Developers of a proposed Kansas City convention hotel told the City Council on Thursday that a delay for a public vote could drive up costs and jeopardize the project.
Steven Rattner, a New York finance expert who has worked on the $311 million, 800-room Hyatt hotel deal for more than two years, said developers were ready to go to Wall Street to finalize the hotel bond financing — until a Kansas City petition initiative drive recently halted that effort.
If the developers have to wait six to eight months or longer for a public vote on those petitions, Rattner told the council, construction costs and interest rates could rise or other factors could unravel the financing.
“I can’t guarantee you the project will happen,” he said, adding that the group is otherwise ready to close the deal in December or January and wants to break ground next spring, with an opening date in 2018.
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The city attorney has advised that the petitions are legally flawed and the council should not put them on the ballot next year. The council is weighing that legal advice against a desire to be responsive to voters.
Dan Coffey, spokesman for the petition group pushing for the public vote, said after Thursday’s presentation that he had heard nothing to change his mind.
“There’s nothing to lose by having a vote on it,” Coffey said.
The hotel would require $50 million in tourism tax dollars through a 25-year bond, land valued at $4.5 million and other public tax subsidies. But it does not rely on general fund dollars or any city debt guarantee.
Kansas City lawyer Mike Burke, representing the developers, said that if the hotel underperforms, the investors — not taxpayers — will bear the risk and costs.
Mayor Sly James told his colleagues that over the past four years, other hotel proposers wanted between $75 million and $130 million in cash from the city. This was the best possible deal Kansas City could get, he said, and requires far less public subsidy than in other cities.
Angie Stanland, vice president of recruiting with Cerner Corp., said her company had just completed a 14,000-participant conference that filled 25 hotels from the airport to Overland Park. She suggested that as Cerner grows, it becomes harder for Kansas City to host its annual gathering.
“Kansas City is where we want to be,” she said. “Adding 600 to 800 rooms is incredibly important to us.”