Backers of Luxury Hotel Project by Kauffman Center Seek Council Approval

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.

The 13-story Performing Arts Center Hotel project is proposed for a site across Wyandotte Street from the Kauffman Center. (Image from Hotel Bravo! developer)

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.

The proposed Performing Arts Center Hotel (right) would be located across Wyandotte east if the Kauffman Center garage. The new Loews Convention Hotel is shown in the upper left. (Image from developers)

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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