Kansas lawmakers pass targeted economic incentives to fund a Chiefs or Royals stadium

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Legislators in Kansas have passed a bill that would finance billions of dollars worth of construction costs for a professional sports stadium for either the Chiefs or the Royals, and the governor is expected to sign it.

Gov. Laura Kelly’s chief of staff Will Lawrence told lawmakers that Kelly would sign the bill if it wasn’t meaningfully changed from what was presented at a committee meeting on Monday. The House and Senate passed the bill without amendments, meaning an incentive package is likely to be offered to the Kansas City sports teams.

“Our members saw a vision and a future for Kansas that literally will bring hundreds of thousands if not millions of people to see the Chiefs,” said House Speaker Dan Hawkins, R-Wichita.

Jackson County, Missouri, voters rejected a proposed renewal of a three-eights cent sales tax in April. Kansas lawmakers sprang into action to workshop a bill that would target the franchises. The original proposal failed earlier this session after it didn’t get a vote as legislators focused on passing tax cuts, but lawmakers returned Tuesday for a special session. After tax cuts passed Tuesday, they turned their attention to the Chiefs.

Proponents and opponents

Before the floor debate, a joint committee heard testimony from both sides of the debate. Legal representatives for the Chiefs and Royals, as well as lobbyists from Scoop and Score, a 501c4 dedicated to moving the Chiefs to Kansas, spoke in favor of the proposition.

Opposed were some of the most influential conservative groups in the state, Americans for Prosperity Kansas and the Kansas Policy Institute.

The proposal allots 70% of funding for stadium projects with a revamped version of Sales Tax and Revenue (STAR) bonds, which would use sales taxes from the stadiums and in the surrounding business districts to pay off the bonds. It only uses state sales taxes unless a municipality gets involved and foregoes some local sales taxes for the project.

The Kansas Department of Commerce would have to approve the project after an independent economists assesses the financial impact. The state’s Legislative Coordinating Council would ultimately approve any deal, which would have to be made within a year. If negotiations aren’t done within a year, the Legislature can extend talks another year.

The bill also allows funds earmarked for attracting a sports franchise that are currently funded by revenues from sports gambling and from lottery revenues in excess of $71.5 million per year. The bonds would need to be paid out over a 30-year period.

House Debate on Star Bonds

Rep. Sean Tarwater, R-Stilwell, served as the carrier of the bill, and was tasked with describing it’s provisions and answering questions from other lawmakers. He said this is an opportunity to save the sports teams from a potential move out of state, and to take it out of the hands of Missouri — which lost the St. Louis Rams, Kansas City Kings and other professional sports teams.

Tarwater also pointed to STAR Bond’s success in large-scale sports projects, as well as the revenue generated by the Chiefs and the civic pride in retaining the teams.

“The number one tourism project that we paid for with STAR Bonds is that racetrack up in Wyandotte County, and the number two is the stadium up there, and number three is all up in the same area. Well that area was a field when it first started,” Tarwater said. “We produce over $100 million in just sales tax, there are 100 new companies that were created that are now up there. There are 5,700 every-day jobs. There are houses and apartment complexes and all kinds of construction and it started with a STAR Bond.”

Several Democratic supporters couched criticisms of the process while still maintaining support for the bill.

House Minority Leader Vic Miller, D-Topeka, who ultimately voted for the bill, said he didn’t like the lack of transparency in the bill. He proposed an amendment that would make the deal public before approval. Under the bill, the deal will only become public after it is approved by the Legislative Coordinating Council. Tarwater said that’d allow others to undermine Kansas’s deal, and the amendment failed.

Rep. Boog Highberger, D-Lawrence, also noted that the lead lobbyists advocating for the move Scoop and Score don’t disclose their donors. He likened it to the 2022 legalization of sports gambling that had a last-minute change that diverted 80% of revenues from sports gambling to a fund to attract a professional sports team, the same fund that’ll partially finance bonds in this bill.

Rep. Jason Probst, D-Hutchinson, stood in support of the bill but protested how efficient the legislative process is when there are money and donors involved.

“It is amazing to me the speed with which we can solve problems when they’re oriented around wealth, when they’re oriented around business. We can come up with a solution and we can buy every lobbyist in the building and we can create a virtual armada of lobbying effort to get this done,” Probst said. “But I never see anything that even comes close to this kind of effort, to this kind of solidarity on anything that actually affects the human condition — when we have discussions about homelessness or hunger or childhood poverty.”

Fiscal conservatives also raised issue with the project, noting a historical precedent of poor returns on public investments in stadiums.

“You take the serious business press and they’re all over what a scandal public subsidies to stadiums actually are, that as far as a notion that it has a good return on investment, that it meets a good economic development criteria is basically laughable,” said Rep. Paul Waggoner, R-Hutchinson.

The bill passed with 84 votes, a two-thirds majority. Overall, the votes for and against didn’t have a strong partisan bias, with both parties having a similar percent of their caucus voting for either side.

Senate debate on STAR Bonds

After the House debate, the Senate passed the bill after about two hours of debate. Fewer opponents raised concern in the Senate, but Sen. Molly Baumgardner, R-Louisburg, did have several pointed questions for the bill’s carrier Sen. J.R. Claeys, R-Salina, on potential use of eminent domain, potential renovation costs interrupting the bond schedule and the lack of time to review the bill.

Several dissenters also spoke out after the vote: Sen. Mike Thompson, R-Shawnee, saying the loose framework and lack of legislative oversight could be an issue, Sen. Alicia Straub, R-Ellinwood, called it a gamble and Sen. Marci Francisco, D-Lawrence, was concerned about the transfer of lottery funds in excess of $71.5 million could lose value over time.

The vote was 27-8, with most of the dissenters being Republicans.

Next steps

Kelly commended the legislature after the House and Senate approved the bill. Kelly can’t officially sign it into law until after the legislation is formally delivered to her, which could take several days.

“The bipartisan effort to invite the Chiefs and Royals to Kansas shows we’re all-in on keeping our beloved teams in the Kansas City metro,” Kelly said in a statement. “Kansas now has the opportunity to become a professional sports powerhouse with the Chiefs and Royals potentially joining Sporting KC as major league attractions, all with robust, revenue-generating entertainment districts surrounding them providing new jobs, new visitors, and new revenues that boost the Kansas economy.”

Now the sports teams and the Kansas Department of Commerce can commence negotiating on a potential stadium. Korb Maxwell, a lawyer representing the Chiefs, said the Chiefs position remains that they’re going to review all options available before making a decision, but was pleased with the decision Kansas lawmakers made in creating a path for the team to negotiate.

As reported in the Topeka Capital Journal

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