I was excited and surprised to read in Saturday’s Star that, after years of speculation and hand wringing, a tentative deal for a new $300 million, 800-room convention hotel is in place.
City officials and the development group did a good job of keeping this under wraps. As far as I know, no city official gave any public inkling that a deal was close.
As recently as mid-March, Mayor Sly James was quoted in The Star as saying, “The hotel will happen when we get the right deal and I’m speaking financially.”
Behind the scenes, obviously, things were moving quickly.
Assuming the new hotel comes to fruition, this will be huge for Kansas City. In combination with Sprint Center, the Power & Light District, the downtown streetcar line and the Kauffman Center for the Performing Arts, the hotel will, in my opinion, be the capstone of Downtown renewal.
What was little more than a decade ago a lifeless, rundown area that attracted few suburbanites, much less tourists, has become a veritable magnet for the young, the cultured and basketball fan-atics. Add the new hotel and you’ve got a downtown that could rival any other in the Midwest besides Chicago.
Now, let’s take a closer look at this deal…One aspect of it took me completely off guard, and another is very troubling.
Michael/Mike Burke, developer
I was momentarily bewildered when I read in Diane Stafford’s thorough story that one Michael Burke was the leader of the hotel development team.
I thought she must be referring to some Michael Burke besides the Mike Burke whom I supported for mayor against Sly James four years ago.
But, no, it wasn’t someone different; it was my Mike Burke — former city councilman and development attorney — who ran in 2011 but very wisely ran a dirt-free campaign.
As a result of keeping it clean, Burke stayed in James’ favor after the election. In fact, James appointed him to some volunteer position — can’t remember what — at City Hall.
In recent months, obviously, Burke switched roles, going from development attorney to developer.
It was he, Stafford said in her story, who assembled a group now called KC Hospitality Investors LLC, consisting of investors from the East and West coasts. That group, the story said, is putting up a majority of the $300 million in private funds that will largely finance the project.
City Manager Troy Schulte said the city’s only direct financing would be $2 million a year for 25 years from the city’s Convention and Tourism Tax, which isn’t available for general city expenses, anyway. The city also will provide land worth an estimated $13 million.
Of course, tax abatement under Missouri’s Tax Increment Financing statute is also involved. The usual suspects — the head-in-the-sand, we-can’t-afford-it crowd — will screech about the TIF, but wisely the city is not exposing itself, as it has done on other projects, to open-ended financial obligations. (The city is subsidizing P&L, for example, to the tune of about $14 million a year.)
But back to Mike Burke…Maybe you caught my drift a few paragraphs earlier when I noted that Burke was careful to stay in Sly’s good offices. Had he not done so — had he fired off a nasty mailer in the closing days of the 2011 mayoral campaign in a desperate attempt to win — Sly would never have blessed him as the lead developer on the convention hotel. And you cannot develop a convention hotel without the mayor’s blessing.
It occurs to me now — boing! (sometimes I’m a little slow) — that Burke probably knew he was going to lose the 2011 election and made sure he kept himself on Sly’s good side so he could capitalize on future city-related opportunities.
With the hotel deal, he has reinvented himself as an entrepreneur and probably stands to make millions on this deal.
Hats off, then, to Michael/Mike Burke — developer, former city councilman, onetime mayor wannabe and, I trust, still “good guy.”
One part of the deal that looks highly suspect is that Hyatt, as the deal is proposed, would be the sole caterer for events held across from the hotel in the Kansas City Convention Center’s Grand Ballroom. The Hyatt’s “exclusive” would last 15 years.
To me, that stinks. And the City Council — which will have the final say on this deal — should pull the plug on that part of it.
As it is, according to Stafford’s story, eight caterers service the Grand Ballroom. That insures competition and makes it more likely that conventioneers are going to get good food and that the prices will be at least somewhat competitive.
Let’s assume the City Council approves this exclusive catering deal. Suppose the food is not good? (You wouldn’t think that would be the case, but it’s certainly possible.) That, in itself, could end up costing Kansas City big conventions. The word would surely spread quickly in the hospitality industry that the food at the Grand Ballroom sucks.
In addition, what would stop Hyatt from charging ridiculous prices for its fare? Maybe it would decide to charge $100 each for meals at the Grand Ballroom, instead of, say, $35 to $40.
The promise of an exclusive for Hyatt appears to me to be a wishin’-and-hopin’ horseshoe toss by Burke and KC Hospitality Investors. I can’t imagine that if the City Council stood firm and said “no” to the Hyatt exclusive that the investors would walk away. There’s too much money on the table.
The council that considers this deal — probably the council that will be seated after the June 23 municipal elections — needs to be extremely vigilant about the public interest on all aspects of this deal. It also needs to make sure that the catering contracts remain competitive.
I certainly intend to make my voice heard at City Hall on this important point.
…I’m wondering, do you think the fact that I contributed $5,000 to Michael/Mike Burke’s mayoral campaign will help me get his ear on this?