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Plan for heavily subsidized, Ultra-Luxury Hotel faces historic resistance and a major setback

October 24, 2019

Is the era of entitlement for massive luxury subsidies over in KC?  We hope so. But with so many flaws, this project makes a poor litmus test. Regardless, we hope the decision sends a strong signal to big developers and their legions of lawyers: Kansas Citians are looking for help with their neighborhoods and a sense that City Hall is starting to talk about equity. If this is the start of a trend perhaps KC's economic development bureaucracy will focus on more constructive issues and address local problems, like our affordable housing crisis and our far-flung, crumbling infrastructure. The following article is excerpted in compliance with copyright laws.

 

KC Business Journal  ..."The Tax Increment Financing Commission of Kansas City voted 8-3 to deny a request for a massive incentive package after six months of delays that the panel offered to the developer in an effort to generate agreement among all concerned parties.

 

The [Bravo!] project advances to the City Council, but because the TIF Commission did not recommend the

plan, it now requires a super majority on the council to advance. That will be a challenge with the newly elected council members.  TIF Commission rejections are rare, and the denial reflected months of concerns about shifting numbers and facts, as well as disagreements between the developer and the taxing jurisdictions affected by the proposed property tax abatement.

 

The $63 million luxury hotel proposed near the Kauffman Center for the Performing Arts will face a tougher road to a city incentive package after a big rejection on Thursday. The Tax Increment Financing Commission of Kansas City voted 8-3 to deny a request for a massive incentive package after six months of delays that the panel offered to the developer in an effort to generate agreement among all concerned parties.

 

The project also reflects a changing attitude among economic development officials in Kansas City, where new Mayor Quinton Lucas has indicated that the era of largely unquestioned subsidies within already thriving redevelopment areas will be exchanged for a more nuanced and restrained approach.  [Thursday's] analysis indicated that public money would subsidize about 34% of the project's cost.

At the meeting, the taxing jurisdictions reiterated concerns they had expressed at nearly every stage of the process. Taxing jurisdictions, such as school districts and libraries, forgo additional revenue when increases in property taxes are abated. 

 

The project advances to the City Council, but because the TIF Commission did not recommend the plan, it now requires a super majority on the council to advance, meaning the support of nine of 12 members. That will be a challenge with the newly elected council members.  

TIF Commission rejections are rare, and the denial reflected months of concerns about shifting numbers and facts, as well as disagreements between the developer and the taxing jurisdictions affected by the proposed property tax abatement. The incentive would divert property taxes on increases in value to the developer to offset costs.

 

Because of the high-end finishes, the developers have argued, it needs a higher level of incentives than a typical hotel. After taxing jurisdictions had voiced concerns at prior meetings about the proposed 75% abatement level, the TIF Commission and Lucas asked the developer to shrink that number. On Thursday, the developer returned and proposed diverting the city's parking garage funds to taxing jurisdictions to quell their concerns about forgoing funding from property tax revenue. But the revised plan would retain roughly the same level of developer incentive funding — about 71%.

 

The taxing jurisdictions were not buying it, however.  All affected jurisdictions voiced concerns about the project, pointing to how late the developer sent amended documents ahead of the expedited meeting that it had insisted on, as well as the developer's failure to strike deals with all jurisdictions after being granted delays.  Caleb Clifford (Jackson County) said the issue boiled down to the fact that the developer sought an unprecedented amount of incentives to build an ultra-high-end project on a tract that is perhaps the best vacant parcel in the entire city.  “I think if we’re going to be supportive of this project, I would question, what would we not support?”

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