The American Royal Association has agreed to give up its lease claim to Kemper Arena, clearing the final obstacle to the arena’s long-awaited redevelopment.
With one more city council vote Thursday, Kansas City will be free to transfer Kemper Arena to Foutch Brothers for redevelopment as a regional destination for youth and amateur sports. It’s the final milestone in a complex, years-long series of city negotiations to try to find a new use for the neglected arena.
The City Council’s Planning, Zoning and Economic Development Committee endorsed a change Wednesday to the city’s 50-year lease with the American Royal Association, and it goes to the full council Thursday for a vote. The property transfer to Foutch is then expected to close Friday.
“Everything’s good,” Foutch Brothers CEO Steve Foutch said Wednesday, noting that this lease amendment was key to allowing the city to complete the arena transfer to his company. “It clears the path to get it closed.”
Foutch has been champing at the bit to get started on reconstructing Kemper Arena as a facility for amateur team sports, family activities and entertainment. He had hoped to have the closing by late July and start construction, because the building is already scheduled to be ready to host events in July 2018. Under new ownership, the building will be known as Mosaic Arena.
Kemper Arena quickly lost city business after Kansas City opened the Sprint Center downtown in 2007. Kemper has been virtually mothballed for several years and was incurring annual maintenance costs in excess of $1.2 million, so the city was eager to transfer it to a private owner for repurposing.
The city’s lease agreement with the American Royal Association dates from 1995 and potentially lasts through 2045. When adopted, it allowed the association to use Kemper Arena for 20 days each year. But the city has now negotiated a lease change that terminates the association’s interest in Kemper Arena and the north parking lot, redirecting those events to Hale Arena.
The agreement commits the city to undertake up to $500,000 for deferred maintenance projects at Hale and the rest of the American Royal Center to better serve the association.
The amendment also includes a termination fee of $2.5 million, to be paid to the association if it gives timely, 24-months notice by Dec. 31, 2028, and vacates the American Royal complex no later than Dec. 31, 2030. That gives the city at least a full fiscal year to plan for that payment. If the association remains at the complex past 2030, then no termination fee is due.
The lease term remains Oct. 15, 2045, but both parties can terminate under certain circumstances. The city can terminate the lease early if the American Royal’s usage of the complex drops below 70 days. The American Royal has an exit strategy without ongoing rental obligations.
The American Royal has already stated its desire and intention to relocate and build a $160 million complex in western Wyandotte County, near the Village West shopping district. But the timing of that move is not yet certain.