Three Kansas City Council members pressing for additional financial details about the planned downtown convention hotel have been rebuffed, for the moment at least, by city officials and the owner of the $322 million venture.
Councilwomen Heather Hall, Teresa Loar and Katheryn Shields filed a proposed ordinance late last week to freeze the city’s $35 million contribution to the project until Loews Hotels, the owner and operator, provides the requested information on terms and sources of the money for the deal.
Hall said they are not opposed to the hotel but insist on more transparency regarding finances.
“We aren’t saying anything against Loews or the hotel,” said Hall. “We are concerned that the citizens of Kansas City know where the money is coming from and whether it is a solid financial plan.”
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The council has no formal action to take on the project, which it agreed to in a 2015 memorandum of understanding.
The city attorney’s office, which reviews all proposed ordinances for legality, declined last week to clear the measure sponsored by Hall, Loar and Shields.
City Attorney Cecilia Abbott did not return a phone message Monday. But Mayor Pro Tem Scott Wagner, chair of the finance and governance committee, said he was advised that it was invalid because it would undermine the 2015 agreement. The measure sits on the committee docket for Wednesday, but Wagner said he will hold no hearing.
“I’m not in the habit of having hearings on ordinances that are not legal,” he said.
Mike Burke, the local attorney who represents the hotel venture, declined to comment Monday. Sarah Murov, spokesperson for the New York-based Loews Hotels, said in a statement: “All of the required documentation has been submitted, reviewed and approved. We look forward to bringing a world class hotel to the Kansas City market in 2020.”
After many fits and starts, including the exit of the original hotel operator and lead investor, plans are in place for a 23-story, 800-room luxury hotel at Baltimore and Wyandotte Streets across from Bartle Hall, to be complete sometime in 2020. Loews received final approvals last week from two city agencies that are providing tax breaks, the Land Clearance for Redevelopment Authority and the Tax Increment Financing Commission.
Loews executive vice president Alex Tisch and the project’s two other equity investors, Steve Rattner and Tim O’Byrne, briefed council members for more than two hours last week. They said financing is anchored by a $110 million construction loan from Wells Fargo Bank, $79 million in revenue from bonds to be sold by the Land Clearance for Redevelopment Authority and the Tax Increment Financing Commission, and a $32 million bank loan secured by catering revenue. Tisch and the other investors will put in $59.6 million.
The city has committed $35 million in cash, payable when the deal formally closes, and $7 million for part of the land downtown.
The three council members said they wanted to see letters from the lenders that guarantee financing. They also asked for all agreements signed off on last week by the redevelopment authority. Hall expressed dismay that many of the documents approved by the agency appeared to have blank pages. City Finance Director Randy Landes said the documents were “substantially complete” and would be filled out by closing.
One document sought by the council members, called a term sheet, was partially included in a presentation by Loews on Thursday. Shields said in a statement Monday that because of the protracted history of the project — the 2015 agreement was struck by the previous council — and the changes in owners and investors, more due diligence on the project is necessary.
“This Council has the obligation to verify its feasibility before investing millions of public dollars — and a one page PowerPoint slide does not satisfy that requirement,” Shields said in a statement Monday.
The three sponsors of the ordinance scheduled a press conference for 1 p.m. Tuesday at City Hall.