Fooled Again: Turns Out Kansas City Must Pay Millions to Bail Out Taxpayer-Subsidized Hotel
Updated: Nov 10, 2021
The convention hotel deal was pure City Hall. Sly James claimed the incentive package and the subsequent $325 million hotel as a major milestone. Costs from the complex TIF and LCRA deal by development attorneys and City Hall to get the Loews Kansas City Hotel built have taken officials by surprise. Costs start coming due as work begins for next year’s KCMO budget.
The city is facing a $4.4 million shortfall because of a combination of a 2015 deal that awarded millions in payments and incentives to the 800-room convention center hotel, and an agreement on catering fees for the city's convention center. About $1.7 million of that gap will be covered from the general fund. Budget costs associated with the hotel and the catering contract, which kicks in this coming fiscal year as the hotel prepares to open in March, also will lead to reductions to programs that receive money from the city’s tourism-related taxes.
The 2015 deal gave Loews Hotel exclusive catering rights in the convention center’s grand ballroom and conference center for 15 years. That deal requires the city to pay Loews $509,000 in the first year as a management fee, plus reimbursement of all expenditures related to
There's more. The city other’s commitments for the project included a $35 million cash donation and a $7 million land donation, plus approvals of tax increment financing and a community improvement (CID) sales-tax district.
For Kansas City there is a lesson: When officials promise a deal won’t affect the general fund, be very skeptical. Mayor Lucas said “ I hope it tells us that we need to be very careful in using the city’s backing to help set up a number of these deals.”
Too Many Hotels, Too Many Subsidies. Many hotels have been incentivized in the broader downtown area in recent years. So much so, Visit KC last year asked the city’s incentive granting bodies to slow down on giving money to those projects to allow demand to catch up. At an October 2019 meeting of the Tax Increment Financing Commission of Kansas City, where it denied the proposed $63 million performing arts campus hotel, Visit KC’s new CFO, Randy Landes, said the organization did not support that project.
Excerpted from KCBJ and Other sources. No sources quoted in their entirety.