Kansas tightened rules on development incentives. They don’t apply to these projects
Kansas lawmakers added transparency and accountability measures to the widely criticized STAR bonds program this spring, but the new rules will not apply to two youth sports facilities — in Overland Park and Kansas City, Kansas — that are moving closer to construction.
STAR bonds, a development incentive backed by Kansas sales tax revenue, have drawn scrutiny because of failed projects that did not meet the program’s tourism and income goals. When legislators reauthorized the program for five more years in April, they insisted on higher investment minimums and added a handful of new guidelines intended to prevent future unsuccessful ventures.
The guidelines went into effect on July 1.
But Overland Park’s Bluhawk and KCK’s Homefield, which will go in the old Schiltterbahn location, were able to obtain STAR bonds not long before those changes went into effect. According to the Kansas Commerce Department, they will be held to the rules in place in 2019 and 2020 when the projects gained approval for vastly different original plans.
Plans approved by Wichita to add TopGolf to an existing STAR bond will also operate under the old law.
That has caused debate among some city and state officials, who argue that the projects — both of which have seen several iterations of plans over the years — would benefit from greater oversight and transparency.
Kansas Sen. Molly Baumgardner, a Louisburg Republican and staunch STAR bonds opponent, pointed to Bluhawk as evidence of the program’s failures.
The project, she said, was in an area of south Overland Park that would have developed without STAR bonds financing.
“If you look at what originally was proposed for Bluhawk, it’s been so distorted and so altered from the get-go, that it would ever be considered for STAR bonds, I think, is just terribly egregious,” she said.
Bluhawk developers expect thousands of people to visit the sports center, including from out of state, touting the facility as a future draw to Johnson County. They said the financing is crucial to construction beginning later this year.
“Though the development has been through various cycles, as well as a pandemic, we are very pleased with the progress we have made and the stage we are in,” said Bart Lowen, vice president of development for Price Brothers.
Some worry that both of the proposed youth sports facilities will struggle to attract the sort of visitor numbers and tourism envisioned when the state incentives were approved. Both projects will add to a growing portfolio of youth sports projects already underway in Kansas City.
City leaders recently broke ground on a $37 million soccer complex in the Northland. A multi-sports facility with a hockey rink, similar to Bluhawk, had been proposed for Olathe in the past few years. And in 2018 Foutch Brothers developers converted Kemper Arena in the West Bottoms into Hy-Vee Arena, offering a dozen indoor courts and food and retail options aimed at hosting big tournaments. But it has struggled financially.
Developers of the new projects though, say that they will be unique attractions, drawing thousands of local and national visitors.
And some officials said it’s fair for the projects to be grandfathered in under previous STAR bond rules, and that forcing the ventures to abide by the new guidelines would only delay work further.
“These projects were already in process. They meet the requirements of the statute at the time they were approved,” said Sen. Rob Olson, an Olathe Republican. “I really think there’s been plenty transparency though but I’m glad we got the additional.”
“We need more development in this state. That is a fact and these are the tools we have. And I’m excited they’re being used.”
New rules
Under the STAR bond extension approved in April, projects will need to publicly post all details of proposals on their website before and after holding public meetings to solicit feedback.
A summary of community support and involvement would then be submitted alongside the project proposal to the state department of commerce for approval.
Additionally, all projects must go through a feasibility study with a contractor chosen by the agency.
Projects that had been approved in any form prior to June 1, will be able to move forward without additional public involvement and relying upon feasibility studies done by contractors hand picked by the developers.
Olson, an Olathe Republican and chair of the Senate Commerce Committee, said he wished the projects had been established under the new rules but felt it was only fair they be held to the standards in force at the time the plans were approved.
The Legislature, he said, should have moved quicker to improve the program.
“For the last several years they’ve been messing around trying to get this stuff done and done right,” Olson said. “This is all stuff that could have been done two or three years ago and should have been.”
‘Ice eats cash’
Price Brothers, which is developing Bluhawk in southern Overland Park, won STAR bond approval in 2019 for a sports complex with a hockey arena, which they hoped would attract an amateur team.
But attorney Aaron March, representing the developers, said those plans changed after Price Brothers lost their sports partner, Denver-based Roughriders Sports Club. A new company, Sports Facility Management, stepped in last year.
Dev Pathik, founder of Sports Facility Management, warned that “ice eats cash,” meaning that it is expensive to maintain, and that it will take time to build a market for it in Overland Park. So developers initially considered leaving ice out of the first phase of construction, March said.
“But then we all walked into the lieutenant governor’s office and he said ‘where’s the ice?’ Ice was vitally important to the lieutenant governor,” March told the City Council last month. “So we hit pause. And even though ice doesn’t make a lot of economic sense to start with, when the lieutenant governor tells you, you better move ice to phase one, we stopped. We rejiggered it. We reevaluated it.”
