Exactly 14 months after Jackson County voters rejected a sales tax that would have guaranteed the Kansas City Chiefs and Royals remained in the county, Missouri lawmakers will gather for a special session aimed at keeping them in the state.
The session, starting June 2, launches the most pivotal month yet in determining the future of the teams.
By June 30, one or both teams may have committed to moving to Kansas or declared they’ll stay in Missouri. The decision will shape the future of the Kansas City metro and which state could burn upwards of $1 billion in tax incentives to secure the right to call the teams their own decades into the future.
After Jackson County residents strongly rejected a 3/8-cent sales tax in a 58% to 47% vote, the teams find themselves in a much more favorable environment.
Politicians in both states have sprinted to win their business, creating an incentives arms race that’s given the teams choices – or at the very least let them play the states against each other in pursuit of a more generous deal. And it’s a battle playing out without either team publicly outlining stadium plans or site options.
While officials in Kansas and Missouri cast the teams as economic development engines, experts say that’s not the case. Still, as the bi-state competition comes to a head, both states have put forward – or hope to put forward – aggressive packages to entice the teams.
Kansas officials dangle the possibility of publicly financing up to 70% of the cost of new stadiums for the teams, despite questions about the plan’s feasibility. Under a plan put forward by Republican Gov. Mike Kehoe, Missouri would potentially pay up to half the cost of new or upgraded stadiums, if lawmakers approve it during the special session.
But there’s a catch. Decision time has arrived for the teams, thanks to a ticking clock inserted into the plan the Kansas Legislature passed and Democratic Gov. Laura Kelly signed into law a year ago. The state’s offer to negotiate use of a supercharged version of its Sales Tax and Revenue, or STAR, bonds program to pay for stadiums expires on June 30.
Under the current deadline, the Chiefs and Royals must decide by then whether to try to use the Kansas program to move across the state line. It’s a high-stakes choice, complicated by the fact that Missouri currently lacks an incentives offer.
For now, the teams’ only specialized incentives program in law to help finance new stadiums remains the Kansas offer. Every day that passes by without an approved Missouri plan, Chiefs and Royals owners must weigh the available Kansas offer against the promise of a potential, but not guaranteed, Missouri option.
“I believe that (if) Missouri does not put some sort of offer forward, I’m not speaking for either those teams, I think the risk is real that they don’t stay here,” Kehoe said during a news conference on Tuesday, where he announced the special session.
“I believe that the package that we can present to them, again with the help of the local communities, will be serious enough for them to give it great consideration.”
Kansas deadline nears
While top Kansas lawmakers have the option to extend the STAR bonds proposal by a year, officials have signaled they see very little reason to do so, while Missouri lawmakers haven’t passed their own package. At the moment, Kansas is likely at the peak of its leverage.
Kansas’ Legislative Coordinating Council, a body of top state lawmakers, must approve any agreement with the teams by June 30. The council can also vote to extend the STAR bonds package for another year by July 1 or at its first meeting after July 1.
The law authorizes Kansas to potentially issue STAR bonds to pay for up to 70% of the cost of stadiums for one or both teams – up from the 50% in the current law. A Chiefs stadium alone could cost at least $2 billion. A Royals stadium could be another $1.5 billion, if not more.
The debt would be repaid over 30 years by a combination of tax revenue from the stadiums and surrounding development, sports gambling revenue and Lottery revenue. As part of the bill, annual Lottery revenues above $71.5 million each year are redirected into a fund to help pay off the bonds, a change likely worth about $10 million a year.
Cities and the counties have the option to pledge local tax revenue from inside the STAR bond district toward repaying bonds, but don’t have to. But any local government that decides against pledging revenue would likely lose leverage during negotiations over the terms of a STAR bond agreement with one or both teams.
“Actually, I think we’ve made a very good proposal, and I think that they know we’ve made a good proposal, and certainly, Missouri hasn’t done anything,” Kansas House Speaker Dan Hawkins, a Wichita Republican, told Fox 4 last week.
Kehoe wants to change that soon. The Missouri special session that begins Monday will resurface the stadiums funding plan that the governor tried and failed to get passed in the final week of the regular session earlier in May.
The proposed program offers funding for stadium development by covering annual bond payments up to the amount a team generated in state tax revenue in the year prior to when it took effect. The program would dedicate funds for bond payments up to the amount of revenue “historically generated by the teams.”
The proposal would set a minimum project cost of $500 million to qualify and stadiums must have a seating capacity of more than 30,000. The measure would allow the teams to apply for the aid but the state would have to sign off on each project. The proposal would also require contributions from local governments.
Competition for teams
Geoffrey Propheter, a professor at the University of Colorado-Denver who has studied sports and urban affairs, said at a state-to-state level, Kansas’ offer is more generous, authorizing up to 70% financing for stadiums, compared to a maximum 50% public aid in Missouri.
But Missouri likely has the edge when it comes to local contributions, given the tax base of Jackson County or Clay County. He suggested Wyandotte County – which has been floated as a possible Kansas home for the teams – would be able to commit significant local tax dollars.
“This is just a state legislation. You can still have the local government throwing money in the pot,” Propheter said in a recent interview.
And he’s not convinced Johnson County, despite its affluence, would want a stadium. Some discussion has centered on whether the Royals would potentially move to the former Sprint campus in Overland Park.
“If you look at where these things are located, they’re located in low land value areas, usually rural areas and/or ‘blighted’ – I put blighted in quotes because that’s all subjective,” Propheter said.
Propheter and other researchers who study the economics of sports stadiums repeatedly warn they aren’t major drivers of development. It’s a conclusion backed by decades of research.
Kehoe has centered his pitch for a stadiums package on economic developments arguments, however. In justifying a special session, he has invoked past special sessions focused on major manufacturers and businesses, such as Boeing.
Top lawmakers agree with him. Missouri Senate President Pro Tem Cindy O’Laughlin, a Shelbina Republican, said that while the stadiums represent an “easy topic to demagogue,” the teams constitute major employers that draw significant traffic into the state.
If the teams left Missouri, it would be a “tremendous loss,” she said.
“I think there’s always a fine line between tax incentives for specific things like this,” O’Laughlin said in an interview. “I think the Chiefs and Royals really are part of the fabric of our state. They draw people in from across the country. If we lose them, what do we have?”
The Missouri Senate will play a critical role in the special session. Kehoe signaled he wants the legislation to originate in the chamber, marking a reversal from the regular session, when the House easily passed his stadium proposal only for it to stall in the Senate.
The final week of the regular session left Democrats angry with Republicans over the majority party’s decision to cut off multiple filibusters. The move allowed GOP senators to advance a state constitutional amendment that would again ban abortion and pass legislation to roll back voter-approved sick leave protections for workers.
Senators from both parties were also upset with the House, after GOP leaders there refused to bring up a budget bill with funding for capital improvement projects across the state, including for a new mental health hospital in Kansas City.
Kehoe’s stadiums proposal didn’t receive a vote in the Senate amid the animosity. When the governor announced the special session on Tuesday, he said the session would also include considering some funding that previously failed to pass – including the hospital – as well as disaster relief after a tornado in St. Louis and other severe weather in eastern Missouri.
