The Kansas City Council has passed a financing package that offers a clearer picture of the public commitment to the Royals new downtown stadium at Crown Center.
The plan comes in three parts.
One ordinance, approved unanimously on Thursday, rezones 68 acres of the stadium development area, a key step for the $2 billion project to move forward.
The second ordinance authorizes more than $615 million in bonds, $537 million of which will pay for the construction of the ballpark, team offices and infrastructure improvements.
The third ordinance approves a tax increment financing plan that creates a so-called “stadium impact area” that stretches from Interstate 670 and the state line to 31st and Campbell streets. The law uses the taxes collected from that area in 2025 as a baseline, and redirects much of any revenue above that amount for the next 30 years to help pay the stadium construction debt.
After Thursday’s Council action, Kansas City Mayor Quinton Lucas said the city has now completed all the necessary legislative steps to move the project forward.
“I think we have probably one of the best deals in Major League Baseball for a local market,” Lucas said. “What you have seen is a strong and robust public-private partnership, a whole lot of give and take.”
Brooks Sherman, president of business operations for the Royals, said Thursday that demolition and excavation on the stadium site could begin next year.
“We've got our agreements done with the city,” Sherman said. “We'll get that done rapidly with the state and then we're ready to go.”
Not every city official is on board with the plan.
“We're taking out loans on taxpayer dime to pay for a baseball stadium, and those loans come with interest,” said 6th District Council member Johnathan Duncan after a Finance Committee meeting on Tuesday. “We all know, with any loan or a credit card payment, that the interest is going to be much higher.”
How bonds pay for a stadium
Kansas City’s more than $600 million contribution to construction costs has been widely publicized. The money will come from the sale of special obligation bonds, essentially a type of loan that the city will have to pay back, as outlined in the development deal passed in August.
The Missouri Development Finance Board will issue the bonds to finance Kansas City’s contribution. That includes $537 million for construction of the stadium, team offices and supporting infrastructure. $58.8 million is capitalized interest on the loan and $19.4 million is the cost of issuing it, for a total of $615.2 million.
The ordinance, which passed Thursday in a 11-2 vote, also directs City Manager Mario Vasquez to take funding from other pots of money to put toward the stadium development: the waterworks fund, sewer fund, stormwater fund, the food and beverage portion of the convention and tourism tax, the streetcar fund, and the fund for streets, sidewalks and bridges.
Duncan and 1st District Council member Nathan Willet voted against the ordinance. The Northland Council member said he did not support the city taking money from funds meant to support neighborhoods across Kansas City for the Royals ballpark.
“We are shifting certain pots around,” Willet said during Thursday’s Council meeting. “This is not like it's only taking the money from this area. We're also dipping into other pots of money.”
Duncan, from the 6th District, has noted the bond’s dollar figure doesn’t tell the full story, and documents from the city manager’s office presented to Council members this week show the city will be on the hook for $1.393 billion over the life of the loan.
“So we're looking at $1.3 billion of a public investment, which is twice what taxpayers were told we’re actually investing,” Duncan said after a Finance Committee meeting on Tuesday.
Kennesaw State University economics professor J.C. Bradbury, who studies sports economics, told KCUR the actual figure Kansas City will pay for the stadium is still unknown.
“I don't see anything clear about this,” Bradbury said after reviewing the city’s financial estimations around the development. “What this shows is how recklessly they're going towards this.”
A TIF plan and a stadium impact area
City Council’s plan to pay back the money from the sale of bonds depends on a hodgepodge of sources that includes on-street parking revenue on game days, money generated by a tax increment financing area at the stadium, restaurant tax revenue and gaming revenue.
City Council passed the TIF ordinance 11-2 on Thursday, which diverts future taxes collected from the stadium development site itself. The Economic Development Corporation of Kansas City estimated this will generate about $381.9 million to pay down the cost of the project.
The ordinance also creates a larger stadium impact area to capture many incremental increases in certain tax revenues.
For instance, any future increases in the impact area in convention and tourism sales tax revenues from prepared food and beverages, any future increases on license tax revenues from electricity or natural gas companies, and any future increase in earnings tax revenues from the Internal Revenue Service offices or Union Station would also get swept up to pay off the bonds.
The impact area itself reaches well beyond the ballpark development, and includes the Crossroads, Westside, Longfellow, and Union Hill neighborhoods, and portions of the West Bottoms.
In a study on the stadium impact area, Chicago real estate consulting company Hunden Partners projected cumulative tax revenues of $688 million over the next 30 years.
Based on an analysis of attendance before and after a new ballpark was built in other cities, the study also suggests that attendance at a new Royals downtown ballpark will increase.
In 2030, when Royals CEO John Sherman wants the stadium to open to the public, the study projects average attendance will be 25,946 during each of the team’s 81 regular season home games. The study also factors in attendance numbers for three hypothetical postseason games in 2034, bumping that year’s average attendance to 26,404.
Studies have shown that any novelty effects that might boost attendance at a new sports stadium eventually wear off.
Mayor Lucas sponsored the financing plan legislation.
“There is a responsible way to make sure that we are funding this — one that does not put our taxpayers at risk — and I think that's what we saw,” Lucas said on Tuesday, following a presentation on stadium financing.
