Metrowire Media - Original Article
June 24, 2015
KC's UNCONVENTIONAL ROUTE TO BOOKING A DOWNTOWN CONVENTION HOTEL
As a board member for VisitKC, Mike Burke watched Kansas City bleed conventions for years. Meeting planners loved downtown, but always had the same complaint: their 2,000 rooms would be spread thin across seven hotels in Kansas City, complicating transportation and racking up additional costs.
He also watched the city council appoint a 14-person committee to navigate an RFP process for a downtown convention hotel without the support of the mayor and without knowing the financial parameters the city could commit to. It failed miserably.
Burke stepped in and told Mayor Sly James he wanted to put together a development team – JE Dunn, HNTB, Polsinelli, and Trozzolo Communications – and make a downtown convention center hotel happen.
And it appears that team is going to make it happen. Hyatt recently announced it would bring a $300 million, 800-room hotel at the corner of 16th and Baltimore. It would have full convention facilities: a 25,000-square-foot ballroom, 75,000-square-foot meeting and pre-convene space, and a restaurant hotel.
But a number of hurdles must be cleared first.
“Probably the biggest hurdle and what we took the most time trying to figure out over the last three years was what level of risk the city would accept, and what they would put into the project to ensure that it would happen,” Burke told CCIM. “Once the city said no, we will not do a city-owned, city-financed hotel like Houston and others had done, we had to go out and find an owner/investor.”
A pair of “well-heeled” New York and Denver investors with hospitality experience came to Kansas City and immediately grasped what a blooming, vibrant place downtown had become. They raised the private capital to go in on the project.
The city issued certain guidelines: it would commit no general fund money – that money is “tapped” in paying for police, fire, and city government – and wouldn’t guarantee TIF bonds. But about everything else was on the table; It offered to give hotel operators control of the city’s ballroom and convention center, it found an additional revenue stream in changing an ordinance that allowed tax-exempt groups to book big blocks of hotel rooms; and finally, it offered Hyatt the rest of the land on the city-owned block.
The development team has a memorandum of understanding with city, which has been approved by city council and states that the city’s commitment is non-binding, but gives the city an “ironclad” 120-days exclusive to put the deal together.
“We’re in that 120 days now, and the single most important factor to the success is getting the interest rate and bond coverage that will allow us to build this hotel,” Burke said.
The group is going before the TIF Commission, Land Clearance for Redevelopment Authority, and is in the process of forming a CID to generate an additional sales tax of 1 percent. The group is also looking into an assessment that will be used to issue bonds secured by a tax whish is foreclosable.
In the meantime, Burke has gotten blessings from Julia Irene Kauffman and Shirley Helzberg, who see a great amount of synergy between the hotel and the performing arts center.
“All of us see this as a missing piece in the Kansas City convention business but in so many other ways,” Burke said. “It’s an anchor for the entertainment district, it’s an anchor for the arts district, for Kauffman center, and allows us to market ourselves to conventions which otherwise would pass us by.”
Twenty-five years ago, Charles Garney took a piece of flat land, and with vision and passion began creating Briarcliff Development. Now, the Northland development firm celebrating the silver milestone.
Julie Andrews, Garney’s daughter and the newest chairperson of the Board, says it’s unbelievable 25 years have gone so fast and she learned important business lessons for her father on how to set the company up for success.
“Integrity is always the shortest path to success,” Andrews said. “We try to be open in every relationship, have fun and love what we’re doing.”
Pat Murfey, CCIM specializes in Commercial Properties with Kansas City based real estate brokerage Evergreen Real Estate Services. Pat can be reached at 913-951-8402 or Pat@KCEvergreen.com.