Monday, October 25, 2004

A Taxing Question

Other than the presidential choice, Kansas Citians will have another decision to make this Election Day.

On the ballot is a sales tax called “Bi-State II.” For those not familiar with the area, Kansas City is a large metropolitan area that spans 2 states, Missouri and Kansas. While downtown Kansas City is located in Missouri, a large suburban area is located across the state line in Kansas. The Chiefs and Royals play at stadiums in Missouri.

A few years ago, a tax was passed (called the “Bi-State tax”) that called for a sales tax in counties on both sides of the state line. The money was used to renovate the decrepit Union Station building and to create what is now the Science City museum, located in the Union Station. What resulted is a beautifully restored historic building with a financially struggling museum. That tax was the first to include both sides of the state line.

The two sports stadiums, Kauffman Stadium for the Royals and Arrowhead Stadium for the Chiefs were built in 1971 right next to each other, creating what is called the Harry Truman Sports Complex. The Complex is made up of the two stadiums and acres and acres of parking lots. The Complex is located east of downtown, near the intersection of two major interstate highways, I-70 and I-435. The stadiums were well designed and have aged well over the years. Both are still considered two of the best stadiums in baseball and football. Getting to and leaving the stadiums is extremely easy. There are several gates providing easy access to the stadiums, and parking is easy. From my house, I can get to my seats at Kauffman in about 30 minutes.

The stadiums are owned by Jackson County, and the teams lease the stadiums. In the most recent lease, the teams agreed to stay in the stadiums until 2015, provided certain improvements were made to the stadium. This put the county in a bind. On the one hand, the teams are guaranteed to remain in Kansas City for another 10 years, but it soon became apparent that the county could not afford to make the required improvements without help. If the improvements are not made, then the teams are allowed to break their lease.

Bi-State II is a quarter-cent sales tax to raise money for renovations at the Sports Complex. The tax also includes funding for arts programs in the Kansas City area. Part of the money will be used to help construct a new performing arts center in downtown Kansas City, with other money going to the passing counties to fund arts programs.

The tax will expire when $360 million has been raised for the stadiums. Each stadium will receive $180 million for renovations. The Royals will contribute $15 million to the project and the Chiefs will contribute $50 million. The money will be used to improve the stadiums, including widening the concourses, constructing new luxury suites, and improving the infrastructure (plumbing, etc) of the stadiums.

The tax must pass in three counties (Jackson and Clay in Missouri, Johnson in Kansas), but is also on the ballot in two other counties (Platte in Missouri and Wyandotte in Kansas).

So, why should tax payers pass this tax? I’m struggling with that question as I try to decide how I will vote (I live in Platte County, Missouri). As a sports fan, I would love to see the stadiums renovated to make them more state of the art. I’ve visited newer stadiums in other cities and have been quite impressed. But the bigger question for me is this: Is this the BEST solution for Kansas City?

Let’s look at some history. In 1997, Kansas City decided to invest $23 million in improvements to Kemper Arena. The Arena is about as old as the stadiums (built in 1974), and the improvements included adding seats and enhancing the concourse areas. Just 7 years later, it became clear that the building was no longer adequate, and in August of this year voters approved a hotel and rental car tax to fund the construction of a new, state of the art arena in downtown. Did we waste that $23 million?

Downtown is now becoming a thriving area. Many old buildings have been renovated by private investors and converted to stylish loft apartments and condos. And with the addition of this arena and H&R Block’s plan to locate its world headquarters nearby, downtown is on a strong comeback trail. More people are moving into the area, and development is at an all time high. What would adding a baseball stadium to the area do?

The tax would provide $180 million to Kauffman Stadium, and the Royals would also include $15 million. That’s nearly $200 million. How much is a new stadium? One of KC’s many sports architecture firms has revealed a plan to build a baseball stadium downtown for around $250 million. I’m not sure which is the best way to go, but it certainly should be considered. If the tax had language that allowed the money to go toward a new stadium OR renovations to Kauffman, I might be more likely to vote for it. By voting for it the way it is, I’m giving up the idea of building a new stadium downtown. Given the choice of spending about the same money either way, I might choose to build a new stadium to help in the revitalization of downtown. Downtown stadiums have worked wonders in cities like Denver and Pittsburgh. They also have failed in cities like Detroit. If done correctly, a baseball stadium can do wonders for a blighted downtown. What if, given that the taxpayers are willing to pay $180 million, a private party comes forward (like Sprint did with the Sprint Center Arena) and is willing to pay a substantial amount to fund a new stadium?

The Chiefs are consistently profitable, thanks in part to the NFL’s generous television agreement. Chiefs’ games are always sold out. The owner of the Chiefs is Lamar Hunt, one of the wealthiest men in America. He is willing to pay just 27% of the cost of renovating the stadium. The renovations will only enhance his profit. Why can’t he help more? Why must the vast majority of this project rest on the shoulders of the taxpayers? (by the same account, Royals owner David Glass is paying only 9% of Kauffman’s renovations). The Arrowhead renovations include a new, larger Arrowhead club and luxury suites, areas that most fans never see. Should fans pay $180 million for shorter lines to buy a hot dog?

The campaign for the tax has asserted that this tax will assure that the teams will not leave Kansas City. However, in a recent interview, Chiefs owner Lamar Hunt said that even if the tax fails, the Chiefs will not leave Kansas City. His dedication to keeping the Chiefs in Kansas City was apparent. I would think that Hunt would be saying anything to get the tax passed, given that it will enhance his profits, and yet he said it plain as day – the Chiefs are not going anywhere.

So, after taking all of this into consideration, I believe my vote will be No. I would be more willing to vote Yes if the team owners paying a larger portion of the renovation costs and if the tax included language that allows the tax to pay for EITHER renovations or a new stadium.

I am all for the arts portion of the tax, and would approve that, if it were on the ballot on its own. In contrast, taxpayers would fund $50 million of the new Performing Arts Center, while $254 million will be paid by private contributions.

A sports talk host recently indicated that downtown business leaders are quietly lying back, and if Bi-State II fails, will reveal a plan to bring baseball downtown. It’s a tough choice. Recent polls show that the tax is failing. It will be difficult for Jackson County who will be put in a bind to meet its obligations in the stadium lease. But if the tax passes, are we throwing away an opportunity to do something better?

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