Hotel Indigo is planned for Kansas City Costume building on Grand

The Kansas City Costume Co. building at 2020 Grand Blvd. is planned for redevelopment as a Hotel Indigo under an $11 million plan made public Wednesday by Crossroads area redeveloper Matt Abbott.

The plan calls for the building to be expanded by one floor and turned into an 80-room hotel after an interior gutting and mechanical systems replacement.

It is the 10th boutique lodging facility announced or under construction in downtown Kansas City and the Crossroads district.

The site on Grand is the second Hotel Indigo proposed for the city’s core in recent months. Hotel Indigo, part of the InterContinental Hotel reservation system, also is involved in a combination hotel/apartment redevelopment plan for the vacant 12-story Brookfield Building at 11th Street and Baltimore Avenue.

The new proposal from Abbott, who is redeveloping multiple properties in the Crossroads, got a go-ahead Wednesday from the Land Clearance for Redevelopment Authority, which approved a redevelopment contract with Carbondale Apartment Group LLC, of which Abbott is the principal.

Because of the property configuration, the building has three stories visible on Grand, with another floor below Grand that has street-level access on the west side. The hotel plan would add another floor, but with the fourth story set back from the existing facade to comply with historic preservation rules. The plan also calls for addition of a rooftop deck.

Abbott said the property didn’t work for Kansas City Costume Co., which needed better parking options for its retail operation and which couldn’t afford necessary building improvements. He also noted that “a number of people before me have looked at this building (to buy) but backed out” when the improvement costs became apparent.

A spokesman for Kansas City Costume Co. said the company expects to occupy the entire building until later this spring. He said the company plans to relocate to 5035 Raytown Road but will make a formal announcement later.

Abbott told LCRA commissioners that he purchased the building for $2 million last fall. Documents indicated that the project calls for $2.2 million in equity financing.

He said the financing package includes a $6.3 million bank loan from Equity Bank, a $2.5 million Small Business Administration loan plus federal and state historic tax credits, but it also needs property tax abatement to produce an adequate return on investment. The request was for a 10-year Chapter 99 tax abatement through the authority.

Asked what he would do with the building if an abatement were not approved, Abbott said he would likely “sit on it and do nothing. … I won’t do the deal without tax abatement.”

LCRA executive director Joe Egan said the project, as proposed, would produce an expected level of return on investment that was “significantly below market rate” without abatement. He said the building’s purchase price was reasonable and the project appeared to be manageable with abatement.

When asked why he would enter a riskier hotel venture rather than redevelop the building for surer return on investment as apartments, Abbott said the building simply wasn’t conducive to apartment use.

“I’ve studied this thing for a year,” Abbott said. “I know this project is the right fit for the property. I didn’t close on the building until the feasibility study was done. I accept the risk.”

Abbott also said he does development projects in 13 different markets and he chooses where to work based on “the city and people in the area (supporting) the projects I do. None of my work would happen here without the city and everybody coming together to do development and appreciate developers taking vacant, nonperforming properties and making something of it.”

Abbott also is rebuilding a mostly demolished site on the northeast corner of 19th Street and Grand to become his Crossroads office.

Staff of LCRA and the Economic Development Corp. of Kansas City recommended the project as part of the existing Central Business District Urban Renewal Plan.

Taxing authorities did not offer testimony against the abatement request, but the commission’s approval came after a lengthy discussion about whether the taxing authorities had enough time to react to the proposal.

The county now values the property at $1 million. Abbott’s proposal estimated the assessed value after project completion at $9.5 million.

Jack Feldman, tax incentive specialist for Jackson County — an affected taxing jurisdiction along with the city, the public school district and the public library district — said the taxing entities hadn’t met with Abbott about the abatement request. He suggested a one-month delay for LCRA to consider the redevelopment contract.

The commissioners decided to go ahead with the contract approval vote but asked the development authority staff to come up with clear guidelines about giving at least five working days’ notice to the taxing jurisdictions about upcoming agenda items to allow them the opportunity to meet with developers about proposed abatement requests.

This story was originally published January 27, 2016 at 3:59 PM with the headline "Hotel Indigo is planned for Kansas City Costume building on Grand."