kansas city convention headquarters hotel tax increment financing plan

Kansas City Convention Center Headquarters Hotel

Legend Project 1

F

Project 2 Plan Boundary

*Boundaries are approximate and do not represent legal descriptions.

Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101-2887 Tel: 651-223-3000 Fax: 651-223-3002 www.springsted.com

MEMORANDUM TO:

Heather Brown, Executive Director, Tax Increment Financing, EDCKC

FROM:

Matt Stark, Springsted Incorporated

DATE:

June 25, 2015

SUBJECT:

Cost-Benefit analysis of convention hotel

Springsted was recently retained by the Economic Development Corporation to review the development of a convention hotel and related amenities, and to estimate the relative costs and benefits related to economic development incentives that may be extended to the developer. This memo provides a summary of our efforts, and the findings derived from our analysis. Introduction The applicant is proposing the construction of a convention hotel in downtown Kansas City. The proposed project includes an 800-room hotel, approximately 75,000 square feet of meeting space, 15,000 square feet of additional retail space, and a 450-stall parking garage, along with related on-site improvements. Total construction is anticipated to be in excess of 670,000 square feet on 2.75 acres of land. To make this development feasible, the developer is seeking assistance for the project in the form of Tax Increment Financing for a 23-year term, augmented by supplemental TIF on sales, earnings, utilities, food and beverages, and lodging taxes. Most jurisdictions would participate in TIF redirection for the full 23-year term; the City would extend its participation to 30 years. It is anticipated that the site, building, and contents will be owned by the Land Clearance for Redevelopment Authority (LCRA), resulting in property tax exemption and a sales tax exemption on construction materials. Our analysis is focused on the TIF incentives, and so it does not show projected property taxes and exemptions. Even so, the lack of property tax revenue streams plays a significant part in the overall impact for a number of jurisdictions. Additional contributions from the City are similarly outside the scope of this analysis.

EDCKC Cost-Benefit Analysis – Convention Hotel Page 2

Assumptions Our analysis and projections depend on a number of assumptions about the proposed development. Assumptions about the proposed development include the following: • Renovations and construction will occur in 2016 and 2017. • Operations will begin in 2018. • Project costs, not including financing costs, total $274.75 million. o Construction materials are assumed to be exempt from sales taxes. o Spending by workers during the construction period is expected to add $12.5 million in taxable sales by the City. o Property values for land, buildings, and tangible personal property are not included in this analysis. • The developer anticipates total payroll of $20 million starting in 2018. Based on median wages for hotel, food service, and management positions, we anticipate that the $20 million in payroll translates to approximately 550 positions, with an additional 13 positions added in 2019 and 2020. • Based on regional multipliers for developments in the Accommodations sector, indirect economic effects will generate an additional 453 FTEs, and additional payroll of $25.3 million. • We estimate that the new positions (direct and indirect) will bring 87 new residents to the City, and 35 to the School District. • 30% of gross salaries will be spent on taxable goods and services. • Consumer spending will be 70% in Kansas City, 80% in Jackson County, and 80% in Missouri. • We anticipate that new employment will bring 9 additional students to the School District. Incentives The applicant is seeking Tax Increment Financing to offset eligible project expenses. This financing is expected to include statutory TIF redirection of 50% of economic activity taxes (“EATS”), which include sales tax, food and beverage surtax, utility taxes, and individual earnings taxes. These revenue streams would be captured and redirected for 23 years. In addition to statutory TIF assistance, the developer is also seeking supplemental TIF assistance from the City. This assistance would include the remaining 50% of EATS, as well as 90% of revenues from lodging taxes. The City’s participation in both statutory and supplemental TIF is expected to run for 30 years; other jurisdictions would participate for 23 years. Because the hotel property is expected to be held by LCRA, we do not include any property tax revenues in this analysis, except for a very small contribution derived from residential property expected to be built to house new workers. Additional contributions from the City, outside of TIF assistance, are outside the scope of this analysis; we trust that the City will adjust this report’s projections accordingly.

EDCKC Cost-Benefit Analysis – Convention Hotel Page 3

Per-capita Costs and Revenues For each entity with taxing authority over the project site, we have reviewed the most recent available financial statements and used this information to generate per-capita and per-worker costs and revenues. On the revenue side, we have excluded property, sales, and earnings taxes in the overall calculation, because these sources are calculated separately based on specific project data. Including them in the per-capita calculations would result in double-counting of the revenues. Other revenue line items (permits, fines, intergovernmental transfers, etc.) were allocated between residential and commercial/industrial sources, from which we derived revenues per capita and per commercial/industrial employee. On the expenditures side, we looked at each line item for operating expenses and allocated each expense between residential and commercial/industrial uses. Similarly, we allocated each jurisdiction’s net capital investment between the two categories. From these, we calculated total costs per capita and per worker. For revenues and costs alike, we calculate total average values, as opposed to marginal costs and revenues. This has the effect of overstating the impacts of new population, because a significant proportion of each jurisdiction’s costs and revenues are fixed, and thus would change very little based on population growth. Detailed studies of appropriate marginal costs for each jurisdiction would be significant projects in their own right, and as such are outside the scope of this analysis. For the purposes of illustration, we present a scenario in which half of each jurisdiction’s per-capita costs and revenues are treated as fixed, with the other half growing in proportion to additional residents and workers. Our findings below show the results of both the full average cost scenario and the 50% marginal cost scenario. Findings Our projections indicate that over the first ten years of the development, positive net benefits will be shown by the four jurisdictions which collect sales and earnings taxes. Five jurisdictions show negative net impacts due to the cost of serving new residents and employees without offsetting property tax revenues. For the Blind Pension Fund, percapita revenues are anticipated to be sufficient to offset the cost of services, so it shows a modest positive benefit. Impacts for each jurisdiction are estimated below: Full average cost scenario: 10-Year Economic Impacts Taxing Authority

Public Benefits:

Public Costs & Incentives:

Net Benefits (Costs):

City of Kansas City Jackson County Mental Health Fund EITAS

76,330,794 10,847,445 12,419 102,753

62,921,930 5,472,870 100,673 150,206

13,408,864 5,374,575 (88,254) (47,453)

Blind Pension Fund Kansas City Public Library Kansas City Zoological District Kansas City Public Schools Metro Community Colleges State of Missouri

63,947 96,847 1,221,906 605,369 1,133,690 86,352,679

39,006 313,917 714,316 1,872,146 1,462,701 41,648,652

24,940 (217,069) 507,591 (1,266,778) (329,011) 44,704,027

EDCKC Cost-Benefit Analysis – Convention Hotel Page 4

Measured over the longer term, the same trends are seen. Total impacts for each jurisdiction are shown below: 30-Year Economic Impacts Taxing Authority

