mean wrote:
Even if we assume that a HQ hotel will, in the short term, draw in visitors and conventions we wouldn't otherwise be able to compete for, that doesn't answer the larger questions of how long we can expect that to continue and whether the revenue captured by the project would be adequate to pay off the bonds required to build it. Evidence indicates that gains would be temporary and inadequate, and that more facilities would be required in short order to keep capturing the revenue. The bigger picture here looks like a bad business proposition. It is not sustainable to be locked in a cycle of investing large amounts of revenue to chase a small number of well-heeled but fickle customers with no loyalty, who are going to seek out the competition the second they think they can get a better deal.
Talk about Deja Vu.
It's like I've heard this argument a hundred times before, except instead of "HQ Hotel" it was the Sprint Center and Power&Light District.
And instead of a guy named mean, it was Yael Abouhalkah writing about how a new arena was going to be financial disaster and complete failure for this city.
And then we had some civic leadership with some courage to take a calculated risk, got them built and both have far exceeded any projections and preconceived expectations and flown in the face of all the fear mongering critics that would rather this urban core languish in mediocrity instead of making some real strides in to the future.
For more on another project that was also a "bad business proposition".....
Financially, the Sprint Center is rockin'
KEVIN COLLISON, The Kansas City Star
The Sprint Center is on excellent financial footing, city officials said. Car rental and hotel fee revenues have exceeded projections and a recent refinancing has sliced $15 million from the debt.
The good fiscal news comes on the heels of a report by a respected national trade publication that ranked the nine-month-old arena 30th in the world in ticket sales for all entertainment events, excluding sports. Pollstar magazine found the Sprint Center outperformed arenas in Dallas, Oklahoma City, Omaha, Minneapolis, St. Paul and Denver.
"The arena has been performing quite well when it comes to concerts, and also the hotel and car rental fees are coming in higher than anticipated," City Manager Wayne Cauthen said Tuesday.
"We've been fortunate on this project. We opened it when we said it would be open, and we've got a facility everyone is proud of and is filling the bill."
The $276 million arena, which opened in October, is being financed primarily with a $4 increase in the car-rental fee and a $1.50 increase in the hotel room fee approved by city voters in August 2004 by a 57 percent majority.
At the time of the election, critics of building the arena predicted revenues would fall short and the city's bond rating would be undermined.
But revenues have generated more than $40 million since the city began collecting them in February 2005.
The car rental and hotel revenues are doing so well, in fact, that the city has been able to set aside $15 million in reserve toward eventually providing 514 premium parking spaces required in its development agreement with Anschutz Entertainment Group, which invested $53.2 million in the project and manages the arena.
The city wants to purchase and demolish the Kansas City School District headquarters building at 1211 McGee St. for that parking project.
The property is across the street from the arena's north door and is considered an ideal location for the proposed garage.
City officials are awaiting an answer from the district on their offer.
But it's the debt restructuring deal completed two weeks ago that has particularly pleased city officials.
During a period of turmoil and tightening credit in the financial markets, the city was able to refinance the variable-rate original bonds issued three years ago with new fixed-rate bonds ranging from 4 percent to 5.5 percent.
The new arena debt repayment schedule, which stretches out to 2040, projects annual fee revenues running 4 percent above the amount required for debt service, a conservative estimate according to finance officials.
"All and all, this was a really favorable outcome in a tough market," said Randy Landes, the city treasurer. "The city has been able to bank a considerable amount of excess fee revenues over and above the debt service."
The $4 car-rental fee increase approved by voters also earmarked 50 cents for the Convention and Visitors Association. That fee has generated $3.8 million for the association.
