The proposal for a luxury hotel in Kansas City is facing a city council hurdle

An architectural representation from three years ago shows the Loews Kansas City Hotel above, the Kauffman Center for the Performing Arts on the left and the planned Hotel Bravo on the right.

An architectural rendering from three years ago shows the Loews Kansas City Hotel above, the Kauffman Center for the Performing Arts on the left and the planned Hotel Bravo on the right.

Courtesy EJ Holtze Corporation

Developers looking to build a high-end luxury hotel in downtown Kansas City might reappear at City Hall soon.

The project was first proposed in 2018, but the developers are still seeking political support for property taxpayer support, which they believe is vital.

Eric Holtze, the developer of the so-called Hotel Bravo, recently met with key figures at City Hall, including Kansas City Mayor Quinton Lucas and Councilor Lee Barnes, who heads a council committee that would first consider the proposal. Holtze is trying to secure support for a project that his supporters say will lead to the city’s first five-star hotel.

Barnes said Hotel Bravo is tentatively slated for a hearing before the Neighborhood Planning and Development Committee on June 23.

The Hotel Bravo would be located at 1601 Wyandotte St., currently in a grassy, ​​vacant lot across from the Kauffman Center for the Performing Arts. The average cost of a hotel room there could be $ 240 and includes high-end amenities.

Holtze said the Hotel Bravo would offer the kind of experience that is lacking in the current Kansas City hotel scene.

“The market is dominated by three and a half star hotels, which I call beige hotels,” says Holtze. “You know, nice, decent places to stay, but no sights. We call this an experience hotel. “

But the project is facing political headwinds, mainly because the hotel is seeking public funding in the millions through tax increases. This is a popular program in Kansas City that allows a development project to track future tax revenues that it will generate from sales and property taxes, for example.

Some at the town hall have concerns about the look of approving incentives for a hotel aimed directly at the enjoyment of wealthy guests.

Additionally, the project needs nine of the 13 votes – a super majority – in the city council to receive TIF. In 2019, after questioning the project’s need for public aid, a majority of the members of the Tax Hike Funding Commission recommended that Hotel Bravo be given the tax aid it wanted.

Support for Hotel Bravo?

A year ago, Holtze and his partner Whitney Kerr Sr. held a press conference and predicted that they would have received enough support in the council to get the TIF, only to learn something other than enough members publicly stated that they were against it Project.

This time Holtze is more cautious when it comes to the prospects of his project when it comes to the vote.

“We now have more support from the Council than ever before,” said Holtze. “We have to find out whether we have nine votes. I mean, we didn’t count nine rock-solid votes, no. “

Some members of the council are enthusiastic about Hotel Bravo, including Teresa Loar, a member of the Northland council.

Lucas was non-binding when asked about the project.

“It is interesting for some to say that we are overspending south of the river and to turn this year’s largest taxpayer-funded giveaway to a luxury hotel south of the river,” Lucas said in a statement referring to recent complaints from some councilors that Northland is not getting enough investment. “Still, I look forward to further reviews and comments from the school district.”

KCPS superintendent Mark Bedell said he continued to see developers asking for more incentives than appropriate or necessary.

“Every dollar that goes to an over-stimulated project is a dollar that does not support vital public services, including Kansas City education,” Bedell said in a statement to The Star. “While we continue to stress that we are not against development, the Kansas City children should not be shouldering the financial burden of luxury hotel and apartment facilities.”

Barnes didn’t give his opinion on Hotel Bravo when it was reached on Wednesday.

“There are a few things that I think need to be sorted out before I really get into it,” he said.

Car park revenue

This includes, among other things, the money generated by the Hotel Bravo through the use of the parking garage for the Kauffman Center.

The Hotel Bravo imagines paying the town hall so that its guests can park in the Kauffman multi-storey car park. Holtze anticipated an annual payment of $ 400,000 to $ 500,000.