Public Benefits:

Public Costs & Incentives:

Net Benefits (Costs):

City of Kansas City Jackson County Mental Health Fund EITAS Blind Pension Fund Kansas City Public Library

289,172,399 41,050,058 52,049 386,025 239,478 389,107

239,330,864 17,698,674 374,673 559,029 145,208 1,168,202

49,841,535 23,351,383 (322,623) (173,004) 94,270 (779,095)

Kansas City Zoological District Kansas City Public Schools Metro Community Colleges State of Missouri

4,620,239 2,291,341 4,232,514 323,905,089

2,213,364 6,967,422 5,443,263 155,033,254

2,406,875 (4,676,080) (1,210,749) 168,871,835

As mentioned earlier, our projections use full total average costs based on new residents and workers, which include fixed costs that would not be impacted proportionally by growth, thus overstating the net costs to each jurisdiction. If we were to assume, for the sake of argument, that 50% of costs and revenues were fixed, and limit our calculations to the 50% remaining as variable, the impacts to each entity would be as follows: 50% Fixed Cost Scenario: 10-Year Economic Impacts Taxing Authority

Public Benefits:

Public Costs & Incentives:

Net Benefits (Costs):

City of Kansas City Jackson County Mental Health Fund EITAS

72,534,408 10,203,679 10,663 54,119

56,011,110 4,051,153 50,336 75,103

16,523,298 6,152,526 (39,673) (20,984)

Blind Pension Fund Kansas City Public Library Kansas City Zoological District Kansas City Public Schools Metro Community Colleges State of Missouri

33,102 70,654 1,139,979 334,525 577,400 73,141,981

19,503 156,958 576,278 936,073 731,351 20,824,326

13,599 (86,305) 563,701 (601,548) (153,951) 52,317,655

By comparison with the full-cost scenario, the negative impacts are significantly lessened by taking marginal costs under consideration. Those jurisdictions without sales and earnings tax revenues are almost entirely affected by per-capita revenues and costs; thus, halving these costs essentially halves the overall impact.

EDCKC Cost-Benefit Analysis – Convention Hotel Page 5

Figures for the full 30-year period are consistent with the trends seen earlier. These impacts are shown below: 50% Fixed Cost Scenario: 30-Year Economic Impacts Taxing Authority City of Kansas City Jackson County Mental Health Fund EITAS Blind Pension Fund Kansas City Public Library Kansas City Zoological District Kansas City Public Schools Metro Community Colleges State of Missouri

Public Benefits:

Public Costs & Incentives:

Net Benefits (Costs):

275,041,833 38,653,983

213,605,667 12,407,191

61,436,166 26,246,792

45,517 205,014 124,667 291,629 4,315,343 1,283,365

187,336 279,515 72,604 584,101 1,699,658 3,483,711

(141,819) (74,501) 52,063 (292,472) 2,615,686 (2,200,346)

2,162,349 274,731,058

2,721,632 77,516,627

(559,283) 197,214,431

A summary of each jurisdiction’s impacts are included as an attachment to this report. If you have any questions about our assumptions or our analysis, please do not hesitate to contact us. We hope this report provides your policy makers with valuable information to use in their decision making, and we hope we may be of service to you again in the near future.

Cost-Benefit Analysis

Cost-Benefit Summary - 10-year analysis Per-capita impacts calculated at 100% of total average revenues and costs. Benefits

City of Kansas City

Jackson County

Sales Taxes: Property Taxes: Income Taxes: Other Revenues: Total Revenues:

$ $ $ $ $

59,215,381 61,741 6,617,184 10,436,488 76,330,794

$ $

Costs Costs for Services: Incentives: Total Costs:

$ $ $

Net Cost/Benefit Public Benefits: Public Costs & Incentives: Net Benefits (Costs): Present Value of Public Benefits: Present Value of Incentives:

Springsted Incorporated

$ $

9,522,466 37,447 -1,287,532 10,847,445

13,821,640 49,100,290 62,921,930

$ $ $

$ $ $

76,330,794 62,921,930 13,408,864

$ $

66,533,108 42,622,295

Mental Health Fund -$

Blind Pension Fund

EITAS --

8,908

$

$ $

3,510 12,419

2,843,433 2,629,437 5,472,870

$ $ $

$ $ $

10,847,445 5,472,870 5,374,575

$ $

9,450,486 2,282,484

Kansas City Public Library

-5,485

$

$ $

97,268 102,753

100,673 100,673

$ $ $

$ $ $

12,419 100,673 (88,254)

$ $

10,645 -

-2,258

$

$ $

61,688 63,947

$ $

52,387 96,847

150,206 150,206

$ $ $

39,006 39,006

$ $ $

313,917 313,917

$ $ $

$ $ $

102,753 150,206 (47,453)

$ $ $

63,947 39,006 24,940

$ $ $

96,847 313,917 (217,069)

$ $

89,399 -

$ $

55,655 -

$ $

83,531 -

--

--

--

1

44,460

Kansas City Zoological D istrict $ 1,058,052 --$ 163,854 $ 1,221,906

--

Kansas City Public Schools --

Metro Community Colleges -$ 21,110 -$ 1,112,580 $ 1,133,690

$ $ $ $ $

36,290,068 23,641,215 26,421,395 86,352,679

1,462,701 1,462,701

$ $ $

41,648,652 41,648,652

$ $ $

1,133,690 1,462,701 (329,011)

$ $ $

86,352,679 41,648,652 44,704,027

$ $

987,161 -

$ $

75,882,835 -

$

63,682

$ $

-541,687 605,369

276,076 438,240 714,316

$ $ $

1,872,146 1,872,146

$ $ $

$ $ $

1,221,906 714,316 507,591

$ $ $

605,369 1,872,146 (1,266,778)

$ $

1,064,621 380,410

$ $

526,200 -

State of Missouri

Summary10

Cost-Benefit Analysis

Cost-Benefit Summary - 30-year analysis Per-capita impacts calculated at 100% of total average revenues and costs. Benefits

City of Kansas City

Jackson County

Sales Taxes: Property Taxes: Income Taxes: Other Revenues: Total Revenues:

$ 227,625,839 $ 188,908 $ 21,980,393 $ 39,377,259 $ 289,172,399

$ $ $ $

36,094,033 163,875 -4,792,150 41,050,058

Costs Costs for Services: Incentives: Total Costs:

