Now that the champagne corks have popped at Crown Center over the plans to build a ballpark there, it’s worth considering what comes next for Missouri and Kansas.

On the Missouri side, Kansas City ordinance 260339, passed on April 9, instructs the city manager to move ahead on all sorts of things regarding the deal. Section 7 provides for up to $250,000 for, among other things, “professional services, including but not limited to economic advisory services, financial advisory services, bond advisory services, legal services . . .”

That means the city is going to seek professional opinions on the deal’s feasibility. Who the city hires will tell us a lot about how committed it is to protecting taxpayers. As one person told me, “if they hire an architectural firm, we’ll know they’re not serious.”

The city has a history of relying on conflicted organizations to conduct studies, as it recently did with the World Cup. In 2016, the city paid CDFA—a trade group formed “to promote the common interest of Development Finance Agencies with respect to public policies and programs”—to measure the effectiveness of Kansas City’s subsidy culture. The laughable conclusion was “each incentive dollar invested generated $3.83 in additional tax revenue.”

In Kansas, taxpayers are still waiting on two things. First, they don’t know how big the STAR bond district will be. Previous reporting was a 293-square-mile district encompassing Wyandotte County and the western half of Johnson County. But it could be much, much bigger to make the deal pencil out. Once the district is set, the secretary of commerce is empowered to make it larger whenever he would like (see page 1) to capture more tax revenue.

Second, taxpayers are also waiting on Kansas to determine the base year, which is the year in which the state sales tax revenue is fixed, diverting every additional dollar within the district to the Chiefs’ developments. You might expect the base year to be 2026, when the legislature endorsed the measure, or whenever the project breaks ground. Or perhaps 2025, when the deal was agreed to.

But the deal actually allows the secretary of commerce to set the base year whenever he wants (see page 22). It could be set at 2015, meaning every state sales tax dollar generated over the amount collected in 2015 would go to the Chiefs.

In a deal this expensive for Kansas, the size of the district and the base year are likely to reignite howls of protest from all quarters.

As elected leaders in Topeka and Kansas City throw themselves self-congratulatory parties, the rest of us are faced with the bar tab. And the hangover.

The post Next Up on Chiefs and Royals Stadium Saga appeared first on Show-Me Institute.

Council members Quinton Lucas and Heather Hall voiced reservations. Hall found it “really hard for me to swallow that pill.” But she did. Lucas said the blight claim “sure doesn’t seem to pass the smell test of what blight is.” Yet he voted to support it. Only Councilwoman Alissia Canady voted against the measure.

The Journal concluded, “What we are hearing from staff is that once something is blighted, it’s always blighted…” Hall added. “That’s got to stop.”

Then stop it. All the hand-wringing and nose-holding in the world doesn’t matter if councilmembers continually vote yes.

The post The Crown Center Blight Expansion Is Bad Policy. Period. appeared first on Show-Me Institute.

Now we know why.

The report, which is labeled a "summary of findings" (no word yet on whether the city will produce the full findings) is dated February 21, 2013—two and a half years ago. It considered a 1,000-room hotel, not the 800-room hotel we're dealing with today. That caveat aside, it makes claims about potential Kansas City convention business that are sanguine, to say the least.

Let's dig in to the report, available at the link below. Figure 1-2, on page 6, is labeled, "Primary Competitors – Operating Performance," and it lists three hotels. Only one of them is downtown— the Marriott—and it gets 45% of its business from conventions. (The other two hotels are in Crown Center and get only 10% of their business from conventions.) The Marriott's occupancy rates for 2010, 2011, and 2012 are 51%, 51% and 53% respectively.

Just below, in Figure 1-3, are listed the "Secondary Competitors." Two of them, the Crown Plaza and the Holiday Inn, are downtown and get at least a quarter of their business from conventions (25% and 40% respectively). Their occupancy rates for 2010 through 2012 average around 55%. In other words, the downtown hotel business in Kansas City is awful. The national average occupancy rate for all hotels is around 64%, and the report says the rate in Kansas City hovers around 60% (Figure 1-1).

According to documents previously released by the City, the expectation is that the convention hotel, which will go downtown, will have an occupancy rate of 68%. That’s quite a jump.

Basically, proponents of a new 800-room downtown convention hotel are arguing that by increasing supply, demand will jump. Is it really reasonable to believe that this hotel will beat the downtown hotel average by nearly 20 points? Perhaps more importantly, is it reasonable to believe that it would do so without cannibalizing existing (and depressed) hotel traffic? We think not. How many members of the previous City Council, who hurried to approve this project, had been shown this report and understood its implications?

It would be wonderful if a private builder wanted to take on this project—and all its risks—with his or her own money. But that hasn’t happened, so Kansas City taxpayers are being asked to foot a large portion of the bill. Given what we are starting to learn about the project, we can understand why no private hotelier will touch this; and why taxpayers should be just as hesitant.

