ORDINANCE NO. 000382

Accepting the recommendations of the Tax Increment Financing Commission as to the Hotel Phillips Tax Increment Financing Redevelopment Plan approving the Hotel Phillips Tax Increment Financing Redevelopment Plan; designating a Redevelopment Area; stating the Councils intention to annual appropriate 100% of the economic activity taxes for the Plan and making certain findings in connection with the Plan.

WHEREAS, pursuant to the Real Property Tax Increment Allocation Redevelopment Act, Sections 99.800 to 99.865 of the Revised Statutes of Missouri, 1986, as amended (the "Act"), the City Council of Kansas City, Missouri, by Ordinance No. 54556, passed on November 24, 1982, and thereafter repealed and amended in certain respects by Committee Substitute for Ordinance No. 911076, as amended, passed on August 29, 1991, created the Tax Increment Financing Commission of Kansas City, Missouri (the "Commission"); and

WHEREAS, the Commission has been duly constituted and its members appointed; and, after all proper notice was given, the Commission met in public hearing; and, after receiving the comments of all interested persons and taxing districts, closed said public hearing on March 8, 2000 and on March 8, 2000, approved Resolution No. 3_6_00 (the "Resolution") recommending to the City Council the approval of the Hotel Phillips Tax Increment Financing Plan (the "Redevelopment Plan"); and

WHEREAS, the Redevelopment Plan is a comprehensive program intended to satisfy, reduce or eliminate those conditions, the existence of which qualified the Redevelopment Area as a conservation area, and to enhance the tax base within the Redevelopment Area through the implementation of a single Redevelopment Project and the adoption of tax increment financing in said Redevelopment Project Area; NOW, THEREFORE,

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

Section 1. The recommendations of the Commission concerning the Redevelopment Plan as set forth in the Resolution attached hereto as Exhibit "A" are hereby accepted and the Redevelopment Plan, a copy of which is attached hereto as Exhibit "B," is hereby approved and adopted as valid and the Redevelopment Project contained therein are hereby authorized.

Section 2. All terms used in this Ordinance shall be construed as defined in Sections 99.800 to 99.865 of the Revised Statutes of Missouri, as amended.

Section 3. The following_described tract is hereby designated a Redevelopment Area:

TRACT I:

All of Lots 11, 12 and 13, Block 20. ASHBURNS ADDITION, a subdivision in Kansas City, Jackson County, Missouri, according to the recorded plat thereof, being more particularly described as follows: Beginning at the Southeast corner of said Lot 11, being also a point of intersection of the West right_of_way line of Baltimore Avenue with the North right_of_way line of 12th Street, as said avenue and street are now both established; thence West along the South line of said Lot 11 and along said North right_of_way line, a distance

of 142 feet to the Southwest corner thereof; thence North along the West line of said Lots 11, 12 and 13, being also the East line of a 16 foot wide alley, a distance of 75 feet to the Northwest corner of said Lot 13; thence East along the North line of said Lot 13, a distance of 141.99 feet (142 feet, platted) to the Northeast corner thereof; thence South along the East line of said Lots 13, 12 and 11 and along the West right_of_way line of said Baltimore Avenue, a distance of 75 feet to the point of beginning.

TRACT II:

All of Lot 14, Block 20, ASHBURNS ADDITION, a subdivision in Kansas City, Jackson County, Missouri, according to the recorded plat thereof, being more particularly described as follows: Beginning at the Southeast corner of said Lot 14, being also a point of the West right_of_way line of Baltimore Avenue, as said street is now established; thence West along the South line of said Lot 14, a distance of 141.99 feet (142 feet, platted) to the Southwest corner thereof; thence North along the West line of said Lot 14, being also the East line of a 16 foot wide alley, a distance of 25 feet to the Northwest corner of said Lot 14; thence East along the North line of said Lot 14, a distance of 141.99 feet (142 feet, platted) to the Northeast corner thereof; thence South along the East line of said Lot 14 and along the West right_of_way line of said Baltimore Avenue, a distance of 25 feet to the point of beginning.

Section 4. In accordance with the recommendations of the Commission as set forth in the Resolution, the City Council hereby finds that:

A. The Redevelopment Area qualifies as a Conservation Area as evidenced by the following factors:

1. The Redevelopment Area is an improved area located within the territorial limits of Kansas City, Missouri.

2. Fifty percent or more of the structures in the Redevelopment Area have an age of thirty_five years or more.

3. The Redevelopment Area is not yet a blighted area, but is detrimental to the public health, safety, morals, or welfare and may become a blighted area because of any one or more of the following factors:

a. Dilapidation. In recent years an increasing portion of hotel revenue has been required for structural maintenance and improvements, thereby decreasing the funds available to provide modern amenities required to attract appropriate clientele. Consequently, the current room rates required to operate the hotel are more than most customers are willing to pay for rooms that lack modern amenities as is evidenced by the hotels declining occupancy rate, which currently averages 50% and is steadily declining.

b. Obsolescence. The Hotel Phillips does not provide the room size, communications facilities or hotel services necessary to attract an appropriate and sizable clientele.

