Kansas City wants to refinance its Power and Light District house UPDATED
01/17/2014 3:07 PM
01/17/2014 3:07 PM
: Kansas City officials issued a clarifying statement Friday on the budget documents concerning the debt payments on the Power and Light District.
In the statement, the city confirmed general fund debt service of $19.7 million for the project this year, and a projected payment of $21.1 million in the next fiscal year. City officials used the same numbers in an email Thursday.
Friday, though, officials said the bond payments in both years include an estimated $5.8 million in tax revenue from the district itself — funds that are put into the general fund, but not directly reflected in the budget document.
The general taxpayer-supported bond gap, they said, is expected to be $13.9 million this year, and projected to be $15.3 million next year.
Now the city wants to refinance the bonds, reducing the next payment from $21.1 million to $14 million. Of that, $5.8 million will still come from the district, leaving taxpayers on the hook for just $8.2 million in the next fiscal year.
The city wants to use the $6 million it saves on debt service to fund part of the city’s pension funds.
But the cost of the refinancing will be evident on the back end, because the bonds will be extended — just like refinancing the house. That will cost taxpayers $36 million, beginning in 2032-2033.
Glad we clearedthat
Buried in this week’s budget submission by Kansas City city managerTroy Schulte
is an admission that the annual taxpayer cost for the Power and Light District project may be officially out of hand.
This fiscal year, the city thinks, taxpayers will have to come up with $19.7 million for the city’s share of the publicly-guaranteed bonds for the project. That’s an astonishing figure — it’s close to what the city spends on its entire Health Department.
The payment is so high, in fact, that Schulte wants to refinance the KC Live bonds and cut the yearly payment back, to about $14 million in the next fiscal year.
Anyone who’s ever refinanced a home knows what comes next. In order to refinance the bonds, bond payments will have to be extended on the back end by seven years, to fiscal year 2039-2040.
And that refinancing will require an additional $36 million, officials estimate, during those additional out-years.
The Power and Light District remains an important project meant to rebuild the city’s downtown. But it has not provided the tax revenue it was expected to, a problem that will haunt the city for decades.