News The Power & White District is doing good - Page 2

Titty Meat · 07-18-2010, 01:05 PM

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.
More News
In a tangled TV market, it’s hard for rivals to uproot established cable providers Tom Bloch to leave H&R Block's board in September Facing ire of critics, Apple offers free protective case for new iPhone Online auction sells recovered items from police departments Neurosurgeons consider hospital shift Focus on business retention grows Consumer gloom weighs on markets; Dow drops 261 Insider trading | Jack Henry & Associates Business briefs: Earnings reports from Citigroup, Gannett and others Mismatch in the job market Goldman Sachs agrees to $550 million settlement Revenue at KC area casinos trails last year’s pace Jobs and consumer confidence slump while corporate profits grow Best of the blogs Cityscape | Bistro in KC to test chain’s new happy hour items Ways to save as you head off to college Missouri, Kansas see increased foreclosure activity Flash forward | The week ahead in business Anticipation of Goldman Sachs settlement turns stocks around Starwatch consumer | Children’s tents recalled In a major shift from its original financing plan, Kansas City officials now project that the Power & Light District will require a long-term $10 million to $15 million annual cash subsidy.

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.”

Fish · 07-18-2010, 05:03 PM

Quote:

“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....

WoodDraw · 07-18-2010, 05:03 PM

When they issued the bonds, the margins were so tight everyone saw this coming. Not exactly something you advertise when you're trying to sell the plan, though.

BWillie · 07-18-2010, 05:04 PM

Quote:

Originally Posted by Dante84

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

The bars arent hurting at all.

Yeah no kidding its a lot more than I envisioned it to be. I go down there every other weekend at least and drop at least a hunski each time. Its brought me downtown from olathe and I even have friends from nevada, mo and they literally come all they way for pnl. If its not.doing as well as expected then somebody did a bad job forecasting

**Saul Good** · 07-18-2010, 05:06 PM

Quote:

Originally Posted by billay

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

It needs subsidies because the costs to build everything went over budget and caused the businesses to open much later than expected, not because it's struggling from a revenue perspective.

“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.”

**Bearcat** · 07-18-2010, 05:11 PM

Quote:

Originally Posted by jiveturkey

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.

The Flying Saucer is cool....

I wandered around there for a few hours Friday night to enjoy the live music... Lucky Strike was $10, the Dueling Piano bar was $8 (iirc), and Shark Bar was $7. After that I went to Stables (which, from the last couple of visits, seems to have become a gay bar) and had by far the best drink of the night for $6.

BWillie · 07-18-2010, 05:14 PM

Quote:

Originally Posted by jiveturkey

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.

Its not 10 a drink, he's just exaggerating. I like to go to shark bar and drinks there are probably the highest priced out of any place down there and that would be around 7 dollars. PNL is always packed to shit at least for night life and if you don't like it you probably just don't like meeting new people.

jiveturkey · 07-18-2010, 05:15 PM

Quote:

Originally Posted by Bearcat

The Flying Saucer is cool....

I wandered around there for a few hours Friday night to enjoy the live music... Lucky Strike was $10, the Dueling Piano bar was $8 (iirc), and Shark Bar was $7. After that I went to Stables (which, from the last couple of visits, seems to have become a gay bar) and had by far the best drink of the night for $6.

I guess that we just don't venture to the bars down there. It's pretty much Flying Saucer or bust for us.

Demonpenz · 07-18-2010, 05:21 PM

take a flask to an outside bars before you go to the square. Jeez where is your brain. Or just walk back to the parking lot and drink there, that place is a party itself. No place is really my Scene anymore, but power and light is full of people to meet and yap too.

|Zach| · 07-18-2010, 05:54 PM

It isn't really my scene but I think it has been a good thing and a lot of people go. I don't think it has been a negative...it draws a lot of people in.

**Bearcat** · 07-18-2010, 06:34 PM

Quote:

Originally Posted by BWillie007

Its not 10 a drink, he's just exaggerating. I like to go to shark bar and drinks there are probably the highest priced out of any place down there and that would be around 7 dollars. PNL is always packed to shit at least for night life and if you don't like it you probably just don't like meeting new people.

No, I'm not... the Shark Bar was actually the lowest of the 3 places I went Friday night, at $7 for four splashes of alcohol and a cup of sprite, and that doesn't include the cover charge. Lucky Strike was $10, and the bartender even warned me "it is $10, is that okay?"

It's a cool place and I'm not sure why some people are set on hating it (well, excluding billay, who's just here to stir shit anyway), and of course I can always head to a dive bar, drink beer, or just hangout for the music... just sayin'.

