Another potential stumbling block for downtown Kansas City convention hotel

Opponents of a downtown Kansas City convention hotel filed petitions Friday that launched another attempt to force the $311 million project to a public vote.

Dan Coffey, speaking for a group that calls itself Citizens for Responsible Government, delivered 200 signatures on preliminary petitions to start a referendum process that will require them to gather 3,400 signatures to compel an election, possibly in November.

They are aiming to halt the project just as it’s getting ready for final financing and a groundbreaking in September.

Developers are planning for an 800-room Hyatt Hotel right next to the Bartle Hall ballroom. It would be the first new convention hotel built in Kansas City since 1985.

“People are still saying, ‘Hey, we’d like to vote on that,’ ” Coffey said after filing the petitions. “We’re not against the hotel. … Just don’t take taxpayers dollars.”

Financing of the $311 million hotel includes $35 million from the city’s convention and tourism tax, a combination of tax increment financing and a community improvement district and the donation of city-owned property at Baltimore Avenue and Truman Road.

City Attorney Cecilia Abbott said her office would review the petitions for legality. The opponents will have about a month to gather the necessary signatures.

Citizens for Responsible Government tried in late 2015 to halt the hotel project through an initiative petition drive, but the Jackson County Circuit Court ruled in early 2016 that that petition measure was unconstitutional.

Coffey said a recent Missouri Supreme Court ruling appears to state that petitions with the proper number of signatures under the Kansas City charter must be placed on an election ballot. That ruling pertained to petition initiatives, and it’s not clear if it would also apply to referendums, which attempt to overturn City Council votes.

The City Council just last week gave final approval to the development plan and rezoning for the hotel. The development team said that council vote allowed them to put together the final private financing for project.

Reaction was largely negative to the Citizens for Responsible Government’s latest attempt for a public vote.

“This is another example of an isolated group of individuals trying to block the tremendous momentum Kansas City is experiencing to move us forward to become a world-class city,” said Mike Burke, a local real estate attorney who represents KC Hotel Developers LLC, which is spearheading the Hyatt project. “They represent no one but themselves as they continually seek publicity for themselves regardless of the damage it does to the community.”

Burke’s statement said the Kansas City Council voted 11-0 to approve the zoning plan with no public opposition showing up that day. He also added that the hotel’s financing structure involves no debt guarantee nor general fund obligations that put taxpayers at risk if the hotel doesn’t perform up to expectations.

“The conventions slated to come to Kansas City once this hotel is built will bring in hundreds of millions of dollars for our city,” Burke said in a statement. “And this project will bring in hundreds of millions of dollars of private investment to our city. Those are powerful and meaningful numbers.”

Ronnie Burt, CEO of Visit KC, which markets the city’s convention and tourism business, said Citizens for Responsible Government’s tactics are putting future convention business at risk.

Burt said the potential delays are jeopardizing the city’s reputation and credibility in the convention industry. He noted that the National Association of Insurance Commissioners had expressed interest in having its national meeting at the Hyatt in the fall of 2020 but was now reconsidering.

“I think it’s irresponsible for a small group of people to try to derail so much success in this city,” Burt said.

Brian Arscott of the National Association of Insurance Commissioners confirmed the organization was looking elsewhere for its 2020 event, which is expected to draw about 2,000 visitors. The group, which is headquartered in Kansas City, has not held a national meeting here since 1999.

Joe Reardon, president and CEO of the Greater Kansas City Chamber of Commerce, expressed his hope that the matter never appears on the ballot.

“The city’s elected representatives voted just one week ago giving the final approvals necessary to allow the project to proceed.” Reardon said in a statement to The Star.

Kansas City Mayor Sly James called the hotel a fiscally responsible plan and said Citizens for Responsible Government’s petition “is what putting politics before common sense looks like.”

“I’ve championed this project for six years,” James said in a statement. “It has been the focus of reporting, resident feedback, a thorough review process, along with public legislative debate.

“The group petitioning opposed candidates for City Council who supported this project, and who were elected by their constituents,” James continued.

“Last year, this group opposed the renewal of our earnings tax, a critical source of public safety funding, which the public overwhelmingly renewed despite this group’s objection. This group opposed the (general obligation) bond proposals this spring, all three of which the public overwhelmingly supported. They’ve opposed me in any effort we championed.”

JE Dunn, the contractor on the hotel project, also sounded its displeasure.

“The petition that was filed today is frustrating because so many local construction jobs are at stake with every delay on the convention hotel; not to mention the at-risk expense of many local companies that are working to keep the forward momentum of our great City,” JE Dunn spokeswoman Emily Fors said in a statement.

Council members also expressed their frustration.

“It seems as if we have had this political conversation, we’ve re-litigated it, this council has had a number of opportunities to discuss and vet it,” said Kansas City Councilman Quinton Lucas. “We’ve resolved, I think, the political conversation around it.

“I understand some of the public concern and discontent in this investment,” he went on. “As someone who believes in responsible public investment, I don’t think this is the most fruitful way of protecting taxpayer dollars going forward.”

The referendum petition is wedging for new legal footing between two court rulings and leading the City Council into “such uncharted territory,” City Councilwoman Jolie Justus said.

The Jackson County Circuit Court ruling against the Citizens for Responsible Government in early 2016 found that the petition’s request for an election conflicted with state law that gives city councils the authority to enter into TIF agreements. It also determined an election would force the city to breach contracts with developers.

The Missouri Supreme Court earlier this year, in a separate case, ruled that the City Council had to put a minimum wage question on the ballot even though existing state law appears to ban municipal minimum wage ordinances.

The Supreme Court’s ruling appears to open the possibility of giving voters a chance to reject the zoning ordinance for the hotel, even though state law may not allow it.

The issue over the potential breach of contracts, however, may still be a legal standing the city could use to avoid the election.

“They are either filing their referendum knowing their action is illegal,” Justus said, or “they don’t care about the binding contracts, and they want to leave it to the city to clean up the mess that’s left.”

Coffey believes the city should be able to find financing without public money, and that voters should be given the chance to opt out.

“Taxpayers don’t have to be involved in the financing of the project,” he said. “If it’s such a good deal, (private investors) should be knocking down the door to invest in it, and I don’t see that.”

This story was originally published April 28, 2017 at 9:44 AM with the headline "Another potential stumbling block for downtown Kansas City convention hotel."