Tonight’s Agenda Review status of T-Bones Baseball Review proposed new Management Agreement provisions Recommend adoption of proposed new Management Agreement 2 Current Status • The Kansas City T-Bones generate a direct and indirect economic impact of $4.2-million a year for Wyandotte County and are an integral part of the Village West area, which is the #1 tourist attraction in the state of Kansas. • As new attractions have been added, attendance at the T-Bones games has declined. • In 2014, the Unified Government took over ownership of the Community America Ball Park, making the T-Bones a tenant. 3 T-Bones Baseball Annual Attendance *between 48 and 50 games per season 300,000 275,000 In 2010 250,000 213,000 In 2016 200,000 150,000 100,000 50,000 ntage Change  0 2010 (3%) 2011 2012 (2%) 2013 4% 2014 2015 (6%) 2016 (7%) 4 Current Status • June • 2016: The UG sent a demand letter to the T-Bones T-Bones responded that their income was insufficient to meet the current lease agreement obligations • UG paid $125,000 in September 2016 for: • Property taxes on parking lot, and • Legends common area maintenance charges 5 Current Status • UG purchased stadium in February 2014; State approved use of $5.5 million in STAR Bonds; Bonds paid off December 1, 2016; No outstanding debt on stadium. • 20-year Lease with annual payments from T-Bones to UG • T-Bones • T-Bones • T-Bones • T-Bones • T-Bones pay all operating expenses; UG pays for capital maintenance costs pay 50% of UG sewer rates and 100% of UG stormwater rates pays 100% of BPU electric and water rates pay 50-cent ticket tax that goes to Parks & Rec TURF fund pay for taxes on parking lot and the Legends common area maintenance charges • UG liable for property tax on stadium* * Due to SBOE finding that stadium activities are not tax-exempt; appeal process ongoing • UG receives 25% of profits from non-baseball events held at stadium • T-Bones must make stadium available to local high school teams and community events for minimal cost 6 Current Situation: UG Staff Review • Agreed Upon Procedure conducted by UG Independent Auditors Revenue and attendance declines correlated year-over-year • Salary and travel expenses consistent with size of team operations • • Cash management and financial transactions review demonstrated proper controls • Compared agreement provisions of 11 publically-owned baseball teams Several consistent with T-Bones agreement • Several did not require team to pay utilities • Most included provisions for revenue sharing arrangements • • Jointly worked with T-Bones on a pro forma financial “break-even” analysis • 7 Pro forma model analysis assumed team can sustain operations during lean years Management Agreement • Modify from lease to Management Agreement • • • T-Bones named as Manager Provides opportunity to change tax status related to property tax on stadium; If granted, tax exemption would mean the UG no longer liable for $246K p/yr. T-Bones will no longer pay to the UG annual lease payment of $33K p/yr. • Change the agreement term from 20 years (ending in 2034) to 6 years (ending in 2022) • UG responsible for Legends parking lot property tax and common area maintenance costs: • • • BPU/UG utility account put in the UG name for bills beginning in June 2017 • • Property tax on Legends parking lot – totals $119K p/yr., 46% or $54,740 UG receives back Common area maintenance charges – totals $25K p/yr. T-Bones paying UG discounted portion of total bill (including sales tax/PILOT), estimated at 45% of total bill • T-Bones discount on future utility bills in the UG’s name: • ERC and ESC remain at existing rate structure • Electric rate of 6.5 cents per kWh going forward • Water rate at $1.77 per CCF going forward UG covering the remaining costs of the utility bill, estimated at 55% of total bill 8 Management Agreement Past Due Bills and Surety Bond • T-Bones agrees to pay past due bills over 4-years ($20K p/yr.) • Proposal includes that unpaid UG sewer/stormwater bill of $6K discounted to $3K • Management Contract is structured on a “go forward” basis, using actual performance numbers. Indication is they will be able to cover costs outlined. • T-Bones required to obtain a surety bond of $135K, which includes: • Annual utilities estimate with sales taxes & PILOT: $115K • One-fourth of other obligations paid by UG (parking lot property taxes, CAM): $20K. 9 Fla'ns Paths Ruled Ann? Ali?y WNE ?in WW 3110 all) WW WTaU?aiIn IBH) JEED Rq?yTaoW 5410 5410 SHED WWQIBGW T d