TOPEKA — Moving the Chiefs to Kansas will spur economic development, but the complexity and lack of details about the deal make it difficult to determine what taxpayers will ultimately pay.
The announcement that the Chiefs and state of Kansas will spend an estimated $4 billion to build a domed stadium in Wyandotte County surrounded by an entertainment district and a team headquarters and training facility in Johnson County has prompted questions about whether Kansans will lose money on the deal.
Economic growth in a large and so-far-undefined area in Wyandotte and Johnson counties will be reserved to pay down STAR bonds over the next two or three decades. The Chiefs also could enjoy property tax subsidies and other financial support if economic development programs are implemented locally.
It is accurate when state leaders say no new taxes will be implemented to move the Chiefs across the border, said Ian Graves, a Prairie Village City Council member and self-described public finance policy wonk who has been studying the details.
However, the project may require new taxes down the road to cover the loss of revenue growth that would normally flow into the state’s coffers, he said.
The Chiefs project will be funded through a 60-40 public-private partnership, according to terms posted online by the Kansas Department of Commerce. The state’s 60% of funding will come from a mix of STAR bonds, or sales tax and revenue bonds, and funds in the Attracting Professional Sports to Kansas Fund, which is revenue from iLottery and sports betting.
STAR bonds also will be repaid with 100% of liquor sales tax collected in the district.
ACCORDING TO a Commerce Department fact sheet, the state expects 20,000 new jobs to be created during the construction phase and more than 4,000 new permanent jobs at the stadium and entertainment district that will surround the stadium. The annual estimated economic impact is expected to be $1 billion, and the Chiefs will pay $7 million in annual rent.
Graves said his primary concern is with how the project freezes future revenue growth.
“We are diverting natural revenue growth over time that we rely on to basically account for the increase of price in goods and services that governments require,” he said. “If you look at sales tax revenue growth, just naturally, it floats with inflation because as the price of purchased goods go up, sales tax revenues also climb, and then that increased revenue goes back to be able to support the city or state.”
Graves said his interest isn’t part of his Prairie Village role but came about because the city recently passed bonds and he had spent time learning about their mechanisms. He used his computer science background to build an online tool to take a deep dive into costs associated with the Chiefs project.
The tool allows users to change assumptions such as the interest rate, repayment period and principal amount.
“Even after I made it, I’m like this still isn’t super easy to understand,” he said. “You can set worst-case scenarios, but basically it’s just a lot of money going to it, and you can see that most of it is just regular old sales and use tax. The narrative about alcohol and gambling revenues, that’s just kind of window dressing. It’s just sales taxes that are powering this thing.”
Toggling different scenarios on Graves’ STAR bonds financing model, the state’s portion over time — including principal and interest — could be anywhere from $3 billion to $4 billion and on up.
Paul Byrne, economics professor at Washburn University, said moving the Chiefs will definitely generate new economic activity for Kansas.
“Some of the critics kind of downplay that, but you’re having a lot of people crossing the state line, they’re going to spend a lot of money,” he said. “That money is going to have a multiplier effect, and that’s going to have an impact on the revenue. So that I definitely take as a given.”
