New sales taxes are likely at Crown Center hotels

A plan billed as “cooperative funding” for improvements to the Westin and Sheraton hotels at Crown Center skated smoothly Wednesday through a key step in the approval process.

The proposed ordinance would redirect part of the city’s convention sales tax collected on room rates at the two hotels to provide up to $15 million toward an estimated $30 million worth of the hotels’ interior renovations.

Stacey Paine, president of Crown Center Redevelopment, owner of the properties, said renovations to the combined 1,500 hotel rooms were necessary “to ensure we have some of the best and enough hotel rooms” to serve Kansas City’s convention industry.

The proposed ordinance states that the renovation “is not financially feasible if all of the funding must be provided by the developer.”

The ordinance also would create a Community Improvement District that would add a 1-cent sales tax for 30 years, assessed solely on the room rates in the two hotels.

The CID revenues would go for upkeep and improvements to Crown Center’s public spaces, including the parking garages, skywalks, sidewalks and landscaping.

Councilman Scott Taylor said the proposed ordinance was a creative use of the city’s economic development tools and that it was a worthy tax proposal given Crown Center’s status as a visitor and family attraction.

No one testified against the proposed ordinance at a meeting of the Kansas City Council’s Planning, Zoning & Economic Development Committee. Committee members voted 5-0 to advance the measure to the full council, with a do-pass recommendation.

Councilwoman Katheryn Shields said she favored the proposal because the money would be paid only by people who stay overnight at the hotels but would go to the benefit of Kansas Citians.

The two hotels also agreed to a room-block provision in which they will commit a certain number of rooms to Visit KC to help market the city for large conventions.

Crown Center also agreed to commit $250,000 a year in the years 2018-2024 to the city’s new Shared Success Fund.

Shared Success is a recently approved mechanism to channel a percentage of funds from economic development projects toward an account that can be used to help advance redevelopment projects in parts of the city where development isn’t happening through market forces.

Charles Renner, an attorney representing Crown Center, said the sales tax details likely will take three to six months to put together after approval by the full council.