K.C. still must subsidize entertainment district

KANSAS CITY, Mo. -- Even as the World Series and other events have drawn crowds and cash to Kansas City's Power & Light District, taxpayers continue to pay millions in subsidies for the entertainment area.

Just-released state data show sales for the district were up 15 percent in October from the same month in 2013, translating into an additional $50,000 in sales tax revenue for the city to help pay down the massive debt on the district, The Kansas City Star reported.

But the money coming in remains below what was anticipated before the Cordish Co. development opened in late 2007. Consultants in 2004 projected that new city and state tax revenue paid by the district's residents and businesses would be able to cover the debt.

"I don't think there will be a point at any time in the foreseeable future, probably the next 20 years, where it actually pays for itself," city manager Troy Schulte said.

Nick Benjamin of Cordish, executive director of the Power & Light District, thinks the debt shouldn't overshadow all the positives.

"The point of Power & Light and the city's investment wasn't solely for Power & Light," he said. "It was to revitalize downtown. It's hard to argue that's not happening."

Back in 2006, the city issued $295 million in bonds to help Cordish of Baltimore build the seven-block entertainment district. About two-thirds of that funding was for site acquisition, parking garages and other public infrastructure, including sewers and streets.

The city guaranteed the debt, but the consulting firm C.H. Johnson estimated the district itself would generate $18 million to $20 million in taxes to cover that annual debt service. But the district opened just before the collapse of the nation's economy and took longer to lease than expected.

Sales, property and earnings tax revenue to help pay the debt has ranged from $4.5 million to $5.4 million in recent years, according to the city. But Schulte, who was not city manager when the Power & Light District city obligation was approved, noted that's only about 25 to 30 percent of what's needed each year. Taxpayers are covering the rest.

The city no longer guarantees that kind of debt, and now hires third-party consultants who don't have a connection to the developers to make sure revenue projections for incentive projects are conservative and realistic.

Meanwhile, Benjamin thinks district revenue is likely to continue growing, as the district has finally reached 94 percent occupancy.

"There's an intangible benefit, a non-dollars-and-cents benefit that I feel is important," Benjamin said. "Whatever the benefit in terms of sales, there was a generational experience in Kansas City. Many thousands of Kansas Citians experienced the World Series with us downtown."