Kansas City to spend millions from general fund to cover T-Mobile Center improvements

·5 min read

Kansas City will dip into its general fund for the first time for repairs of downtown’s T-Mobile Center after the coronavirus pandemic caused a sharp drop in revenues.

The Kansas City Council approved a request Thursday to transfer about $4.2 million from the city’s general fund to pay for new LED signs inside and outside the arena, to replace basketball equipment for college tournaments and for technology upgrades.

The city-owned facility is managed by ASM Global. The management agreement calls for the company to cover 35% of capital maintenance costs, while the city covers 65%.

Ordinarily, a special fund that collects user fees on the arena and taxes on hotel rooms and rental cars has covered those costs for the city. But that fund collected less than half its budgeted revenue in the city’s 2020-2021 fiscal year. And it’s expected to come up short again for the 2021-2022 fiscal year.

The council voted 8-1 on Thursday to approve the request. Council member Brandon Ellington opposed the request, while members Lee Barnes, Teresa Loar, Katheryn Shields and Mayor Quinton Lucas were absent for the vote.

Ellington told The Star he objected to sending taxpayer dollars to a privately-managed facility.

Before the vote, city officials told The Star they expect to take more from the general fund in coming years to pay for both capital improvements and debt service on the 14-year-old T-Mobile Center. Exactly how much is needed will depend on the speed and strength of the recovery from the pandemic.

During a committee meeting last week, 4th District council member Eric Bunch questioned how much of a priority the council should place on repairs to the venue.

“Is this something that needs to be done in the deepest recession we’ve seen since the great Recession in the late 2000s?” he said. “That’s what gives me pause here.”

Bunch questioned whether the council should use money from the general fund, which funds police, roads and other basic services, at a time when the city has many other priorities, including a needed sidewalk repair program that could cost hundreds of millions of dollars.

“Meanwhile we’ve got neighborhoods who are struggling,” with their basic services declining, Bunch said. “It’s hard for me to see the general fund being used for this purpose versus all the million other quality of life needs our community is seeing.”

Bunch questioned whether the city ought to be in the venue business at all and asked city staff to explain what sorts of profits the city amasses off the T-Mobile Center in good times.

On Thursday, he said he still didn’t like the idea of spending general fund dollars on the venue but he thought it was important to maintain city infrastructure like the arena.

In the committee meeting, Tammy Queen, the city’s finance director, said the special fund has generally helped the city cover its share of ongoing maintenance costs. But that fund has never been a windfall.

“We don’t have a lot of margin in the fund in general,” she said. “Even in the best of economic times it has been a struggle.”

Local development attorney David Frantze, who is representing the management company, said the funds were needed to keep the arena competitive. Without the improvements, T-Mobile Center would struggle to attract top events, thus worsening the financial position of the venue.

“The goal here is to try to identify only critical priorities. This is not a wish list or anything,” he said. “But these are things that if we don’t do we believe it impacts the ability of this arena to continue to attract the top events.”

Shields, the 4th District at-large council member, said the city has historically failed at maintaining its physical assets. She said the city should invest in the downtown venue if it wants to see events bounce back to prepandemic levels.

“The T-mobile Center is an asset of this city,” she said. “I wish there were some other way to pay for it than out of the general fund. But I think it would be short sighted not to move forward on these maintenance requirements. “

The city issued a total of $233.2 million in bonds in 2005 and 2006 to finance construction of the arena, which was originally called the Sprint Center. The developer contributed another $53.2 million toward the project.

On average, the city spends about $14 million per year on debt service paying down the bonds, which are expected to mature in 2040. Generally, those payments are covered by arena revenues. But declining revenue caused the city to dip into its fund balance from the special arena fund, said city spokeswoman Maggie Green.

That means for the foreseeable future, the city may have to rely on its general fund to help pay for both maintenance and debt on the venue.

“That would be dependent on how quickly and how well the economy recovers from the impact of COVID,” Green said.

In his presentation to the council committee, T-Mobile Center’s manager Jay Cooper showed images of a giant LED billboard on Grand Avenue with big chunks missing.

In an interview, Cooper said the lighting systems as well as those that automate systems like HVAC and plumbing are aging.

“It’s a 14-year-old building and certain systems are reaching the end of their life,” he said. “As the manager, ASM’s goal is to protect the city’s asset.”

Cooper said the arena also needs concession improvements, a new point of sale system, improvements to suites and new basketball goals to meet requirements of the Big 12 and the NCAA.

He said the arena generally delivers profits to the city, but couldn’t say how soon the special arena fund would be replenished to avoid going into City Hall’s general fund.

“But what I can say is that the sports and entertainment industry as a whole is bouncing back incredibly,” he said.

The Star’s Glenn E. Rice contributed to this report.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting