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.”

[Titty Meat]

Originally Posted by Iowanian

How much is the city bringing in with sales tax on concerts, food and drinks in the area, in addition to property taxes on those facilities in P&L, and other ancillary income from fuel tax, hotel tax, permits, parking tickets etc?

Apparently not much if the city is having to pay 10-15 per year.

[|Zach|]

Originally Posted by Mojo Jojo

The difference is that the places you list have built businesses on their own...they were not subsidized by tax payer dollars for start up. I think that a lot of local businesses resent losing money to the city's publicly funded pet project.

Yes. I understand that. But the idea that Westport and other places are now ghost towns just is not the case.

At the end of the day P+L has been good for this city. It isn't my scene for nightlife but I like what it has done and it has been good for my business personally. Hell, the P+L space was used a few weeks ago in a great way to pretty much seal KC's bid as a host city for the World Cup which will be a huge financial gain for the city.

It has done a lot of good things directly and indirectly.

[|Zach|]

Originally Posted by billay

You listed 3 bars in Westport out of how many? A place like Barleys closed because of PNL. The point is there were a handful of other bar districts PNL wasn't nessecary at all and the long term sustainability is questionable.

I think you are taking the narrow view.

[Sweet Daddy Hate]

Meh. I'm going to the Blarney Stone for some reasonable drinks and shuffleboard, bitchhh...

[RJ]

Originally Posted by Mojo Jojo

Yes, and Cordish also did a lot of the development in the inner harbor back in the day. That is how they made their name...they are a Baltimore company. I don't know how often you go to Baltimore, but I am there two or three times a year, and the turnover in the inner harbor is unbelievable. Outside of the ESPN Zone and a couple of other restaurants I don't think many originals are still there.

ESPN Zone closed a few weeks ago, along with 4-5 more in other cities.

[Titty Meat]

Originally Posted by |Zach|

I think you are taking the narrow view.

Nah I just think things could be better. For example Westport is 1000000X better than PNL but howcome you can bring your beer outside at PNL but not at Westport? It's bullshit how much the rules are changed for PNL.

[|Zach|]

Originally Posted by billay

Nah I just think things could be better. For example Westport is 1000000X better than PNL but howcome you can bring your beer outside at PNL but not at Westport? It's bullshit how much the rules are changed for PNL.

Meh, its just business and politics. It just is what it is...it doesn't bother me that much. Some businesses are adapting just fine. More so P+L took a lot of the dbags out of Westport...I like the crowds there more now than I used to it also brings money in from people from JOCO and other suburbs who wouldn't come within 100 ft of Westport because they believe the myth that it is really dangerous.

[Titty Meat]

Originally Posted by |Zach|

Meh, its just business and politics. It just is what it is...it doesn't bother me that much. Some businesses are adapting just fine. More so P+L took a lot of the dbags out of Westport...I like the crowds there more now than I used to it also brings money in from people from JOCO and other suburbs who wouldn't come within 100 ft of Westport because they believe the myth that it is really dangerous.

Thats a good point about the douchebags. I was there Friday and realized there wasn't many douchebags. Yea the myth about Westport being dangerous is funny, though I did see 3 cop cars speeding towards Main St. and The ghetto bird. Juco folks aren't used to that.

[RNR]

Originally Posted by kcchiefsus

Your not paying $7 a drink if you get a beer or a well drink. You can get any of those for $4 a drink. Sure its more than I would prefer to spend but it isn't $10 a drink.

I was going by what someone posted. I worked in Atlanta back in 2002 and the going rate for a beer was $5.50 at couple of the places we went to. I left sober

[|Zach|]

I don't remember drink prices being really out of hand. Of course I don't drink all that much so when I do it isn't a big issue. I think a single wide IPA bottle was 5 and change or something after I would get done shooting at the piano bar. Which seemed fair enough for a premium domestic.

[Mojo Jojo]

Originally Posted by RJ

ESPN Zone closed a few weeks ago, along with 4-5 more in other cities.

Another Cordish project going down the drain. Damn, now I need to find more new things to do in Baltimore.

[RJ]

Originally Posted by Mojo Jojo

Another Cordish project going down the drain. Damn, now I need to find more new things to do in Baltimore.

I don't think it was Cordish. I believe most of the ESPN Zones around the country were closed.

[Mojo Jojo]

Originally Posted by |Zach|

Yes. I understand that. But the idea that Westport and other places are now ghost towns just is not the case.

At the end of the day P+L has been good for this city. It isn't my scene for nightlife but I like what it has done and it has been good for my business personally. Hell, the P+L space was used a few weeks ago in a great way to pretty much seal KC's bid as a host city for the World Cup which will be a huge financial gain for the city.

It has done a lot of good things directly and indirectly.

I'm not saying it is not doing good things for the city; I'm saying that so far it has been a financial debacle for the tax payers because of the city and Cordish. The Legends developer paid off debt early...Cordish is asking for more. If it was so successful in revenue then the debt would get paid down...not increased. At some point someone needs to be held accountable. With the Sprint Center was built there was a budget and once the money was gone it was gone and AEG was on the hook. No such deal with Cordish about P&L. AEG couldn't double dip...why should Cordish?

[RNR]

Originally Posted by |Zach|

I don't remember drink prices being really out of hand. Of course I don't drink all that much so when I do it isn't a big issue. I think a single wide IPA bottle was 5 and change or something after I would get done shooting at the piano bar. Which seemed fair enough for a premium domestic.

I think anyone who goes to a fancy place or a trendy place expects to pay higher prices. The club scene is not my thing. If I am in one it is a southend place where I can throw darts. They can draw a rougher crowd but if you are a southender they most likely know you and there won't be any trouble. Late at night it can get a little rowdy but nowdays I am gone by then You can get Bud, Coors and the like for around $2.25 to $2.75 and call drinks around $3.50 to 4.00~

[|Zach|]

Originally Posted by RedNeckRaider

I think anyone who goes to a fancy place or a trendy place expects to pay higher prices. The club scene is not my thing. If I am in one it is a southend place where I can throw darts. They can draw a rougher crowd but if you are a southender they most likely know you and there won't be any trouble. Late at night it can get a little rowdy but nowdays I am gone by then You can get Bud, Coors and the like for around $2.25 to $2.75 and call drinks around $3.50 to 4.00~

I don't particularly think P+L is fancy or trendy...it is just where people like to go. It isn't really about being seen but more so I want this certain drink and I want to be in a certain place.

The places I like to go to personally are pretty varied...some nice some not so much.