InterContinental Hotel asks city for power to charge checkout tax

The InterContinental Hotel wants to use state power to hide a price increase.

That’s one way to think about the $190-a-night hotel’s desire to establish a community improvement district. Creatures of state law, community improvement districts asses special taxes that property owners within the district can use to repair buildings, plant trees or buy advertising. Shopping centers are heavy CID users.

The InterContinental’s request is a little unusual because the “district” does not extend beyond the hotel. If approved, guests at the InterContinental would be charged an extra 1-percent sales tax. The hotel’s ownership wants to use the money to defray the cost of renovating the property, which opened in 1972.

At the Planning, Zoning and Economic Development committee hearing on Wednesday, hotel representatives argued that the parking garage and other areas had deteriorated to the point that the hotel met the legal definition of blight. A blight finding is usually necessary for the city or one of its related economic-development agencies to start working their powers, such as establishing a CID.

Public officials like CIDs because, unlike tax abatements or tax-increment financing deals, they don’t lose anything in the bargain. In fact, as the hotel reps argued Wednesday, the city and other taxing jurisdictions stand to benefit from the arrangement because a spiffed-up and guest-crowded InterContinental would likely create more tax revenue.

Still, there are reasons to deny the request.

First, the blight finding is sort of ridiculous. Sure, there may be enough cracks in the concrete to meet the statutory definition of blight. But the term becomes meaningless when it can be found at hotels valued at $28 million. As Councilwoman Heather Hall said at yesterday’s hearing, blight findings in Kansas City are as common as Kleenex.

Second, it sets a bad precedent. Brett Ellison, general manager of the Marriott east of the Country Club Plaza, flatly told the planning committee that if the InterContinental gets a CID, the city should expect other hoteliers to come forward with similar requests.

Third, it’s dishonest in an abstract sort of way. A CID would allow the InterContinental to more or less hide a small surcharge from its guests. Rooms will be reserved and slept in before the charge appears; even then, it can disappear in the crowd of other taxes, including the tax on hotel nights the city levies to pay off the debt on the Sprint Center. (People who rent cars in Kansas City also pay a special arena tax. Thanks for visiting!)

Of course, these point-of-sale “takings” happen all across the metro. CIDs and similar transportation development districts are so ubiquitous that worrying about precedents may be a moot point.

But establishing a community improvement district when the “community” is a swank hotel owned by a concern in Rhode Island seems a bit much. At Wednesday’s meeting, the planning committee voted 3-1 to send the InterContinental’s CID request to the full council with no recommendation, the equivalent of a shrug. The council is expected to vote on the matter on September 22.