$ 51,450,394 $ 187,880,470 $ 239,330,864

$ $ $

Net Cost/Benefit Public Benefits: Public Costs & Incentives: Net Benefits (Costs):

$ 289,172,399 $ 239,330,864 $ 49,841,535

Present Value of Public Benefits: Present Value of Incentives:

$ 193,898,394 $ 125,943,458

Springsted Incorporated

Mental Health Fund

Blind Pension Fund

EITAS

--

$ $

-275,388 -2,015,953 2,291,341

Metro Community Colleges -$ 92,183 -$ 4,140,331 $ 4,232,514

1,027,413 1,185,951 2,213,364

$ $ $

6,967,422 6,967,422

$ $ $

5,443,263 5,443,263

$ 155,033,254 $ $ 155,033,254

$ $ $

4,620,239 2,213,364 2,406,875

$ $ $

2,291,341 6,967,422 (4,676,080)

$ $ $

4,232,514 5,443,263 (1,210,749)

$ 323,905,089 $ 155,033,254 $ 168,871,835

$ $

3,098,984 871,033

$ $

1,536,272 -

$ $

2,843,684 -

$ 217,691,684 $ -

$

24,003

$

9,855

$

$ $

13,065 52,049

$ $

-362,022 386,025

$ $

-229,623 239,478

$ $

-194,152 -194,955 389,107

10,582,966 7,115,708 17,698,674

$ $ $

374,673 374,673

$ $ $

559,029 559,029

$ $ $

145,208 145,208

$ $ $

1,168,202 1,168,202

$ $ $

$ $ $

41,050,058 17,698,674 23,351,383

$ $ $

52,049 374,673 (322,623)

$ $ $

386,025 559,029 (173,004)

$ $ $

239,478 145,208 94,270

$ $ $

389,107 1,168,202 (779,095)

$ $

27,530,753 5,226,268

$ $

34,381 -

$ $

259,101 -

$ $

160,806 -

$ $

258,615 -

--

--

Kansas City Zoological D istrict $ 4,010,448 --$ 609,791 $ 4,620,239

38,984

$

--

Kansas City Public Library

2

Kansas City Public Schools $

State of Missouri $ 136,081,062 $ $ 89,475,965 $ 98,348,062 $ 323,905,089

Summary30

Cost-Benefit Analysis

Cost-Benefit Summary - 10-year analysis Per-capita impacts calculated at 50% of total average revenues and costs. Benefits

City of Kansas City

Jackson County

Sales Taxes: Property Taxes: Income Taxes: Other Revenues: Total Revenues:

$ $ $ $ $

59,215,381 61,741 6,617,184 6,640,103 72,534,408

$ $

Costs Costs for Services: Incentives: Total Costs:

$ $ $

Net Cost/Benefit Public Benefits: Public Costs & Incentives: Net Benefits (Costs): Present Value of Public Benefits: Present Value of Incentives:

Springsted Incorporated

$ $

9,522,466 37,447 -643,766 10,203,679

6,910,820 49,100,290 56,011,110

$ $ $

$ $ $

72,534,408 56,011,110 16,523,298

$ $

63,226,172 42,622,295

Mental Health Fund -$

Blind Pension Fund

EITAS --

8,908

$

$ $

1,755 10,663

1,421,716 2,629,437 4,051,153

$ $ $

$ $ $

10,203,679 4,051,153 6,152,526

$ $

8,889,715 2,282,484

Kansas City Public Library

-5,485

$

$ $

48,634 54,119

50,336 50,336

$ $ $

$ $ $

10,663 50,336 (39,673)

$ $

9,116 -

--

$

63,682

$ $

-270,843 334,525

Metro Community Colleges -$ 21,110 -$ 556,290 $ 577,400

138,038 438,240 576,278

$ $ $

936,073 936,073

$ $ $

$ $ $

1,139,979 576,278 563,701

$ $ $

334,525 936,073 (601,548)

$ $

993,253 380,410

$ $

290,270 -

2,258

$

$ $

30,844 33,102

$ $

26,193 70,654

75,103 75,103

$ $ $

19,503 19,503

$ $ $

156,958 156,958

$ $ $

$ $ $

54,119 75,103 (20,984)

$ $ $

33,102 19,503 13,599

$ $ $

70,654 156,958 (86,305)

$ $

47,034 -

$ $

28,787 -

$ $

60,715 -

--

--

--

1

44,460

Kansas City Zoological D istrict $ 1,058,052 --$ 81,927 $ 1,139,979

--

Kansas City Public Schools --

State of Missouri $ $ $ $ $

36,290,068 23,641,215 13,210,698 73,141,981

731,351 731,351

$ $ $

20,824,326 20,824,326

$ $ $

577,400 731,351 (153,951)

$ $ $

73,141,981 20,824,326 52,317,655

$ $

502,577 -

$ $

64,375,412 -

Summary10

Cost-Benefit Analysis

Cost-Benefit Summary - 30-year analysis Per-capita impacts calculated at 50% of total average revenues and costs. Benefits

City of Kansas City

Jackson County

Sales Taxes: Property Taxes: Income Taxes: Other Revenues: Total Revenues:

$ 227,625,839 $ 188,908 $ 21,980,393 $ 25,246,693 $ 275,041,833

$ $ $ $

36,094,033 163,875 -2,396,075 38,653,983

Costs Costs for Services: Incentives: Total Costs:

$ 25,725,197 $ 187,880,470 $ 213,605,667

$ $ $

Net Cost/Benefit Public Benefits: Public Costs & Incentives: Net Benefits (Costs):

$ 275,041,833 $ 213,605,667 $ 61,436,166

Present Value of Public Benefits: Present Value of Incentives:

$ 184,400,156 $ 125,943,458

Springsted Incorporated

Mental Health Fund -$

$ $

-194,152 -97,478 291,629

Kansas City Zoological D istrict $ 4,010,448 --$ 304,895 $ 4,315,343

72,604 72,604

$ $ $

584,101 584,101

$ $ $

$ $ $

124,667 72,604 52,063

$ $ $

291,629 584,101 (292,472)

$ $

83,637 -

$ $

193,094 -

Blind Pension Fund

EITAS --

Kansas City Public Library

--

38,984

$

24,003

$

9,855

$

$ $

6,532 45,517

$ $

-181,011 205,014

$ $

-114,811 124,667

5,291,483 7,115,708 12,407,191

$ $ $

187,336 187,336

$ $ $

279,515 279,515

$ $ $

$ $ $

38,653,983 12,407,191 26,246,792

$ $ $

45,517 187,336 (141,819)