Lieutenant Governor and Secretary of Commerce, David Toland tells it differently:
“What was important to the Department of Commerce was making sure that we have that destination which is going to draw new dollars and new people to spend money in the state of Kansas. So the hook that is particularly unique about Bluhawk is the ice. So that was not something that we were willing to move away from because it’s important to have that. That’s the draw,” Toland said.
Whether that ice will bring visitors to Kansas has been debated by some city and state officials. Overland Park Councilman Faris Farassati, one of two who voted against the STAR bonds request, argued that the sports facility is not a unique attraction and does not meet the standards of the state program.
The overwhelming majority of the council felt that the new version of the project was an exciting addition to the growing area.
Lowen, with Price Brothers, said building the sports facility in phases, with one sheet of ice to start, “will adequately support the interest level of the new facility and future expansion will complement the growth model.”
Much of the Bluhawk site is already developed, southwest of U.S. Highway 69 and 159th Street, with the expanding AdventHealth South Overland Park, retail, restaurants, apartments and a grocery store.
“The existing commercial space is 100% leased, with more activity on the horizon. Tenant announcements will be forthcoming this summer and we are very excited to embark on this next major phase of development,” Lowen said.
An outside firm studied the feasibility of the project. And last month, Pathik said he expects the first phase to draw more than 153,000 visits from outside a 100-mile radius, and nearly 500,000 total annual visits.
He highlighted his network of similar sports facilities across the country, saying that the Overland Park location will likely beat expectations and draw youth athletes and families from other states.
The first phase of the arena could be under construction before the end of the year, Lowen said, and open as early as 2023. It would include an ice rink for hockey practice, league and tournament play, as well as figure skating, boutique ice shows and similar events. It also includes basketball courts, an indoor turf field, movable stadium seating, golf simulators, batting cages, a dining area and more.
The next phase calls for another sheet of ice, four additional hard surface courts, more of the indoor turf field and a fitness center.
The entire facility could be completed in 2028, at a cost of $434 million.
Rise in kids sports complexes
In Kansas City, Kansas, yet another massive youth sports project is underway. Two former Sporting KC executives plan to invest hundreds of millions building a “youth sports mecca” on the site of the defunct Schlitterbahn water park.
Homefield LLC is planned for Western Wyandotte County, an area that has become ground zero for the state’s STAR bond program. The Kansas Speedway was the first recipient of the powerful inducement, and since then projects like Village West, Children’s Mercy Park, the relocation of Dairy Farmers of America and others have received millions in sales tax dollars.
Developers of the Homefield project, former Sporting KC executives Ron Heineman and Greg Cotton, were not immediately available for comment.
Last August, developers said they were seeking about $130 million in STAR bonds. The commerce department approved that request late last month.
But developers have hinted that they may ask for more state support as the scope of the project has ballooned in recent months.
Homefield would be a multi-sport indoor facility surrounded by outdoor fields, retail, office and entertainment space. The 300-acre development could also include a man-made lagoon for watersports like kayaking, paddle boarding and cliff diving.
Sen. David Haley, a Kansas City, Kansas, Democrat, said he was concerned that without being accountable to the new guardrails, Homefield would falter like previous Wyandotte County STAR bond ventures.
Previous projects, he said, had failed to pay city utility bills and helped Western parts of Wyandotte County while ignoring the inner city areas that need economic development.
“This could happen again,” Haley said. “That out of county revenue that the city realizes should trickle down to some sum of benefit for Wyandotte County.”
Homefield will add to the flood of youth sports projects underway in Kansas City.
“There’s a lot of projects happening simultaneously,” said Kristen Davis, executive director of KC Premiere, the metro’s largest youth basketball organization.
Davis previously consulted on Bluhawk but is no longer involved. She believes that while there is strong demand for local youth sports venues, they are tricky to make profitable. Many leagues like KC Premiere rent school gymnasiums for practices and tournaments at much lower rates than private facilities charge.
That makes the big, weekend events and tournaments that draw people from outside the area crucial to a project like Bluhawk.
“A facility can barely make ends meet on rentals,” she said. “It’s events: that’s where those facilities really thrive.”
She said hockey is growing in popularity. But ice rinks are not as flexible as courts or fields, which can be used for multiple sports and events.
“Any venue to be financially viable needs to co-mingle as many options as possible and square footage needs to be used for multiple purposes,” Davis said. “And that’s the challenge with ice: you can only do so much with it.”
“It was a great concept. It’s still a great concept if it comes together as planned. I just think they have to be real careful about how they allocate the space.”
This story was originally published July 9, 2021 at 5:00 AM.
