Unified Government considering selling the downtown Hilton Garden Inn Hotel

Ever since 2000, the Hilton Garden Inn hotel in downtown Kansas City, Kansas, has been a money loser.

Because it’s half-owned by the Unified Government of Wyandotte County/Kansas City, Kansas, the hotel requires public subsidy to stay afloat.

The UG is now thinking about offloading that liability.

A spokesman for UG confirms today that City Hall is looking for a real-estate broker to help evaluate a possible sale of the hotel.

“The UG has released a notice of need for a firm to provide brokerage services for the potential sale of the Hilton Garden Inn,” writes UG spokesman Edwin Birch in an e-mail. “However, we are still in the process of evaluating the responses to the notice of need and have nothing else to share at this time.”

Built between the headquarters of the Board of Public Utilities and the Jack Reardon Convention Center, the Hilton Garden Inn was supposed to be part of a catalyst for development in KCK’s downtown core.

The UG made use of a federal U.S. Department of Housing and Urban Development grant and proceeds from a loan from the same agency to finance the bulk of the hotel’s construction. It had entered into a partnership with JE Dunn and a real-estate affiliate of DST Systems to co-own the Hilton Garden Inn.

But the hotel hasn’t lived up to expectations. The Pitch reported last September that UG’s financial audits over the years have consistently shown that UG has had to make advances to the hotel to cover its losses. The same audits portend little prospect of the hotel springing a profit on its own in the future.

Moreover, UG has pledged more subsidies into the hotel than its private co-owners, despite splitting ownership evenly. UG has advanced more than $5 million into the hotel (not counting $2 million it spent on its renovations), while the JE Dunn-DST joint venture has extended little more than $1 million over the life of the hotel, according to county records.

For each of the next two years, the UG plans to expend $280,000 of its allocation of federal Community Development Block Grants to paying debt service on the Hilton Garden Inn.

Murray Anderson, a KCK resident and candidate for the BPU Board (he’s running on a plank of privatizing the ratepayer-owned utility), broached the idea of selling the Hilton to the UG Commission in 2013. He said the UG should use the money to start a venture-capital fund for small businesses in KCK’s urban core, which he has argued was the original intent of the HUD dollars that UG used to build the hotel.

No word yet on what UG would do with the money if it went ahead with a sale of the hotel.