The Unified Government announced today that the building of a new hotel next to the Hollywood Casino at Kansas Speedway would be delayed.
The 248-room hotel next to the casino was supposed to have started this week. It would have included a large meeting space that might have been used for conventions.
UG spokesman Mike Taylor said originally the casino was to have started construction on the hotel by February of 2014, and that was part of a development agreement made between the UG and the casino. If it didn’t start on the project, it was required to pay 1 percent of the casino’s annual gaming revenues to the UG as a penalty each year. The UG gave the casino an extension on the deadline last year while a study was being done on an event center.
The casino still plans to build the hotel at a future date, Taylor said. The owners of the Hollywood Casino are Kansas Entertainment and Penn Gaming.
A spokesman for Penn Gaming said that pending legislation in the Kansas Legislature was one of a number of factors that was considered in the decision whether or not to postpone construction.
Because of the delay that has been announced today, Taylor said the casino would owe the UG about $1.4 million in penalties for February 2014 through February 2015. Every year after that, if it is not built, it will have a 1 percent penalty, he said.
Part of the reason to postpone the decision to start building the hotel is that there are some bills in the Kansas Legislature that would change the way casinos are taxed, and a bill that would allow The Woodlands race track to reopen with up to 2,800 slot machines, according to Taylor.
Taylor said The Woodlands would have a significant tax advantage over the casino if that legislation passes. He said Hollywood Casino had to guarantee $250 million in investment when it was built, and the UG supports the Hollywood Casino’s position.
“Hollywood Casino is a strong partner which provides major financial support to our community. While I’m disappointed the hotel project is not moving forward at this time, I’m pleased the Unified Government will receive significant new revenues from the casino operator for as long as the project is postponed. That is a benefit and positive news for our citizens and taxpayers,” said Unified Government Mayor Mark Holland in a news release.
Mayor Holland said the delay in the casino hotel project is not a negative reflection on the Village West area.
“The Village West area continues to be a major draw for tourists, business investment and is an economic leader in the Kansas City region. The Legends Outlets is adding a number of new restaurants, shops and a new Residence Inn Hotel. The new $64-million United States Soccer Training Complex, a multi-dealership auto plaza and the global headquarters for the Dairy Farmers of America will also call the area home. And Hollywood Casino continues to do well in the very competitive Kansas City gaming market. The future remains bright for Wyandotte County,” Holland said.
Do a number of hotels proposed for the Village West area have an effect on this hotel project?
Currently, one hotel, the Residence Inn, is under construction west of the Yard House at The Legends Outlets. There was discussion of building a hotel from OnGoal, which is spearheading the development of the new U.S. Soccer complex near 98th and Parallel Parkway. Last week, officials of OnGoal did not show a hotel building on the plans for their development project at a UG meeting, and said they still may build a hotel in the future somewhere in that area, although they had no specific location at this time.
Unified Government Commissioner Mike Kane said about today’s announcement about the Hollywood Casino hotel, “Obviously, we’re disappointed in the fact they put it off.”
Kane, who represents the 5th District, northwestern Wyandotte County, said while the UG will receive some money in the short term, that’s not what it really wanted.
“We really didn’t want the money, we wanted the hotel,” he said.
“Until we get a convention center, we’re losing a lot of money,” Kane said. He said it’s possible that Kansas City, Kan., and Wyandotte County could get some smaller conventions if it had an event center, similar to what is proposed for the new hotel at the casino.
“I do not like losing money that we could have had, even if it’s just a delay,” Kane said.
Last Oct. 30, the UG Commission heard the results of a feasibility study that said that spending here could go up as much as $47.6 million with the construction of a multipurpose arena, but an arena would not necessarily be a big money-maker. The study analyzed different types of meeting facilities. The study reported that the space that most likely might succeed here was a 7,000 to 10,000-square-foot multipurpose arena to house a minor league hockey or basketball team.
The study estimated that the arena would not make much money for the UG, compared to what it is spending for it. The consultant felt that the Kansas City area was saturated with these sorts of buildings. However, he still thought it would work with the Village West area.
The UG already receives 3 percent of the gaming revenue through a gaming tax, which is required by state law. The casino also pays the UG a $500,000 charitable contribution fund every year, which has been used for health-related programs, $500,000 for three nonhost school districts and $100,000 to a parks and recreation fund, all three negotiated in a local agreement with the casino. The casino also pays property tax to the UG.
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