Government & Politics

American Royal project in KCK is uncertain as lawmakers balk at using STAR bonds

The American Royal (seen here in 2013) retains its lease for the American Royal Complex in the West Bottoms through 2045, but it’s exploring other options for its future.
The American Royal (seen here in 2013) retains its lease for the American Royal Complex in the West Bottoms through 2045, but it’s exploring other options for its future.

No American Royal project in Kansas will move forward using state sales tax revenue bonds — at least for now — under a budget agreement reached Monday night.

Discussions have been in the works to move the American Royal, which includes the iconic horse and livestock exhibitions and barbecue contest, from Kansas City to western Wyandotte County.

The American Royal issued a statement Tuesday afternoon saying only that “we have been exploring options for our future locations that will support our mission to promote agriculture excellence and youth education.”

The release said, “At this time, we have no new information about our location to share.”

The American Royal is in a long-term lease with Kansas City, Mo., so the move across the state line from its historic home would be notable. The organization estimates that it generates a $60 million economic impact annually and said it accounts for $4.4 million a year in local tax revenue.

Sen. Jim Denning, an Overland Park Republican, told fellow members of the Senate Commerce Committee that the budget agreement would halt the use of STAR bonds for the project, at least temporarily, until a House committee considers reforms to the program.

Steve Kelly, deputy commerce secretary under Gov. Sam Brownback, told legislators there have been discussions about an American Royal project but the proposal is in flux.

“It’s not a project yet,” Kelly said. “We have no district established.”

Officials with the Unified Government of Wyandotte County and Kansas City, Kan., could not be reached for comment Tuesday.

A state Department of Commerce report obtained by The Associated Press described a hotel, a children’s museum and a 5,000-seat hockey arena that could be developed to help draw the American Royal to western Kansas City, Kan., from its home in Kansas City’s West Bottoms. Other elements were retail stores, restaurants and an outdoor farming exhibit for children.

Lamar Hunt Jr., owner of the Kansas City Mavericks minor-league hockey team, said the American Royal was driving the effort to expand the number of ice arenas in the Kansas City area. The goal also would be to attract a United States Hockey League franchise, an organization for hockey players age 20 and younger.

“We’ve spoken with them,” Hunt said of planners with the American Royal. “Hockey would be a part of the programming for the complex or arena. Remember, we only play 28 (home) games in the USHL, so we’re a minor aspect.”

Separately, Loretto Sports Ventures LLC, the official name for the Mavericks owner and operator, released a statement Tuesday that said in part, “While there is potential for hockey programming within the complex, plans are in no way finalized.”

The Loretto statement emphasized that the Wyandotte County discussion “in no way impacts or affects the current home of the Missouri Mavericks” at the Silverstein Eye Centers Arena in Independence.

For now, that means the American Royal stays based in Kansas City, where it began more than 100 years ago. It had been a cherished city tradition for decades, but leaders in the organization have clashed with Kansas City officials in recent years.

In October 2011, American Royal leaders proposed demolishing Kemper Arena to make way for a custom-made, multipurpose arena for the Royal. The city balked at providing $30 million for the deal, and preservationists vehemently objected to knocking down Kemper.

Last year, the city instead sought proposals to redevelop Kemper Arena, and the Royal said it would not submit a proposal but would pursue other options for its future.

It moved its huge barbecue event to the Truman Sports Complex and continued to host other American Royal festivities at the American Royal Center and Hale Arena.

City Manager Troy Schulte said Tuesday that the Royal retains its lease for the American Royal Complex through 2045, and that has not changed.

“We had heard rumors that they were exploring some conversations with the state of Kansas, but at this point we weren’t planning on making any changes with the American Royal facility until we heard definitely what the American Royal’s plans were,” Schulte said.

But Kemper Arena is another matter.

The city is trying to choose between two redevelopment proposals for Kemper Arena for sports, entertainment and family functions and expects to announce more details on that process late this week.

Schulte said the Royal is not Kemper’s main tenant, and it used the old arena for only a handful of dates last November. It has asked for just a few dates this November for its saddlebred horse show, which the city will accommodate. Going forward, Schulte said the Royal’s needs shouldn’t interfere with repurposing the arena.

Asked whether Kansas City would regret losing the American Royal if it left for Kansas, Schulte replied, “Sure, I think it’s a tradition that we would like to have in Kansas City. … If they chose to go to Kansas and can get incentives from the state of Kansas that keeps them in the metropolitan area, I think that’s fine with us.”

Councilman Scott Taylor, chair of Kansas City’s planning, zoning and economic development committee, agreed that Kansas City has no intention of trying to compete with Kansas incentives to try to keep the American Royal in the city.

But now the Kansas incentives are in doubt as well. Kansas lawmakers balked at the idea of using the Village West STAR bonds district for an American Royal development. The bonds for Village West, which includes retail and sports venues, are expected to be paid off by the end of 2016, and the sales tax revenue of about $42 million should flow into the state’s coffers, they said, not be redirected to a new project.

Kelly said the American Royal project could be a standalone district, meaning it would not need revenue from the Village West district to pay off bonds. But lawmakers were skeptical it could generate enough sales tax revenue on its own to be viable.

In a STAR bonds project, a district is established and sales tax revenue from the district is used to pay off the bonds that finance the development. STAR bonds were used by the Unified Government for the Village West development.

Currently, the Kansas Commerce Department negotiates STAR bonds projects with local governments, and the secretary of commerce has authority to approve them. The department has been in discussions with the Unified Government of Wyandotte County and Kansas City, Kan., on the American Royal proposal.

Legislators said they need more oversight of STAR bonds projects.

Senate President Susan Wagle said any plan to shift the Village West district’s sales tax revenue to a new project defeats the purpose of seeding a project that eventually brings new revenue to the state, especially since the state budget is now more dependent on sales tax revenue.

The tax policy of Brownback and the Legislature in recent years reduced income tax rates for individuals and eliminated income taxes for some 300,000 businesses. The revenue loss required the Legislature to increase sales and cigarette taxes last year.

Wagle, a Wichita Republican, noted that three of six STAR bonds projects in the department’s annual report were not meeting revenue projections. Kelly said projects such as the Prairiefire development in Overland Park and the Schlitterbahn water park in KCK suffered from bad economic timing.

“We as a legislature would like to see more scrutiny,” Wagle said.

Sen. Jeff Melcher, a Leawood Republican, said he didn’t see how the American Royal could be a standalone STAR bonds project.

“That’s an awful lot of saddles,” he said about potential sales.

Rep. Marvin Kleeb, an Overland Park Republican and House Taxation Committee chairman, said earlier that proposed STAR bonds reforms would keep sales tax revenues from being “redeployed into an expansion or overlay project” so that the state sees a return on the investment.

“The American Royal would need to be viable and sustainable on its own,” Kleeb said.

The Star’s Eric Adler and Diane Stafford contributed to this report.

Edward M. Eveld: 816-234-4442, @EEveld