Jun. 19--The Hyatt Regency Wichita is financially healthy, city officials say, despite the hotel's four-year record of net losses. 

Anti-tax activist Karl Peterjohn passed out information to reporters at Tuesday's City Council meeting obtained from an open records request that shows the Hyatt Regency posted net losses in each of its first four years of business. The city took over ownership of the hotel late last year. 

The annual net losses, from 1997 to 2000, total more than $3.1 million. 

The city's economic development director, Allen Bell, however, said that those figures would be positive without taking into account depreciation and amortization. The hotel's original investors wanted the tax benefits from a loss, he said. 

However, the Hyatt has had a positive cash flow and is paying its own way, Bell said. During that time, the hotel showed a positive return on investment, although not a large one, he said. 

"We inherited a very healthy financial operation over there," Bell said. "It has all the money it needs to keep operating." 

The city has been financially involved in the Hyatt from its inception. Before it opened in 1997, the city invested $10.2 million in the hotel and $23 million more in improvements in the area around Century II and the Hyatt. 

In September 2001, the City Council voted to buy out its private partners in the Hyatt Regency. Under the terms of the deal, the city would pay the investors $2.5 million from its insurance reserves and assume $15.7 million in debt. 

Except for the first year of business, the hotel has posted an operating surplus before interest, depreciation and amortization. 

While he hasn't studied the situation in detail, with a positive cash flow and operating income, "I'd say things are OK," said Michael Flores, assistant director of Wichita State University's School of Accountancy. "That's not a bad position to be in." 

There are a host of ways to evaluate the health of a company, Flores said. "I personally would be comforted by a positive cash flow -- that tells me you're not bleeding cash. After that, everything else is negotiable." 

The taxpayers would be exposed to risk if the city has had to inject cash into the hotel, he said. 

Peterjohn, executive director of the Kansas Taxpayers Network, said, however, that from his view, a loss is a loss. 

Using the Hyatt example to bolster his argument, Peterjohn said the city should not approve a downtown arena because of the potential for financial exposure. He disapproved of the action taken by the City Council Tuesday to postpone a public vote on the arena; he wanted the vote to take place Aug. 6 as planned. 

"The city already has its money-losing Hyatt Hotel as an example of the problems that can arise in economic development," Peterjohn said in a statement. "Wichita already has enough problems without adding another financial 'white elephant' to the many challenging financial issues this community faces." 

The Hyatt, Bell said, has found a healthy demand for meeting room events and functions and maintains high occupancy rates -- averaging in the mid-70 percent range. 

"The hotel has got a very healthy book of business," Bell said. 

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(c) 2002, The Wichita Eagle, Kan. Distributed by Knight Ridder/Tribune Business News.