Good afternoon Steve Rattner from KC Hotel Developers and an equity holder in the Loews Kansas City.
No one in this room is more pro-development for Kansas City than I am. But unfortunately I appear before you to speak against the tax incentive. I believe the project is not viable, two, the hotel was not needed today, and three, the project siphons off funds that are certainly needed to Visit KC and others.
If you take a look at the developer’s project, they are relying on 2019 projections on both cost and income for the hotel. These are dramatically different times. If you run the 136 ADR and the 35% occupancy that is being run today, this hotel will lose money.
Two, the original cost of $64 million has not been updated for today's pricing. I believe that's close to $85 million dollars; income going down costs going up.
Three, the financing markets. If you take a look at it, they don't have a mortgage, they have a sale leaseback with very uncertain terms. Where is the equity coming from? Where is the debt coming from? Hold them to the same standards that you hold to everybody else to make sure they have the funds.
Finally, the hotel is not needed today as we've seen, occupancy is half of what it was in Kansas City. The former head of Visit KC said no more tax increment funding until hotels improve.
There is no relationship between luxury hotels and population growth, that's been proved before. There was no relationship between Kansas City and Nashville Room rates, different drivers.
I've been in the business for 30 years. There is no relationship between the guarantees that we have gotten, we've gotten on that, they said that we have.
Finally, tax increment is stripping Visit KC of what we need now more than ever. I take a little umbrage that Hotel Loews is not a five star hotel. We have everything and more that this city needs that we can provide. The Kauffman will continue to be a good citizen and do that for the Kauffman Center as well. Thank you.