic impact, the job growth, and the environmental impact, too, which I don't know that we all, we stop and consider that very much, either. As far as development goes, that was the second area that you mentioned. Berkley Riverfront Park is probably the site that most of our listeners are familiar with. Certainly lots of Kansas Citians enjoy the amenities of that park, so give us an update on the projects that are going on in that location right now.

Jon Stephens:

We are really excited about Berkley Riverfront. It's 50-some acres, and over the last 20 years, my predecessors and a lot of committed people, starting with Mayor Cleaver and others, now, Congressman Cleaver, have really supported the cleanup and remediation and rebirth of the Berkley Riverfront. And we're now seeing the rebirth of that with the opening of the Union Apartments. I'm actually sitting in our offices on Berkley Riverfront three and a half years ago now when 410 apartment units opened. This is an amazing statistic to me. But this was the first new residences built on the Missouri River in Kansas City, Missouri in 110 years.

Kelly Scanlon:

Oh my! That is ... I can see why you're excited about that.

Jon Stephens:

Yeah, so we're excited about it. And I've been here going on three years, so it'll be coming up on three years, and we've been really pleased of adding an amenity and attraction a year, but really thinking of the Berkley Riverfront redevelopment not as your traditional redevelopment, master plan redevelopment, but thinking of it as rebuilding a new neighborhood for downtown and a destination. Some of the things we've done is we have another 353 units of apartments under construction right now. Bar K, the dog park bar restaurant. So exciting. And this was the first one, and now they are building two or three more around the country already. And we continue to see growth in the park.

Jon Stephens:

And then one of the things that we're really excited about is the fact that the street car has been approved and is on the way to the riverfront-

Kelly Scanlon:

Yes-

Jon Stephens:

Coupled with extensions of the trail and bike/ped infrastructure. And we anticipate that really, in the next 24 months, you will see, there will be around 2000 people living on the riverfront and some other really exciting things, such as a rec hall, which was approved by our commission and is on the way, and that's beach volleyball, beer garden in the park and music and festival.

Kelly Scanlon:

Yeah, isn't Luke Wade involved in that?

Jon Stephens:

He is. Luke Wade is involved in that and is a partner in it, and yeah, we're really excited that it's an amenity of the park that will be operated and managed by Luke Wade and his really talented team.

Kelly Scanlon:

Luke's been a guest with us before and is, I believe, talked a little bit about that and was quite excited, so it's good to see that it's moving forward. Let's skip across town to 49 Crossing, and that's the site of the old Richards-Gebaur Air Force Base.

Jon Stephens:

Yep.

Kelly Scanlon:

It's amazing the transformation that has occurred there. But tell us how Port KC is involved in that. This is an example of your commerce function, so how are you involved?

Jon Stephens:

As a port authority, we serve a unique function in the fact that we are a somewhat independent organization that is created by the state, but we work within the city of Kansas City, Missouri, and we work as somewhat of an independent agency. Our relationship with the Missouri Department of Transportation and with the federal government is somewhat different. One of our core missions within what we do is to receive federal land, derelict state land, and to do reversionary land sales.

Jon Stephens:

And so that's actually what happened as the federal government decided to do what they call BRAC the air base, which was the realignment of military resources. They needed a receiving agency. Port KC, back then the Port Authority of Kansas City, received the land, and over that time, we continued to monitor and maintain all of the components of that as an incubator for small business, so we actually reclaimed the former hangar buildings, so we were able to convert those former air base buildings into really low-cost warehouse manufacturing space for ... I believe we have 26 businesses down there. And we own and operate and manage that.

Jon Stephens:

And then additionally, we've partnered with other developers and other development partners, such as Kansas City Southern, which they've been in the news a lot lately with a pending sale to Canada National rail lines, but they run an intermodal vehicle facility where cars come from Mexico, Canada, and cars come from here and go to Mexico and Canada. I believe around 5,000 new vehicles a month come in and out of the facility there.

Jon Stephens:

And then we work with partners such as Platform Ventures and others for significant new jobs. Because our mission there is to bring back quality jobs. At one point, as an air base, there were 5,000 military personnel that lived and work there-

Kelly Scanlon:

Right-

Jon Stephens:

And our goal is to replace those jobs with great new jobs for the south Kansas city region and to make it a hub of commerce with new buildings on all of that, all of the acreage, but then also continue to do innovation and tech. And we partnered with the community colleges. We have an advanced welding lab there where they do welding certifications. We end up being some of the, I would say, the connector of the pieces down there, while then also still owning the bulk of the land as well that then we lease to developers.

