Here's what I think happened:

The city said, "damn, this is a crappy deal, should we hold out for better? Our track record in this kind of thing is pretty abysmal, we could be left with nothing",

"somebody give me a worst case scenario",

"Worst case, in a tanked economy, we're on the hook for 12 million."

"I can live with that, do it."

Especially since I won't be in office when it is completed and have to live with the financial problems. It will be someone else's problem.

If I recall, it was then EDC head Andi Udris who had the relationship with Cordish, and arranged the entire deal.

I'm not that impressed with Cordish. I understand a lot of the difficulties came from the economic crisis of 2008. However, it also appears that Cordish isn't the easiest company to deal with.

I do think the one positive thing is how AEG has operated Sprint Center, which has been largely successful, and generates money for the City.

The question I have is what parts of Power & Light does the City own? Is it just the garages? I know the City bought the Empire/Mainstreet Theater from Executive Hills. But does the City or Cordish own the actual building now? Does AMC still own the Midland Theater building outright?

Does H&R Block own their building, or lease it from Cordish?

I know something about financial projections. I doubt if the projections factored in the deepest recession in the US in the last 70 years.

If they did, the people who prepared the projections should leave their jobs at city hall and go to work for a hedge fund.

Kind of like our generation of Kansas Citians failing to invest in what it would take for a city to compete in the 21st century. Hey let's poo poo any true infrastructure projects like light rail and disperse all of our infrastructure and business over one of the US's most sprawling metro's so that there's really nothing appealing enough downtown to retain business, attract investment, support a convention economy etc.: AKP's (and my) generation "Hey, I can live with that".

The recession is not the fundamental problem. The revenue projections simply had no basis in reality. Which should not be surprising since the EDC gave Cordish every incentive to provide absurdly high projections: the higher the projected revenue, the more money Cordish got from TIF and MODESA bond issues, and because the city, not Cordish, was on the hook for paying back that money, the more the better.

The P&L is 85% full and is generating less than a third of its projected revenue. At 100% capacity (which is not realistic in any economy), that means it would generate under 40% of its projected revenue, all else equal. If the district were full, P&L businesses would need to do about 2.6 times as much business as they do now to hit the revenue projections. That's simply never going to happen. In a booming economy, you would expect to see something like 30-60% more revenue per storefront, which is a far cry from the 160% more that would be needed to break even on the bond payments.

Part of the reason things are so especially bad with the P&L compared to other EDC-directed, TIF-funded redevelopment projects is that the EDC broke its own rules to cheer-lead the P&L. The EDC usually requires that revenue projections exceed 120% of the amount required to break even on the TIF bonds. That requirement was known to be insufficient, because most TIF-funded projects in Kansas City were not breaking even even before the recession. All the same, the EDC approved the P&L project with (absurdly unrealistic) revenue projections of just 104% of the bond payments.

That is the reason, by the way, that the City Manager's office is now projecting annual deficits on the P&L bonds in the $10MM-12MM range until they are retired in 2033. No one except a few completely uninformed optimists in this thread expect the P&L's financial situation to change fundamentally when the the economy improves.

Yes, apparently that's pretty much what happened. There is a Biz Journal article from back in 2006 that includes a bunch of quotes that read pretty much the same as the ones you made up P&L bonds coverage very skinny

Yes, absolutely.

You know it pains me to write that in reply to something coming from the keyboard of AKP, but it's just blindingly obvious that the city could have got a much, much better deal to do this project. You don't even need the benefit of hindsight to see that.

First, there is an enormous amount of space between the deal the city got—really, the deal the city came up with—and a deal that is still extremely cushy for any developer. For instance, you could have set up the contracts to require that bond payments come out of the developer's net income if revenues fall short of what's required to make payments on the bonds. (That is, the developer kicks in cash to pay off the bonds if there's a shortfall of taxable revenue out of his profits on the project. No profits, no contribution, so it's still a riskless proposition for the developer.)

And if you doubt Cordish (nevermind that there are thousand other developers out there) would have participated under less generous terms, I invite you to look at the terms of its developments in Baltimore and Louisville (which was partially scrapped). In neither city did Cordish get anything like the deal Kansas City gave it.

The city-backed redevelopment process in this city is severely broken, and was broken in new and interesting ways in the case of the P&L District, but it is not difficult to design incentives that are less easy to game and more likely to result in financially viable projects that benefit both the developer and the city. It disturbs me that so many of you apparently think the only way to improve our city is to close your eyes, bend over, and take it up the ass.

Your post was interesting until the part about "thousands of developers", and then no matter how much you talked about ass-rape, I couldn't get back into it.

