Unusual hotel-apartment conversion could save blighted Brookfield Building in downtown KC

From the outside, the 12-story brick tower at 11th Street and Baltimore Avenue doesn’t look terrible. But take care if you venture inside.

Pigeon guano cakes upper floors. There’s water damage throughout the building. Fire damage in some parts. And the worst case of mold infestation that a professional blight inspector has seen in one of Kansas City’s historic downtown buildings.

But a Wisconsin-based company is ready to look past two decades of neglect and rot to propose a $33.3 million acquisition and redevelopment of the 85-year-old Brookfield Building. It’s a renovation that has stymied other redevelopers for two decades.

The proposal would remake the tower into a rare hybrid of hotel and market-rate apartments under a plan submitted to a Kansas City tax abatement board, provided the City Council accepts a negotiated tax abatement plan.

The development team of Great Lakes Management Group and Kothe Real Estate Partners, working as Brookfield Hotel Redevelopment Corp., wants to tackle the tower that’s been partly vacant since 1997 and completely vacant since 2007.

Former owner Richard Turner stopped paying taxes on the building and, at one point, offered to sell it to the Downtown Council for as little as $700,000. Utilities have been turned off since the last tenant, a ground-floor restaurant, left after a fire.

“He got in over his head,” said Kansas City real estate consultant Bob Mayer, who previously advised Turner, a California resident. “He decided he couldn’t redevelop it.”

For a long time, others couldn’t see the possibility, either.

The city now classifies the 105,000-square-foot building as dangerous. Its adjacent sidewalks were barricaded in 2012 after chunks of the terra cotta facade fell to the street from the 11th floor. And there’s been another impediment to redevelopment — no parking.

But last year, Kansas City-based Sunflower Group, which has successfully redeveloped other downtown offices, bought the property from Turner and initiated the process to earn historic designation for the building. That paves the way to get historic tax credits to help pay for renovation.

“We made the building eligible for someone else to follow through,” said Jason Swords, a Sunflower principal.

That someone is the Great Lakes group, which wants to close on a $2.4 million purchase from Sunflower in October. The building would become the group’s first project in Kansas City.

The developers intend to turn it into a Hotel Indigo with 113 rooms on floors two through nine, and 27 apartments on floors 10, 11 and 12. It also intends to return part of the ground floor to restaurant use. The Hotel Indigo flag is part of the Intercontinental Hotel Group.

None of that can happen, they say, without public subsidy.

The Great Lakes team requested a 10-year, 100 percent property tax abatement, during which time the developers would pay only the current assessed value on the vacant building, and a subsequent 50 percent, 15-year abatement in which they’d pay half of the newly assessed value based on the redevelopment.

Jackson County taxing authorities countered with a proposal for a 20-year abatement instead of 25 years plus $10,000-a-year payments in lieu of taxes. The developers then suggested a 10-year, 100 percent abatement followed by a 13-year, 50 percent abatement plus an $8,000 payment in lieu of taxes in years four through 10.

The tax abatement board on Wednesday morning approved sending that request on to City Hall for further consideration.

The request is through the Chapter 353 tax abatement incentive program under Missouri’s Urban Redevelopment Corporation Law. Approval requires a finding of blight based on property deterioration, functional obsolescence and bad environmental or health conditions.

The Chapter 353 advisory board asked some tough questions before forwarding the tax abatement request but had no problem agreeing to the finding of blight based on an independent study by Sterrett Urban LLC.

Consultant Pat Sterrett called the mold infestation “the worst I’ve seen.” Floors seven through 12, he said, have basically become a pigeon roost. The building requires roof repair, asbestos and lead paint abatement, a full systems overhaul, sprinkler installation, upgrades to meet fire and disability codes, and substantial vandalism repair.

It’s fallen a long way from earlier glory days as headquarters of Unitog. In fact, it’s named the Brookfield Building in honor of Unitog founder A.D. Brookfield. Unitog bought the building in 1975 and occupied it until 1997.

Before Unitog, the building was known as the Fairfax Building, named after its major tenant, the offices of Fairfax Airport.

Developers think the conversion can be done for the estimated $33.3 million. The project estimates $4.5 million in developer equity and $17.8 million in debt. The development team includes Kansas City-based Rau Construction and Rosemann & Associates architects.

If the Brookfield becomes Hotel Indigo and apartments, the developers said, they will have negotiated a deal with nearby parking garages to serve guests and residents.

Developer Kevin Page said the lack of parking had been a redevelopment barrier to date, but Kansas City’s streetcar line, which will pass a block from the hotel, has cut down that barrier’s size.

If it goes through, Hotel Indigo will be part of a flurry of small hotel projects underway in downtown Kansas City in addition to the large Hyatt planned for across the street from the Kansas City Convention Center.

This story was originally published August 26, 2015 at 10:43 AM with the headline "Unusual hotel-apartment conversion could save blighted Brookfield Building in downtown KC."