Chiefs practice field in Olathe would break new ground in siphoning off city tax money

Two local Kansas governments will be holding public hearings tomorrow on possible subsidies for a new Kansas City Chiefs stadium to defray the state’s possibly insurmountable costs. Wyandotte County holds its first public hearing at 5:30 pm, and the city of Olathe in neighboring Johnson County, where a Chiefs practice field would be built, will follow at 6 pm. Olathe apparently plans to vote on stadium funding at its meeting, and accordingly has published its plan, which is a doozy:

• The legislation would create a 165-acre tax district around the new facility for diverting city taxes.
• Within that area, all city sales tax revenues, the city’s share of county sales tax revenues, and 7% of the 9% city hotel tax — except for any money already pledged to paying off other projects — would be redirected to the Chiefs to cover the team’s development costs.

Economist J.C. Bradbury weighed in over the weekend to call this “bonkers,” and it indeed would break new ground in siphoning off tax money for a stadium: Olathe wouldn’t be just giving up increased tax revenues like in a TIF, but all sales and hotel tax revenues within the tax district, for the next 30 years. (At least the tax district is smaller than the state’s incredible 293 square miles, but that’s a low bar for comparison.) The likely practice field site is currently undeveloped, at least, so Olathe wouldn’t be losing much in existing taxes; unless, of course, a Chiefs development lures away businesses that would otherwise locate elsewhere in Olathe and moves them to the tax-subsidy district, which is pretty likely.

Meanwhile, economist Geoffrey Propheter chimes in to note that rezoning the practice field site as exempt from property taxes would cost the city about $37 million in present value of lost future tax revenue. No one has yet attempted to calculate how much Olathe would give up in future sales and hotel tax money.

At this point, the best-case scenario for Olathe might be that it turns out no one wants to open a ton of hotels and restaurants and other businesses around a practice field that’s only open to the public a handful of days a year, and there’s not so much local tax revenue to lose. Or the city council could just say, “We get all the hassle of hosting a Chiefs practice field but the Chiefs keep all the tax money? No thanks.” We’ll find out tomorrow night.