$ $ $

205,014 279,515 (74,501)

$ $

25,920,160 5,226,268

$ $

29,987 -

$ $

137,427 -

--

2

$ $

-275,388 -1,007,977 1,283,365

Metro Community Colleges -$ 92,183 -$ 2,070,166 $ 2,162,349

513,706 1,185,951 1,699,658

$ $ $

3,483,711 3,483,711

$ $ $

2,721,632 2,721,632

$ $ $

$ $ $

4,315,343 1,699,658 2,615,686

$ $ $

1,283,365 3,483,711 (2,200,346)

$ $ $

2,162,349 2,721,632 (559,283)

$ 274,731,058 $ 77,516,627 $ 197,214,431

$ $

2,894,032 871,033

$ $

$ $

1,452,124 -

$ 184,638,308 $ -

Kansas City Public Schools $

858,718 -

State of Missouri $ 136,081,062 $ $ 89,475,965 $ 49,174,031 $ 274,731,058

77,516,627 77,516,627

Summary30

But-For Determination Report Economic Development Corporation Kansas City, Missouri Kansas City Convention Center Headquarters Hotel Project

June 26, 2015

Table of Contents 1

PURPOSE .................................................................................2

2

EXECUTIVE SUMMARY................................................................4

3

THE PROJECT ...........................................................................5

4

REDEVELOPMENT COSTS ...........................................................6

5

ASSISTANCE REQUEST ..............................................................9

6

RETURN ANALYSIS ..................................................................11

7

BUT FOR CONCLUSION.............................................................15

Mission Statement Springsted provides high quality, independent financial and management advisory services to public and non-profit organizations, and works with them in the long-term process of building their communities on a fiscally sound and well-managed basis.

The Project

2

1. Purpose The report that follows is pursuant to Missouri Statutes 99.800 et seq. relative to a determination that the proposed Project within the proposed TIF Redevelopment Plan would not reasonably be anticipated to be developed without adoption of the Plan. We have approached this determination based on the proposed Projects’ plans regarding redevelopment costs, outcomes, financing sources, and timing, to develop a measure of the Developer’s expected return when compared to the amount of risk. If a project is owned and operated as an investment, a measure of return is calculated considering the time value of money, and involves an assumed sale of the property at a price appropriate in the market place. The final determination is based on whether or not a potential return is reasonable without the requested subsidy, within the current marketplace and at the present time. The Developer is seeking assistance from the following sources to assist with the financing of the redevelopment project: • Statutory TIF; • City Supplemental TIF which will include the re-direction of certain City revenues for a thirty (30) year timeframe; • Creation of a Community Improvement District (“CID”) that will impose a special assessment on real property and a 1% sales tax; • A sale leaseback for the hotel site, hotel, along with all furniture, fixtures and equipment during the construction period and for thirty (30) years following completion of the construction of the Project; and • A contribution from the City of Kansas City, Missouri in the amount of $35,000,000 along with a land contribution with an estimated value of $4,500,000. Under statutory TIF, it is anticipated the following sources of revenue will be captured for a twenty-three (23) year period: 50% of growth in Economic Activity Taxes (“EATS”) which includes individual earnings tax, sales tax, transient food and beverage tax, and utility tax. Additionally, 50% of the 1% CID sales tax will be captured and re-directed under statutory TIF. City Supplemental TIF assistance is anticipated to capture the following sources of revenue for a twenty-three (23) year period: the remaining 50% of growth in EATS not captured by statutory TIF applicable to the following City tax rates for individual earnings tax, sales tax, transient food and beverage tax, and utility tax. In addition to the revenues sources listed above, it is anticipated under the City Supplemental TIF assistance that 90% of the growth in taxes attributable to the Convention and Tourism tax rate and the City hotel transient guest tax rate Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

The Project

3

will be captured. For years 24-30, the Developer is requesting the City continue to re-direct and capture 50% of the growth in applicable sales taxes that would be allowed under the TIF statute for statutory TIF along with the remaining 50% of growth in sales taxes that would be captured and re-directed under City Supplemental TIF.

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

The Project

4

2. Executive Summary The calculated internal rates of return with and without the subsidy request, based on the project costs and operating revenues of the proposed project are shown in the tables below. Determining if a project would occur without subsidy requires the testing of various assumptions which have a material effect on the calculated unleveraged internal rate of return. We have tested the sensitivity of the return without assistance by varying the cost and the revenue assumptions, each independently and then collectively. The reason for testing sensitivity is to illustrate the magnitude with which project assumptions would have to change in order for the project to be considered feasible without assistance. Table A details the significant findings of the sensitivity analysis: Table A

Without Assistance Sensitivity Analysis

Change Necessary to be Feasible

Rate of Return without assistance

Decreased Costs

50% Decrease

10.71%

Increased Revenue

99% Increase

10.65%

Combined Cost and Revenue Changes

33% Decreased Costs 33% Increase Rev

10.62%

The table above indicates the magnitude at which project assumptions would have to change for the project to have a feasible rate of return without assistance. Based on the Korpacz/Price Waterhouse Cooper Real Estate Investor Survey the current range of unleveraged market returns for a hotel project of this nature is 8.75% to 13.0%, with an average of 10.69% which we used as our feasibility benchmark. Absent the changes outlined above, the project would not attract a market return sufficient enough to warrant investment and would not likely be completed through private enterprise alone. Table B, below, illustrates the Developer’s rates of return with and without assistance: Table B

Base Developer Pro Forma Unleveraged Leveraged

With Assistance

Without Assistance

12.0% 19.7%

2.4% 0.54%

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

The Project

5

3. The Project The Developer is proposing the construction of an approximately 672,255 square foot convention hotel in downtown Kansas City. The proposed redevelopment project contemplates the construction of an approximately 800 room hotel, approximately 75,000 square feet of meeting space, approximately 15,000 square feet of additional retail space, related amenity space and a 450 space parking garage along with related on-site improvements. The redevelopment area is approximately 2.763 acres and is generally bounded by 16th Street to the south, Truman Road to the north, Wyandotte Street to the west, and Baltimore Avenue to the east all in Kansas City, Jackson County, Missouri. The Developer of the project is KC Hotel Developers, LLC. The Developer provided an estimated timeframe for project design, demolition, construction, and hotel completion. Upon completion of project design in the spring of 2016, demolition and construction will commence with the hotel anticipated to be completed by 2018. Construction is anticipated to be completed within a 32 month timeframe.

