Jackson County politicians have avoided a big hurdle regarding the Kansas City Truman Sports Complex renovations. The Truman Sports Complex, home of the Kansas City Royals, almost lost hundreds of thousand of dollars due to an unfavorable choice in surety companies while shopping for surety bonds to renovate the stadium. According to Jackson County, they have discovered the lowest expense solution to the dilemma relating to the surety bonds used to revamp the Truman Sports Complex.
The surety company who wrote the original $22 million bond for the job went into bankruptcy, which caused the surety to lose its required AAA rating. The county was then going to be forced to look elsewhere for the surety bond which would end up costing roughly $200,000 in additional premium with a new surety company. But on Monday, the Jackson County Legislature authorized the waiving of the original AAA credit rating requirement that the surety company was to uphold avoiding the extra premium.
“This looks like a wonderful resolution,” said Dennis Waits, the new chairman of the Legislature.
The reasoning for the AAA credit rating requirement was to guarantee the financial strength of the surety company backing the bonds they wrote which protected public money. Obviously the surety company is not in great financial shape considering their bankruptcy so the county just modified the criteria the surety must meet. Normally, removing the AAA rating requirement negates the point of having the bond in the first place because now that the surety’s financial strength is more than questionable there is absolutely no guarantee that they can pay any claims that may arise. Being that much of the work is already complete, the risk that a claim will arise is minimal which makes this a reasonable solution. This resolution works out for the Royals because more time will be spent completing the stadium job as oppose to raising more funds to pay the additional premium of a new bond. The Kansas City Royals will now be playing ball in their new home sooner than later.
This is a perfect example of why it is so important to carefully choose the surety company that is backing your bonds. Most of the time it would be very risky to modify the financial requirements sureties must meet mid job, but in this case the majority of the work is done and there is a small possibility for a claim. Hopefully all goes well with the rest of the Truman Sports Complex project.