Tuesday, May 26, 2009

Portland Bust

Someone please explain to me what all the bad blood is about the P&L District???

I really shouldn't read the comments section to stories in KC's paper of record/cheerleader. If something stupid is said in this town, odds are that it appears in the Star's comment section. Maybe we're a little spoiled here at the KC Beer Blog because our commenters actually add value to the blog.

So I read the above little comment buried in some rant about Kansas Citians not being enlightened enough to throw away millions of dollars on downtown development. The comment was in response to a Star article proclaiming that the Portland Trail Blazers and city of Portland were impressed with the P&L District.

I was literally shocked that another city would look at the P&L District as a case study of what you would want your city to spend money on. It seems Portland has built their own version of Kemper Arena, an arena built in a depressed area with the hope that development will surround it. As with Kemper, it hasn't happened in Portland. This has made the Trail Blazers a little angry since their arena isn't making them enough cash. They're going to the city officials and begging them to spend even more taxpayer cash to develop the area around their arena. Since they're not footing the bill, they see the P&L as an acceptable project.

And there's the rub. The year-old Power & Light District is hemorrhaging taxpayer money. Opened amid an economic free fall, leasing rates and sales taxes have failed to hit city projections. Cordish has sued Jackson County to lower its property tax assessment in the district and has developed a local reputation for hardball negotiating and tin-eared community relations.

Meanwhile the city, which issued $295 million in bonds to pay for infrastructure and some building costs, has been forced to dip into its general fund to cover its debt service.

Kansas City Mayor Mark Funkhouser, who is seen by the business community as anti-development, is philosophical about the district, launched during his predecessor's tenure. It's a "good product," he said, and it's nice to have crowds of people and night life where none existed before.

But he doesn't believe government should be building bars and restaurants. And as a former city auditor, he harbors few illusions about the economics involved.
"It's never going to make money," he said. "I can't imagine how it could make money."

None of this is mentioned in the Star article, of course, only the fact that Portland likes the P&L District. Hence, Star commenter confusion such as “Does anyone actually believe things used to be better back when there was absolutely nothing at all down there? Anyone? Anyone?... “.

Well I think we would have been better off with the $295 million we spent on the deal. That money's gone and we're not getting it back. So yes, we would be $295 million richer as a city, which would make us better off than a collection of douchey bars.

This would be even worse for Portlanders who have a thriving downtown. The thriving just isn't happening where city leaders and the Trail Blazers want it to happen.

Since The Oregonian doesn't really have anything to gain by cheerleading the P&L they also did some other real reporting.
The Power & Light District is credited with helping the city increase convention bookings by 30 percent in 2008, which represents an 80 percent increase in convention-related room days for local hotels.

But as a local gathering spot, it's still a work in progress. The district draws a decent lunch crowd, but weeknights can be slow. And though the district's Live block hosted 150 music events last year and does a brisk business on Friday and Saturday nights, the nearby restaurant row is often sleepy.

On a balmy Friday night in early May, casual dining chains such as Chipotle Mexican Grill and Ted's Montana Grill are moving burritos and bison burgers.

But at the 801 Chop House, which features a long wine list, curtained-off dining alcoves and 22 varieties of steaks and chops, exactly three tables are occupied at 8 p.m. Across the street at the Bice Italian Cafe, it's the same story.

High-end dining isn't the district's only sore spot. City officials say retail has been slow to materialize, too. There's the new grocery store and a JoS. A. Bank men's clothing outlet. But Cordish marketing posters festoon empty storefronts imploring people to "Take the new downtown for a test drive."

Blake Cordish, a vice president in the family business, contends that the district has been phenomenally successful given the state of the economy. Though other leading developers are going bankrupt, "our portfolio is thriving."

Cordish says 90 percent of the Power & Light District is leased, including tenants who have committed or are building out their space.

City officials figure only 72 percent of the space is occupied and say Cordish has made many pronouncements about tenants and occupancy rates that didn't pan out in the past.

"Missouri's motto is 'Show Me,'" said Missy Wilson, vice president of development services at Kansas City's Economic Development Corp. "The public will believe it when they see it."

In the meantime, Cordish has sued the county over its property taxes, as well as the owners of the Bice Bistro for back rent and the costs of finishing the restaurant and adjoining gelato cafe.

The contractor who did much of the nearly $3 million build-out of the 801 Chop House has sued the restaurant's owners and Cordish for failure to pay for $600,000 in work.

