Screwing KC Taxpayers – The Downtown Hotel Chapter

I’ve been watching local politics for decades, and I have never, ever seen the stars align so perfectly to demonstrate how the development community screws Kansas Citians as we will be seeing in the Downtown Hotel saga. (I apologize for using the coarse term “screw”, but any other accurate term would be far more vivid and nasty.) If you want to learn how “big money Kansas City” steals from regular people, grab your popcorn and watch.

First, understand that the big money wants to build a big, expensive hotel downtown, regardless of the consequences for the rest of the city. Why? Because there is a lot of money for them to make, while they bear no risk at all for the inevitable failure of their false projections.

$300,000,000. That’s the low end of what the project is anticipated to cost. That is money that will be spent – pure economic heroin jabbed into the arms of development lawyers, construction companies, consultants and landowners. Three. Hundred. Million. Dollars. (Plus the cost over-runs and change orders and litigation and – well, I would continue on but I can sense the development community reading these words as the hottest form of pornography they can imagine, and I hate to give them that much pleasure.)

How much of this will be your money? An awful lot of it, but they won’t tell us until AFTER the Mayor and Council elections. But look at Indianapolis if you want to see what they are dreaming about; there, they screwed the public to the tune of almost $50,000,000, PLUS free land, PLUS 10 years of not having to kick in a nickle of taxes. Taxes get paid by residents, not public money “capitalists”.

And Indianapolis got off light – the public money “capitalists” are already licking their chops at the prospect of a bigger orgy at Kansas City’s expense. “Deno Yiankes, president and CEO of White Lodging, said his firm was interested in Kansas City but would require a ’significantly higher’ public contribution than Indianapolis.”

“Significantly higher”?!?!?! Please, development crowd, can’t we JUST give you free land, $50,000,000, and 10 years of tax free living, and call it even?! Do you have to hurt us even more???

Ominously, three Mayoral candidates went along on a trip to Indianapolis to look at this “success story”. One wonders if the development people took those candidates for a tour of Indianapolis Public Schools – one of the least successful school districts in the universe. I’m sure it was a nice trip, and they all endorsed the idea of a downtown convention hotel. Folks, we’re screwed.

They won’t discuss the financing details until after the elections. Folks, we’re really screwed.

Downtown hotels barely achieve 50% occupancy rates. As a taxpayer/investor, do you really want to build 1,000 rooms, at a cost of $30,000 each (or more), to enter a market that is so over-saturated that it can sell only half its beds? Of course not.

But, if you’re a construction company or a development lawyer or a consultant, it’s not your money you’re playing with. You will get paid whether the thing flops or not. (Look at the Renaissance Hotel in St. Louis if you want to see how quickly this thing will land in foreclosure, after the construction companies, development lawyers and consultants have been paid.)

And if you’re a candidate for Mayor or City Council, who do you think is going to write you bigger checks? The average Joe barely scraping by, or the public money “capitalists”, who stand to grab a portion of $300,000,000?

Will we sit by and watch it all happen?

16 Responses to “Screwing KC Taxpayers – The Downtown Hotel Chapter”

  1. meesha.v says:

    I have to agree on this. Downtown hotels can’t survive on conventions alone. The only places where it makes sense for a tourist to stay downtown are Chicago, NYC and others where the area is packed with tourist attractions and events happen every day. And even there most of the time I book rooms on Priceline at 60% off. You cannot talk with a straight face about any successful downtown hotel in KC.

  2. hyperblogal says:

    The city is already subsidizing most of the downtown hotels. If a new one is built the first thing that will happen is theft of business from the established hotels. Thus we will not only have the lug on the new hotel but the lug will increase on the old hotels. Kansas City is hot in the summer and cold in the winter… not exactly a destination convention city.

  3. Nick says:

    Will we sit by and watch it all happen?

    Sadly, yes.

  4. craig says:

    And this is the kind of crap that will make the E-tax go away (thank god).

