Bank of America and Wells Fargo have been tapped as lead underwriters for $1.8 billion of sales tax and revenue bonds the Kansas Development Finance Authority plans to issue to finance the state's share of a $3 billion domed stadium for the NFL's Kansas City Chiefs.
Joining bookrunner BofA and co-senior manager Wells Fargo on the STAR bond deal are Public Financial Management as financial advisor, Gilmore & Bell as bond counsel, and Kutak Rock as issuer's counsel, according to Robert North, chief counsel at the Kansas Department of Commerce, who said bond issuance is probably 10 to 12 months away.
"I don't think we know enough today to be able to say (the bonds are) going to be 100% tax-exempt, but certainly the vast majority we expect to be tax-exempt," he told The Bond Buyer on Wednesday.
Whether or not ratings will be sought for the bonds has yet to be determined, although North noted that other STAR bond issues in the state were not rated.
"Some of the models and projections that we've looked at did have a rating for at least part of the debt, so I think it's just too early to say definitively," North said, adding that unrated bonds for the stadium would probably be marketed to sophisticated investors.
In December, team and Kansas officials announced the Chiefs' move from Kansas City, Missouri, to an at least 65,000-seat stadium in Wyandotte County, Kansas, starting in the 2031 football season. Under a
The bonds will be backed by incremental increases in state sales and liquor taxes collected in the project's STAR bond district located in Wyandotte and Johnson counties, according
This beefed-up version of STAR bonds with a maximum maturity of 30 years is in a
STAR bonds for a Royals stadium are not happening after the team missed a Dec. 31 deadline, Kansas House Speaker Daniel Hawkins
Kansas' deal with the Chiefs, which has moved to a definitive documentation stage where NFL approval will be sought, has been the target of much scrutiny with some criticizing it for being financially lopsided in the team's favor.
Patrick Tuohey, a senior fellow at the Show Me Institute, a St. Louis-based think tank dedicated to free markets, pointed to research that has found little to no economic impact on host municipalities from pro-sports team stadiums.
Even if the STAR bond district, which is approaching 300 square miles, is expanded and also captures incremental growth in city and county sales taxes, it would have to generate billions of dollars in new taxable spending to pay for the stadium, he said.
"If I were a bond buyer and I don't have taxpayers on the back end supporting this, I'm going to probably want a much higher interest rate," Tuohey said.
North said STAR bonds would be used to cover 60% to 70% of the cost of some qualified ancillary developments. The term sheet lists several such developments as including a Chiefs' team headquarters, practice facility, an entertainment venue, parking facilities, and housing with the state's share capped at $975 million.
The issuance of Kansas STAR bonds began in the 1990s as a way to help finance tourist attractions. Following debt retirement, the additional sales taxes generated by the developments are designed to flow into state and local government coffers. There were 16 projects with STAR bond financing at various stages of completion and repayment in 11 cities, according to the
A 2021 Kansas legislative audit estimated
There has
A default in June 2022 on $14.1 million of sales tax-backed community improvement district bonds — a different credit from the STAR bonds — the city sold for the same project
On Wednesday, bond trustee UMB Bank
Jennifer Shea contributed to this article.