Titty Meat · 07-18-2010, 07:44 PM

Quote:

Originally Posted by Bearcat

No, I'm not... the Shark Bar was actually the lowest of the 3 places I went Friday night, at $7 for four splashes of alcohol and a cup of sprite, and that doesn't include the cover charge. Lucky Strike was $10, and the bartender even warned me "it is $10, is that okay?"

It's a cool place and I'm not sure why some people are set on hating it (well, excluding billay, who's just here to stir shit anyway), and of course I can always head to a dive bar, drink beer, or just hangout for the music... just sayin'.

Did they give you a tissue too? You must be Laz's son.

Valiant · 07-18-2010, 08:44 PM

Quote:

Originally Posted by Dante84

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

The bars arent hurting at all.

Then these places doing well need to ante up..

I was against the place and its cost on the city..

Who exactly gets the money from the parking and where does it go??

As for the dress code, I agree with it unless they are doing bike night or something similar..

Valiant · 07-18-2010, 08:48 PM

Quote:

Originally Posted by Bearcat

No, I'm not... the Shark Bar was actually the lowest of the 3 places I went Friday night, at $7 for four splashes of alcohol and a cup of sprite, and that doesn't include the cover charge. Lucky Strike was $10, and the bartender even warned me "it is $10, is that okay?"

It's a cool place and I'm not sure why some people are set on hating it (well, excluding billay, who's just here to stir shit anyway), and of course I can always head to a dive bar, drink beer, or just hangout for the music... just sayin'.

Yeah I agree.. Have had a few bachelor parties this summer there and it has force me to drink beers just because I do not want to spend 10+ bucks on my 7n7's..

**RNR** · 07-18-2010, 09:00 PM

Quote:

Originally Posted by Valiant

Yeah I agree.. Have had a few bachelor parties this summer there and it has force me to drink beers just because I do not want to spend 10+ bucks on my 7n7's..

$10 for a drink?

Frazod · 07-18-2010, 09:03 PM

Quote:

Originally Posted by RedNeckRaider

$10 for a drink?

Sounds like the yuppie places in Chicago. Can you imagine paying for yourself AND buying drinks for the tail you're chasing on top of it? ****.

07-18-2010, 01:05 PM
Titty Meat Inmem 2.0 Join Date: Aug 2007 Location: My house Casino cash: $-992442	The Power & White District is doing good 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. More News In a tangled TV market, it’s hard for rivals to uproot established cable providers Tom Bloch to leave H&R Block's board in September Facing ire of critics, Apple offers free protective case for new iPhone Online auction sells recovered items from police departments Neurosurgeons consider hospital shift Focus on business retention grows Consumer gloom weighs on markets; Dow drops 261 Insider trading \| Jack Henry & Associates Business briefs: Earnings reports from Citigroup, Gannett and others Mismatch in the job market Goldman Sachs agrees to $550 million settlement Revenue at KC area casinos trails last year’s pace Jobs and consumer confidence slump while corporate profits grow Best of the blogs Cityscape \| Bistro in KC to test chain’s new happy hour items Ways to save as you head off to college Missouri, Kansas see increased foreclosure activity Flash forward \| The week ahead in business Anticipation of Goldman Sachs settlement turns stocks around Starwatch consumer \| Children’s tents recalled In a major shift from its original financing plan, Kansas City officials now project that the Power & Light District will require a long-term $10 million to $15 million annual cash subsidy. 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.”
Posts: 78,087

07-18-2010, 05:03 PM	#17
WoodDraw Veteran Join Date: Mar 2004 Casino cash: $10005059	When they issued the bonds, the margins were so tight everyone saw this coming. Not exactly something you advertise when you're trying to sell the plan, though.
Posts: 3,785

07-18-2010, 05:21 PM	#23
Demonpenz Woman should only make babies Join Date: Nov 2003 Location: Apartment "G UNIT!" Casino cash: $-203864	take a flask to an outside bars before you go to the square. Jeez where is your brain. Or just walk back to the parking lot and drink there, that place is a party itself. No place is really my Scene anymore, but power and light is full of people to meet and yap too. __________________
Posts: 54,942

07-18-2010, 05:54 PM	#24
\|Zach\| For The Glory Of The City Join Date: Sep 2002 Location: Kansas City Casino cash: $3186768	It isn't really my scene but I think it has been a good thing and a lot of people go. I don't think it has been a negative...it draws a lot of people in.
Posts: 54,688