The Beacon ran a long article late last week about the Kansas City Royals stadium proposal that includes a bunch of worthwhile analysis of the deal, including why using taxes from in and around the stadium isn’t really the project “paying for itself.” (“Some ballgame attendees might be going to a Crown Center restaurant instead of a Waldo restaurant that day. That shift in economic activity within Kansas City is a net neutral from a tax revenue perspective.”) But the most interesting part is buried many paragraphs down, in a discussion of the type of bonds the city plans to use to borrow $600 million for stadium costs and why:

Kansas City intends to issue these Royals bonds as “special obligation bonds,” as opposed to revenue bonds or general obligation bonds. That means that the city is essentially promising to pay back a certain amount of money every year…

If the city wanted to get a lower interest rate, it would have needed to take the stadium proposal to a public vote — either for a sales tax as Jackson County did or for general obligation bonds, using property taxes.

The going interest rate for K.C.’s special obligation bonds, reports the Beacon, is 5.725%, compared to 4.25% for general obligation bonds. Applied to a $600 million loan, this means that Kansas City is going to be spending about $7 million a year extra on stadium bond payments in order to avoid a public vote. That’s money that, if it were used to finance other city spending, could cover about $117 million in different public needs, if the city had gone the voter-approval route for the Royals project. But you can’t put a price on not letting the people vote, or rather you can, and that price is $117 million.

In other evading-democracy news, meanwhile, Mayor Quinton Lucas’s rush to get a Royals deal down on paper before anyone could try to force a public vote seems to have run afoul of another small matter: the residents of a 33-story apartment building adjacent to the stadium site who say the project would be infringe on their property rights, and who are now suing to block part of it.

According to the lawsuit filed Monday in the Jackson County Circuit Court, the [San Francisco Tower] condominium’s association is seeking a temporary restraining order and an injunction against three defendants — the city of Kansas City, the Royals and Crown Center — for protections over its longtime easements and property rights.

Some of the property rights include:

• An approximate 0.835-acre central mechanical plant and maintenance shop;
• A transformer and primary switchgear rooms;
• Utility tunnels, including a 24-foot-wide tunnel under Grand Boulevard;
• A pedestrian bridge;
• A 400-space parking garage
• A passage over San Francisco Garden.

The association states that plans for 68-acre ballpark district show the tower surrounded, as well as the stadium approximately 100 feet from the condo’s entrance.

All this building infrastructure is on Crown Center property, but the condo association says it has easements in place guaranteeing it the right to use the property for this stuff. The residents say they’ve been trying to negotiate with Royals execs, the Crown Center, and the city since May, to no avail, and so are seeking a restraining order and injunctions against the part of the project that would infringe on their rights, though they’re not seeking to stop the project overall.

This is all pretty embarrassing for Mayor Quinton Lucas not to have addressed sooner, but then, crossing all his t’s in a timely fashion doesn’t really seem like one of his core strengths. Lucas said yesterday that he “will support all parties in reaching an amicable resolution whether through the Court’s declaration of rights outside the stadium footprint, as sought here, or through alternative dispute resolution.” No word yet on whether an injunction might have any impact on the inevitable lawsuit over whether a public ballot measure will be ruled to come too late to overturn the stadium plan, assuming voters give it a thumbs-down; governance is too important to be left to the masses, which is why we instead leave it to bond financiers and city lawyers, apparently.

Also on Friday, the Kansas City TIF Commission issued its Downtown Stadium TIF Plan, spelling out in a bit more detail — though still far from complete detail — what public money will be going to a new Royals stadium if and when it gets final approval following the city council’s yes vote on Thursday. Having to dig through two separate financial documents in one day seems like it should be an OSHA violation; fortunately, veteran K.C. journalist Dave Helling has done a lot of the summing up already on his Substack, so we can use that as a jumping-off point.

