Kansas City convention center hotel petitioners get their day in court

The proposed high-rise convention hotel would be near the Kauffman Center for the Performing Arts.
The proposed high-rise convention hotel would be near the Kauffman Center for the Performing Arts.

Lawyers for a citizens group, for the city of Kansas City and for developers of the proposed downtown convention center hotel tried Tuesday afternoon to convince a judge that voters should — or shouldn’t — be allowed to vote on the hotel.

Facing off in the Independence courtroom of Jackson County Circuit Judge Jennifer Phillips, the three lawyers presented their cases without calling witnesses.

Phillips took the matter under advisement and said she will consider all the information entered into the record during the 1 1/2 -hour writ of mandamus hearing that was held because a group of voters wants the judge to order a public vote on the planned $311 million Hyatt hotel.

The deadline to get an issue on the April 5 municipal ballot was Jan. 19. The next scheduled city election would be in August, with a May 24 deadline to get items on that ballot.

Jonathan Sternberg, attorney for the petitioners led by Dan Coffey, a spokesman with the Citizens for Responsible Government group, said after the hearing that he believes the group’s argument is convincing and that the group has a right to put an ordinance before voters.

The group’s petition essentially would give voters the power to decide whether the city can help develop, finance, build or operate a new downtown convention center hotel.

Sarah Baxter, staff attorney for Kansas City, said the city believes the petition initiative is invalid because the City Council already has approved the 800-room hotel deal and it would be a breach of contract with the hotel developers to stop it.

“The bottom line is that these contracts have been executed,” Baxter said. “The city is bound by those contracts and will be bound by those contracts whether or not there is an election.”

She said that the petitioners’ proposal also conflicts with established tax increment financing law, that it would affect future TIF projects and that it would force the city to waste resources on an election.

Jack Kilroy, a Polsinelli attorney representing the hotel developers who were allowed to intervene in the lawsuit, agreed with the city’s stance that citizens cannot restrict powers granted to the City Council by the state of Missouri. Those powers include the City Council’s authority to grant TIF incentives.

Kilroy also emphasized that the hotel contracts are binding, as are the contractual intents specified in the memorandum of understanding that was reached before the petition group filed its signatures.

The City Council in July approved a financing package to build the hotel near the Kansas City Convention Center. Construction was planned to begin in the first quarter of this year, with a mid-2018 opening expected. But within two months of the council’s vote, the citizens group headed by Coffey gathered petition signatures to challenge the deal.

Counsel for the city and for the development team, headed by former city councilman Mike Burke, said from the outset that the petition was flawed and that delays would push the hotel costs higher.

In November, the City Council, with only one member dissenting, voted against putting the initiative petition on a ballot. In December, Coffey’s group responded by filing the lawsuit that put them in court.

Burke said before the hearing that the hotel developers have committed investors who believe in the hotel and in Kansas City and want to see the project go through. He said delays aren’t likely to affect the investors’ commitment, but other factors are important to consider, namely the possibility that interest rates or construction costs will rise enough to affect the project.

“Those are the two big variables,” Burke said. “We thrive on stability.”

Sternberg said he didn’t expect to lose the case, but if he does, he is likely to recommend that his clients appeal.

The $300 million project is designed to add 800 rooms to the city’s downtown hotel stock.

Mike Burke, Burke Swerdling & Associates and KC Hospitality Investors, LLC, city of Kansas City, JE Dunn Construction and HNTB Architects, are all key players in bringing a new 800-room convention center hotel to downtown Kansas City. (May 8, 2015

Diane Stafford: 816-234-4359, @kcstarstafford