In what’s shaping up as a preemptive move, the Olathe City Council on Tuesday will consider creating a large STAR bond district later this year to cover the former Great Mall of the Great Plains site.
According to Olathe officials, there’s no plan yet to develop the former mall site, which has been substantially demolished to prepare it for an eventual redevelopment.
Instead, the city wants to ensure that the sales tax revenue bonds, known as STAR bonds, can be used if and when a development plan surfaces.
“We want to preserve our ability to use that should the appropriate project come up,” said Tim Danneberg, an Olathe spokesman.
The law that allows STAR bonds expires on June 30, 2017, meaning the tool goes away unless the Kansas Legislature reauthorizes it. Even if STAR bonds don’t expire, they probably will be subject to closer scrutiny by lawmakers, some of whom believe the incentive has been used without enough oversight.
That concern also, in part, prompted the timing of last week’s announcement that STAR bonds would pay for up to half of a $160 million proposal to build a new complex for the American Royal near the Legends shopping district in Wyandotte County.
“I think there was, less on our part and more on the state, an urgency to get this district set up,” said Unified Government of Wyandotte County/Kansas City, Kan., spokesman Mike Taylor. “Just in case.”
STAR bonds allow a tourism development project, one that’s deemed significant enough to draw a sizable number of visitors from 100 miles away or farther, to use local and state sales taxes generated by the attraction to repay up to half the debt on a project. They’re considered one of the more potent development incentives in the region.
STAR bonds were first used to support the development of Kansas Speedway in Wyandotte County. Since then, STAR bond projects have spread out in Kansas. The Village West shopping district, Children’s Mercy Park (both in Wyandotte County) and the Museum at Prairiefire (in Overland Park) are examples of STAR bond projects. Last week, STAR bonds were envisioned as up to half of the funding source for a proposed $160 million American Royal complex near the Legends.
An earlier proposal for the American Royal, which surfaced late last year, drew the ire of Kansas legislators. That proposal contemplated redirecting state sales tax revenues from the Village West and Legends STAR bonds in Wyandotte County, which are set to be paid off early, and using that $42 million for the American Royal.
“The districts can’t share in that type of revenue,” said Kansas Sen. Jim Denning, an Overland Park Republican and a chief critic of that previous American Royal plan.
Other uses of STAR bonds have given lawmakers pause, such as including auto dealerships as part of STAR bond district. Auto dealerships, they say, hardly constitute tourism attractions.
Controversy about STAR bonds predates the American Royal project. Lawmakers were unhappy when an erstwhile proposal to build a large aquarium at the Mission Gateway project, along with a Walmart Supercenter, meant that a nearby Walmart in Roeland Park would close and cost that suburb significant sales tax collections. That aquarium proposal never broke ground at Mission Gateway.
The agenda for Tuesday evening’s Olathe City Council agenda lists the STAR bond item on the consent agenda, which suggests that the item should pass without much, if any, discussion.
The agenda item would call for a public hearing to create a STAR bond district for the Great Mall site, as well as undeveloped ground to the north of the now-demolished mall, on Dec. 6. A STAR bond district could be created shortly after that hearing.
The Great Mall amounted to a great disappointment for Olathe when it failed meet original projections for visitors and sales when it opened in 1997. The mall closed in 2015, and demolition of the mall started last summer. The property is owned by VanTrust Real Estate, a prolific Kansas City development firm.