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Redevelopment Costs

6

4. Redevelopment Costs Detailed in Table C below are the total development costs and percentage of total project costs. Table C Total Development Costs Land Acquisition Hard Costs Design and Professional Hotel Soft Costs Financing Costs Project Management Development Fees Total Development Costs*

Total Costs

% of Total

$13,000,000 218,119,267 19,472,947 12,217,347 36,046,000 2,368,422 9,619,149 $310,843,132

4.18% 70.17% 6.26% 3.93% 11.60% 0.76% 3.09% 100.00%

*The Developer intends to request all statutorily eligible TIF reimbursable costs be available for potential reimbursement from TIF funds generated from the redevelopment project area; however, the preliminary projections of TIF revenue capable of being used to reimburse eligible costs is substantially lower than the total amount of expenses eligible for reimbursement. For details related to the anticipated amount of reimbursed costs upon which this analysis is based please see the assistance request portion of the report and Table F.

Acquisition

The total development costs related to land acquisition are estimated to be $13,000,000. Currently, the Developer does not have ownership of any of the parcels within the redevelopment area; the parcels are currently owned by the City and a third-party. To assist with the redevelopment of the site, the City intends to contribute the parcel under their ownership to the Developer; the estimated value of the land is approximately $4,500,000. Regarding the parcels owned by a third-party, the Developer is currently in negotiations to purchase these properties and estimates the cost of acquisition to be approximately $8,500,000. The acquisition cost equates to $19.34 per building square foot, or approximately $16,250 per new hotel room created, and accounts for 4.18% of the total project cost.

Hard Costs

Table D includes development costs related to hard cost line items along with the percentage of total project costs, cost per square foot, and cost per room. Table D Hard Costs

Total Cost

% of Total

Streetscape and Site Work Hotel Construction Conference Center Construction Hotel Equipment (FF&E) Garage Total Hard Costs

$2,395,811 $107,683,445 $68,412,799 28,800,000 10,847,212 $218,119,267

0.77% 34.64% 22.00% 9.27% 3.49% 70.17%

Total Cost per Square Foot $3.56 $233.71 $323.34 $42.84 $16.14 $324.46

Total Cost per Room $2,995 $134,579 $85,516 $36,000 $13,559 $272,649

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Redevelopment Costs

7

The source of the hard cost assumptions is based on preliminary cost projections prepared by the Developer’s contractor. The total hard costs for the development of the hotel, net of the conference center and FF&E costs, is equivalent to approximately $151,133 per hotel room. To provide an understanding of the reasonableness of the hard costs, we consulted the Hotel Development Cost Survey 2014/2015 prepared by HVS. This survey provides an estimate of the national average cost per room for varying cost categories and by product type. Per the survey, the average cost per room for full-service hotels for the building and site improvements is $193,600. The Developer’s assumption of $151,133 is lower than the average costs provided for in the survey. The survey reports the average cost of FF&E is $28,400; the Developer’s assumption of $36,000 is slightly higher than the average and most likely includes equipment costs associated with the conference center portion of the project. Additionally, the Developer assumed a cost of $10,847,212 to construct the approximately 450 space parking garage which is equivalent to $24,105 per parking space. The hard cost category is the largest segment of the development costs, accounting for 70.17% of the total project costs. Consequently, this is a segment where project costs savings could have a positive effect on the rate of return realized by the Developer, while higher than estimated costs would have the converse effect. In the return analysis section of the report, we discuss the sensitivity of the rate of return to changes in the project costs, such as, the effect on the return without assistance if there were a decrease in project costs. Soft Costs

For purposes of this review we have grouped individual line-items under the following soft cost categories to demonstrate the total soft costs, percentage of total project costs, cost per square foot, and cost per room in Table E below: Table E Soft Costs

Design and Professional Hotel Soft Costs Financing Costs Project Management Development Fees Total Soft Costs

Total Cost

% of Total

19,472,947 12,217,347 36,046,000 2,368,422 9,619,149 $79,723,865

6.26% 3.93% 11.60% 0.76% 3.09% 25.65%

Total Cost per Square Foot $28.97 $18.17 $53.62 $3.52 $14.31 $118.59

Total Cost per Room $24,341 $15,272 $45,058 $2,961 $12,024 $99,654.83

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Redevelopment Costs

8

The total amount of the costs under the soft cost category is approximately 25.65% of the total development cost. The largest portion of the soft costs is related to the financing costs line item, which is approximately 11.60% of the total soft costs with $24,820,000 of the $36,046,000 being the capitalized interest for the bonds. The design and professional fees are the second largest percentage of the soft cost budget category with $19,472,947 or 6.26% being spent on design, professional and legal services. Design is the largest portion of the design and professional fees with an estimated cost of $12,873,710. The hotel soft costs are approximately $12,217,347 or 3.93% of the budget; the pre-opening costs are the largest portion of the hotel soft costs with an estimated amount of $7,200,000. The development fees are approximately 3.09% of the soft cost category which is $9,619,149. The remaining the soft cost is related to a line item for project management which is $2,368,422 or 0.76% of the soft cost budget. The total soft costs, net of financing costs, equates to $54,598 per room. For comparison the total average soft cost per room as indicated by the HVS cost survey is $45,600; however, the Developer’s assumption includes the development of the conference center facility resulting in costs slightly above average. The total cost of developing the hotel and associated conference facilities, net of financing costs, equates to $343,496 on a per room basis. In comparison, the HVS Survey determined the national average cost per room for developing a full service hotel was $334,900. The proposed total cost for construction of the hotel and conference facilities is approximately 2.5% greater than the national average for a full service hotel. In the “Return Analysis” section of the report we discuss the sensitivity of the rate of return to changes in the project costs, and the effect on the return if there is a decrease in the project costs.

