InterContinental Hotel’s ‘blight’ request gets tepid reception

A Kansas City Council committee gave a decidedly half-hearted response Wednesday to the InterContinental Hotel’s request for blight designation that would allow for a new sales tax to help pay for the hotel’s $16 million renovation.

The Planning, Zoning and Economic Development committee did not endorse the four-star Country Club Plaza hotel’s request but voted 3-1 to send it out of committee to the full council with “no recommendation.” The council is expected to vote on it Sept. 22.

Committee member Katheryn Shields said that she supports the hotel and that this was the way to move the measure forward. She said she thought a council majority may be more supportive at the meeting in two weeks.

The luxury hotel needs the blight designation to establish a community improvement district limited to the hotel property at the corner of Ward Parkway and Wornall Road. The CID would allow the imposition of a new 1-cent sales tax for 20 years on guests and other hotel patrons.

Although the hotel charges an average of $190 per night and is a premier brand, its conditions meet the definition of blight under Missouri’s Community Improvement District statute, according to consultant James Potter.

He said the parking garage has structural and other problems, the driveway (above the ballroom) leaks and sends water into the ballroom, and many of the guest rooms and public areas have serious deferred maintenance issues.

Councilwoman Heather Hall voted against moving it out of committee, and she expressed the same concerns that some in the audience shared with the committee.

“We have used the word ‘blight’ like Kleenex,” she said, adding that if the hotel’s owners need to upgrade their facility, they should do it with their own money instead of seeking a community improvement district that will allow them to impose a 1 percent tax.

“How come the owners didn’t take care of some of this prior to now?” Hall asked.

Hotel General Manager Don Breckenridge said the ownership changed at the beginning of this year, taking over from a previous ownership group that had been there nine years. He didn’t elaborate on that ownership change and left City Hall after the meeting without answering other questions.

But during the meeting, Breckenridge emphasized to the committee that this request is very different than many other development proposals before council.

“This is not a TIF. This is not an abatement,” Breckenridge said, referring to projects that get property tax breaks or tax redirections that take potential tax money away from schools, libraries and other public entities.

Instead, he said a CID is recommended in the Midtown Plaza plan as a good way for businesses to protect and enhance their properties. He said some hotels in Kansas City have received TIF or abatement assistance, but that’s not the case with the InterContinental, which is making a significant capital investment in the upgrades.

Breckenridge said only 3 percent of the hotel’s guests are from Kansas City, so the vast majority of people paying the tax would be tourists and other out-of-towners.

According to the community improvement district petition on file with the city, the tax would raise an estimated $282,000 in the first year, depending on hotel revenues. If that projection is fulfilled, it could conceivably raise about $5.6 million over the 20 years to reimburse hotel owners for part of the $16 million renovation cost.

Potter noted that the hotel’s assessed valuation has dropped by about $1 million since 2010, but improvements could boost its value. That in turn could mean more property taxes generated by the hotel to benefit the city, he said.

Still, this could create demand by other hotel owners seeking their own CID. In fact, Brett Ellison, general manager of the Kansas City Marriott Country Club Plaza, 4445 Main St., told the committee that the Marriott is doing its own $15 million upgrade. But if the InterContinental gets a CID, he said the Marriott’s ownership will ask for one too.

Jan Parks, spokeswoman for the Coalition for Kansas City Economic Development Reform, said true blight exists on the East Side, not the Plaza, and this type of public assistance should be reserved for the East Side.

This story was originally published September 7, 2016 at 6:37 PM with the headline "InterContinental Hotel’s ‘blight’ request gets tepid reception."