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Archive for May, 2015

I heard from a mildly pissed off Mike Burke this morning.

If you read my last post, you know that I applauded the recent announcement of a deal between the city and a Burke-led development group to build a new $300-million convention hotel at 16th and Wyandotte, cater-corner from the Kauffman Center for the Performing Arts.

In that post, I also speculated that Burke — whom I supported to the tune of $5,000 in the 2011 mayor’s race — may have known he was going to lose that race against Sly James and went out of his way to keep the campaign clean in order to leave the door open for future business opportunities with the James administration.

Burke objected to that, as well as to my criticism of part of the hotel deal that would give Hyatt — the prospective hotel operator — an exclusive, 15-year catering contract with the Kansas City Convention Center’s Grand Ballroom. Currently eight caterers service the convention center.

Let’s take these points in order…

On his kid-glove treatment of James in the mayor’s race, Burke said he resented the implication that he went easy on James with an eye toward future business opportunities, such as the hotel deal that is in the works.

The clean-campaign pledge, Burke said, was a “pre-primary, mutual agreement” between him and James, in which both candidates agreed to stay out of the mud.

“He kept his word, and I kept mine,” Burke said.

Burke also said he campaigned vigorously right through election eve and expected to win the election. He didn’t have enough money for any pre-election polling, he said.

In addition, Burke said, he and James had agreed that whichever of them emerged victorious “would use the other in some productive capacity” in his administration.

It was that agreement, apparently, that led to James appointing Burke to head a city committee aimed at turning the Google Fiber network into business opportunities benefitting the Kansas City area.

On the proposed exclusive catering contract at the convention center, Burke said Ronnie Burt, president of the Kansas City convention and visitors bureau, had told him that Bartle Hall is the only major convention center he knew of that did not have an exclusive catering contract. (I’ve got a call in to Burt on that point.)

Granting one hotel operator an exclusive contract, Burke said, serves to significantly reduce the city’s “direct-cash” subsidy of the hotel deal.

One of Kansas City’s “extremely tough parameters,” Burke said, was its determination to commit no General Fund money to the project. (The city wanted to avoid a situation like that with the Power & Light District, where the city has ended up with multi-million-dollar-annual payments to retire bonds issued to finance the project.)

With an exclusive caterer, then, the city saves money at the expense of higher prices at the convention center’s Grand Ballroom. (The exclusive contract applies only to the Grand Ballroom, not the other convention center elements, like Bartle Hall’s exhibition area.)

**

Here’s my response to those two points…

First, I was aware all along that Burke and James had agreed to run a clean campaign and probably overstated the situation when I said in my earlier post that Burke “was careful to stay in Sly’s good offices.” I accept that both men complied with a “gentlemen’s agreement.”

I still believe, however, that Burke — a very smart man — probably was operating with the idea that, if he lost, it would behoove him down the road to not alienate James in any way during the campaign. As a development attorney, Burke had brought business before the City Council for many years, and he certainly did not want to jeopardize that.

Second, I still don’t like the idea of giving Hyatt an exclusive catering contract. As I said in the earlier post, the higher food prices that will result from such a contract could cost the city some big conventions. Convention planners are smart shoppers, you know, and have very sharp pencils.

And, again, what if food provided by the Hyatt sucks? The convention center — and those attending conventions — could be stuck, at least until the situation got remedied. Burke said the contract will include “safeguards” protecting the convention center’s interests, but, nevertheless, I see significant risks in the convention center’s lack of options.

I still believe that if this deal gets traction with the City Council, which it should, changes could be made to the catering deal without the development group walking away. Like I said, there’s way too much money on the table. The developers want to get as much out of it as they can, and the city has to be careful not to give away too much.

When the Cordish Co. came along with the P&L deal during the Kay Barnes administration, the city was desperate: Downtown was a certifiable disaster, and the city was not in a strong position to get concessions.

It’s different now: Downtown is humming; the Sprint Center is one of the most successful arenas in the country; and the PAC, with its shell design and angled glass face, is a beckoning jewel.

It’s a new day in Kansas City, and it’s plain to see we have a lot to offer convention planners.

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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.

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The block on the right is where the new convention hotel would be built. I took this photo from 16th and Wyandotte, looking north on Wyandotte. At left is the southern extension of the Kansas City Convention Center. (The Kauffman Center is directly behind me.)

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.”

Catering contract

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?

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I returned yesterday from Louisville, my hometown, where I went to the 141st Kentucky Derby.

It was a beautiful Derby Day, as you’ll see in a minute, and a record crowd of 170,000 turned out.

The Derby is a permanent sellout, with the vast majority of Grandstand and Clubhouse seats owned by corporations or people who have held the seats for decades.

One time I was able to buy tickets by writing to Churchill Downs months in advance — and those seats weren’t very good. Usually, I buy tickets outside the track. That was the case this year, and because I was on my own, I had no trouble.

Immediately upon arriving at a track-perimeter gate, I was able to buy a clubhouse ticket for $200 — $10 over face value — from a guy who was standing around trying to sell a couple of tickets he had acquired. The fact that I arrived at the track very late — about 2;30 p.m. — helped me get a ticket at close to face value. At that point, I was the only person around looking for a ticket.

But I have lots of photos for you, so let’s get the show on the road!

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This is from the first-floor clubhouse, the area where I try to get tickets. You can’t see much of the race live, but you can see the races on a large video board in the infield…Note the famous Twin Spires between the two upper-level sections.

 

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A closer look at the Clubhouse , which essentially consists of the seats in the area near the finish line. The first elevated level is the third floor. Above that are the “Millionaires’ Row” levels — very pricey and virtually impossible to come by without serous connections.

 

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A most wonderful hat.

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More hats and a collection of Derby glasses. (When you buy a mint julep, for about $9, it comes in that year’s Derby glass.)

 

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The Derby isn’t all glamor.

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Ditto.

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The men seem to come up with the most bizarre outfits.

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Ditto.

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Now there’s an outfit. That guy came all the way from Kansas City, I understand.

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This guy and I both liked Mubtahiij, an Irish bred, who finished eighth.

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Happiness abounds.

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Amid all the hubbub and excitement, sometimes you just need to collect yourself.

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This is called the “walkover,” when the horses — accompanied by throngs of people with connections to the owners — are led from the stables to the paddock area. The No. 4 horse is Tencendur, who finished well back.

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This is the Post Parade, where the horses come onto the track about 15 minutes before Post Time. No. 18 is the eventual winner, American Pharoah.

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The horses have just passed the finish line for the first time and are heading into the Clubhouse turn. That’s Dortmund (8) leading on the rail. (He finished third.) Firing Line (10), who finished second, is next to him, and American Pharoah is third. It’s unusual for the horses leading in the first turn to stay up front all the way around the track, but that’s how it went Saturday.

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After the Derby is prime time for people who live near the track to sell barbecue, hamburgers, hot dogs, beverages and other items to hungry and thirsty people headed to their cars. the infield video board and a small section of the racetrack stands are visible behind the utility poles and at far left. P1040868

I’ve been parking for several years with Charlie and Barb, who make their side yard available to a limited number of people. They used to jam cars into every part of the yard but stopped doing that a few years ago.

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And then…it’s all done.

 

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