Kansas bill offers bonding to cover 75% of cost to build Chiefs, Royals stadiums in Kansas

by Tim Carpenter, Kansas Reflector
June 16, 2024

TOPEKA — Legislation to be presented Monday to Kansas lawmakers to lure the Kansas City Royals or Kansas City Chiefs across the state line would allow issuance of bonds to cover 75% of stadium projects with a minimum capital investment of $1 billion.

The STAR bonds would have a 30-year payback schedule, rather than the 20-year timeline for other state bonded projects. Current STAR bond law in Kansas limited financial support for economic development projects to 50% of the cost.

In addition to state revenue from sports gambling and lottery gaming, sales tax revenue from businesses in the respective sports stadium development districts would be earmarked to cover bond debt. In another unusual move, the bill would allow up to 100% of sales tax revenue on alcoholic liquor sales within a stadium district to be dedicated to paying off bonds.

A 40-page bill outlining details of the incentives was prepared for consideration during the special legislative session called by Gov. Laura Kelly for the purpose of resolving a stalemate on state tax reform. The session formally opens Tuesday, but committees devoted to business and tax issues will convene Monday.

The scramble in Kansas to pull together a bill supporting construction of Kansas stadiums for the Royals or Chiefs followed the April rejection by Jackson County, Missouri, voters of a sales tax measure that would have generated funding for a downtown baseball stadium for the Royals and financed renovations to Arrowhead Stadium where the football team plays. The teams are bound to existing stadium leases through 2031.

Kansas House and Senate commerce committee members are to meet 2:30 p.m. Monday at the Capitol to wade through the stadium bill. The bill draft could be amended by committees in either chamber. Legislative leaders expect the measure to be voted on Tuesday by the full House and Senate and, if approved, sent to the governor.

Missouri Gov. Mike Parson said Missouri would develop a “competitive” offer regarding the professional sports franchises if Kansas stepped forward with a package.

Big lobbying push

An army of lobbyists and other business interests have made informal presentations in recent weeks to any of the 165 Kansas legislators willing to talk about the STAR bond blueprint. Those conversations are expected to continue Monday night among lawmakers invited to a Lawrence steak house to hear from lobbyists, a Royals executive and representatives of organized labor.

Kansas Senate President Ty Masterson, R-Andover, and House Speaker Dan Hawkins, R-Wichita, reached out to owners of the Chiefs to see if they were open to consideration of “mutually beneficial opportunities.”

An organization called Scoop and Score was formed to pitch the border-war idea, but much of that organization’s marketing has been on behalf of a stadium for the Super Bowl champion Chiefs.

“Here in Kansas, we have the unique opportunity to solidify our region as the forever home of the Chiefs at no additional cost to Kansas taxpayers,” Scoop and Score’s social media post says. “We need every Chiefs fan in the state to contact their legislator and urge them to vote to keep the Chiefs in Kansas City.”

Americans for Prosperity in Kansas, however, has campaigned against the STAR bond concept. Legislators with constituents long distances from the Wyandotte County or Johnson County suburbs where the stadiums would likely be constructed have expressed doubts.

Two-stadium solution

The proposed STAR bond bill addressed one financial concern raised by skeptics of the attempt to raid Missouri for the Chiefs or Royals. The bill says bonds for stadium projects issued by the Kansas Development Finance Authority would be obligations of KDFA and “shall not constitute a debt of the state of Kansas within the meaning of … the constitution of the state of Kansas.”

“They are not full faith and credit bonds” and would be “payable solely from the sources identified in the STAR bonds financing act, namely incemental sales tax, alcohol tax and expanded lottery money,” said a briefing document summarizing the bill.

That provision would forbid general tax revenue flowing into the Kansas treasury to be called upon to pay holders of STAR bonds issued for the NFL or MBL stadium projects if one of the sports business districts failed to generate sufficient revenue in the future.

Reports of revenues filed with the Kansas Department of Revenue in connection to STAR bonds for sports stadiums “shall be kept confidential and if unlawfully disclosed would be subject to penalties.”

The bill would make permanent a one-year budget provisio approved by the 2024 Legislature that would dedicate lottery revenue above $71.4 million annually, excluding revenue from sports gambling, to the Attracting Professional Sports to Kansas Fund.

Some fine print

Under the bill prepared for consideration by the Legislature, the secretary of the Kansas Department of Commerce would have authority to enter into a STAR bond agreement with no more than two professional sports franchises. The bill proposed sports business districts would be established by June 30, 2025, but a council comprised top legislative leaders and the governor could extend the deadline for one year.

A final agreement with the Royals or Chiefs would have to be approved by the same bipartisan council of politicians, which is known as the Legislative Coordinating Council. The LCC would possess authority to approve or reject the deals whether the Legislature was in session or not. The agreement wouldn’t be considered a public record until the LCC by majority vote accepted an agreement.

The definition of “major professional sports complex” for purposes of the bill would be a stadium with more than 30,000 seats for holding National Football League and Major League Baseball contests as well as other events.

A memorandum summarizing the bill says franchises eligible for the incentives would be NFL or MLB teams located in “any state adjacent to Kansas.”

The Kansas bill would allow, but not require, local governments to dedicate tax revenue to the sports franchise developments for the Chiefs or Royals.

Kansas Reflector is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and X.