By Kevin Collison
Backers of a proposed $63 million ultra-luxury hotel project by the Kauffman Center intend to bring their plan before the Kansas City Council within a few weeks saying they “feel really good” about their prospects for winning a supermajority.
“We’ve met with all the Council members and they’ve afforded us an open dialogue,” said developer Eric Holtze. “They’re interested in the numbers and want to do what’s best for Kansas City.
“We feel really good about our situation.”
Holtze and his development partner, Whitney Kerr Sr., have been pursuing their plan for a 143-room, five-star hotel on a vacant lot near 16th and Wyandotte since September 2018. Its working title then was “Hotel Bravo!”
Last October, the KC Tax Increment Financing Commission voted against endorsing their request for TIF and Super TIF tax incentives totaling about 35 percent of the development cost.
That negative recommendation means what’s now called the Performing Arts Center Hotel redevelopment plan will require a nine-vote Council supermajority for approval.
Compounding the developers challenge, the Council has become more critical about the use of tax incentives, particularly downtown, since the election of several new members last year along with a new mayor, Quinton Lucas.
Lucas reiterated his opposition to the luxury hotel incentive request over the weekend on Twitter.
“My answer is no and I can’t see where nine votes come from,” Lucas stated.
At a press conference Friday atop a parking garage next to the proposed hotel site, Holtze said the developers have lobbied Council members over the past several months.
Among those attending the event was Councilwoman Teresa Loar.
“I think everyone has an open mind and everybody feels good about the project,” she said. “It depends on how stuck you are on now or how you’re looking forward.
“I think the city needs a five-star hotel.”
The developers released a letter signed by four former mayors, Kay Barnes, Richard Berkley, Emanuel Cleaver II and Charles Wheeler, in support of the deal.
The developers also disclosed that PAC Holdings, a non-profit associated with the Kauffman Center that controls the property, plans to sell the development site for $3.7 million and invest the proceeds to help fund the hotel project.
The financing package calls for $16.5 million in private equity, $19.5 million in TIF-backed bonds and private loans totaling $27 million.
The developers emphasized the city would not be required to back any of the financing for the project should there be revenue shortfalls.
The property currently pays no property taxes and over the 23-year course of the TiF plan would still yield $20 million in new revenues to the city, school district and other taxing jurisdictions, the developers estimated.
Parking for the project would be provided at the 1,100 Performing Arts Center garage across Wyandotte, a city-owned asset the developers said has been significantly under-utilized.
They estimated the garage is only half-full during most performances at the Kauffman Center. In return for using the garage for hotel parking, they estimated the city would receive about $300,000 per year, an amount included in their $20 million revenue estimate.
“There’s no requirement for taxpayers to build a garage or guarantee the debt,” Kerr said. “We’re setting a new standard for TIF. That’s why it deserves support from the community.”
The downtown hotel industry has changed substantially since the Performing Arts Center Hotel project was first proposed in 2018. Visit KC, the regional tourism organization, has expressed concerns about overbuilding.
Several new hotels, including the 800-room Loews Convention Hotel across the street from the proposed PAC Hotel, have opened and now all are struggling to survive because of the Covid-19 pandemic.
The developers emphasized the proposed PAC Hotel would be the city’s only five-star hotel and would appeal to a different level of national and world traveler.
“We think right now is the perfect lift-off time for both the city and us,” Holtze said.
“The industry has reached the bottom point and is on the way up. We think that by mid-2022 the industry will be back to where it was before Covid hit.
“The time to develop a hotel is when you see the upcoming and not riding the crest.”
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Definitely agree that a five-star hotel is needed, but the optics of months of backroom lobbying with the councilmembers are not good here.
As for the building designs, it looks like an early 70s East German government office block. Hasn’t even been built yet and it looks quite dated.
KC cannot support a 5 star hotel. Average rates would need to be in 200.00 plus range per night. Not possible for a mid tier market. Additionally, downtown KC is severely overbuilt.Not enough demand. KC cannot support a four Seasons, Ritz Carlton etc. the Loews is already struggling. This would be a bad idea, poorly executed.
I have to agree that this is just a bad idea. This project has terrible timing, they are about 5 years too late. I think high-end hotels are essential, however the climate is absolutely wrong for this. For crying out loud Webster House just indefinitely shut down across the street!
The level of their request for more TIF taxpayer funding annoys me, and I’m glad that the Mayor and City Council are waking up to that issue. We have too many other very important issues, highlighted by racial injustice, violence, and KCPD concerns in our city, that require better use of taxpayer funds. And I was struck by Derik B’s reminder that that wonderful 5 star Webster House just had to shut down. In addition, I think that the pandemic is going to be around for awhile given continued reports of increased cases. History has shown us that previous pandemics, note especially the 1918 flu epidemic, will result in covid-19 recurrences that will continue to slow our economic growth and diminish the demand for a 5 star hotel in Kansas City.
The building of the Kaufman center was one of the key catalyst for the entire downtown revival. The Kaufman family and Kaufman foundation have dumped uncountable sums of money into our city and it wouldn’t be what it is today with at their support. Right now it’s a field with almost 0 property tax, this deal doesn’t include city income tax or all the revenue from income tax of all the employs etc etc. If you think it’s five years too late then you don’t have grand enough vision for our city. The Webster house wasn’t for tourist, not sure what the compare there was. Not the same. The Kaufman foundation see’s this is an important enough peace to the puzzle to let them have the land for it. It’s not like they are just going to let some company build a mixed use development or an office building there. There is no tax payer investment here, if it doesn’t make money who cares, it’s non of our problems. Still helping the economy more than a field. Don’t understand what all your issue with it is. Let the Kaufman foundation have this one. If they get on it could be open for the NFL draft, plus the point of the Kaufman is it would open up travel for people to come see some of the world class concerts. Someone isn’t going to fly their jet down from up north or Oklahoma to see something and stay at the Marriott. MKC the downtown airport has actually been busier than several major airports due to slow downs with commerical so that level of customer is growing all the time. People are flocking from the coasts to places like Texas, there is still major potential for Kansas City to get new and major HQ relocation. Businesses like that need places to put other CEOs up. They are building a Google Data Center here plus a new 2 billion Data Center campus up north. Again its a field and there is no tax payer investment and the Kaufman foundation wants it. That should be enough for anything that has been around and followed our city over the years. Its nothing compared to what Cordish got.
I very much so agree with the sentiment here. KC naysayers have been proven wrong year after year. We have to keep thinking big.
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