Kansas House passes extension of bonds used for economic development, moves to Senate

The Kansas House last week easily passed a measure that would extend the life of sales tax revenue bonds, often considered one of the most powerful economic development inducements in Kansas.

House Bill 2184 is headed to the Kansas Senate Commerce Committee after the House voted 112-11 to approve legislation that would extend the expiration date for STAR bonds, scheduled for July 1 under current law, to 2022.

Reps. Willie Dove, a Bonner Springs Republican, and Keith Esau, an Olathe Republican, were the only local House lawmakers to vote against HB 2184.

STAR bonds allow approved real estate developments to capture local and state sales taxes generated by a project to pay for eligible costs. First used for the Kansas Speedway in the late 1990s, STAR bonds are supposed to be used only for destination-scale projects that are expected to attract at least 30 percent of its visitors from 100 miles away or more.

STAR bonds have had a hand in shaping much of the new development in western Wyandotte County, including Village West, Children’s Mercy Park, Hollywood Casino and other projects.

It’s also been used in Johnson County for the Prairiefire development in Overland Park.

Officials from Kansas City, Kan., and Olathe were among those who testified in favor of extending STAR bonds.

Mike Taylor, a spokesman for the Unified Government of Wyandotte County and Kansas City, Kan., implored House lawmakers to renew STAR bond authority beyond this year. He cited the $450 million of STAR bonds used in Village West, which in turn leveraged more than $1.4 billion in private investment. Taylor added that Kansas City, Kan., will receive $12 million a year in sales tax revenue attributable to Village West since STAR bonds were paid off early at the end of 2016.

The Unified Government and the Kansas Commerce Department are also considering using $80 million in STAR bonds for an American Royal complex and other developments near the Kansas Speedway.

Tim McKee, president of the Olathe Chamber of Commerce, supported renewal of STAR bonds, even though Olathe has never had a project that used the tool. Olathe last year did approve a STAR bond district at the site of the former Great Mall of the Great Plains. There are no plans to develop the site in south Olathe, but city officials wanted to establish a district anyway in case a proposal came along.

STAR bonds have been the subject of scrutiny for years as lawmakers have questioned how developers have used them and the lack of oversight involved.

The Senate Commerce Committee, where HB 2184 now awaits a hearing, is expected to offer close scrutiny of the bill.

This story was originally published May 8, 2017 at 4:39 PM with the headline "Kansas House passes extension of bonds used for economic development, moves to Senate."