The real red ink, however, is at the city, which was looking for sales taxes generated in the district to pay three-quarters of its bond payments. In the first year of the district's operation, sales tax revenue fell 84 percent short of its projections, forcing the city to exhaust a reserve fund and tap its general fund for an additional $4.7 million to meet debt payments. This year, even with more bars and restaurants open, it forecasts a $7 million to $10 million shortfall.

"I think the City Council made some decisions that were socially driven and not necessarily business driven," said Jeffrey Yates, Kansas City's finance director. "While we're recognizing now it's going to cost the general fund, everyone realizes that it's better than what we had."

I'm not going to lie and say that I haven't enjoyed the P&L District, hell, I go to The Flying Saucer 3 times a week. What I am saying is that KC threw their money away and subsidized an unprofitable development all the while promising to make the city richer. It was all lies and I hope Portlanders see through the lies when it comes their turn.

18 comments:

  1. Yeah, I live in downtown, but it has added really 0 value to me personally. If it helps maintain or raise the value of my property fine, but most people in the area know what's really going on down there.

    As far as the Flying Saucer, it gets a free pass because it does bring value to that area with the insane amount of beer taps it has. It has the distinction of being 1 of only 2 places I've been to at the P&L District.

    I just prefer less douchy people, present company excluded, most of the people waiting in line at McFadden's, etc... aren't worth pissing on.

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  2. This said it all:

    "The conclusion they communicated repeatedly to Cordish: "Interesting, it appears to be successful here," said Tom Miller, chief of staff for Mayor Sam Adams. "But if you want to cookie-cutter it and drop it into Portland, it will fail."

    The P&L wouldn't work in Portland at all. And like you and Hoopster have said, it doesn't REALLY work in KC. Maybe eventually things will turn around but the real core people who live in the city aren't going to go there. It is almost like a mall in the middle of a bunch of vintage shops. People who know the area will still go to their favorites, people who don't, will hit the "mall".

    The area around the Rose Garden is definitely in need of revitalizing but they will have to aim for the crowd that is going to the games or who wants to be near the action - Portland already has enough areas with the bars and clubs that (I think - it has been almost 15 years since I lived there and have gone to clubs) alone isn't going to be enough of a draw.

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  3. Portland has a hell of a lot less to worry about than we do. It already has 3 or 4 neighborhoods comparable to 39th street/Westport as well as a thriving downtown with a genuine, unmanufactured appeal. Something like P&L would never fly there. Beyond that, it is a growing city that seemingly everyone wants to move to. It's not in much danger if something flops.

    As you may have guessed, I love Portland and desperately want to make love to it every chance I get.

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  4. Don't be jealous and take a hit out on me, but I am moving back to Portland next year :) SOOO EXCITED :)

    Oh, and to make this topic, BEER IS GUD!

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  5. I think I would kill a man to live in Portland.

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  6. I am a woman so I guess that keeps me safe. PHEW! :)

    BEER!

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  7. I grew up in Portland & lived there for all but 7 years of my life. Love the town, but living there & visiting there are two VERY different things. Cost of living is extremely high (the house I own in Waldo would have cost over twice as much in Portland - you would laugh at the pieces of junk I looked at in P-town going for nearly $400k). And the job market has sucked for all of my adult life (15 years). So if you want a shitty job and an expensive place to live but a high quality of life, go for it. ;) Me, I prefer to visit in August when the weather's awesome.

    Anyway...Something like the P&L would NOT go over well in Portland (and certainly not the Rose Garden ... it'd be like putting the P&L down by Kemper). Put it out in the burbs - I could see it succeeding in Beaverton. But then, the Blazers don't play in Beaverton, do they? ;)

    As someone mentioned, Portland already has Hawthorne, Mississippi, Belmont, the Pearl, Goose Hollow, NW 23rd, and various other pub/restaurant areas. It doesn't need another one - and one full of chains that feels like a shopping mall would almost surely flop.

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  8. P&L will always have (blood) BBQ sauce on their hands for kicking out Danny Edwards (and not even using or knocking down his building) to replace him with some disgusting Super-Dave's crap. That's like the "curse of the bambino" just worse.

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  9. I don't understand the animosity toward the Power & Light. Honestly, I think it's probably one of the better done projects that KCMO has done in a long time.