• Before we get to Helling’s analysis, one technical point: Though the funding plan is described throughout as “tax increment financing,” it’s not a traditional TIF plan, which involves redirecting increased property taxes from in and around a development to help pay the developer’s costs. Since the Royals stadium will already be publicly owned and thus owe no property taxes, what Kansas City is instead looking at is diverting city sales, income, hotel, food and beverage, and other taxes from in and around the stadium district — making this a STIF (sales tax increment financing), or really a mega-TIF.
• The stadium will cost $2,051,249,065 to build, of which Royals owner John Sherman will provide $911,249,065. This leaves precisely $1.14 billion for the city and state to cover; it was thoughtful of Sherman not to force taxpayers to have to dig around for exact change.
• As discussed last week, the city will spend $90 million on infrastructure, with no specific funding source spelled out. Another $510 million will come from city mega-TIF tax money, a proposed 1% sales tax hike in a “community improvement district” of undetermined size — though as Helling calculates, all these combined are projected to “yield about $12.7 million annually, not nearly enough to cover yearly payments on a $510 million dollar debt.” (KCTV reports that an additional $128 million would come from raiding other city revenues, including restaurant taxes, gaming revenues, and parking revenues.)
• The state of Missouri will provide $254 million from the Show Me Sports Investment Act — an amount equal to all state tax revenue already being paid by the Royals — $50 million in tax credits, $35 million in “infrastructure contributions,” and $100 million in transportation spending.
• That leaves $101 million unaccounted for, which is listed in the TIF Commission spreadsheet as being from “other public sources.” As Helling writes, this “could be Missouri — the state already provides Jackson County $3 million a year for the Truman Complex; perhaps that’s part of where the money is coming from. Or it could be from Jackson County. Or some combination. Or not. It isn’t clear.”
• None of this counts: property tax breaks, which as previously noted could add half a billion dollars or more to the city’s cost [UPDATE: Geoffrey Propheter projects $325-375 million]; or the steeply discounted rent (just $1 a year) that Sherman would pay; or the cost of giving up all stadium revenues to the city’s billionaire tenant, including naming rights for a building that he wouldn’t own.
• Helling also mentions “undefined ‘redirections’ of $710.3 million from the ‘stadium impact area’ and another $259.5 million in ‘city funds,’ defined as the restaurant and gaming tax, on-street parking revenues, and revenue from ‘ancillary’ development.” Given that this is only mentioned in a chart showing “downtown stadium revenue projections, I think this isn’t additional public spending, but rather an attempt to make the taxpayer tab look better on the balance sheet by saying, “But the city will get to keep all the money we make from parking meters!” But, like Helling, I’m not 100% confident of anything here.
• Unlike in Tampa, there’s no “waterfall” fund; the TIF district dissolves once the stadium is paid off. Unless the city decides to extend it, obviously, which is a thing that tends to happen once team owners start sniffing around for additional upgrades down the line.
• Like the proposed stadium in Tampa, this one could be intentionally on the small side: the minimum number of actual seats is 30,000, with additional standing room. That could come as an unpleasant surprise to Royals fans, who turned out at an average of more than 30,000 a game as recently as 2016, and who have crossed that mark at three home games this year despite a last-place team. Expect higher prices at a new Royals stadium than at 38,000-capacity Kauffman Stadium, especially for big games or when the team doesn’t suck.

With all that in mind, it seems fair to conclude that the total public cost of the Royals deal is much likely to be closer to $2 billion than the reported $1.14 billion — making the $1.9 billion stadium effectively a free gift to Sherman. And, much like the Chiefs deal across state lines in Kansas, it’s a cost that K.C. and Missouri taxpayers can never hope to recoup just from whatever additional spending results from moving the Royals from one part of town to another. This race for most taxpayer-soaking MLB stadium deal to date is going to go down to the wire.

The $1.5 billion–plus Kansas City Royals stadium subsidy plan sailed through its first city council committee hearing yesterday, with the Finance, Governance and Public Safety Committee voting unanimously to approve $600 million in city funding plus hundreds of millions more in tax breaks. The vote sent Mayor Quinton Lucas into paroxysms of metaphor, declaring that “today is a home run for Kansas City” and that the approval “ensures today that we can walk and chew gum,” among other things.

The committee vote followed a contentious hearing where Kansas City residents, in their first opportunity to sound off on the stadium plan after details were released just the day before, spent hours taking two minute apiece at the microphone, with supporters mostly touting the stadium as a job creator (nope) while opponents mostly complained that billions of dollars in public expense was being rushed through in a matter of days in order to avoid a public vote. The most contentious moment ended with what KMBC, in a paroxysm of the passive voice, described as “one person ended up in handcuffs after being escorted out.”

What actually happened is made clearer in the video posted by KMBC. After testifying against the council approving the stadium funding without a public vote, Darrell Miller, a Kauffman Stadium worker who is a leader with the Missouri Workers Center that is behind the push for a November ballot measure, began complaining off-mic that pro-stadium-funding speakers were being allowed to go over time while opponents were being cut off. In the video, two security officers grab Miller while he’s speaking and begin dragging him off, as he declares, “Get your hands off me!” Eventually even more officers arrive and drag Miller out of the room and then wrestle him to the ground and handcuff him; Fox4KC reports that he was then charged with trespassing and assault, as one does.

The stadium funding next heads for a full council vote, which a city spokesperson said should take place later this week — presumably at its next hearing tomorrow at 2 pm, so get your stadium bingo cards ready — while a rezoning vote to allow for stadium construction will follow on September 3. It seems pretty unlikely that a significant number of councilmembers are going to step up to block the bill at this point, though at least one yesterday did object to the fact that plans were moving ahead without a promised fiscal impact study of spending so much money on the Royals while getting no rent and virtually no stadium revenues in return. The state of Missouri would still need to formally sign off on its $540 million share, but as the state has already set aside money for that, it seems a fait accompli as well.

