Union Station's $40 million endowment is departing
Rob Roberts
Staff Writer
Union Station's $40 million endowment may be nearing the end of the line.
Bud Jeffress, CFO of Union Station Kansas City Inc., said five years of operating deficits have drained the unrestricted portion of an endowment fund supporting the station.
About $16 million remains in the fund, Jeffress said, but its use is restricted to capital improvements.
Jeffress said Union Station officials may ask the Missouri Development Finance Board, which oversees the endowment, to allow "invasion" of the restricted cash.
Overland Park Mayor Ed Eilert said he is amazed that the money was gone so soon after the 1999 reopening of Union Station.
In 1996, voters in four metropolitan counties approved an eighth-cent bistate sales tax to restore the 90-year-old landmark and create a science museum there. As a member of the Bistate Commission, Eilert helped oversee the spending of $119 million in sales tax revenue to achieve those ends.
"The voters were told that earnings from that endowment, not the principal, would be used to offset the operating expenses at Union Station," Eilert said. "I'm not sure the public understands the full extent of the public and private dollars that have gone down the drain for that project."
Sean O'Byrne, who became interim director of Union Station after former CEO Turner White stepped down June 1, said the station's operating revenue through July was $5.3 million -- $4.2 million less than expenses.
The $2.5 million in budget cuts O'Byrne announced in July -- including 30 layoffs and closing Science City on Mondays and Tuesdays -- mean the deficit for the year should be held to $5 million, he said.
"We have the money to cover that," O'Byrne said. "Where it gets dicey is next year."
Among significant contributors to the endowment were Sprint Corp., Kansas City Power & Light Co., the Ewing Marion Kauffman Foundation and the Hall Family Foundation. The Hall family, which donated the bulk of the restricted money, supports its use for operations, Jeffress said.
But Union Station can't count on gaining access to the restricted endowment money. Neither can station officials count on financing from Bistate 2, a new one-quarter-cent sales tax on the November ballot in five metro counties.
O'Byrne said he was disappointed that Union Station was not included as a guaranteed beneficiary as was the proposed Metropolitan Kansas City Performing Arts Center, which would receive $50 million. But he said he understands the reasoning of Bistate 2's framers.
"There's a public misconception that Union Station squandered the money from Bistate 1," O'Byrne said. "So I think they wanted to be cautious about how they involved Union Station in Bistate 2."
He said no public money has been spent on Union Station losses. The only significant flaw with the first bistate tax, he said, was that promoters thought the current attractions could pay for themselves and generate enough revenue to run a 90-year-old, 850,000-square-foot train station.
"The heat, lights, power, maintenance and security for this box cost $5 million annually," he said. "So is Science City pulling Union Station down, or is Union Station pulling Science City down?"
O'Byrne said the latter has been the case. But the cuts announced in July will trim Union Station's annual budget to about $15 million.
O'Byrne said it may take two more years to balance Union Station's budget. He said he's hopeful that donors who jumped the train may return now that the nonprofit corporation appears to be on course toward black ink.
In addition, a recently announced agreement to lease 160,000 square feet to the Internal Revenue Service and the soon-to-be- displaced Kansas City Main Post Office will add $3 million in annual revenue by 2007. By then, O'Byrne said, he expects an additional $1 million to $2 million a year from leasing other buildings and vacant ground on the property.
Officials also expect revenue from a new dinosaur exhibit, an exhibit of 1940s vintage rail cars and improvements to the City Dome planetarium. Those additions will be financed with the final $1.3 million in Bistate 1 money.
"My No. 1 attraction now is this 95-foot ceiling," O'Byrne said. "People walk in, take a snapshot and don't even buy a cup of coffee."
Reach Rob Roberts at 816-421-5900 or
rroberts@bizjournals.com.
