Less than two months ago, Kansas Gov. Laura Kelly gleefully announced that the state had enticed the Kansas City Chiefs to cross the state line for a shiny new stadium in Wyandotte County and team headquarters in Olathe.
In the days that followed, leaders in Olathe acknowledged that they had been negotiating with the team for two years under a nondisclosure agreement.
But somewhere along the way, someone forgot to let Wyandotte County officials in on the plan.
That left the Unified Government of Wyandotte County and Kansas City, Kansas, just 60 days to negotiate the terms of its Chiefs deal before their deadline to sign on.
On Feb. 5, with two weeks left before the deadline, the UG Board of Commissioners voted 7-3 to approve a $450 million incentive package for the Chiefs.
But not without some grumbling.
“Wyandotte County was the last to know about this giant secret,” District 8 Commissioner Andrew Davis told The Beacon. “That’s why I voted no — because I would have wanted us to use up more time. I think we had every right to do so, considering we weren’t at the table from the beginning.”
Short notice
The Chiefs deals in Kansas will use sales tax and revenue bonds, known as STAR bonds, to help finance construction of the new domed stadium, a surrounding entertainment district and a new Chiefs headquarters and training facility.
Essentially, Kansas is establishing districts in Wyandotte and Johnson counties where any increases in state sales tax revenue will help pay for the construction of those developments, rather than paying for government services statewide.
The Kansas Department of Commerce will be responsible for drawing the boundaries of those districts and has not yet released a final map. But a graphic initially published when the announcement was made in December includes nearly all of Wyandotte County, Olathe, Lenexa and Shawnee in that STAR bond district.
(In reality, any STAR bond district would look more like a slice of Swiss cheese, with carveouts for existing STAR bond projects like the Kansas Speedway or The Legends mall.)
That state STAR bond district is not to be confused with the local STAR bond districts, which are what the Unified Government as well as the Olathe City Council voted on recently.
The state’s STAR bond district only promises away the sales tax revenues that would otherwise go toward the state budget. The local STAR bond district, on the other hand, redirects sales tax revenue that would go toward the Unified Government’s budget to pay for local roads, the police or public transportation.
When Kansas signed the deal with the Chiefs in late December, that started a 60-day clock for the Unified Government and Olathe to sign on with their own local STAR bond districts.
That’s two months to negotiate a half-billion-dollar sales tax incentive for a $3.3 billion stadium and entertainment district deal.
Davis said the time crunch created by the Chiefs and Kansas lawmakers limited the Unified Government’s ability to advocate for its residents and negotiate a better deal.
“As a Unified Government, our budget’s about half a billion dollars, right?” Davis said. “It took us six months, seven months, to arrive at a budget that’s half a billion dollars. Investment for the Chiefs, just the capital investment is about $3 billion.”
He compared it to the $113 million American Royal STAR bond project, finalized last month, which included commitments for prevailing-wage jobs and a “noncompete” clause, which ensured that American Royal wouldn’t host events that compete with the UG’s Sandstone Amphitheater.
If not for that noncompete agreement, the American Royal could end up cannibalizing economic activity from other areas of the county — resulting in a loss of money for the UG.
That deal, he said, took upward of six months to negotiate. But with just 60 days for the much larger Chiefs deal, he said the UG would be unable to secure those kinds of commitments.
Threat of a worse deal
Carlos Pacheco, who represents District 5 on the UG Commission, voted “yes” on the Chiefs deal partially because he thought it would bring new economic benefits to Wyandotte County — especially if it’s paired with proposed Kansas legislation that would authorize a local income tax.
But just as importantly, he said the ordinance approved on Feb. 5 would create guardrails around the STAR bond deal that would protect Wyandotte County residents from a potentially much worse deal.
“This is already something that was in the works,” Pacheco said, “without UG input, to the best of my knowledge, before that (Dec. 22) announcement.”
And the way that state legislation is written, Kansas lawmakers were given the authority to retroactively change Wyandotte County’s local contribution without its permission.
So, for example, if the Kansas Department of Commerce wanted to redraw the local STAR bond district to include all of Wyandotte County, they could do so, even though the Unified Government drew the boundaries only around the future stadium and entertainment district.
But the Unified Government’s ordinance was written so that the county will only contribute sales tax revenues if the local STAR bond district’s boundaries are left untouched.
“Let’s say that they do draw the district differently than what we expect it to be in Wyandotte County, which is just the stadium and entertainment district area,” Pacheco said. “Let’s say they do draw it to a larger portion of Wyandotte County to make sure that the bonds are underwritten. … Then that still goes to our local control now. Before, we would have had zero control or zero ability to affect that whatsoever.”
A community benefits agreement is still possible
The Feb. 5 ordinance came with a few community benefits attached.
The biggest one is a promise — by the state of Kansas, rather than the Chiefs — to finally repair three major bridges on the Kansas River.
Kansas will contribute $135 million to replace the Central Avenue bridge, which has been closed for nearly five years, as well as $1.2 million to repair the Kansas Avenue bridge and $2 million to repair the Union Pacific bridge.
Additionally, Kansas will provide $1.5 million to fund public transportation in Wyandotte County.
“If the state wouldn’t have stepped in and helped us with that,” Pacheco said, “I just don’t think it would be something as high on our priority (list) when the only way to pay for it would be to ask for more in taxation.”
But other commissioners, such as Jermaine Howard of District 1, voiced frustration during the Feb. 5 meeting that nothing in the Chiefs deal was an explicit community benefit to northeast Kansas City, Kansas, which has been neglected for decades. Howard ultimately voted “yes.”
Even though Davis opposed the ordinance redirecting sales taxes to the Chiefs, he said that the Unified Government still has a few more opportunities to demand more concessions from the team.
For one, he expects that the Chiefs will ask for a community improvement district, which will allow the Unified Government to levy a special sales tax at the stadium to help fund the development.
He also said it’s possible that the Chiefs may ask the Unified Government for a property tax exemption for the entertainment district.
Under the current plan, the new stadium will be owned by a new sports authority that would be established by the Kansas government, making it exempt from property taxes. However, Todd LaSala, the UG’s economic development attorney, told the commission that may not be the case for the surrounding entertainment district.
A representative of the Kansas City Chiefs declined to comment for this story.
And if the Chiefs ask for additional tax benefits beyond the approved STAR bond district, Davis expects some real concessions from the team.
That could include promises for prevailing-wage jobs, as well as commitments to work with locally owned and minority- and women-owned businesses.
And importantly, Davis wants the Unified Government to have a say in what the ancillary development looks like from a land-use perspective. For example, he would much prefer Class A office buildings and mixed-use housing and retail — as opposed to big-box stores that would compete with the Aldi and Target across the street.
Davis said that those are details that should have been nailed down before giving the Chiefs a $450 million sales tax subsidy, rather than after.
Howard said at the Feb. 5 meeting that he was voting yes on the ordinance because once they have a seat at the bargaining table, the Unified Government can be a part of the negotiations that they had been excluded from for two years.
“I’ve heard a lot from the Chiefs about how they’re going to pour into the community,” Howard said. “We have an opportunity to stand flat-foot and say, ‘Hey, if you are not willing to deliver on this, then we have no deal, and we have leverage to do that right.’”
