New KCMO council members finally get to quiz convention-hotel developers

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The previous Kansas City, Missouri, City Council led a busy lame-duck session, using its last week in power to pass a series of major initiatives. One was approving public incentives for the proposed $307 million convention-hotel deal, roughly half of which will be financed by tax redirections or abatements.

A week later, nine of the 12 council members from the previous four years were replaced with new members. Since then, the council has not held a public briefing about the convention hotel. Instead, Thursday council business sessions have been mostly perfunctory affairs lately, with council members hearing long presentations about broad topics of less import, such as what the Port Authority is up to these days.

Thursday’s briefing comes two weeks after a contentious closed-door discussion about the hotel and a petition initiative process that seeks to put to a public vote City Hall’s commitment of taxpayer dollars to the hotel project. Some new council members, apparently frustrated by not having yet been given a briefing on one of the major projects facing the council, requested a public discussion of the hotel.

Mike Burke, the Kansas City real estate lawyer who has been the face of the 800-room hotel project at 16th Street and Wyandotte, was joined by his development partners Steve Rattner (this guy, not that guy) and Tim O’Byrne to field questions from the mostly newly seated council.

Some newcomers to the council had pointed questions about the project. Lee Barnes, a 5th District at-large councilman, asked Burke to explain why he had gone to solicit companies such as JE Dunn and HNTB for services early on but hadn’t apparently sought business from minority- or women-owned firms.

“What I don’t see is any involvement from the African-American community in terms of architects and engineers,” Barnes said.

Burke responded that firms the size of JE Dunn have the capability to work with the hotel developers without a contract, something that smaller enterprises aren’t able to do.

Alissia Canady, representing the 5th District, asked whether Burke would be willing to sign an agreement before work starts on the hotel that would require the developers to hire a certain percentage — 30 percent was one figure she threw out — of local workforce for the project. Kansas City has a workforce ordinance requiring that construction projects draw at least 10 percent of their workers locally. Local, defined therein, is in the Kansas City region, meaning Olathe residents could satisfy the requirement.

Burke was initially reluctant to field Canady’s question, saying it’s “something we need to discuss with you” while adding in that there may be some legal concerns about such an arrangement.

Left mostly untouched was the matter of the petition initiative. Citizens for Responsible Government, a group of City Hall watchdogs, submitted 2,000 valid signatures seeking a citywide election on whether taxes should be committed to the convention hotel. City Hall attorneys believe that the petition initiative process can’t undo what’s already been done: namely a signed and executed contract between the city and the developer. 

Rattner asserted that any delay in the project timeline puts the hotel deal at risk. (Side note: Developers almost always say this.)

Ratter told The Pitch during a break in the middle of the business session that construction costs have already risen $30 million, or 10 percent of the project cost, over the past 18 months. A delay of another six months to accommodate an election, he says, puts the project budget at risk.

But didn’t he factor in a contingency for possible delays, which aren’t rare in major development projects, we asked?

Rattner tells us that there’s a contingency for a rise in interest rates, something which Federal Reserve Chairwoman Janet Yellin has indicated could very well happen by the end of the year. But no contingency for project delays.

“The other thing I’m concerned about is what if a war breaks out in the Middle East and you can’t finance anything?” Rattner says.

Not having a contingency for global conflict is something we can understand.