Main Lodging Partners, an entity of Sunflower Development Group and True North Hotel Group, plans a February groundbreaking for a 112-room hotel at 2001 Main St.
The $19 million Hilton Home2Suites, an extended stay lodging facility, will move forward under a sale-leaseback plan in which PortKC holds title to the property and the developer makes lease payments to cover the debt service on the building.
Ownership by PortKC makes the property tax exempt and resolves what the developers said last month was a funding gap to complete the project. Developer Jason Swords said this week that no further city money is going into the project.
The hotel will occupy a 1.2-acre downtown Kansas City site that previously was considered undevelopable. To open the site for construction, the city paid $300,000 to demolish the Walnut Street ramp between Main and 20th streets. It also completed lengthy negotiations to relocate a large billboard that impeded redevelopment.
The plan calls for a 10-year, 100 percent property tax abatement followed by a five-year, 50 percent abatement. When the lease expires and the developers have made the required payments, the developers will take title to the property and it no longer will be exempt from property taxes.
The arrangement involves PortKC issuing bonds to provide the legal framework to accomplish the sale-leaseback. The developers’ lease payments effectively will make the debt service payments on the bonds. The developers also will make payments in lieu of taxes, which will make up for part of abatement.