With sales tax revenues dwindling in the economic downturn, Jackson County has struggled to keep current on payments related to the Truman Sports Complex.
But county officials downplay the significance of any partial or delayed payments to the Royals and Chiefs, currently short by more than $2.5 million.
They add that the teams are not threatening the county with default of the leases that govern the use of Arrowhead and Kauffman stadiums. Such a default would raise concerns about the teams leaving Kansas City.
Spokesmen for the Royals and Chiefs declined to raise concerns about delayed payments.
“The Royals continue to work with our partners, Jackson County and the JCSCA (the Jackson County Sports Complex Authority), as they deal with the economic challenges presented by the current economic climate,” said Mike Swanson, a spokesman for the Royals.
The Royals and Chiefs, team spokesmen added, have complied with all requirements of the lease, amended in 2006 when voters approved a 3/8-cent sales tax to finance construction bonds for a major renovation plan for the stadiums, then estimated at $575 million.
Don’t worry about any doomsday scenario of the county defaulting on its bond payments, county officials emphasized.
“Jackson County is never going to default on those bonds,” said Calvin Williford, the county’s director of intergovernmental relations and communications.
Renovation of the stadiums — which has now exceeded more than $650 million — is mostly completed. And now, county officials say, the leases are entering a new era where repairs, maintenance and operations of the stadiums will become primary.
That’s currently where the county is coming up short — in paying maintenance and management fees.
The county owes the teams a total of about $7 million per year for management fees, and it currently owes the Chiefs $1.3 million and the Royals $1.38 million, according to county officials.
Sales tax revenue for the stadiums this year is projected to fall to $30.19 million, just below what was produced in 2009. In 2007, the tax produced nearly $32.5 million.
More significant, the current revenues have been short the last two years of paying the annual debt service on the bonds — just above $32 million.
County officials say the sales tax revenues, combined with contributions from the city, state and a county parks tax, as well as team lease payments, are sufficient to meet the annual debt service.
County and sports complex officials also are banking on the sales tax ticking back upward.
“I don’t think it’s a significant issue,” said Jim Rowland, executive director of the Jackson County Sports Complex Authority. “The (sales tax) money is still flowing in, and this will work itself out over time.”
Rowland said the fact that the long economic downturn hasn’t created a revenue issue before now should be comforting.
“The sales tax probably reached its bottom early this year,” he said. “As it moves up, this will become a moot point.”
County officials had been scheduled to meet on Wednesday with the Royals’ and Chiefs’ ownership. But the meeting was postponed until later this month.
Adding to the county’s cash flow problems is the slow payment of funds by other governments that have pledged to contribute to the stadium upkeep fund.
Kansas City, for example, has paid less than $500,000 of the $2 million it has pledged for 2010. The Kansas City Council is expected to approve this month payment of the remaining $1.5 million, in installments.
County officials confirmed last week that its reserves dwindled to a point this year that when the teams were scheduled to receive part of their management fee payments, they were only paid in part.
What’s more, soon after the Chiefs requested payment from the so-called RMMO (repairs, maintenance, management and operations) last month, county officials held up the payment, surprising Rowland and the Chiefs.
“I was told today by Chiefs management that the last RMMO (payment), which was signed by me on 8/31/2010 … was stopped,” Rowland wrote to Williford in an e-mail.
“Was someone going to let us know?”
Rowland confirmed last week that the county’s hold on an RMMO payment was the first he had ever seen.
Williford described the delays in payments as a “prudent pause” that taxpayers would expect of the county as it moves into this new era of maintaining the stadiums and their costly renovations.
In an e-mail response to Rowland, Williford said the county is undertaking a review of the teams’ RRMO fund “in connection with an overall review of the sports complex financing.”
Williford said any payments would be deferred until team officials and county officials could meet so the county could update everyone “on the current status of the financing.”
He added: “I think all parties can sit down and work out a process so this is not an issue.”