Kelly Scanlon:

Jon, as much as anyone that I know, seriously, you have been involved in developing Kansas City in recent years. You've been involved with the Kansas City Convention and Visitors Association in a number of different capacities. You were the economic development director for the unified government, the interim executive director of the KCK Area Chamber, the president of the Kansas City Power and Light District, and you've worked at some of Kansas City's largest and most well-known marketing advertising agencies. And you have one of your own, as a matter of fact. So you have this really wide perspective to draw from when it comes to talking about Kansas City and its opportunities. Where should we be looking as a metropolitan area that straddles the state line for our next opportunities?

Jon Stephens:

I'm a south Kansas City kid. I grew up in south Kansas City ,and I see so much potential in our Kansas City region. I hold where Kansas City is and where we're headed in incredibly high regard. I think we have a unique opportunity to take advantage of the fact that we have two states. And I think in many ways, it's no longer the dividing line that it was even five years ago. Maybe I'm sometimes too optimistic, but I do think that we are presented with a great opportunity here that some of the verticals that the Kansas City metro has gained on is ... We are one of the global centers of engineering. We're one of the global centers of architecture.

Kelly Scanlon:

Yes.

Jon Stephens:

I just saw a statistic today that over the last 12 months, we are the eighth ranked city in America in total distribution and jobs of e-commerce and distribution and logistics.

Kelly Scanlon:

Mm-hmm (affirmative).

Jon Stephens:

And I think the fact that we recognize and acknowledge collectively, be it KCK or Johnson County with Logistics Park, or Liberty or Belton, we've all recognized that we are the logistics center of the country, and the rest of the world has noticed that. We continue to grow there, and so I think our opportunities are moving not just from crossroads of America, but leveraging that crossroads not just to be a place that goods pass through, but to continue to be a place where goods are manufactured, where goods have final assemblage. I mentioned earlier, we talk about the global supply chain, and I've been lucky enough to have been, I think, broadened my perspective nationally and globally, as we've looked at our supply chain and what we do.

Jon Stephens:

And pre-COVID, the world was really ... You look at the Amazon models and the Target models of how goods moved, and pre-COVID, really, the world was moving towards a just-in-time delivery model, so that was get the goods that you're going to buy that are going to be on the shelves tomorrow to the warehouse the day before they're needed. Right? And then they go on the shelf or they're delivered to your front door. And we saw that that has a challenge when there's disruptions. Be it manufacturing or raw goods or final assembly, when factories shut down, that becomes a pretty fragile system.

Kelly Scanlon:

Oh, yeah.

Jon Stephens:

We now are moving, I think globally, but particularly in America, to a just-in-case model. We're seeing more and more businesses that want two and three times the cold storage space, two and three times the advanced robotics distribution space. And we are in a really amazing position in Kansas City to not only be the place where the final assembly takes place and the manufacturing and the quality jobs that come with advanced manufacturing, where that takes place, but my goodness, with the leadership we have here, we're in a great position to design those buildings, to engineer the structures of them.

Kelly Scanlon:

Right.

Jon Stephens:

Our ability to be the design, structural, and really help guide logistics and distribution for the next 50 years. We're in a great position for that in Kansas City. And that's not all. We can't take our eyes off the prize of continuing to be a great place to live and the fact that all of our communities around the metro have these great advantages, and we have to continue to double down and reinvest in those. Mayor James, our previous mayor in Kansas City, Missouri once said to me, we have to always remember that we can walk and chew gum at the same time.

Kelly Scanlon:

Very true.

Jon Stephens:

When I say that we need to be a logistics and engineering and design hub, that's important, and we need to double down on that globally. But we also have the ability with the new terminal opening at KCI, we are a really desirable city. We used to say, put us on the undiscovered list. When I was at Visit KC, we talked a lot about we wanted to be one of those 10 places you didn't know were cool. Now people know we're cool, and now we have to live up to it, and we have to make it a place that stays affordable, that stays, has a high quality of life for everyone, that continues to be diverse and unique.

