Think of it as a black eye for KC and another nail in former mayor Kay Barnes’ coffin…
Yesterday’s Wall Street Journal drilled Kansas City’s Power & Light District and Cordish for the bad bet Barnes made in 2005 that the taxes generated by the $850 million entertainment district would pay for itself or the city would pick up the tab.
We all know what happened next.
"Today, the project, which sits near the onetime headquarters of Kansas City Power & Light Co., generates less than one-third of what is needed to cover the debt service on the bonds," the Journal says. "The city is setting aside $12.8 million in its budget for the fiscal year that starts next month to cover the gap, a notable hole in a $1.3 billion budget that calls for $7.6 million in cuts to the fire department."
Worse yet, "Given the sluggish real-estate recovery, the city expects similar gaps to persist for years." the Journal adds.
The Journal points to cities with similar woes, but while today’s Star pants about yet another bogus "best of" by Travel & Leisure magazine for KC’s being a "hipster" magnet (like Travel & Leisure would know), there’s zero coverage on the dinging by the Journal.
A dinging with teeth, as opposed to the hollow best of blowjob.
"These dashed hopes are contributing to broader fiscal problems. Kansas City’s high debt was cited by Fitch Ratings in February when it warned of a potential downgrade," the story continues. "’The city’s debt load has increased substantially over the past decade resulting from an aggressive infrastructure and economic development expansion plan,’ the ratings firm said.The redevelopment efforts came after decades of decline in Kansas City. Population shifts to the suburbs left the once-bustling downtown littered with parking lots and few restaurants or residents. The grand vision was for an arena surrounded by stores, restaurants, apartment buildings and offices."
That the P&L is at 85 percent occupancy isn’t exactly a good sign either.
If we can’t make it at 85 percent, how much upside is there?
"The Power & Light District’s never going to make money, we gave too much away," says Westport businessman Bill Nigro. ‘Their sales would have to triple or quadruple to break even and we just don’t have the population base."
Unfortunately, "Sales-tax revenue is also off," the Journal says. "Cordish has blamed this partly on the lack of a professional sports team at the arena. The apartment buildings that also would have boosted traffic have stayed on the drawing board."
The P&L has hit KC in the pocketbook in less obvious but significant other ways, Nigro notes.
"Kansas City used to get (more) sales tax money from all the entertainment districts and the city got to keep that money," Nigro says. "That includes Westport, the City Market, Martini Corner and the Plaza. But now, not only does the city not get to keep the sales tax money from Cordish because it goes to pay off the bonds, they’re getting less sales tax money from the other entertainment districts whose business went down because of competition from the Power & Light. So it’s a double whammy."
Barnes is also credited with spearheading the Sprint Center on the premise of luring a pro hockey or basketball team. Yet while Sprint seems to have worked out well for concert promoters, that’s not the case with the P&L, Kemper Arena and the American Royal.
In fact, here’s how Barnes’ Wikipedia page characterizes her legacy downtown:
"Barnes was a principal architect of Kansas City’s deal with private investors to develop the downtown Power and Light District. The terms of the deal essentially require the City to pay for shortfalls in revenue on the servicing of the bonds issued to develop the district. P&L has been a fiscal disaster for Kansas City with taxpayers perennially paying millions of dollars on the bond obligations out of the general budget, and forcing the city to offset the debt by cutting into essential services, such as street maintenance and fire protection. Some have suggested an investigation into Barnes’ direct and indirect relationships with developer Cordish Co. and the financing banks should take place."