c. Deterioration. Because of the sums required to physically maintain buildings within the redevelopment area, improvements of aesthetic elements such as wall covering, carpeting and furnishings have been neglected leaving the hotel unable to compete for business and convention clientele.

d. Presence of structures below minimum code standards. The construction design and standards of the hotel predate the current building code of Kansas City, Missouri. While the hotel was constructed according to the building code as it existed in the late 1920s, the code has subsequently changed.

e. Excessive vacancies. The occupancy rate of the Hotel Phillips is presently in decline and not expected to increase in the absence of major renovations.

f. Lack of ventilation, light or sanitary facilities. The heating, ventilating, air conditioning and plumbing provided by the Hotel Phillips is outmoded and insufficient to provide the hotel guests with the quality of service they expect to receive. Increasing maintenance costs of these facilities does not allow sufficient savings in order to perform a major overhaul. Moreover, the hotel lacks the proper windows and insulation to keep energy costs at a reasonable level.

g. Inadequate utilities. The utilities are not sufficient to provide the services expected of a modern hotel. Not only are the heating, ventilation and air conditioning services inadequate, but wiring and telecommunication systems do not provide the services necessary to compete with more modern hotels, such as phone lines for fax and computer modem usage.

h. Depreciation of physical maintenance. As the hotel ages, the cost of physical maintenance will increase dramatically, while income from room rental will continue to decline.

i. Lack of community planning. The hotel is an underutilization of valuable downtown real estate. The renovation of the Hotel Phillips will assist in the attraction of out_of_town visitors and conventions to downtown Kansas City.

B. The Redevelopment Area has not been subject to growth and development through investment by private enterprise and would not reasonably be anticipated to be developed without the adoption of tax increment financing, as evidenced by the following factors:

1. The proposed redevelopment of the area will require an estimated investment of approximately $23,500,000, of which approximately $7,300,000 of financial assistance through tax increment financing is necessary to cure the conditions that qualify the property as a Conservation Area and to generate an acceptable return on investment to attract private investment.

2. In the absence of tax increment financing, a below_market rate of return of approximately 12 has been projected. These returns are not sufficient to attract private investment capital. With tax increment financing, the projected rate of return ranges from 18 to 20 percent. The use of tax increment financing makes the Plan feasible and thus attractive to private investment.

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C. An affidavit, signed by the redeveloper or redevelopers and submitted with the Redevelopment Plan, attesting to a detailed description of the factors that qualify the Redevelopment Area as a Conservation Area and that the Redevelopment Area has not been subject to growth and development through investment by private enterprise and would not reasonably be anticipated to be developed without the adoption of the Redevelopment Plan, is attached as Exhibit 10 to the Redevelopment Plan.

D. The Redevelopment Plan, conforms to the Downtown 2000 Area Development Plan (approved by the City Council in 1983) and with FOCUS, the comprehensive plan for the development of the City as a whole.

E. The areas selected for Redevelopment Projects include only those parcels of real property and improvements thereon which will be directly and substantially benefitted by the Redevelopment Project Improvements.

F. The estimated dates of completion of the Redevelopment Projects and retirement of obligations incurred to finance Redevelopment Project Costs have been stated in the Redevelopment Plan and are not more than 23 years from the adoption of any ordinance approving a Redevelopment Project within the Redevelopment Area.

G. The Redevelopment Plan includes a plan for relocation assistance for businesses and residences.

H. A cost_benefit analysis showing the impact of the Redevelopment Plan on each taxing district which is at least partially within the boundaries of the Redevelopment Area has been prepared in accordance with the Act.

I. The Redevelopment Plan does not include the initial development or redevelopment of any gambling establishment.

Section 5. The Commission is authorized to issue obligations in one or more series of bonds secured by the Hotel Phillips Account of the Special Allocation Fund to finance Redevelopment Project Costs within the Redevelopment Area and, subject to any constitutional limitations, to acquire by purchase, donation, lease or eminent domain, own, convey, lease, mortgage, or dispose of land or other property, real or personal, or rights or interests therein, and grant or acquire licenses, easements and options with respect thereto, all in the manner and at such price the Commission determines, to enter into such contracts and take all such further actions as are reasonably necessary to achieve the objectives of the Redevelopment Plan pursuant to the power delegated to it in Ordinance No. 54556. Any obligations issued to finance Redevelopment Project Costs shall contain a recital that they are issued pursuant to Sections 99.800 to 99.865, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

Section 6. That the Council states its intention to annual appropriate 100% of the Economic Activity Taxes, as defined in 99.805, RSMo, generated within the Redevelopment Area, for public, municipal purposes associated with the Redevelopment Plan. The Council finds and determines that the use of funds set forth in the Redevelopment Plan constitutes a public, municipal purpose.

Section 7. Pursuant to the provisions of the Redevelopment Plan, the City Council approves the pledge of all funds that are deposited into the Hotel Phillips Account of the Special Allocation Fund to the payment of Redevelopment Project Costs within the Redevelopment Area and authorizes the Commission to pledge such funds on its behalf.

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Approved as to form and legality:

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Assistant City Attorney