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Assistance Request

9

5. Assistance Request The preliminary financing plan for the development scenario, which this review is based on, is shown in Table F below: Table F Project Financing

Amount

Equity

$51,732,000

Private Debt

95,045,132

Statutory TIF/Supplemental TIF

42,215,000

CID Special Assessment and Sales Tax

82,351,000

City Grant Contribution

35,000,000

City Land Contribution Total Project Financing

4,500,000 $310,843,132

The Developer is seeking assistance from the following sources to finance the redevelopment project: statutory TIF, City Supplemental TIF for a thirty (30) year time period, creation of a CID that would impose a special assessment on real property and 1% sales tax, a sale leaseback for real and personal property, and a grant contribution from the City of Kansas City, Missouri. Funding sources for statutory TIF and City Supplemental TIF assistance will be generated by certain taxes. Under statutory TIF, it is anticipated the following sources of revenue will be captured for a twenty-three (23) year period: 50% of growth in Economic Activity Taxes (“EATS”) which includes individual earnings tax, sales tax, transient food and beverage tax, and utility tax. Additionally, 50% of the 1% CID sales tax will be captured and re-directed under statutory TIF. City Supplemental TIF assistance is anticipated to capture the following sources of revenue for a twenty-three (23) year period: the remaining 50% of growth in EATS not captured by statutory TIF applicable to the following City tax rates for individual earnings tax, sales tax, transient food and beverage tax, and utility tax. In addition to the revenues sources listed above, it is anticipated under the City Supplemental TIF assistance that 90% of the growth in taxes attributable to the Convention and Tourism tax rate and the City hotel transient guest tax rate will be captured. For years 24-30, the Developer is requesting the City continue to re-direct and capture 50% of the growth in applicable sales taxes that would be allowed under the TIF statute for statutory TIF along with the remaining 50% of growth in sales taxes that would be captured and re-directed under City Supplemental TIF. Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Assistance Request

10

The Developer has estimated the statutory TIF and City Supplemental TIF revenues captured and re-directed under TIF will generate enough funds to finance $42,215,000 in reimbursable project costs, based on current projections. The Developer is also anticipating CID funds generated through a special assessment on real property and 50% of the 1% sales tax, not being captured by TIF, to be available to finance approximately $82,351,000 in reimbursable project costs, based on current projections. Regarding the available TIF funds and total development costs portion of the report, the Developer anticipates requesting all development project costs which are allowed under the TIF statute, be eligible for reimbursement with available TIF funds. The capacity to reimburse development project costs is based on the capacity of the TIF and CID revenue streams, which may be more or less than projected; thereby, impacting the capacity to reimburse eligible development costs and subsequently the rate of return for the project. If the actual TIF and CID revenues are generated at a greater rate than currently projected, there may be a corresponding increase in the anticipated rate of return for the project from what is currently illustrated within this report; however, any potential return realized by the Developer will be subject to any applicable redevelopment agreements and terms associated with public participation for the project. As indicated above, there will be a sale leaseback for the hotel site, hotel and all furniture, fixtures and equipment during the construction period and for thirty (30) years following completion of the construction of the Project. It is anticipated the sale leaseback will provide for sales tax exemption on all construction materials and tangible personal property purchases, along with an exemption from real and personal property taxes. The City will also be contributing a $35,000,000 grant along with a land contribution valued at an estimated $4,500,000. The Developer has indicated the private development costs will be funded through a mix of private debt and equity. The Developer anticipates bond obligations will be issued with revenues from the statutory TIF and City Supplemental TIF being pledged to a tax-exempt TIF bond issuance and revenues generated by the CID will be pledged to a taxable bond issuance. The Developer provided a preliminary private permanent financed amount of $95,045,132. This equates to an equity requirement of $51,732,000. The private debt is preliminarily anticipated to be financed at an interest rate of 6% over a 25-year term. In the return analysis section we will illustrate the impact on the projected rate of return with and without various levels of public assistance. Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Return Analysis

11

6. Return Analysis Utilizing the operating pro forma prepared by the Developer we evaluated the need for assistance for the proposed development by comparing the potential return with and without assistance. The Developer provided an 11-year operating pro forma for the development, which included the build-out, and operating revenue and expense assumptions. The Developer demonstrated the potential return through an unleveraged and leveraged internal rate of return (IRR) calculation, to illustrate the potential return with and without assistance. The return realized by the Developer is a result of the assumptions used in the creation of the operating pro forma; therefore, a number of steps must be performed to analyze the reasonableness of the assumptions used. The first step in analyzing the return to the Developer is to determine if the costs presented are reasonable. We have discussed a portion of the costs above and have commented on the mechanics whereby cost savings on the private side could occur. If cost savings for the Developer’s share occur absent any other changes, the Developer would realize a greater return than projected. In the sensitivity analysis below we examine the impact of cost savings on the projected rate of return without assistance. The second step in calculating the return to the Developer is to determine if the operating revenues and expenses of the proposed hotel operation are reasonable. 

 



The Developer has projected an initial average daily rate for the hotel of $153.69 in year 1; upon stabilization in year 4 the annual daily rate is $181.35. The occupancy assumption is 57.9% in year 1, with a ramp up to a stabilized occupancy of 66.5% in year 4. The estimated first year food and beverage sales are estimated at $20,351,000 for the hotel. Hotel food and beverage sales are estimated to increase at a rate of 4% over the first four years before stabilizing at a rate of 2% annually. The net operating income ratio (before debt-service, depreciation, and TIF reimbursement) is 17.5% in Year 1 and stabilized at approximately % in year 25.3%.

We examined hotel daily rates and occupancy statistics in the Kansas City area market, and the Developer’s assumptions appear reasonable. The Developer indicated the assumptions for the operation of the facility are derived from information provided by their anticipated flag partner, who based their assumptions on their operations nationwide and within the local market. In the sensitivity analysis we examine the impact of increased daily hotel rates on the projected rate of return without assistance.

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Return Analysis

12

The third step in analyzing the return to the Developer is to determine if the assumptions for a sale of the asset are reasonable. The return analysis to the Developer should factor in a hypothetical sale of the asset at the end of ten years of operations. A critical assumption when valuing the asset at the time of the hypothetical sale is the capitalization rate. The available net operating income divided by the capitalization rate results in the assumed fair market value of the asset. The Developer has used a capitalization rate of 8% for the project to calculate the hypothetical sale value. In reviewing historical cap rate trends for hotel developments, we feel 8% is a reasonable assumption. The Developer’s pro forma provided an unleveraged IRR calculation. An unleveraged IRR calculation is used in order to compare the potential return to the Developer based on the Price Waterhouse Cooper (PWC)/Korpacz Real Estate Investor Survey, First Quarter 2015 which provides a market comparison on which project feasibility can be judged. Table G below, shows the Developer’s base pro forma rate of return without assistance and with assistance on an unleveraged and leveraged basis. Table G Base Developer Pro Forma

Unleveraged IRR

Leveraged IRR

Without Assistance

2.4%

0.54%

With Assistance

12.0%

19.7%

To evaluate the rate of return a project of this nature would require to be considered “feasible” we consulted the Korpacz/Price Waterhouse Cooper Real Estate Investor Survey prepared for the first quarter of 2015. This survey provides a resource for comparing the Developer’s rate of return to a market benchmark to help determine feasibility. According to the developers surveyed, the typical unleveraged market return necessary for a developer to pursue a project of this nature falls in a range from 8.75% to 13.0%; with an average return of 10.69%. In order to answer the question “is the development likely to occur without public assistance” we analyzed the without incentive scenario, using the base developer pro forma without assistance as the basis of the assumption. We performed a sensitivity analysis in order to understand the magnitude at which project costs would have to decrease, or conversely project revenues would have to increase, for the project to be considered feasible. For this sensitivity analysis we are using the average market return from the Korpacz Survey of 10.69% as our target for a “feasible” project.