HVS Study – Summary of Findings – DRAFT – Proposed Convention Hotel – Ka….pdf

The post The Convention Hotel’s Promised Occupancy Rates Are Suspect appeared first on Show-Me Institute.

The pair also expressed concern that the revenue generated from the catering rights arrangement wouldn’t meet the city’s projection of $30 million a year. Even if lack of competition increases prices, Shalit said, the two areas may generate only $17 million in revenue. The Business Journal reported that if gross revenue generated from the catering rights agreement is insufficient to make the scheduled fee payment, the city will have to pay the shortfall from “any legally available” city funds.

This matches other reporting which claims that Kansas City would have to almost double their convention business in order to make the proposed convention hotel work financially.

Right now, caterers pay a fee of 18 percent of their revenue to Bartle Hall for the right to be able to work at the convention center. That amounts to $2.2 million a year and is used to pay off Bartle Hall’s bonds, plus maintenance, operations, and the like.

In the proposed deal being considered by city leaders, Kansas City has guaranteed payments to Hyatt of just over $62 million for 15 years, or about $4.1 million a year. Here’s how that would work: The Hyatt will still pay a catering fee of about 18 percent to Bartle Hall. Bartle Hall will keep 4 percent to service their bonds and provide maintenance, etc., and return 14 percent to the Hyatt to cover the city’s 15-year, $62 million catering commitment.

In order for the project to generate the $4.1 million, Hyatt would have to conduct $30 million in catering each year. (Fourteen percent of $30 million is $4.1 million.) In any year that Hyatt does not reach $30 million in catering, the city would have to make up the difference. Currently, the catering business for Bartle Hall is about $12-15 million each year. If it were to remain at that level, under the new agreement the city would be paying Hyatt $2 million a year to make up the difference, as 14 percent of $15 million is $2.1 million—$2 million under the $4.1 million commitment.

The city’s argument that a convention hotel and catering agreement won’t drain the general fund assumes that catering business will double. If it doesn’t double, the general fund will have to support not only the catering agreement with Hyatt, but probably Bartle Hall, as it’s unlikely that their portion of the catering fee is sufficient to service bonds and maintain the property. (The agreement with Hyatt also states, “City will maintain the existing Convention Center to its current standards.”)

No one is promising that building a new 800-room hotel will double business, either in room nights or catering. They would be laughed out of the room if they did. (The deal might actually cost Kansas City business.) But all the financing models make the assumption that business will double. Taxpayers and city leaders have to decide if that is a reasonable gamble.

The post How the Convention Hotel Could Drain the General Fund appeared first on Show-Me Institute.

The Aldi in Gladstone, Missouri, just outside the city limits to the north, is not shown on the map. It charges only 4.725 percent sales tax. Again, that was no surprise because Kansas City is generally a high tax city.

The stores in Waldo and East Brookside to the south both charge 5.85 percent sales tax. The Aldi to the north, supposedly in the middle of a food desert but definitely in the poorer part of town, charges 6.35 percent sales tax.

The reason for this higher rate is the Independence Avenue Community Improvement District (CID), which collects an additional .5 percent tax on top of the existing sales tax. This means that the tax rate on unprepared food such as groceries is 6.35 percent; for restaurants it is 11.35 percent. According to their website, the purpose of the CID is:

to provide for enhanced and reliable improvements, security, services and activities, such as general maintenance of public areas, continued efforts to address area beautification related issues, as well as other concerns within the Independence Avenue corridor not already receiving such services.

It used to be that security, general maintenance, and beautification were addressed by the police, public works, and the parks department. As the city fails to provide these basic services, neighborhoods step in and do it themselves. As a result, the poorest neighborhoods, where the need is greatest and the ability to pay lowest, pay higher taxes.

The post Kansas City’s Reverse Robin Hood appeared first on Show-Me Institute.

What could go wrong?

Councilman Russ Johnson has filed a resolution that would direct City Manager Troy Schulte to apply for a Federal Transit Administration grant to study extending the proposed streetcar line to the Country Club Plaza and University of Missouri-Kansas City area.

The current proposal has the line running a 2.2-mile route from River Market to Crown Center. The second leg would add a little more than three miles.

City officials apparently feel they need to go straight to ludicrous speed with this crazy train proposal, but basically all of the same objections apply to the new plan as the old. Kansas City’s streetcar plan attempts to satisfy a market demand for transit that does not exist along the proposed route and will cost at least — and now, potentially far more than — $100 million to get off the ground. In addition, despite city promises, the plan will make the city less competitive, not more competitive, with a spike in local taxes.

Is this really what Kansas City needs to be investing in right now? The Kansas City Star‘s Yael Abouhalkah recently noted that Kansas City has the second-worst debt service burden among the largest cities in the region and one of the highest tax burdens. Why would the city aggravate concerns that are already making it less competitive, and why on Earth would they double down on such a plan?

The post Double Trouble: Kansas City Considers Extending Trolley Line To Plaza appeared first on Show-Me Institute.

