Kansas City Urban Center Is Budget Hole

[thelakelander]

The tab is mounting for this Midwestern city on a bet it made during the real-estate boom on an $850 million entertainment district meant to breathe new life into its struggling downtown. While the eight-block restaurant, nightclub and retail complex named the Power & Light District is mostly complete, traffic and sales are well below initial projections when construction started in 2006.

- Such woes are common among real-estate developers who imagined values and rents in a fast-growing U.S. economy would continue to rise for years. But the Power & Light District stands out because it was financed through a technique that seemed like it would pay for itself. Kansas City directed future sales and property taxes in the district to pay back the $295 million in bonds that the city issued for the project, which went toward infrastructure and to directly support the development. In the event there weren't enough taxes, the city agreed to pick up the difference.

- 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 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. Given the sluggish real-estate recovery, the city expects similar gaps to persist for years. "Our street maintenance has had to come down; our budget for neighborhood and community services has had to come down," says Scott Wagner, a first-term member of the city council. "You have a very large expense associated with a certain project, and that can't help but stand out."

- Some cities followed similar models, such as Rockford, Ill., which has been paying hundreds of thousands of dollars each year in debt service to cover gaps for a set of planned housing and retail-development projects that stalled with the downturn. The city expects the deficits to narrow or turn positive as the economy recovers. Other cities, such as New York, subsidized transformative projects that are now fully or partially stalled, producing few taxes while not delivering what was envisioned. 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 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.

full article: http://online.wsj.com/article/SB10001424052702304331204577356471425094502.html?mod=wsj_share_tweet

[Gators312]

If you build it they "might" come.

[fsquid]

projections are always much higher than reality on these things.

[rafael2]

Don't forget that Kansas City in the model used by the Jacksonville Civic Council for it's Downtown Improvement Plan report. The plan that is the foundation for downtown redevelopment and we know that it gets a new name every month along with it's fuzzy funding. If you say anything bad about that plan via most of Jacksonville's print media, they will "Block" comments with a canned catch all phrase, blocked because your account "have been used to post abuse or spam, or have false information", seems they can't make up their minds witch one of the 3 it is. Your opinion by the way, is False information.
 

[Tacachale]

It's not all bad news over there. Another paragraph says:

Power & Light has gradually lured tenants since opening four years ago, and the commercial space is now 85% occupied, according to Cordish. Occupied by a mix of local retailers like a family-owned grocery store as well as national chains like Chipotle, the mostly red brick low-rise district has a relatively lively bar and nightclub scene.

On a recent warm weekday evening, the Gordon Biersch Brewery Restaurant was lined with diners eating at tables open to the outside. Other evening attractions include a high-end bowling alley and an AMC movie theater.

And this is without the apartment buildings that were originally planned for the development, and with the overlarge arena struggling. I wonder how many Kansas Citians consider the project a bust.

[Gators312]

I wonder how many Kansas Citians consider the project a bust.

Probably only those who are impacted by the public service cuts that are being done to offset the debt expense.

Kansas City has done some very successful QOL projects, has nice parks, plenty of shopping districts, great restaurants that aren't chains all over.   No transit outside of buses, but they at least have bus shelters!

Learning from some of KC's successes wouldn't hurt Jax in the least.  I just hope they are paying attention to the not so successes too. 

[I-10east]

Kansas City has done some very successful QOL projects, has nice parks, plenty of shopping districts, great restaurants that aren't chains all over.   No transit outside of buses, but they at least have bus shelters!

There it go, a typical post. A thread that was supposed to be used to learn from other cities automatically turned into a Jax vs KC pissing contest. Now, if I was to say "well atleast Jax has sucha, sucha" fourteen people will jump down my throat saying that I'm off base and a homer, but as long as the comments are against Jax, it's all good and no one will say anything.

[Steve_Lovett]

Kansas City's Power & Light District is a fairly contrived urban entertainment complex. When you're there you could be anywhere - there is nothing that is necessarily unique or special to Kansas City. It was developed by Cordish and is a prototype of sorts, not unlike what Rouse delivered at the Jacksonville Landing - and I suspect their struggles are similar.

Overall downtown Kansas City has many great success stories: H+R Block's move to a downtown headquarters, the growth in downtown residential development/redevelopment (amongst the highest increase nationally), investment in a successful state of the art sports/concert Arena, library, expanded convention center, and Symphony Hall.

One would think it would be tougher to rally the KC region around it's downtown than it should be here due to the many multiple municipalities, counties - and the fact that the majority of the region's wealth isn't just outside of Kansas City proper, but it's on the Kansas side of the border...