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A man who worked on the revenue projections, Rob Hunden, puts the blame on Cordish. "The tenants who have opened there have performed as projected," he told The Kansas City Star last week.
Not exactly. In fact, not at all. C.H. Johnson estimated that the city would collect $14.1 million in sales taxes from Power & Light in 2008. Actual number: $2.2 million.
A higher-than-anticipated vacancy rate doesn't explain a gap of that size. The wild-eyed forecasts were designed to make people feel good about the investment. The consultants sold it, and the city bought it. Now we're picking up the tab.
Nick Benjamin, the Cordish official who runs the Power & Light District, says too much is being made of the predictions. "From our perspective, we would like the focus to be on the present," he says. Benjamin says Cordish is confident that revenues from the project will continue to grow, and the gap between the tax collections and the debt service will shrink.
Of course, the $10 million–$15 million annual subsidy is only part of the bill that taxpayers are left with. Ever puzzle over the heft of a bar tab after a night on the town in Kansas City, Missouri? You think it's some last-call shot you forgot you ordered. More likely, it's the city's punch-to-the-pocketbook taxes.
Eating and drinking in some parts of Kansas City carry a surcharge of more than 10 percent. In addition to the standard city, county and state sales taxes, Kansas City charges a 2 percent tax in restaurants and bars. And in some parts of town, an additional 1 percent tax benefits a "transportation development district," a sort of admission fee to certain destinations — the Country Club Plaza and, yes, the Power & Light District. Add it all up, and a 10.725-percent sales tax lurks at the bottom of every bar and restaurant bill issued within the confines of Power & Light.
Under the development agreement, most of the sales tax goes to pay off the debt. The creditors also receive the taxes on the earnings of people who work inside the district and a portion of the property taxes. This is the essence of tax-increment financing, the city's go-to economic-development tool.
But even with all the help you and your drinking buddies are providing, the Power & Light bondholders are left short. So the city's general fund has to step in to make up the difference. The $10 million–$15 million payouts that Schulte anticipates having to make until 2032 are, in essence, a subsidy on top of a subsidy.
Kay Barnes, former mayor and one of the architects of the Power & Light plan, accuses Schulte of raining on the district's beer-spewing parade. The town boss from 1999 to 2007, Barnes liked to get things done, and she didn't like it when people stood in her way. When she tried to put together a downtown entertainment district in her first term, her most vocal skeptic on the City Council was Jim Rowland. So she removed him from the powerful Planning and Zoning Committee.
It paid off. Barnes got the deal done with Cordish in her second term. The city gave up a lot, with Cordish receiving $54 million in direct subsidies on top of the money that the city spent building new roads and parking garages.