As Chiefs, Royals seek votes for KS stadium financing, Gov. Kelly signals veto unlikely

Kansas Gov. Laura Kelly doesn’t intend to veto a sweeping plan to draw the Kansas City Chiefs and Royals away from Missouri with more than a billion dollars in bonds, a top aide to the governor said Monday as lawmakers prepare to debate the proposal.

The Democratic governor’s chief of staff, Will Lawrence, said in a letter and at a hearing in Topeka that while Kelly remains neutral on the legislation, “at this time” nothing in the bill would cause her to reject it. He noted the bill could still be changed by lawmakers, a caveat that leaves the door open to a veto if the measure is altered significantly.

“If this bill were to land on the governor’s desk as it is, we don’t have concerns over the bill, nothing that would warrant a veto,” Lawrence said.

Kelly told reporters earlier in the day that the measure was “not something I’m going to invest a lot of energy in. I think this is something for the Legislature to work through.”

The announcement came as supporters and opponents of the plan mounted an all-out effort to persuade lawmakers before the start of a special session on Tuesday. While the session was called to pass a tax cuts package, much of the attention of lobbyists and lawmakers has been turned to the prospect of luring the Chiefs and the Royals.

An attorney representing the Chiefs stopped well short of promising that the team would relocate to Kansas if the plan passed, but cast the legislation as the state’s moment to seize the initiative after Jackson County voters in April rejected a stadiums sales tax that would have guaranteed the team remains in Kansas City.

“Missouri spoke, Jackson County spoke. They had their opportunity,” the attorney, Korb Maxwell, said at a joint hearing of the House and Senate commerce committees. “But now there’s a moment for Kansas to step up and an option for us all here.”

An attorney for the Royals, David Frantze, said the expiration of the Royals’ lease at Kauffman Stadium following the 2030 baseball season lends urgency to the team’s need to secure a new home.

“This STAR bonds legislation you’re considering offers a very good opportunity for us to explore an option in the state of Kansas,” Frantze said.

The latest proposal would allow Kansas – or a city or county – to issue bonds to finance up to 70% of the cost of stadiums for one or both teams. An earlier draft that had been shared among lawmakers over the weekend placed the percentage at 75%, but by Monday afternoon it had dropped.

A Chiefs stadium alone could cost at least $2 billion. A Royals stadium could be another $1.5 billion, if not more. To finance the projects, Kansas would issue Sales Tax and Revenue, or STAR, bonds that are backed by future anticipated tax revenues from the stadiums and surrounding development.

Under the plan, Kansas would also use sports betting and some Lottery revenues to repay the bonds, which would have a 30-year term. Economists who have studied sports stadiums question the financial viability of the bonding plan.

Past academic reviews have found that nearly all empirical studies found “little to no tangible impacts of sports teams and facilities on local economic activity” and that the level of subsidies typically provided for stadiums “far exceeds any observed economic benefits.” Any identified economic effects typically occurred in the area immediately surrounding a stadium, but those impacts weren’t always present and “can not be generally applied to all stadium projects.”

“If I’m the Chiefs, this is a blank check,” Geoffrey Propheter, a professor at the University of Colorado-Denver who has studied sports and urban affairs, said in an interview.

The measure pledges revenue from a fund aimed at attracting professional sports teams toward repaying the bonds. That fund, created in 2022 when lawmakers legalized sports betting, contains most of the sports betting revenue coming into the state.

The Legislature this spring also placed a provision in the state budget directing excess Lottery revenue above $71.5 million a year into the fund. The proposal before lawmakers would make that change permanent, potentially adding roughly $10 million a year or more into the fund. Proponents estimate the fund could eventually draw in $25 million a year.

If a project encountered difficulty making bond payments on time, lawmakers would likely face pressure to increase the amount of Lottery revenue sent into the fund, which would reduce the amount of Lottery revenue available to fund the state government.

Some lawmakers on Monday questioned whether the Chiefs or the Royals would be able to secure STAR bond financing and then layer on additional economic development incentives. One program mentioned multiple times was PEAK, which allows some out-of-state businesses that relocate into Kansas to retain 95% of payroll withholding taxes for new jobs created.

Maxwell didn’t rule out the Chiefs seeking other economic development incentives. He said incentives could be negotiated if the team moves forward on a specific property and works with a locality. He said any discussions would have to answer whether restrictions placed on such incentives to end the so-called “border war” between Kansas and Missouri would apply.

“We understand this has to have a positive impact and return on investment for the taxpayers out there,” Maxwell said.

Rep. Kristey Williams, an Augusta Republican who asked about PEAK, said after the hearing that she wished lawmakers knew the total package.

“We just know one piece of the puzzle,” Williams said.

STAR Bonds Bill Summary by The Kansas City Star on Scribd

STAR Bonds Bill Proposal by The Kansas City Star on Scribd

Opponents at Monday’s hearing pointed to shortcomings in the STAR bonds program and argued that a stadium project would be shifting economic activity from other parts of the state into the STAR bond district. They raised concerns about whether Kansas’ credit rating would be at risk in the event of a default.

“There’s also a cost to taxpayers because when that money shifts – if we’re spending money at businesses now, dining retail and so forth – that money is generating sales tax that goes into the general fund. If that money is being spent in a STAR bond district, it’s going to pay off debt,” said Dave Trabert, CEO of the Kansas Policy Institute.

The proposal doesn’t say where a Chiefs or Royals stadium would be located, but most discussion has centered on Wyandotte County, home to the Kansas Speedway, generally considered the most successful STAR bond project. If a stadium STAR bond district overlaps with an existing STAR bond district, the older bond must get priority in repayment under the bill.

Cities and the counties would have the option to pledge local tax revenue from inside the STAR bond district toward repaying bonds, but wouldn’t have to. But any local government that decides against pledging revenue would likely lose leverage during negotiations over the terms of a STAR bond agreement with one or both teams.

The bill authorizes the Kansas secretary of commerce, currently Lt. Gov. David Toland, to negotiate a STAR bond agreement. Any deal would have to be approved by the Legislative Coordinating Council, which includes top House and Senate leaders from both parties. Republicans hold a 6-2 majority on the council.

While the LCC’s vote on an agreement would be public, it could deliberate privately. The proposal keeps revenue reports filed on a STAR bond district confidential.

Supporters of the measure cast it in generational terms, appealing to the emotional bond many lawmakers – and Kansas residents – feel with the teams. They also raised fears that one or both teams could leave the region.

“The legislation before you today seizes a once in a lifetime opportunity to protect a midwest tradition and recruit a major franchise to Kansas,” said Dan Murray, a lobbyist for Scoop and Score, an organization formed in recent weeks to promote the STAR bonds effort.

The House and Senate commerce committees didn’t debate the STAR bonds bill or take any vote on Monday. Lawmakers are hopeful they can limit the special session to a single day – a belief that assumes smooth passage of the tax proposal.

The Kansas Constitution forbids lawmakers from passing bills on the same day they are introduced, unless an emergency is declared by two-thirds of lawmakers present. Clearing that procedural hurdle may offer a test vote on where lawmakers stand on the plan – and whether it will advance quickly.