    The district is definitely geared more toward the convention/entertainment-going crowd. I don't have a problem with that. The idea that someone can go to an event downtown, and walk to bars and restaurants before getting in their cars and heading home is great for Downtown. The idea that convention-goers have a ton of entertainment options nearby is also great. The fact that I don't go there a lot is irrelevant to me -- even though, when I go, I usually have a great time. And I personally really like the Flying Saucer, Gordon Birsch, Chef Burger and Raglan Road. I've had great times at all of them. And I seldom go to the P&L and not see good crowds of people all seemingly having a good time.

    The financials are a disaster...in part because the district has been sitting 1/2 empty for now 19 months since it was all supposed to be open (remember the Elton John concert in October 2007?)

    But I have no beefs with the district itself. It is a definite improvement over empty buildings and surface parking that was there before. Hell, I even enjoy going to Danny Edwards' new place more. All of the beefs on this, IMO, should be centered around poorly negotiated financials of the deal. The district itself, I think, is quite good.

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  10. While it's an improvement, they should have looked into other methods of urban revitalization, which they appear to be doing now. Namely, tax abatements. Crossroads & River Market demonstrate the beginnings of growth that urban centers can sustain without requiring huge influxes of taxpayer money and franchise attraction.

    The problem I have with P&L is two-fold: it doesn't promote or attract local KC talent/enterprise, and it invites crowds I don't really enjoy (jaegerbomb/beer-pong/woo-girl type peeps).

    Portland converted a drug- & crime-ridden industrial area into what's now one of the most exciting areas in the city, by encouraging development via a 10-year tax abatement and attractive land deals with property developers. Think crossroads art galleries mixed with condos and independent cafes, restaurants, bars, even a "living room theater", Bridgeport Brewing, and a Rogue public house.

    http://en.wikipedia.org/wiki/Pearl_District,_Portland,_Oregon

    Looks like KC might be getting the hint, though: http://www.kansascity.com/business/story/1191391.html

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  11. Brent, you can't separate the district from the financials. If the financials were anywhere near acceptable you wouldn't read me complaining about the place. I have a problem that the city is throwing all of this tax money away and it doesn't benefit anyone in any meaningful way. Sure it may increase conventions by 80%, but that doesn't make up for the money sucking hole the district represents.

    This is rich white people entertainment paid for on the backs of citizens and workers of KC.

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  12. Bull, your comment about white people reminded me - I forgot one other craptastic aspect of the P&LD: the dress codeOne guess as to whom they're targeting.

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  13. Case in point in why government shouldn't be subsidizing business. Doesn't anyone wonder what the hell will happen when government gets more involved with health care? Sheesh.

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  14. Bull,

    I disagree. I think it's one thing to say the economics of the district is a failure. It's another to say the district as a whole is a failure.

    I think the district, itself, is a success. The financials are a complete failure.

    If you are Portland, you can look at the district and easily say, yeah, that would work (or not) for our city if we can make the financials work.

    Saying the whole thing is a failure would indicate that you wish you could do the whole project entirely differently. I wish we could have done the exact same project -- just done so in a way that didn't completely bastardize taxpayer dollars and misrepresent the project to the public.

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  16. Brent-
    The financial aspect of the deal is necessarily a part of analyzing whether the district is a success. It would be somewhat akin to a guy making $35k a year driving a Bentley and having the guy tell us it was a successful move because hey, he has a nice looking car. We all know the debt service on that purchase makes it an unmitigated financial disaster.

    (I'll readily admit that the problem with this example is that the guy making $35k would never be permitted to buy a Bentley in real life. There is apparently no such economic vetting done on boondoggle government-sponsored-projects.)

    The P&L will cost taxpayers in KCMO a metric assload of money in the long run, and that's actually the main reason most people have issues with it.

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  17. ^^ Agreed.

    One more thing I think is worthy of note (sorry for so many posts) is that the developer (Cordish) has plunked down very similar developments in a number of cities. Louisville has almost the same exact thing (4th St Live!), including the very same chain restaurants, as do several other cities. It's not unique or special - KC is bleeding money via the food & booze version of a shopping mall. You can check out their other developments hereCordish says in the article that they take the concept & twist it to match the city, but I can tell you that there isn't much difference at all in 4th St Live! and P&L (though the dress code is slightly different to match the attire of the local "urban" population). There's no reason to believe they'd change their approach for Portland.

    If the city's going to throw money at downtown, I'd much rather see it directed toward local entrepreneurs, developers, and residents. Build some loyalty to the city, a sense of culture, reinforce an interest in the local talent...

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