Amid COVID-19 budget uncertainty, Kansas City proceeds with $43M soccer park — warily
Even as it awaits data to show just how drastically the novel coronavirus may hit Kansas City’s budget, the City Council is moving ahead with a $43 million soccer complex in the Northland — cautiously.
The Finance, Governance and Public Safety Committee on Wednesday voted 5-2 to approve a plan to pay for the 12-field park, which would be operated by Sporting KC. The soccer club had also partnered with the city to build and operate Swope Soccer Village, which opened in 2007 and was expanded to include youth soccer in 2013.
But before the City Council approves an agreement with Sporting — currently being negotiated by the Parks and Recreation Department — members want to make sure plummeting sales tax revenues don’t make the project impossible.
“I know that Johnson County just cut $20 million out of their budget,” said Councilwoman Katheryn Shields, 4th District at-large. “We passed a budget recently that we increased dramatically more than that. The state of Missouri is talking about cutting more than $1 billion out of their upcoming budget.
“I just can’t imagine that Kansas City is somehow going to be this island of protected economy where all around us people are saying, ‘Oh my gosh, this could be bad. We had better prepare.’”
Proponents have argued there is a shortage of youth soccer fields in the Northland. Families have to drive to Swope Park or even to fields in Johnson County. Building these fields — proposed at North Platte Purchase Drive and Missouri Highway 152 — will help spark development around the area, they say. No one from the public appeared Wednesday to speak about the project for the committee’s virtual meeting.
Sources of money
Kansas City, like every city and state government, faces an uncertain budget picture in the months ahead because of COVID-19. Restaurants and nonessential stores are shut down, and residents are out of work, knocking a dent in the revenue streams the city relies on. An early model created by the city’s budget experts shows Kansas City could have to cut $155 million from its budget over the next five years in the event of a “light recession” and speedy recovery. Some members of the council have worried that projection is too rosy.
To build the fields, the city plans to extend a tax-increment financing, or TIF, district in the Northland to provide $17 million to the project. Kansas City would also issue $25 million in special obligation bonds — repaid by capital improvements and parks sales taxes — to provide $25 million. The final $1 million would come from the 2nd Council District’s portion of the one-cent sales tax for capital improvements.
The city’s Board of Parks and Recreation Commissioners on Tuesday endorsed the project with the caveat that it wanted to see new budget projections from City Hall before the City Council gives final approval. The committee agreed, amending that into the ordinance it passed Wednesday.
It’s not yet clear how severely the pandemic might affect the city’s sales tax revenue. But for the sake of the discussion, Finance Director Tammy Queen “stress tested” the project with a 10% revenue decline.
In terms of the portion of the project to be repaid by the parks sales tax, she said the city has built in enough cushion. The problem comes when public improvements sales taxes are considered because the city wants to use those to build a reserve for capital improvements at the park, such as replacing the fields when the time comes.
“The stress test of a 10% decline in revenue would cause us to be negative in certain places in certain years of this plan,” she said, adding that it would “cause a problem somewhere else in the fund.”
Most of the committee was assuaged by the promise that they would get to reevaluate the city’s financial position before approving an agreement with Sporting and offering final approval to the plan. The final agreement with Sporting also has to face a vote by the parks board and the City Council.
The city’s parks director, Terry Rynard, said she expected to have a final agreement negotiated with Sporting KC within the month.
That process, Mayor Quinton Lucas said, “gives us our test and our checks.”
“I would suggest that we go ahead and proceed knowing that we have those safeguards, and perhaps on the other side knowing frankly that even if in two weeks the Finance Department comes back with some projection, there is still a possibility that in the summer, the fall, the winter, things change yet again next year,” Lucas said.
Council members disagree
But even so, Shields, who chairs the committee, opposed undertaking such a project in this budget climate. And she called it a “huge mistake” to extend a TIF, arguing it “undermines the concept” of the tax incentive policy.
“The whole purpose of a TIF is to help a business that otherwise would not have been able to develop in a particular area to develop,” Shields said. “But we give them a limited time … well, in these cases the 23 years have passed, and yet, we’re still segregating part of the funds that come off those projects. I think that’s wrong-headed.”
When the committee took its vote and Councilwoman Ryana Parks-Shaw, 5th District, joined Shields in opposition to the project, Shields remarked there were “two votes for sanity.”
“I’m glad to see that I’m not alone,” she said.
As Shields prepared to move on to the next agenda item, Councilwoman Heather Hall, 1st District, interjected.
“I just want to make sure that we understand that we keep civility in this committee,” Hall said. “Whether you agree or don’t agree does not mean one person is sane and the other is not sane, so I would just like to make sure that’s not what you meant when you said that.”
The agreement with Sporting is expected to include more advantageous terms for the city than were agreed to for Swope Soccer Village, where Kansas City was responsible for any maintenance shortfalls. The parks department in the coming years will have to pay to replace the fields at Swope, Rynard said.
In this deal, however, capital costs, such as fields, would be paid for through another one-cent sales tax, this one levied by creating a Community Improvement District around the project. Half of those funds would have to be earmarked for a capital reserve fund.