  5. les says:

    I have trouble seeing who should thank god if the e-tax goes away, other than non-KC/St. Louis residents with extremely high income. The fact that the entire effort was funded by a single multi-millionaire seems telling to me. KC residents are going to have to replace that revenue, a significant portion of which currently comes from non-residents; hard to see why they will be thankful. It looks like another case of the current “government is always bad, taxes are always evil” hysteria getting people to vote against their own interests, again.
    For what it’s worth, I’m a non-resident working in KC and paying the earnings tax.

  6. craig says:

    Les,
    “For what it’s worth, I’m a non-resident working in KC and paying the earnings tax.”
    Me too, and I get absolutely nothing from the E-tax. That is why I want it to go away. It is an unfair tax on the middle class, like myself, that is wasted on frivolous crap by the city. I just would like to give thanks to Rex, who stood up for the little guy, like me, who doesn’t have the resources to fight city hall like he does.

  7. gonemild says:

    Yeah, Les, Craig gets nothing for his E-tax. He doesn’t benefit from roads, police, sewers, sidewalks, or any of that “frivolous crap” that the city provides.

  8. craig says:

    First Dan, the infrastructure of KC proper is such a disaster that claiming that I benefit from it is a joke.
    Second, are you implying that the people that live in KC proper but work in JOCO, Raytown, Indy, Lees Summit, Blue Springs, etc… aren’t entitled to police protection or other city provided services while they are at work? Because I am paying for both theirs and mine.
    The E-tax is a joke and should go away, it is about time that someone with the resources took on the corrupt KC establishment in order to make positive changes.

  9. gonemild says:

    Craig – I just rode from Crown Center to Armour Hills on smooth roads that were well-policed – I saw a police officer assisting a broken down car in the middle of Gillham, but I didn’t notice whether it was a JoCo plate or not. Traffic lights worked, people were walking on safe sidewalks, and I drove past a couple lovely parks. No joke. If you find other municipalities to be more to your liking, brush up that resume.

    On your other “point”, various municipalities choose to raise money for their services through several means. Because Kansas City maintains amenities used by the entire region, it’s not unreasonable to impose a tax that impacts nonresidents. If Overland Park, Liberty, Lee’s Summit or Mission Hills chooses to do something similar, that will be their right. When I shop in those places, I pay my sales tax without whining.

  10. les says:

    In addition to Dan’s reply, Craig, I have to wonder–why are you working in KC if it’s such a burdensome hellhole? You are paying for both your home and KC services (and your KC payment is pretty small potatoes, unless your income is so high that you really shouldn’t be bitching), because you are using both services.

  11. craig says:

    Dan and Les,
    I love it!!!!
    “If you find other municipalities to be more to your liking, brush up that resume.”
    “Craig, I have to wonder–why are you working in KC if it’s such a burdensome hellhole?”
    So you two are actually “baby with the bathwater Republicans”!!!
    That is the equivilant of telling someone that if they don’t like the school district they are in to move to a different city.
    If you two are OK with KC proper sponging off of the rest of the Metro, so be it. The rest of us aren’t, we just don’t have the resources to fight it. Dan, sales tax and E-tax are apples and oranges, nice try.
    Hell, I wouldn’t have a problem with the E-tax if I got a vote in citywide elections. At least then I would have a say in the way my money is spent.
    And Les, “You are paying for both your home and KC services , because you are using both services.” But the residents of KC that work in other municipalities aren’t. Get it? I don’t blame the residents, they work where they can find a job, I blame the incompetent leadership of KC (so in a way I do blame the residents for voting those nitwits in).

  12. gonemild says:

    Craig – You’re calling Les and me “republicans”? Enough with the name-calling!

    More seriously, well, yeah, if you’re living in a place with a school district you cannot accept, you should definitely seek another option, be it private school, a charter, or moving to another district. You could also seek to change the local district, either on a macro or micro level. But, truly, if you have such a problem with Kansas City compared to other places, you should either move in and start voting, or find a job someplace that makes you happier.

    Municipalities need to finance their services. E-taxes, sales taxes, property taxes and fees are the most common means of doing that. They’re all apples as far as I’m concerned, and I don’t think it makes sense to cause the economic disruption of fundamentally altering our tax structure and introducing massive uncertainty into our business planning.