Of that amount, Holtze said in an interview, he plans to ask the city council to consider donating 20% ​​to the Love Thy Neighbor Fund, an initiative between City Hall, Kansas City Court, and others to help seniors helping those who have no financial or physical means to keep their homes in compliance with city regulations.

Another 40% of the park revenues would go to the Onyx Development Corporation for development projects in the 18th & Vine District according to Holtze’s plan.

“I haven’t seen all of the plans, but they do have a development plan to revitalize 18th & Vine,” said Holtze. “But that is the purpose of onyx as I understand it.”

Mark Bryant, the executive director of Onyx, said his organization existed to promote redevelopment of devastated areas east of Troost Avenue. He said there were no development projects at 18th & Vine.

Bryant said Onyx, chaired by barbecue entrepreneur Ollie Gates, would endorse Hotel Bravo if it would bring more resources to 18th & Vine development. However, he added that his organization would not receive funding or work on the projects themselves.

“I think that’s a misunderstanding because that’s what they conveyed to us,” said Bryant. “And I made it clear.”

When asked if the Hotel Bravo could make payments to Love Thy Neighbor and 18th & Vine projects from the hotel cash flow instead of allocating them to the city from the garage payments, Holtze said no. “Because that would lower the hotel’s bottom line,” he said.

‘Do you know bankers?’

Hotel Bravo’s current funding proposal includes $ 16.5 million in equity from investors. There are plans for a $ 27 million mortgage loan.

Then $ 20 million would be spent in bonds. Institutional investors would buy these bonds, adding up to an additional $ 20 million to build the hotel.

Those bonds would be repaid through future taxes that Hotel Bravo generates if the city council approves the TIF plan. The repayment amount over 23 years with interest is $ 47 million, according to Holtze.

That means $ 47 million in taxes – sales tax if a guest makes a purchase in the hotel or if the property value increases because an empty meadow is replaced by a five-star hotel – does not go to the city, the school district and the county for their use, but to pay off the bonds.

The project would generate around $ 20 million in taxes over the TIF’s 23-year term, which would end up in the tax jurisdictions, says the developer. The star didn’t independently verify this number.

A Holtze fact sheet he distributed on Wednesday said, “The city will put ZERO cash into this deal … EVER.”

This is true insofar as, according to the TIF proposal, there is no direct grant from the town hall in the form of an advance payment. The TIF proposal also does not require taxpayers to vouch for the hotel project’s debts if it is not doing well financially.

Holtze said the deal wouldn’t work without a TIF. When asked why the hotel can’t get a loan from a bank instead of issuing $ 20 million in bonds, he said a bank’s loan committee was unlikely to make such a commitment.

“They won’t support it … it’s just the realism of the market,” said Holtze. “You go to a banker – do you mainly know bankers? Because they are conservative. “

Holtze was also asked whether he could look for more equity investors instead of TIF.

No, “because that doesn’t increase profitability, does it?” Said Holtze. “I only have that much net operating income, right? Instead of paying Stifel 6 percent (bond insurer), I would (have to) pay these stock people 25 (percent). ”

Skepticism about incentives is not limited to city council members. Visit KC, the region’s tourism and visitor bureau, has expressed reservations about providing incentives for further hotel developments in the city center.

That was after Visit KC hired a real estate company to research the market in 2019 and concluded that room rates and occupancy began to decline as several new hotels were built in Kansas City. Holtze questioned the methodology of this study.

“At Visit KC, we have not changed our position on continuously promoting hotel development in the city center,” said Derek Klaus, a spokesman for Visit KC, in an email statement. “We haven’t had discussions with this particular developer recently, but welcome this opportunity if it presents itself in the future.”

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Steve Vockrodt is an award-winning investigative journalist who has reported in Kansas City since 2005. Reporting interests include business, politics, judicial issues and breaking news investigations. Vockrodt grew up in Denver and studied journalism at the University of Kansas.

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