The Power & White District is doing good

[Titty Meat]

http://www.kansascity.com/2010/07/13...-need-big.html


Power & Light District will need big subsidies from city
By KEVIN COLLISON
The Kansas City Star

KEITH MYERS | The Kansas City Star
The Power & Light District, where restaurants were busy on Tuesday evening, is still viewed by city leaders as a long-term benefit to downtown despite Tuesday’s news.
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When the city in 2006 approved issuing $295 million in bonds for the downtown entertainment project, it was conceived as a self-sustaining venture. But a delayed opening, the economic downturn and higher-than-expected borrowing costs have meant that so far it has not generated enough revenue to cover debt payments.

“It will probably never fully cover itself,” acting City Manager Troy Schulte told The Kansas City Star in an interview. “We’ve built into all of our long-term projections the assumption of a $10 million to $15 million annual debt subsidy.”

Given Schulte’s estimate, to subsidize the district, developed by the Cordish Co. of Baltimore, city taxpayers would have to shell out at least an extra $230 million by the time the bonds are due in 2033.

Schulte said the subsidy would be built into future budgets, and he and City Councilwoman Deb Hermann said the project, which replaced acres of urban blight, was still a good investment for downtown.

The chief architects of the redevelopment plan, former Mayor Kay Barnes and former City Manager Wayne Cauthen, continue to support the project and are skeptical about the city’s new assumption.

“I would not assume that situation will continue into the future,” Barnes said. “Five or 10 years out, it may look very different and much closer to the earlier projections.”

And the Cordish executive in charge of the district said the company remains bullish on the project.

Schulte, who was not involved in the original Cordish negotiations, said that taxpayers still should be pleased with the investment.

He said much of the money went toward rebuilding crumbling downtown sewers and streets, and the project has greatly improved downtown’s reputation.

“20-20 hindsight is always good, but I’d tell taxpayers to come down and enjoy downtown, because you’re paying for it,” he said.

“The project has benefited the city enormously in a variety of ways and will continue to do so.”

Cauthen, who’s back in Colorado after losing the city manager job in November, was surprised that his successors at City Hall were calculating such dismal long-term financial returns.

“No disrespect to these guys, but I think it would be prudent to speak to the people who put the expectations together,” Cauthen said.

The former city manager said the arrival of a professional franchise at the Sprint Center, the opening of the Kauffman Center for the Performing Arts, a potential new convention hotel and several other unknown variables could mean more business at the Power & Light District and more revenues for the city.

“I agree with the assessment this project was the right thing to do,” Cauthen said. “You never would have had the NAACP in Kansas City the way downtown looked in 2003, or the Big 12 basketball tournament.”

Schulte said he hopes the project will beat the city’s latest projections.

“It’s my hope that an economic recovery and Cordish fully leasing the project will mean that subsidy number goes down,” he said.

The 511,000 square feet of retail space in the Power & Light District is now about 75 percent occupied, according to the city.

Rob Hunden, the Chicago consultant who prepared the revenue projections the city based its assumptions on in 2005, believes that big factors in the shortfall were the delayed opening and continuing vacancies.

The report by C.H. Johnson Consulting assumed that the development would be fully operational with 90 percent occupancy by March 2007 and that it would generate $17.7 million in sales-related tax revenues its first year. Instead, the first two businesses didn’t open until November 2007, and only about a dozen were open by spring 2008.

“The primary assumption going into the analysis was that it would lease up and be completed in the time we estimated, and neither of those things happened,” Hunden said. “The tenants who have opened have performed as projected; the problem is, not enough tenants have opened.”

For their part, city officials are not blaming Cordish for missing the financial projections. They assign the blame to the weak economy, higher-than-expected infrastructure costs and higher-than-expected borrowing costs, again, a factor of the national downturn.

“The deficit is not the result of Cordish,” Schulte said. “They continue to open more retail and restaurants in one of the worst economic conditions the city has ever faced.

“We simply built too much infrastructure on an uncertain revenue stream and optimistic assumptions about the global credit markets.”

Cordish estimated $212 million out of the $295 million in bond proceeds went toward rebuilding the infrastructure in the Power & Light development area. That figure, however, includes two city-owned underground parking garages specifically serving the project.

“This new public infrastructure, which traditionally would have been paid for out of public works, supports the entire downtown, and these expenditures absolutely had to be made if downtown was to continue to be viable,” Nick Benjamin, executive director of the Power & Light District, said in a statement.

The remainder of the bond proceeds went toward developing the project itself. Cordish officials have said their company has invested at least $150 million in the development.

Benjamin also said the project has generated far more tax revenues for the city than have been captured within the development itself for the purpose of repaying the bonds.

“If one includes all the incremental tax benefits that have accrued to the city from the decision to build the district … the Power & Light District is covering not only its own costs, but those of the rebuilt city infrastructure as well.”