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Return Analysis

13

To understand the impact of the project cost assumptions, we have performed a cost sensitivity analysis to determine the rate at which costs would have to be reduced for the project to be feasible without assistance. Table H illustrates the development would need to realize a 50% reduction in project costs in order to be feasible without assistance. Given a 50% reduction in costs the project would have a rate of return of 10.71% which falls into the reasonable range. Table H

Project Costs Sensitivity

Reduction in Project Costs 50%

Rate of Return without assistance 10.71%

To understand the impact of increased operating income, we have performed a sensitivity analysis to determine the rate at which operating income would have to be increased for the project to be feasible without assistance. Table I illustrates the development would need to realize a 99% increase in operating income in order for the project to be feasible without assistance. Given a 99% increase in operating income, the project would have a rate of return of 10.65% which falls into the reasonable range. Based on our review of the operating assumptions an increase of this magnitude is unlikely to occur. Table I

Operating Income Sensitivity

Increase in Operating Income 99%

Rate of Return without assistance 10.65%

As a final step in the sensitivity analysis, and to understand the impact of a combined change in project costs and operating income, we have performed a sensitivity analysis to determine the rate at which these areas would have to change for the project to be feasible without assistance. Table J illustrates the development would need to realize both a 33% decrease in project costs and a 33% increase in operating income for the project to be feasible without assistance. Given these changes in assumptions the project would have a rate of return of 10.62%. Table J

Project Cost & Operating Income Sensitivity

Reduction in Project Costs

Increase in Operating Income

Rate of Return without assistance

33%

33%

10.62%

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Return Analysis

14

The three tables above (Tables H, I and J) indicate the extent at which project assumptions would have to change for the project to have a feasible rate of return, which we believe lies at approximately 10.69% for the proposed project. Absent changes of the magnitude outlined above, the project would not have a sufficient enough return to draw market investment. Only by assuming either a significant increase in project revenues, or decrease in project costs, or a combined change of the two does the return increase to a feasible level without public assistance. Our review of the Development’s proposed project costs and operating revenue indicates the project is unlikely to realize the level of change necessary for the project to proceed without assistance.

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

“But For” Conclusion

15

7. “But For” Conclusion The Developer is proposing the construction of an approximately 672,255 square foot convention hotel in downtown Kansas City. The proposed redevelopment project contemplates the construction of an approximately 800 room hotel, approximately 75,000 square feet of meeting space, approximately 15,000 square feet of additional retail space, related amenity space and a 450 space parking garage along with related on-site improvements. The Developer will bear all the risk until project completion and permanent financing is in place, and continued operating risk thereafter. This level of risk demands a positive return with a range between 8.75% and 13.0% based on the Korpacz Survey, with an average return of 10.69%. To assist with illustrating the impact of the proposed assistance, we felt it was appropriate to calculate the Internal Rate of Return on a leveraged basis. Without assistance the Developer would realize a leverage rate of return of 0.54% and with assistance they would realize a return of 19.7%. A Blight Study prepared by APD Urban Planning and Management, LLC dated June 15, 2015 and an affidavit signed by the Developer states that the redevelopment area is a blighted area and has not been subject to growth and development through investment by private enterprise and would not reasonably be anticipated to be developed without the adoption of tax increment financing. Based upon the Blight Study, Developer affidavit, and upon our analysis, we conclude that the proposed project would not occur on this site at this time without a public subsidy.

Kansas City, Missouri Economic Development Corporation. “But For” Determination Report Kansas City Convention Center Headquarters Hotel Project

Date: Jlune9,2015

ATTN: Project Manager: Dan Moye

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For any project seeking assistance through the following agencies, a completed applicationform must be provided. Those agencies include: Tax Increment Finqncing Commission, Land Clearance for Redevelopment Authority, Port Authority, and Planned Industrial Expansion Authority, Chapter 353.

RE,DEVELOPMENT PROJECT APPLICATION Þ Application must be submitted electronicall)'.

If

more space is requiredfor response lo any question, pleøse attach additional sheet(s).

1.

APPLICANTINFORMATION App I icanlO r ganization Name

KC Hotel Developers, LLC

:

BusinessAddress: P.O.Boxsslg7g,Westminster . co

80035

Timothv L. O'BYrne

Contact Person:

E-Mail Address:

Fax:

Phone: 303.410.5050 Address

(if different than business address)

303.410.5055

nla

Roxsen E. Koch. Polsinelli PC

Attomey for Applicant: Attorney's Address

900 West 48th Place, Suite 900,

KCMO 64112

Attorney? s Phone: 816.572.4669

2.

LOCATION OF THE PROJECT Truman on the north.

General Boundaries:

16th Street on the south,

Baltimore on the east and

\ilyandotte on the west. County:

Council

Jackson

Total Acreage:

District: 4th

2.8 acres

Is the project located in any incentive areas?

16th

What is the current zoningof the project area?

IIR

What is the proposed zoning for the project

& Central PIEA area

area? tIR with olan amendment

If a zoning change is pending, cite application number and present status. If application has not been made, briefly describe what change will be needed and plans for submitting application:

t76455 505283s7.3

Project will need a UR plan amendment

Land Use Plan: Greater Downtown Area Plan DI\D( Need for Modification: Application Pending for change to from DMX to DC under the Greater

Downtown Area Plan

3.

TIIE PROJECT Provide a detailed narative description of the proposed project, including information as the size of the project, amount of land (property) to be purchased, whether the project is a rehabilitation of existing structure(s), expansion, or the construction of a new facilþ, residences, etc. Describe what products or services are to be manufactured or provided through this project.

Demolition of existing office building; Construction of new 800 room convention center hotel with approximatety 75,000 sf of meeting space and. approximately 15,000 sf of retail and related 450 space Darkinq facili8 amenitv space and Site is owned by KCMO and American Hereford Association. City to transfer property to LCRA or other public agency and developer to acquire American Hereford Association property and transfer to same public aqency. Square footage:

Building approximately 6721255 sf, plus 450 space parking facility approximately

146,000 sf

No. of dwelling units

nla.

