Developers looking to build an upscale luxury hotel in downtown Kansas City may soon resurface at City Hall.
The project was first proposed in 2018, but developers are still looking for political support with the help of land taxpayers which they believe is crucial.
Eric Holtze, the developer of what is known as the Bravo Hotel, recently met with key figures at town hall, including Kansas City Mayor Quinton Lucas and council member Lee Barnes, who is in charge of ‘a board committee that would first consider the proposal. Holtze is trying to boost his support for a project that his backers say would result in the city’s first five-star hotel.
Barnes said the Bravo Hotel is tentatively scheduled to appear for a hearing before the Neighborhood, Planning and Development Committee on June 23.
The Bravo Hotel would be located at 1601 Wyandotte Street, currently a grassy, ââempty lot across from the Kauffman Center for the Performing Arts. The average cost of a hotel room could approach $ 240 and would include high-end amenities.
Holtze said the Bravo Hotel would deliver the kind of experience that Kansas City’s current hotel scene lacks.
âThe market is dominated by three-star and three-and-a-half-star hotels, what I call beige hotels,â Holtze said. âYou know, nice and decent places to stay, but not attractions. We call it an experiential hotel.
But the project has encountered political headwinds, mainly because the hotel is seeking millions of public funds through tax increase funding. It’s a program often used in Kansas City that allows a development project to capture future increases in tax revenue that it generates from sales and property taxes, for example.
Some at City Hall are skeptical about the optics of approving incentives for a hotel that is squarely aimed at the pleasure of wealthy clients.
In addition, the project needs nine of the 13 votes – a qualified majority – in the city council to receive the TIF. In fact, in 2019, a majority of members of the Tax Increases Financing Committee recommended not to grant the Bravo hotel the help of taxpayers it seeks after having questioned the need for public assistance from the project.
Support for the Bravo hotel?
A year ago, Holtze and his partner Whitney Kerr Sr. held a press conference and predicted that they had garnered enough support on the board to get the TIF, only to learn otherwise when enough members said publicly that they opposed the project.
This time around, Holtze is more circumspect about the prospects of his project if and when it comes up for a vote.
âWe have more board support now than we’ve ever had,â said Holtze. âThat we have nine voices, we have to go find out. I mean, we didn’t count nine solid votes, no.
Some board members are excited about the Bravo Hotel, including Northland board member Teresa Loar.
Lucas was evasive when asked about the project.
“For some, pretending we’re overspending south of the river, and turning around and returning this year’s biggest taxpayer-funded giveaway to a luxury hotel south of the river is interesting,” Lucas said. in a statement, referring to recent complaints from some council members that Northland is not getting enough investment. “That said, I look forward to further review and feedback from the school district.”
A spokesperson for Kansas City Public Schools, which derives most of its funding from property taxes, did not respond to a request for comment. KCPS officials have already spoken out against the Bravo Hotel.
Barnes did not comment on the Bravo Hotel when contacted on Wednesday.
âThere are some things that I think need to be worked out before I fully commit to them,â he said.
Parking garage revenue
These include how to spend the money generated by the Bravo Hotel’s use of the Kauffman Center parking lot.
Hotel Bravo is considering paying the town hall so that its customers can park at the Kauffman parking lot. Holtze predicted the payout would be between $ 400,000 and $ 500,000 each year.
Of that amount, Holtze said in an interview, he plans to ask city council to consider allocating 20% ââto the Love Thy Neighbor fund, an initiative between City Hall, Kansas City City Court and others to help. the elderly who lack financial or physical resources. ability to keep their homes in compliance with city codes.
Another 40% of parking revenue, as part of Holtze’s plan, would go to Onyx Development Corporation for development projects in the 18th & Vine District.
âI haven’t seen all of the plans, but they have a development plan to revitalize 18th & Vine,â Holtze said. “But that’s the purpose of Onyx, if I understand correctly.”
Mark Bryant, the executive director of Onyx, said his organization exists to promote the redevelopment of disaster areas east of Troost Avenue. He said he didn’t have any development plans at 18th & Vine.
Bryant said Onyx, whose president is barbecue entrepreneur Ollie Gates, would support the Bravo Hotel if that meant it resulted in more resources for 18th & Vine’s development. But he added that his organization would not receive funding or work on the projects themselves.
âI think it’s a misunderstanding because they told us that as well,â said Bryant. “And I clarified it.”
When asked if the Bravo Hotel can make payments to the Love Thy Neighbor and 18th & Vine projects from the hotel’s cash flow instead of allocating them from garage payments to the city, Holtze replied no. “Because it would reduce the amount of the hotel’s profit,” he said.
“Do you know any bankers? “
The Bravo Hotel’s current financial proposition has $ 16.5 million in equity from investors. There are plans for a $ 27 million mortgage.
Then $ 20 million would be issued in bonds. Institutional investors would buy these bonds, which would translate into an additional $ 20 million to build the hotel.
These obligations would be reimbursed by future taxes generated by the Bravo hotel if the city council approves the TIF plan. The 23-year repayment amount with interest is $ 47 million, according to Holtze.
That means $ 47 million in taxes – the sales tax when a guest makes a purchase at the hotel, or when the property’s value increases because vacant grassland is replaced by a five-star hotel – won’t go not to the city, school district and county. for their use, but to pay the bonds instead.
The project would generate some $ 20 million in taxes over the 23-year life of the TIF that would end up in tax jurisdictions, according to the developer. The Star has not independently verified this figure.
A Holtze fact sheet he distributed on Wednesday said: “The city will put ZERO money into this dealâ¦ NEVER.”
It is true that under the TIF proposal, there is no direct subsidy from the town hall in the form of an initial payment. The TIF proposal also does not call on taxpayers to guarantee the hotel project’s debt if it is not doing well financially.
Holtze said the deal doesn’t work without TIF. When asked why the hotel couldn’t get a loan from a bank instead of issuing $ 20 million in bonds, he said it was unlikely that a loan committee of a bank makes such a commitment.
âThey won’t support itâ¦ It’s just market realism,â Holtze said. âYou go to a banker – first of all, do you know any bankers? Because they are conservative.
Holtze was also asked if he could look for more investors in stocks instead of TIF.
No, “because it’s not going to increase profitability, is it?” Holtze said. âI only have a certain net operating profit, don’t I? So instead of paying (bondholder) Stifel 6 percent, I (should pay) these types of equity 25 (percent).
Skepticism about incentives is not limited to members of city council. Visit KC, the region’s tourism and visitors bureau, has expressed reservations about offering incentives for hotel development in the city center.
This was after Visit KC hired a real estate company to study the market and concluded that room rates and occupancy rates were starting to drop because several new hotels were built in Kansas City. Holtze questioned the methodology of this study.
âAt Visit KC, we have not changed our stance on the continued incentive for downtown hotel development,â Derek Klaus, spokesperson for Visit KC, said in an emailed statement. âWe haven’t had any conversations with this particular developer recently, but we welcome this opportunity if it arises in the future. “