While there’s still the possibility of a lawsuit from the workers’ center, which has previously called the rush to preclude a public ballot measure “legally questionable,” it seems entirely possible that Kansas City will approve its $1-billion-plus share of a Royals project just three days after the proposal was released, which would be in the running for shortest public discussion period ever for a stadium deal. That would certainly be a home run for somebody, but who exactly will be left as an exercise for the reader.

A Kansas City council committee is set to vote today on approving city money toward a new Royals stadium, so naturally the actual legislation didn’t get released until yesterday, providing everyone involved approximately no time to read and understand it. While everyone scrambles to play catchup, here’s an attempt to at least figure out the main gist of the city’s proposal, after looking at the most important bits and emailing with a bunch of economists who did the same (particularly University of Colorado Denver’s Geoffrey Propheter, who should be a finalist for the Nobel Prize for Speed Reading).

At stake is one bill, plus three accompanying agreements:

• The bill, ordinance 260704, would allocate $20 million from food and beverage taxes to be placed in a Special Obligation Downtown Stadium Bond Fund, which would be used to pay for [scene missing].
• An accompanying funding agreement, the Baseball Stadium Funding Agreement, would devote $600 million in city money toward a $1.9 billion stadium, with the state and county providing another $540 million. This would include $90 million for “infrastructure” from “funding not otherwise committed to the Project,” plus $510 million in “legally available sources,” which are both fancy ways of saying ¯\_(ツ)_/¯.
• The Baseball Stadium Lease Agreement spells out how much rent the team would pay ($1 a year, plus 5% of net non-baseball profits, which as Propheter notes will likely be 0% if the team as operator is smart enough to ensure that non-baseball events run at a loss) and who would get all other revenues, including naming rights and advertising (Royals owner John Sherman, without exception).
• A Baseball Stadium Development Agreement that probably lays out a bunch of other stuff, I haven’t finished reading it all yet.

The ordinance is super-short, but it contains one slightly worrisome clause: It would authorize “the City Manager to execute a lease, non-relocation agreement, development agreement, community impact partnership agreement, and funding agreement with the Kansas City Royals or an affiliated entity for design, construction, and operations of a new stadium, team offices, and supporting infrastructure.” Previous legislation authorized the city manager to negotiate terms with Sherman; it’s unclear how much additional leeway he would have in “executing” an agreement, though the lease does at least say it’s contingent on a council vote to approve it being held no later than the end of September.

The associated agreements, meanwhile, are very long, and include enough worrisome clauses to keep a council hearing very busy indeed, if anyone chooses to ask about them. In addition to the items laid out above:

• Sherman would pay no property taxes on the stadium, since it would be city-owned, and would also receive a full sales tax exemption from all spending on construction, as well as on future maintenance and upgrade costs. Total cost: undetermined as of yet, but on a $1.9 billion stadium, likely to be half a billion dollars or more.
• The city can’t levy any ticket or parking taxes to recoup its $600 million share, which would instead be paid off by an assortment of “economic activity taxes” (not strictly defined, though expected to include a STIF district to kick back city sales taxes) both within the stadium district and outside it.
• All funds from actual stadium revenue, meanwhile, with the exception of that 5% cut of non-baseball profits if any exist, would go toward paying off Sherman’s costs: $760 million toward construction, plus $55 million in “community benefits” (paid out over 30 years, so actually significantly less than $55 million in present value).
• Any future state or county taxes that impact the team are required to be siphoned off to fund the Royals’ stadium maintenance, notwithstanding that the state and county aren’t even parties to this lease.
• The Royals can stop spending anything more than $1 million a year on stadium repair in the final five years of its lease, which would almost certainly be used by whoever owns the Royals in 2051 to extract a new or renovated stadium.

This is a world-historically terrible agreement for taxpayers, with a near-record $1.9 billion stadium being covered 60% by the public while they receive virtually 0% of the proceeds — and, in fact, would lose far more money from all those tax breaks than any meager non-baseball revenue the city might receive. The total public cost would almost certainly be in excess of $1.5 billion, and could reach $2 billion, either of which would be a new record for the largest MLB stadium subsidy ever.

A vote of the city Finance, Governance and Public Safety Committee is expected today, with a full council vote by the end of the week. If that seems like a crazy rush when the full deal has only been available to read for less than 24 hours, the goal is to pass legislation by the end of the month in order to avoid any possibility of holding a public vote in November, as a local labor group is trying force the city to do with a petition campaign. So the council is willing to cut some corners on democracy in order to … well, cut more corners on democracy, it’s just cutting democracy all the way down, really. Tune in today at 9:30 am Central (Zoom link here) to see if any democracy sneaks in during today’s committee hearing.