Public incentives for a new downtown luxury hotel? Kansas City should just say no

A public hearing is scheduled for Wednesday on a controversial plan to provide public incentives for a proposed luxury hotel downtown near the new convention hotel and the Kauffman Performing Arts Center.

The Tax Increment Financing Commission will hold the hearing and then make a recommendation to the City Council.

We can’t endorse public incentives for this project. The TIF commission should reject the proposal or, at the very least, postpone consideration of the hotel project until the new mayor and council take office.

There is absolutely no need to rush this project through in the current economic and political environment.

The proposal is formally known as the Performing Arts Center Campus plan. Don’t be confused: It has nothing to do with the dance conservatory once considered for the area. Instead, the project calls for a 13-story luxury hotel with 143 rooms, a restaurant, a bar and a fitness center near 17th and Wyandotte streets.

The project would cost $63.5 million. Of that, developers want $18.9 million in TIF and Super TIF public incentives, in which taxes generated by the hotel would be used to pay some of the construction costs.

Developers Whitney Kerr Sr. and Eric Holtze made an aggressive argument for the project Tuesday. They defended public support for a five-star luxury hotel downtown.

“This isn’t just another hotel,” Holtze told The Star Editorial Board. “This is the primo hotel. This is the one that will attract a brand-new audience. The Mercedes audience.”

Kansas City should not be in the business of providing incentives for luxury hotel construction. There is clear evidence that the market is now saturated with hotel rooms, making additional hotel development risky and unnecessary. For that reason alone, the TIF commission should reject the project.

It’s true that downtown Kansas City lacks a luxury hotel. We don’t oppose this project on its merits: If developers want to build their hotel, and they’re convinced it will make money, they should finance it privately. If this project falls through, a new mayor and council may want to pursue private backing for a five-star hotel.

But Kansas City should not be in the business of approving tax incentives so visiting bigwigs can sleep in a $250 room just a stone’s throw away from the performing arts center.

There are other problems with the plan. Tax incentives were designed to give developers a financial break for building in depressed, blighted neighborhoods. The site for the new hotel is an empty lot, now owned by the Muriel McBrien Kauffman Foundation. Even the TIF commission’s staff concluded that the land “is not yet a blighted area.”

With downtown Kansas City on the upswing and hotel rooms rapidly multiplying, the developers can’t make a convincing case that this is a distressed block in need of public support.

Holtze and Kerr are making the classic argument for such incentives: If approved, local governments will get more revenue than they’re collecting now from an empty lot. Another hotel will provide some jobs. Kansas City needs to compete with Nashville and Denver, they said.

But Kansas City doesn’t need a trickle-down luxury hotel to compete with other cities, or grow jobs, or bring in more revenue. It needs neighborhoods that are safe, with healthy and well-educated families. The new mayor and City Council must work on those goals, relentlessly — not on another hotel.

Incentives should go to neighborhoods and people. The private sector can pay for luxury hotels.

This story was originally published May 7, 2019 at 5:37 PM.