    Nobody’s sponging off anyone else. That’s just illogical whining. Suburbanites benefit from Kansas City – that’s why you don’t see Raytown located in the middle of Northeastern Missouri. Kansas Citians support other local governments – when I shop in JoCo, when I pay a speeding ticket in Liberty, when I join the Prairie Village pool. the E-tax is one way that we keep things in balance.

    The leadership of KC is no more or less incompetent than the leadership in any other major city, and much more competent than the leadership in most small ones.

  13. les says:

    If you two are OK with KC proper sponging off of the rest of the Metro, so be it.

    You have an interesting, if distorted, definition of sponging; and if you want to sling mud, you’re sounding a lot like a typical “I got mine, fuck you” conservative. You want some aspect of your suburban home, but you want some aspect of the economic activity of KC, without which you would have neither your job nor an urb to be sub to. You just resent that you have to pay for what you want. Who’s incompetent? KC, which uses a tax on the economic activity within the city to fund some services, or the communities that don’t, but use other avenues. Some capture non-residents; sales tax, for one, and every city/town levies some kind of business tax/license/whatever.

    Or maybe they’re all making the best choices they see? The suburbs look around, see that most of their value is in land and homes, and get most of their revenue from property tax; KC looks around, sees a nexus of economic activity and the costs that imposes, and taxes that.

    You seem to by crying that you’re trapped, can’t move out of this awful situation. Why is that? Oh, you say, your job is supported by and tied to the economy of KC? Huh. But you don’t need any KC services. go Galt, already.

  14. Jim says:

    Does Craig have a point? Is his income being taxed without providing him with representation?

    Lord Camden
    “A constitution grounded on the eternal and immutable laws of nature; a constitution whose foundation and centre is liberty, which sends liberty to every individual who may happen to be within any part of its ample circumference. Nor, my Lords, is the doctrine new, it is as old as the constitution; it grew up with it; indeed it is its support; taxation and representation are inseparably united; God hath joined them, no British parliament can separate them; to endeavour to do it, is to stab our very vitals. … My position is this—I repeat it—I will maintain it to my last hour,—taxation and representation are inseparable; this position is founded on the laws of nature; it is more, it is itself an eternal law of nature; for whatever is a man’s own, is absolutely his own; no man has a right to take it from him without his consent, either expressed by himself or representative; whoever attempts to do it, attempts an injury; whoever does it, commits a robbery; he throws down and destroys the distinction between liberty and slavery.”

    Though the “constitution” he was referring to was the Magna Carta, isn’t it the fundamental reasoning that goes hand-in-hand with the republican form of government guaranteed by our Constitution?

    Have those who work in the city, and taxed by the city, yet having no elected representation in the city, suffered an injury by the city failing to provide thems a corresponding means of representation? Isn’t there a fundamental right to representation that is directly related to taxation?

  15. les says:

    Have those who work in the city, and taxed by the city, yet having no elected representation in the city, suffered an injury by the city failing to provide thems a corresponding means of representation? Isn’t there a fundamental right to representation that is directly related to taxation?

    Interesting, and on some kind of macro, philosophical level there is, or maybe ought to be, such a right. And, as a society, we’ve agreed with that concept and implemented it. At the practical level, of course, it’s impossible. To try to apply it without exception eliminates (as a practical matter) sales taxes, rental car and hotel fees, income/earnings taxes below the national level, etc. Sometimes the only way to vote is to vote with your feet–if you don’t like sales taxes, shop only where there are none, or where you vote on them; don’t like state/local income taxes, only work where you can vote. Should people be able to live in rural/unincorporated areas largely tax free, but also freely avail themselves of the shopping, economic, cultural, etc. benefits of other areas without cost?

    Or maybe the notion of “representation” needs some work in this context.

  16. Chris says:

    The e-tax should be replaced with a sales tax. Once sales tax has been implemented, it will be real easy to determine what areas need to be demolished and start over. That could be done now, but let’s wait another 10-15 years, we have nothing but time.

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