Cost overruns, new budget pushes price of KC’s downtown convention hotel up millions

This story has been updated to reflect the correct number of conventions held in Kansas City in 2000.

The cost to build a new 800-room convention hotel in downtown Kansas City — initially pegged at $310 million — has grown by about $57 million, according to the latest figures.

A new budget for the Loews hotel at the northwest corner of 16th Street and Baltimore Avenue grew to $360 million last year, in part because new elements like an event deck were added to the project.

Since then, the project has incurred $7 million in cost overruns. Those figures were disclosed on Friday at a meeting of the Tax Increment Financing Commission of Kansas City.

The increased costs are the responsibility of the hotel developers, not taxpayers.

The higher cost became clear when the TIF Commission noticed the hotel’s developers had submitted two budgets, one with a bigger price tag. The commission suggested that the developers could amend the TIF plan to resolve the discrepancy. But the developers were not keen on making a trip before the Kansas City Council, whose members were sworn in a little more than a month ago, according to those on the commission.

“Are they concerned about the optics of the whole thing?” asked Troy Nash, a member of the TIF Commission, during Friday’s meeting.

“I think it’s just politics,” replied Wesley Fields, attorney for the TIF Commission.

So instead, the TIF Commission will try and reconcile the two budgets.

City manager Troy Schulte said he wasn’t concerned about the increased price of the hotel since cost overruns are covered by the developer.

“We are actually getting a better project with lower public commitment,” Schulte said.

The hotel project is receiving ample tax subsidy through a combination of tax increment financing, a community improvement district and from a portion of the city’s convention and tourism sales tax. TIF is a method where new taxes generated by a development project go to reimburse certain project costs instead of going to city, county and school district coffers. An improvement district is an additional sales tax or property assessment within an area that’s earmarked for certain costs within a district.

The project, announced in 2015, was long-awaited by city leaders who wanted a new convention hotel, the first of its kind since 1985, as an attempt to boost Kansas City’s pursuit of convention business.

Critics of the hotel said that chasing convention business was a fool’s errand. Kansas City attracted fewer conventions last year — 290 — than the 328 the city hosted in 2000 when the urban core was still a ghost town.

Subsidies for the convention hotel were approved by the Kansas City Council during the waning days of former mayor Sly James’ first term. The next city council was more skeptical of the project due to the subsidy involved, as well as delays in starting construction, but the project remained intact. Activists had also mounted petition initiative efforts to derail the project, another prospect that the hotel’s developers wanted to avoid.

Originally a Hyatt-flagged hotel, Loews later took over as the developer.

Loews plans to open the hotel in 2020, in time for a major convention for the Shriners.

A request for comment from Loews was not returned on Friday.

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Steve Vockrodt is an award-winning investigative journalist who has reported in Kansas City since 2005. Areas of reporting interest include business, politics, justice issues and breaking news investigations. Vockrodt grew up in Denver and studied journalism at the University of Kansas.