Who pays for KC Current stadium bond if tax revenue is short? Team promises this
AI-generated summary reviewed by our newsroom.
- Proposal could require Kansas City to issue up to $235 million in bond financing.
- Developers say the private group would cover any shortfall if tax revenue falls short.
- Some council members questioned whether public financing diverts funds from city needs.
A proposal to fund the expansion of the Kansas City Current’s stadium could cost the city up to $235 million in bond financing.
But development partners for the women’s soccer team say the private group — not the city — would be on the hook if expected tax revenue falls short of paying off the bond.
“At its core, this project allows us to bear all the risk,” Mukul Sharma, a partner at Palmer Square Real Estate. “It does not impact taxpayers, and we’re not asking the taxpayers to be on the hook for any type of debt service payment.”
Sharma told the city’s Finance, Governance and Public Safety Committee on Tuesday that the team is seeking public bond financing to expand its stadium, build a new parking structure and improve infrastructure for the mixed-use development.
The committee advanced a proposed ordinance that would give City Manager Mario Vasquez the authority to negotiate a deal. The full City Council is expected to consider finalizing the ordinance on Thursday. Any deal negotiated between team officials and the city will need to come back to the City Council for final approval.
The Current’s proposal to back the city’s bonds appears to be different from what Royals team officials have proposed for its stadium project, which could cost the city up to $600 million in bond financing.
Critics of that stadium project argue that the city would be on the hook if the expected increase in tax revenue generated around the stadium is still not enough to pay off the bond payments — threatening the city’s funding for core services.
Mayor Quinton Lucas told the Star after the committee meeting that the Current’s offer to back the bonds is an attractive part of the proposal.
“That, frankly, addresses a lot of concerns that exist for not just the taxpayers, but obviously for all of us in this building,” Lucas said, referring to city officials. “We want to make sure we can pay the bills for it.”
Still, some have concerns about the city considering more bond financing.
Council member Johnathan Duncan, who represents the Sixth District, questioned whether entering another stadium project negotiation is tying up too much of the city’s tax revenue. He said the city is currently looking to cut funding for other programs.
“We’re robbing Peter to pay Paul right now for programs,” Duncan said.
Riverfront development plans
Sharma told the committee that the bond financing would help the continued development of the riverfront that is in the process of a $1.4 billion renovation centered on the stadium. So far, Sharma said, $350 million of private investment has gone into the project, including covering the cost of public utilities like electricity and natural gas lines. But there is still much more needed, he said.
“There is a tremendous amount of critical public infrastructure that still needs to be done within the riverfront,” Sharma said. “That is a core part of unlocking even more private investment from us and our affiliates.”
Sharma said adding a new parking structure would also help alleviate parking and traffic congestion in the area. He said that it’s critical for a stadium that would be inviting nearly 7,000 more soccer fans to the area, but also additional development that would follow.
The city and team officials have not yet determined which taxes will be diverted to cover the cost of the proposed bond. Lucas said determining which taxes will be used is still up for negotiation.
But he noted that sales taxes and utility taxes would likely be the primary revenue source. That’s similar to what city officials have proposed for the planned Royals stadium.
Sharma said the revenue for the bonds would come from an ongoing development project that is rapidly growing.
“We really see this as a win-win, not just for our club and riverfront project, but for Kansas City,” Sharma said.
Too many bonds?
Duncan said adding another stadium project to the city’s ledger that does not address the city’s more pressing issues still hurts taxpayers, despite the developers’ plans to back the bonds.
He argued that the private developers could pay for the project themselves and spare tying up city funds that could be used elsewhere.
“We need to ask the question, ‘Is this a need or is this a want for the residents of Kansas City?’” Duncan said to Sharma during the meeting. “Or could you do this with private investment? You told me in private that you could, it would just take longer.”
Duncan also questioned whether the developers would ever be satisfied with the public investment, or if they would continue to ask for more down the road for maintenance of the facilities.
Meanwhile, Lucas argued that the developers for the stadium and the surrounding district have lived up to their promises over the years. He said that has helped attract more development to the riverfront, which is an area of the city that had been “totally forgotten.”
“This is a developer that has continued to deliver,” Lucas said. “This is a project that continues to deliver.”
