An intricate financing web finally has been stitched together to allow 21c Museum Hotels to proceed with renovating the historic Hotel Savoy building in downtown Kansas City.
The Louisville-based hospitality firm has taken about two years longer than originally projected to begin work on the conversion to an upscale, modern lodging facility that will also be part art museum.
“We’ve committed to a new redevelopment schedule,” said Phillip Allen, 21c’s chief development officer. “We’re going to start (interior) demolition and abatement work very soon …in the third quarter 2016.”
Allen said no one thing caused the company’s delay in starting the Kansas City redevelopment at Ninth and Central streets. As a company that specializes in converting historic buildings to boutique hotels, its principals were well schooled in the steps needed to bring the Savoy building back to life, he said.
21c has repurposed old buildings into hotels in Louisville, Cincinnati, Durham, N.C., Lexington, Ky., and Oklahoma City, and is working on a similar project in Nashville. The company’s only built-from-scratch hotel is in Bentonville, Ark.
Junius Hospitality Partners earlier this month acquired a minority interest in 21c, the companies announced Wednesday. The companies said the investment fund will direct capital toward building or acquiring properties for 21c expansion.
“They brought us capital to do up to $250 million worth of new projects,” Allen said. “This will be our second project with Junius. The first was Nashville.”
In Kansas City, Allen said, it took longer than initially expected to get investors lined up along with the necessary Missouri state and federal historic tax credits needed to make the project feasible.
“All of our projects are different,” he said. “We’re dealing with each building as it comes to us. Each presents different challenges, but this one is within our sweet spot. It’s got the problems of old buildings, but we’ve developed expertise in bringing them back to life.”
Allen declined to go into more specific detail about renovation challenges in the Savoy building.
In August this year, 21c received a timeline extension from Kansas City’s Tax Increment Financing Commission and the City Council on the TIF financing plan that initially was approved in October 2013, with completion targeted for 2016.
Allen said the financial details of the plan remain the same for the planned $48 million redevelopment. The TIF arrangement calls for diverting about $30.4 million in property tax and economic activity tax revenue for 23 years to help cover the total costs of more than $89 million, which includes the cost of financing.
21c and a Kansas City investment partner, Eric Holtze, actually acquired the Savoy property in December 2014.
From the outset, Allen said, the company has been aware of the need to balance its sleek, high-end lodging concept with the community character. In each city, he said, the hotel’s restaurant has been particularly focused on themes unique to the city.
The Savoy Grill in Kansas City, long a favorite dining spot, was darkened after a kitchen fire in 2014. 21c last year donated or sold much of the restaurant furniture, equipment and serving pieces.
But, Allen said, 21c intends to preserve “many elements of the Savoy Grill within the grill itself.” He said it was too soon to be more specific, but that work on the hotel and the restaurant would be simlutaneous. The future name of the restaurant hasn’t been set.
Hufft Projects is serving as the executive architect on the Kansas City project. Deborah Berke Partners, the architect affiliated with 21c on all of its properties is working on the design. McGown Gordon is the general contractor.