No. of hotel

rooms

800

_

No. of parking spaces

4s0

List any nationally or locally historical properties and/or districts within the Project Area. (Contøct the City Landmarks Commission at (816) 513-2902 for ínformølion regardìng locøl and national hístorical properÍies and/or dßtricß)

NONE NUMBER OF JOBS $4E,571

350 to 400

I ! !

(includes taxes & benefits)

Created

F'TE

Average Salary:

Retained

nla

Average Salary:

nla

Relocated

nla

Average Salary:

nla $51,ooo

IConstructionjobs

176455 s0s28357.3

1,300

Average Salary:

2

(includes taxes & benefits

EDC Redevelopment Project Application

Total Construction Budget 5236 1842,215 Projected real properly investment.

Land Acquisition $8,500,000

Projected personal propefy investment.

Will there

be the use

Including all of the engineering equipment and housekeeping supplies, the personal property total estimate is $11.3 million. Including the system (computers and such) the total estimate is $12.3 million.

of federal or state incentives for this project? Which incentives and how much is

being sought?

NONE State the need for an incentive (i.e., competitive pressures of the location, need for remediation of blight in proximity to the Project, addition ofjobs to a high unemployment area, etc.)

Redevelopment of blighted are and to develop 800 room convention center hotel which is in need for incentives in order to cause the area to be redeveloped with nrivate investment.

4.

PROJECT COSTS Identifo the costs reasonably necessary for the acquisition of the site andlor construction of the proposed Project together with any machinery and equipment in connection therewith, including any utilities hook-up, access roads, or appurtenant structures. Fair Market Value of Land: $1,531,350 (per countv assessor)

Fair Market Value of Improvement Projected Assessed Value of the Land

& Improvements Upon Completion:

Purelv estimate $ 125 mitlion market value and $40 million assessed value

5.

CONTROL OFPROPERTY

If the Applicant owns the project site, indicate: Date of Sales

Purchase

Price

nla

nla

If the Applicant has a contract or option to purchase the project site, indicate: Sales

Price

Under negotiation with Herford Association. Its last listed asking price was $8.5 million; citv to donate its nronertv to oroiect

Datepurchase/optioncontractsigned negotiating Closing/expiration date 176455 s0528357.3

negotiating J

EDC Redevelopment Project Application

If the Applicant will

lease the project site, indicate:

Expected to be LCRA

Legal Name of Owner Owner's Address

1100 Walnut, Suite 1700.

KCMO 64106 LCRA with purchase by applicant/developer at end of leasehold; term is construction period plus 30 vears of hotel operation

Owner of land upon completion of the Project

6.

LAND ACQUTSTTTON For each Project Area, please provide the following:

. .

A map showing all parcels to be acquired Entire project site (map provided) Addresses and parcel numbers of all parcels to be acquired

--1. Parcel ID 29-230-26-02-00-0-00-000 Address 1501 Wyandotte Street' KCMO --2. Parcel ID 29-230-26-03-00-0-00-000 Address 1517 Wyandotte Street' KCMO --3. Parcel lD 29-230-26-04-00-0-00-000 Address 1521 Wyandotte Street' KCMO --4. Parcel lD 29-230-26-17-00-0-00-000 Address 1501 Wyandotte Street' KCMO ¡ Current owners of all parcels to be acquired American Ilereford Association orvns parcels 1-3 set forth above and City of Kansas City, Missouri owns parcel4 set forth above. Is the use of Eminent Domain anticipated?

7.

No. but notentiallv

SOURCES OX'FUNDS: State amount and sources of financing for each Project costs listed above. Please provide commitment letters for any sources received listing terms and conditions.

SOURCE

AMOT]NT

PRIVATE CAPITAL (LENDER AI\D EOUITY)

$143,920,000

TAXÁ,BLE & TAX EXEMPT BOI\D FINAIICING

$126,241,000

CITY CONTRIBUTION

$35,ooo,oo0

TOTAL SOURCES

8.

$305,161,000

DEVELOPMENT TEAM Identifu members of the development team and provide evidence of experience with other development projects.

Development team includes KC Hotel Developers'LLC as the developer' JE Dunn as contractor, HNTB as lead architect

t'?6455 505283s7.3

4

EDC Redevelopment Project Application

9.

FINANCIALINFORMATION

- include a detailed breakdown of all hard

and soft costs [PROVIDED]

A.

Budget

B.

Complete list of sources and uses of funds (indicate if you have received tax credits and secured other fi nancing) [PROVIDEDI

C.

10 year operating pro forma - One that shows the project without any incentive assistance IPROVIDEDI - One that shows the project with requested incentive IPROVIDEDI The Pro forma should also include assumptions such as estimated lease rates, revenue assumptions, and expense assumptions,

D. E. 10.

If

seeking TIF assistance, provide projections for PILOTS and EATS. IPRovIDEDI

seeking TIF or Chapter 100 assistance, provide a personal property depreciation and replacement schedule. N/A

If

BOND F'INANCING Bond Financing is handled on a case-by-case basis

11.

REQUIRT,D ATTACHMENTS

development and the locations and improvements to be accomplished in each phase.

PROJtrCT WILL BE BTIILT SCIIEDULE ATTACHED. Attachment

C

IN OI\'E PIIASE.

DEVELOPMENT

Design plans for the project (including site plans & elevations), if available.

mayor, county official, state representative, state senator, local taxing entities, and/or neighborhood organization(s). SEE Committee Sub for Ordinance No. 150357, as amended, approving Memorandum of Understanding. City council approved by vote oÍ 12 to 0, with one member absent.

176455 50s28357.3

5

EDC Redevelopment Project Application

12. CERTIFICATION

OF APPLICANT:

The project budget information provided by the Applicant is based on preliminary design of project. All financing numbers are subject to change.

the

NAME:

L.

SIGNATURE: TITLE:

RETURN COMPLETED APPLICATION AND NON-REFUNDABLE APPLICATION FEE TO:

Economic Development Corporation 1100 Walnut, Suite 1700 Kansas City, Missouri 64106

176455 50528357.3

6

EDC Redevelopment Project Application

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FOR INTERNAL USE ONLY Assistance Project

will be evaluated for with financial analysis:

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PIEA/Chapter 353 Chapter 100

Comments:

Advance KC Project Inquiry Meeting Date: Score CardNo.

Financial Analysis Review Committee:

176455 50528357.3

7

EDC Redevelopment Project Application

Convention Center & Hotel Site

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Kansas City Downtown Hotel

Development Schedule Date

EVENT

March 2016

Demolition

March/A

Hotel

SummerÆall2018

s0556356.

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2016