RESOLUTION NO. 140949

Directing the City Manager to enter into a negotiation process with the American Royal Association to structure a public-private partnership for redevelopment of the American Royal complex and demolition of Kemper Arena, a draft plan of finance and a plan to divest the City of its current and future capital maintenance and lease obligations for both Kemper Arena and the American Royal complex facilities for consideration by the City Council.

WHEREAS, the City has received suggestions for various uses of property in the West Bottoms; and

WHEREAS, the City has completed a purposeful planning and analysis process regarding the future use of Kemper Arena and the American Royal complex facilities, including outreach to business owners and neighborhood stakeholders; and

WHEREAS, as part of this process the City has received and completed preliminary evaluations of proposals from both the American Royal Association and Foutch Brothers for potential redevelopment of Kemper Arena and the American Royal complex facilities; and

WHEREAS, the City has completed an analysis of the relative cost of these proposals versus the City’s current financial and lease obligations; and

WHEREAS, the City desires to relieve itself of its current lease obligations with the American Royal Association, which results in an annual operating subsidy, unrecouped costs and deferred capital maintenance; and

WHEREAS, the City has determined that it’s status quo approach to meeting these financial and lease obligations will continue to require ongoing capital contributions and subsidies through the end of the term of the current lease with the American Royal Association; and

WHEREAS, the City’s Adopted 2015-2020 Business Plan does not provide for additional funding for the redevelopment of Kemper Arena and the American Royal complex facilities or for additional costs related to their ongoing maintenance and operations; and

WHEREAS, the City desires to minimize the long-term financial cost of maintaining and operating Kemper Arena and the American Royal complex facilities and is financially unable to redirect additional resources from other basic services such as police, fire, streets, and utilities; and

WHEREAS, the Foutch Brothers have withdrawn their proposal from consideration; and

WHEREAS, it has been preliminarily determined that a capital contribution greater than $20 million dollars plus an annual operating subsidy of greater than $1 million dollars for 30 years would result in a net increase of expenditures by the City over its current level of support for both Kemper Arena and the American Royal complex facilities; and

WHEREAS, any net increase of expenditures over the City’s current level of support for Kemper Arena and the American Royal complex facilities, would otherwise redirect City resources away from these basic services, unless funded, in part, through a dedicated property tax for general obligation bonds, which would require approval by the voters; and

WHEREAS, the American Royal Association has presented a proposal which requests a $30 million dollar capital contribution and a $1 million a year annual operating subsidy to fund their proposed redevelopment of the American Royal complex, to include improvements to the current complex, demolition of Kemper Arena, and establishment of a youth sports facility in partnership with SportingKC; and

WHEREAS, members of the American Royal Association’s development team have previously committed to contribute funds, in addition to their equity contribution to the redevelopment of the American Royal complex facilities, in an amount necessary to fund the demolition of Kemper Arena; and

WHEREAS, the City desires to limit their participation in any potential public-private partnership relative to the redevelopment of Kemper Arena and the American Royal complex facilities, such that it is less than or equal to the contributions of other partners in the project and ensures that any City funds utilized would be committed “last in” - only after other partners funds were otherwise committed; NOW, THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF KANSAS CITY:

Section 1. That the City Manager is directed to engage in a preliminary negotiation process with the American Royal Association as to the structure of a potential public-private partnership for the redevelopment of both the American Royal complex facilities and demolition of Kemper Arena, at a cost to the City no greater than $20 million dollars for capital expenditures and $1 million dollars in annual operating subsidy for 20 years.

Section 2. That the City Manager is further directed to develop a draft plan of finance for the City’s participation in this potential demolition of Kemper Arena and redevelopment of the American Royal complex facilities, including a plan to divest the City of its current and future capital maintenance and lease obligations for Kemper Arena and the American Royal complex facilities, for consideration by the City Council.

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