Jon Stephens:

And I think we're in a great position for that because we have a lot of wonderful, smart people fighting for that throughout our community. We have great leadership in our metro. And I think we sometimes, we get caught up in a lot of news stories that maybe aren't great. But I think recognizing that we have a lot of great leaders and a lot of committed leaders in our metro is something that is going to continue to propel us.

Kelly Scanlon:

You've set some really high goals for Kansas City. You've named a lot of places where there's opportunity that I think the average Kansas Citian hasn't even thought of. When you spoke about architecture, I don't think a lot of people realize that Kansas City is a big leader in sports and stadium architecture, for example. I mean, who would have thought?

Jon Stephens:

I was just speaking to a group earlier today that, on a year-to-year basis, when you look at everything from all levels of sports facilities, arenas, baseball stadiums, football stadiums, college athletic facilities, training facilities, on average, more than 80% of all of the professional and major collegiate stadiums in the world are designed in Kansas City.

Kelly Scanlon:

Yeah, it's amazing.

Jon Stephens:

It is a crazy statistic that people don't understand, but Olympic stadiums and almost every major sports stadium touches and/or that the original sketch or the final design or everywhere in between is created by great minds here in Kansas City. And that's really something special. And it's led to a lot of spinoffs of really great creativity here.

Kelly Scanlon:

Looking ahead, 20 years from now, where do you want Kansas City to be? Locally, what do you want residents to be saying about their city? And nationally and globally, what should be the buzz about Kansas City?

Jon Stephens:

Wow. Wow. That's a really hard question, but I will try to synthesize it. I think where I want us to be is authentic and true to ourselves. I think cities that have stayed authentic and true to themselves but not limited themselves through that authenticity. I've been lucky enough to speak at conferences in great cities like Austin and Nashville and Portland and Seattle and these cities that I think over the years we've looked to. In Denver. And have kind of looked to as aspirational cities that have experienced growth. And I don't want us to be any of those places. I want us to be, in 20 years, I see us being the best Kansas City that we can be and authentic and true to ourselves.

Jon Stephens:

And I think that does mean continuing to grow. And with that, it's growing pains that come with that, as you said, Kelly. But I want us to be the authentic place that we want to be. Connect the dots. Be the creative, artistic hub for all of really not just the Midwest but really the center of North America, really be a creative artistic center and a place that is still accessible to everyone. New college graduates, people that have spent generations here, people of all different backgrounds, I think in 20 years, we want to make sure that all of our neighborhoods are really great, diverse neighborhoods and a quilt work, and that we don't become homogenous or become something through growth.

Jon Stephens:

And I think we can do that. Love going to other cities, and you have these great neighborhoods where the architecture and the people and the restaurants are all different. And we have that now, and I think we can continue to grow it. We can continue to advance and move forward and not be apologetic about bragging about our city. I love the fact that people wear Kansas City shirts that aren't even sports teams. There's no other city in the world where people just wear their city on their shirt, and you're like, well, what does that represent? They're like my city, my place, where I'm from. That's really amazing. And I think in 20 years, I want the next generation to still have that same love but have it be the love for the Kansas City of 20 years from now, not a nostalgic Kansas City, but a future Kansas City.

Kelly Scanlon:

Right. Right. Jon, you've sure given us an awful lot to think about, and as I said earlier, you have had your thumbprint on so many things that are now going on in Kansas Cit, so thank you so much for your dedication to this city, to our community, and we wish you the best of luck.

Jon Stephens:

Thank you, Kelly. I really appreciate the time, and thank you for everything you do.

Joe Close:

This is Joe Close, president of Country Club Bank. Thank you to Jon Stephens for being our guest on this episode of Banking on KC.

Joe Close:

In an age of air travel and space exploration, it's easy to forget the important role our rivers continue to play in our national economy. The Missouri River is one of those major waterways, with one of North America's largest inland ports being built right here in Kansas City. Kansas City was born of the Missouri River, and our history is steeped in river transit. Even today, the river is a catalyst that continues to drive transportation, redevelopment, and job creation in our city, and it will play a major role in shaping our future, too. As Jon noted, the river gives us the ability to leverage our reputation as the crossroads of America, not only positioning us to be a major distribution center that warehouses and moves goods, but designs, engineers, manufactures, and assembles them, too. Country Club Bank is grateful for the opportunity to be a part of some of Port KC's projects, and we look forward to the growth that will flow from them.

Joe Close:

Thanks for tuning in this week. We're banking on you, Kansas City. Country Club Bank, member FDIC.