There are well more than a thousand developers in this country capable of putting up and managing a dozen one- and two-storey buildings. And I'll be happy to extend the ass-rape metaphor if it'll get you back in the mood.

Wasted conversation at this point. focus should be on the future and how to use this asset to best improve the city. I'll tell you I would have probably moved out of downtown without the p&l. it has increased my standard of living tenfold. That doesn't show up in tax revenue receipts.

A few red flags were thrown before approval, with or without a recession in that the numbers were too high even if the times were good. But instead of looking into the numbers (due diligence) they were just accepted and the project moved on.

BTW, the numbers were prepared by Cordish/EDC, not by people at City Hall.

True, we cannot go back in time to change what happened but we can still question the decisions and how they were made that got us to where we are now.

Everyone here knows I think that P&L has been a positive thing for downtown. I think it's a game-changer in many ways. The most important part being that it is bringing people downtown again, which reframes the image of downtown in many people's minds. This cannot be underestimated. Once you get people to come back to a place they avoided, and they have a positive experience, there is a subtle psychological shift. Then they consider moving downtown, or living nearby. They become "opinion-leaders" in that they begin to influence other people--changing their minds.

Let me give you an example. When I moved to New York City at age 29, my small-farming-town mother thought I'd be murdered. She couldn't understand why I, or anyone, would want to live there. Six years after I moved, she came to visit. When she was ready to get on the shuttle bus to the airport, she told me that she'd had the best time of her life, and now she understood completely why I lived there. She went home and became an ardent defender of New York City, and when anyone said anything negative about it, she told them their perceptions where completely off-base, and it was a wonderful place to live.

Cities can be turned around. New York spent billions redeveloping Times Square and 42nd Street because leaders there realized that people were getting a negative perception when they visited. The spent more on law enforcement, and crime dropped significantly to levels not seen since before the 1960s. The spent money cleaning up the parks, and planting more street trees. They invested in a new East Sides subway line. People started moving back into the city. Now, Manhattan is so popular that many cannot find a place to live. Formerly undesirable neighborhoods have boomed.

While everyone is moaning about the City not going after better development plans, please be reminded that there weren't that many developers beating down the door to redevelop downtown Kansas City. Even a local heavyweight, Stan Durwood and AMC, had a difficult and unsuccessful time trying. The current P&L was the third attempt I believe.

The window of opportunity was closing. Had City leaders waited, the economic crisis of 2008 would have probably stopped any chance of accomplishing change for decades. Further delay had additional opportunity costs. Companies were leaving downtown for greener pastures because of the blight and inability to accomplish any improvements. High-prestige companies and law firms didn't want to be next door to adult video businesses and haunted houses in decrepit old buildings.

Now, that said, yes P&L is a financial drain on the City right now. And lessons have been learned. The thing to do is to apply those lessons in future redevelopment plans. Use the knowledge and experience when the East Village gets developed. Some day a plan will come up in the Crossroads.

Sometimes problems like this provide the best education, and encourages future leaders to do better.

So they are saying PnL gets 9 million visitors a year?

That's 25,000 a day.

The national mall gets 30 mil a year.

Disney World gets about 17 million a year.

Yosemite NP got about 4 mil.

Pretty impressive PnL!

While I have been very critical of the one-sided deal, I make an effort to spend in the district. Cosentino's is an easy sell, of course, but I also frequent Bristol, Chipotle, AMC, Midland, Gordon Biersch, and Flying Saucer. Now that I've gotten intimately involved in the Crossroads, I've also come to understand the Live block as an absolute necessity for penning in the drunken masses instead of spreading them out in neighborhoods where they are harder to manage.

Kudos to Cordish, as well, for standing up to be host for gay pride festivities... even though it's a simple economic calculation.

That isn't the issue. The issue is how it was financed and the responsibilities the city assumed. And yes there are lessons to be learned from it.

True, people talk about infrastructure the city financed. But when the city finances garages within projects the cost of those garages are covered by the developer/tenants via their scheduled payments. For its own garages city uses revenue bonds. For water and sewer improvements the city uses revenue bonds. To expose the city's general fund to this expense without a complete and thorough and explore other financing options was unprofessional by the council and EDC. How many miles of city streets are not resurfaced annually because of the subsidy? How much in bridge repairs has been delayed? How much building repairs and maintenance has been neglected? Those are infrastructure items generally addressed by the general fund, not garages and utilities.

I suspect Cosentino's alone seals the deal for quite a few new downtown residents per year.

In any event, without the P&L District, no way KC keeps the Big XII tourney until 2016 and most likely longer, particularly without Mizzou in the Big XII.

I'll say it again, thank you Kay Barnes, for giving us these problems

(the baseball decision I could live without)