Council committee endorses Power & Light District refinancing to help with pension reform
02/26/2014 5:23 PM
02/26/2014 5:23 PM
The Kansas City Council’s Finance Committee on Wednesday endorsed a plan to refinance Power & Light District debt, which helps pay for pension reform but adds significantly to the entertainment district’s long-term costs.
The $35.5 million Power & Light refinancing is part of a multimillion-dollar bond package that the full City Council will vote on Thursday. The package includes up to $71.5 million for the downtown streetcar project and nearly $16 million for other infrastructure and technology improvements.
The refinancing calls for adding seven years to the Power & Light entertainment district’s debt payments, from 2033 to 2040. It lowers the payments from 2015 through 2019 and frees up cash to help pay for pension reform, especially in the 2014-15 budget. But it bumps up the debt payments between 2020 and 2040, a net increase in overall debt of $36 million.
Entertainment district patrons pay part of the debt service, but taxpayers pitch in a much bigger chunk. For instance, in 2013-14, customers will pay about $5.8 million, meaning the taxpayer burden will be about $14 million.
Treasurer Tammy Queen conceded it’s not usually prudent fiscal management to add to debt service payments, but she said that in this case it’s worth it to free up money to fully fund the city’s pensions. And she said the credit rating agencies are taking note.
Moody’s Investors Service has rated these bonds A1 with a stable outlook, specifically mentioning that the city’s pension reform “will assist in addressing a sizable pension burden.”
Fully funding the city’s four pension plans in 2014-15 is expected to cost an additional $15 million. Refinancing the Power & Light debt frees up about $7 million. The rest of the money for next year’s pensions will come from budget cuts and eliminating about 110 positions across multiple city departments.
Finance Director Randy Landes said that if the city didn’t finance the Power & Light Debt, it would have to cut millions more from city services.
In addition to the Power & Light refinancing and money for streetcar construction, the bond package includes $5 million for building improvements to comply with the Americans with Disabilities Act, $3.75 million to upgrade antiquated traffic signals and $7 million for technology upgrades.