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January 20, 2006
K.C. stadium renovations to top $575m
With Jackson County officials drafting new leases for the Kansas City Chiefs and Royals, it's becoming clearer how much taxpayers will be asked to spend on stadium renovations for the two teams: $425 million from a county sales-tax hike; $50 million in state tax credits; and at least $100 million [NOTE: Reader Jerry G points out that the Kansas City Star has this at $200-220 million] for a rolling roof to cover one if not both stadiums, which would be paid for, according to the Associated Press, by a "compensating use tax on out-of-state businesses," whatever that is. Total public cost: $575 million, though it's unclear if that's cumulative spending over 25 years, or present value of the deal. A referendum is scheduled for April 4.
The costs of Truman Sports Complex renovation are 3/8-cent sales tax for 25 years. This amount could range from $837 million to $1.03 billion depending on the sales tax growth rate. The bonds to be sold are $425 million with an amortization of $700 million. Anything over the $700 million is to be used for repair and maintenance at the sports complex. The State of Missouri is giving $50 million in tax credits to the teams. The State of Missouri will contribute $3 million per year, the city of Kansas City, MO will contribute $2 million per year and the Jackson County will contribute $3.5 million per year. These will be for 25 years for a total of $212.5 million.
The rolling roof is estimated to cost $200 million.
The costs of Truman Sports Complex renovation are 3/8-cent sales tax for 25 years. This amount could range from $837 million to $1.03 billion depending on the sales tax growth rate. The bonds to be sold are $425 million with an amortization of $700 million. Anything over the $700 million is to be used for repair and maintenance at the sports complex. The State of Missouri is giving $50 million in tax credits to the teams. The State of Missouri will contribute $3 million per year, the city of Kansas City, MO will contribute $2 million per year and the Jackson County will contribute $3.5 million per year. These will be for 25 years for a total of $212.5 million.
The rolling roof is estimated to cost $200 million.
Mr. Nash, I was wondering where to find info on the rarely discussed "management fees" that operate to essentially pay rent to the teams for playing at the stadiums. I read the lease documents; they referred to the management fees but did not list how much each entity contributes to them.
I wish the JaxCo Sports Authority would just step aside and have Lamar Hunt deal directly with the citizens and the various governments. It would save us all a lot of time and confusion.
Posted by Hippster in KC on January 20, 2006 11:51 AM
Neil,
I hear rumors that the Chiefs are using a threat (real or implied) to move to Wyandotte County as a bargaining chip. I investigated the possibility a few months back and it doesn't seem likely they would move. Here are some thoughts on that probability.
Wyandotte County has 1/5 the population and 1/5 the income as Jackson County, so they can't afford the Chiefs even if they wanted to. The conservatives in Johnson County would oppose any attempt to import the Chiefs and their $5.5 million per year local subsidy. It would have to be financed entirely by the state.
With Kansas currently $4 billion in debt, the over $1 billion cost (interest and principal) needed to satisfy the Chiefs represents 1/4 of that debt. I am convinced I can make a better case against the stadium than proponents can for a stadium. Dont forget that in the year 2000, Missouri income was $20 billion while Kansas could only muster $10 billion.
There is not much economic benefit for western Kansas in an eastern border stadium.
Also, 60 Kansas legislators signed the TABOR pledge. 58 Kansas legislators voted as fiscal conservatives over 80% of the time last year (fact from the Kansas Taxpayers Network). Some of these are the same people but it does indicate conservative consistency in money matters.
Another factor is the Kansas Supreme Court who last year ordered the spending of $400 million for education in 2005, and another $400 million in 2006. A plan to repeal the business equipment tax would require cost $300 million. A stadium would cost another $1 billion. Kansas would have to find an extra $1.7 billion in an election year.
Look at it this way. If the Chiefs really want to move to Kansas (or elsewhere), what better way to set the stage than to insist on a tax they know will not pass. If, In November of 2006, Jackson County rejects the tax, they will go into default and the Chiefs could leave without penalty. Could it be that the Chiefs are not negotiating in good faith?
Maybe it could be financed by a Bi-State tax. You know, a tax that leaves Missouri residents last in line for tickets. I estimate the chance of that happening somewhere between zero and none.
The financial picture is very different when you are being asked to pay a 1/2 cent sales tax (Bi-State II) than when you are asked to increase your total state debt by $1 billion, plus add a yearly $8.5 million subsidy. For Kansas, it's a lose-lose situation.
The obvious solution is for Jackson County to ask voters for an $80 million tax (over 4 years) and tell the Chiefs, "Your tax won't pass. We are going for the $80 million to lock you in for 10 years and we'll talk to you about nine years from now."
Think about it!
Wayne Flaherty