Schulte agreed it would likely have cost the city about as much as the annual subsidy if it had issued general obligation bonds to do the infrastructure work.

But the district was touted as being a redevelopment project that would pay for itself, not a long-term obligation of the city.

“I probably would have sold it on the infrastructure component and talked about how a downtown that shut down at 5 p.m. is now almost a 24-hour operation,” Schulte observed.

The continuing subsidy should not require any future cuts in the city budget because, Schulte said, funding has been built into future budget calculations. Still, the subsidy subtracts from money that could be spent on other city needs.

“You might have $10 million or $15 million to do something else,” he said, “but then if you didn’t have the district you might continue to see businesses leave downtown, and there are costs associated with that.”

As for the Kansas City Council, the city manager believes the projected long-term subsidy should not be a surprise.

“I think they see it as an investment that will pay off, maybe not to the general fund, but from an overall community standpoint and to the benefit of downtown,” Schulte said.

Mayor Mark Funkhouser was on vacation and could not be reached for comment.

Hermann, who leads the council’s finance committee, said that while the city analyzed the original deal with “rose-colored glasses,” the project was still worthwhile.

She agreed with the city’s latest projection.

“Regardless of what the projections were, we need to make it a success,” Hermann said. “Over half of that money that was spent went to infrastructure.

“We were projecting just 100 percent coverage on the payments, and that was rose-colored glasses, but that doesn’t mean it was a bad project.

“We should have been more transparent, but then the economy went bad and we should have talked about where the money was going to come from.”

[Dante84]

You spellt "light" wrong, dumbas

[tyton75]

Seriously.. what is wrong with having a dress code?

[Stewie]

Building a contrived "place to be" usually doesn't work. I like the P&L district, but it's only on my radar if I'm going down there for something else. That's about 3-4 times per year.

[googlegoogle]

Originally Posted by tyton75

Seriously.. what is wrong with having a dress code?

Some people would rather have a dead downtown.

[Titty Meat]

Originally Posted by googlegoogle

Some people would rather have a dead downtown.

Considering there are 1000 other bars in the metro area and the whole thing was built based upon there being a sports team in the Sprint Center I would say the whole thing is a cluster ****.

[KCUnited]

Originally Posted by googlegoogle

Some people would rather have a dead downtown.

I personally miss the '02/'03 downtown.

[Bearcat]

Eh, the Sprint Center is doing well despite not having an NBA or NHL team, and it's not like the P&L is dead... guess next time they should say f*** it, because you never know when the economy will go into the shitter. I'm not a huge fan, and would rather have a few good drinks at some dive bar than pay $10 for the crap they serve at the P&L, but it's a cool place for live music, and there are some nice places hangout and eat.

[Dante84]

It's actually doing quite well, all things considered. (economy, No sports team yet).

The bars arent hurting at all.

[Saul Good]

Originally Posted by billay

Considering there are 1000 other bars in the metro area and the whole thing was built based upon there being a sports team in the Sprint Center I would say the whole thing is a cluster ****.

It's a big cluster **** except for the part about the Sprint Center being the third busiest arena in the country and the fact that the P&L District has to rent bulldozers to scoop up all the money it's making.

[Mojo Jojo]

Originally Posted by Dante84

It's actually doing quite well, all things considered. (economy, No sports team yet).

The bars arent hurting at all.

The Sprint Center is drawing more people without a sports team than if they had one. More concerts & special events on key dates and people don't need to purchase season tickets or partial season tickets. This way the amount people spending money to go to one or two events and not blocking out 40 dates a year for a smaller demo leads to greater income.

[Titty Meat]

Originally Posted by Saul Good

It's a big cluster **** except for the part about the Sprint Center being the third busiest arena in the country and the fact that the P&L District has to rent bulldozers to scoop up all the money it's making.

Yup so much money that it needs subsidies from the city. Reading is your friend.

[ChiefsCountry]

Originally Posted by Mojo Jojo

The Sprint Center is drawing more people without a sports team than if they had one. More concerts & special events on key dates and people don't need to purchase season tickets or partial season tickets. This way the amount people spending money to go to one or two events and not blocking out 40 dates a year for a smaller demo leads to greater income.

Also it allows a larger demographic base as well than a sports team would.

[jiveturkey]

Originally Posted by Bearcat

I'm not a huge fan, and would rather have a few good drinks at some dive bar than pay $10 for the crap they serve at the P&L, but it's a cool place for live music, and there are some nice places hangout and eat.

Where are you paying $10 for a drink down there?

The wife and I routinely visit Flying Saucer for beers/dinner and then hit a movie down there. We're also big fans of the Peach Tree Inn.

[Fish]

“20-20 hindsight is always good, but I’d tell taxpayers to come down and enjoy downtown, because you’re paying for it,” he said.

Ha... Yeah ****ers, you're already being taxed out the ass for this money pit, you might as well come spend all the rest of your moneys on overpriced shit we offer....