Sure, the article conceded, trolleys had been falling out of favor
with the public for years, but “[n]ow gas prices, air pollutants and
spiffy promotional campaigns are making people more aware of the
trolley as mass transit.” One trolley company even said that at least
10 cities were “studying or planning or requesting funding for new
light rail vehicles.” On that list: Kansas City.

Sounds like trolleys are the fresh, happening thing these days when
it comes to municipal development, except for one important thing:
The article quoted here is from 1975. As long-time residents can tell
you, Kansas City does not have a streetcar today, and it’s hard to
argue that streetcars made a substantive “comeback” in the 1970s,
or since.

But will Kansas City soon bring streetcars back to its Main Street?

Maybe, if the city has its way. Last month, the Parking and
Transportation Commission and the Kansas City Council approved
a plan to install $100 million worth of trolley lines following a 2-
mile route running from the River Market to Crown Center.

That’s $50 million per mile; a ludicrous expense, and that’s in the
context of a city that has seen its share of ridiculous rail proposals
over the years.

Indeed, the idea of bringing rail lines in one form or another has
been kicked around exhaustively for the last two decades, and there
are, in fact, two competing passenger rail proposals in Kansas City:
the Main Street trolley and, no joke, yet another $1 billion-plus rail
project that perpetual rail proponent Clay Chastain has proposed.

But even Chastain, the name and face behind KC rail for years, won’t
rally behind a trolley project.

“You’re not going to take a streetcar to the airport,” Chastain told The
Kansas City Star. “This is not the major response we need to build a
world-class transit system.”

When Clay Chastain says your project is impractical, it just might be
impractical.

Missing in all of the streetcar talk is any substantive discussion of why
these projects are necessary, or even desirable, especially in today’s
economic circumstances. Kansas City and other cities removed their
trolley lines decades ago in no small part because trolleys were
impractical for their times, and the impracticality problems of trolleys
remain to this day. The Parking and Transportation Commission’s own
report puts the expense of trolleys at five times what a comparable bus
costs, and that’s assuming there are no cost overruns in the trolley line’s
construction.

But let’s break this municipal issue down to its most salient and important
question: Is a trolley project really the best use of already-depleted
taxpayer dollars? The money Kansas City would spend on these projects
couldn’t be spent on other pressing municipal matters. What would the
city forgo if it rebuilds rail lines that were torn out long ago?

In this economy, Kansas City needs… trolleys?

Really?

Patrick Ishmael is a policy analyst at the Show-Me Institute, which
promotes market solutions for Missouri Public Policy.

The post A Streetcar Too Far: Vanity Rail Lines Are a Waste of Kansas City Tax Dollars appeared first on Show-Me Institute.

On Tuesday, a key Kansas City transit group unanimously endorsed a plan that would put the downtown route primarily down Main, not Grand Boulevard.

The city’s Parking and Transportation Commission approved a consultants’ recommendation, which favored streetcars over rapid buses on a two-mile route from the River Market to Crown Center.

“A Main Street streetcar is the superior alternative,” project manager Charlie Hales, with HDR Engineering, told the commission.

This calls for a Kansas City trolley soundtrack. Hit it, Johnny!

For those unfamiliar with Kansas City’s politics, the idea of bringing rail lines in one form or another has been kicked around exhaustively for the last two decades, to the point where currently there are actually two competing passenger rail proposals: the Main Street trolley and, no joke, a $1 billion-plus rail project that perpetual rail proponent Clay Chastain has put forth. While the prospects of Chastain’s proposal (again) look bleak, supporters of the trolley project are pumping theirs up at a fraction of that price — a cool $100 million.

But even Chastain, of billion dollar rail fame, won’t rally behind a trolley project:

One outspoken opponent [of the trolley project] is Clay Chastain, who has mounted numerous unsuccessful attempts to bring light rail to Kansas City. Chastain has once again gathered sufficient signatures to place a $1.4 billion light rail system before voters next year, but the City Council has not yet approved it for an election.

“You’re not going to take a streetcar to the airport,” Chastain said Tuesday when told about the commission’s recommendation. “This is not the major response we need to build a world-class transit system.”

When Clay Chastain says your project is impractical, that’s saying something.

Of course, Kansas City’s not the only major metropolitan area in Missouri that might put hundreds of millions of quarters on municipal rails. St. Louis is putting together a trolley project that would run from Forest Park to the Delmar Loop — locations that Metrolink already serves, and within walking distance of the #1 Metro bus.

To give you an idea of the sort of distance we’re talking about here:

View Larger Map

The estimated cost for the roughly 2-mile line? About $50 million.

Are these projects really the best use of taxpayer dollars? At least one form of public transit already serves both areas, and in the case of St. Louis’ proposed line, there are two. The money the respective cities would spend on these projects couldn’t be spent on other pressing municipal matters. What would the cities forgo by rebuilding rail lines that were torn out long ago?

In this economy, Kansas City and St. Louis need…trolleys? Really?

The post Nothing Says ‘Progress’ Like a Vanity Trolley Project appeared first on Show-Me Institute.