Legislative auditors skeptical Prairiefire development can pay off $64.8M in bond debt

STAR bond success: $150M MLS stadium debt retired in less than seven years

by Tim Carpenter, Kansas Reflector

Topeka — The Overland Park retail, office, hotel and residential development attached to the Prairiefire museum struggles to attract out-of-state tourists and could default on $64.8 million in bond debt issued through a state economic development program under scrutiny by the Legislature.

Auditors with the Legislature said their analysis of the PrairieFire project built with capital raised through issuance in 2012 of Sales Tax Revenue Bonds, or STAR bonds, indicated the project wasn’t generating enough sales tax revenue to repay debts in the required 20-year period. Originally, $64.9 million in bonds were issued for the project. Debt remaining to be paid: $64.8 million.

Auditors predicted it could take until 2046 or 2104 to produce sufficient sales tax revenue to retire the PrairieFire obligations held by the city of Overland Park.

“They are in danger of default,” said Andy Brienzo, of the Legislature’s audit division. “We can’t say that definitively. There is some additional development that is slated to happen.”

Bob North, general counsel with the Kansas Department of Commerce, said he didn’t share skepticism of auditors but also couldn’t guarantee success of Prairiefire, which includes a museum for traveling natural history exhibits. The commerce department has approved 19 STAR bond projects since the 1990s for Atchison, Garden City, Salina, Wichita, Topeka, Goddard, Manhattan and other cities.

He said museums, racetracks, sports facilities and other venues build with of $1.1 billion in bond proceeds were intended to raise the quality of life for benefit of Kansans and to attract tourists to the state. He said the objective of STAR bonds wasn’t simply generation of tax revenue.

“If they were, we’d take our money and build a bunch of Walmarts,” North said. “The goal of STAR bonds is to create attractions that are going to bring visitors to the state.”

The House and Senate commerce committees this week invited the Kansas Division of Legislative Post Audit to outline findings of a 2021 audit of STAR bond initiatives. Auditors discovered only three projects outside of the mega-development at Village West in Wyandotte County that fulfilled the objective of elevating tourism.

“STAR bonds are a very, very effective and strong economic development tool,” North said. “They’ve worked well in most instances. I’m not going to tell you every project is perfect.”

Rep. Kristey Williams, an Augusta Republican, said she was disappointed with the quality of information submitted to the state by STAR bond recipients.

“As we look at the annual reports that were submitted to the Department of Commerce,” she said, “some of it doesn’t give real data. It might say visitation went up 30%. Well, 30% from what number?”

Sen. Jeff Pittman, D-Leavenworth, said the assessment of STAR bonds by legislative auditors was “a particularly narrow evaluation.” It was based on estimates of out-of-state visitors and documentation of sales tax revenue but didn’t take into account other evidence of economic development such as the multiplier effect of those new businesses, he said.

“I have some issues with some of this,” Pittman said.

The latest STAR bond annual report submitted to the Legislature by the Department of Commerce pointed to success of Children’s Mercy Park where the Sporting Kansas City professional soccer team plays. It’s become one of the state’s top tourist destinations.

To build the MLS soccer complex, $150 million in STAR bonds were issued in 2010. That debt was paid off in less than seven years.

Jake Reid, president and chief executive officer of Sporting Kansas City, said the franchise derived significant benefit from the STAR bond law and the private-public partnership with the Unified Government of Wyandotte County and the state of Kansas.

“We’re the second-smallest market in our league, yet we often times consistently punch above our weight class in terms of on-field results as well as the business results,” Reid said. “On average, we drive over 600,000 per year through Children’s Mercy Park.”

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See more at https://kansasreflector.com/2022/01/22/legislative-auditors-skeptical-prairiefire-development-can-pay-off-64-8m-in-bond-debt/

December tax collections in Kansas show growth

Total tax collections for December in Kansas were $890.3 million, a 7.8 percent increase over the monthly estimate, according to Gov. Laura Kelly.

It is also a 15.6 percent, or $120 million, growth over December 2020.

“Over the past three years my administration has taken steps to restore the Kansas economy, and that fiscal responsibility has paved the way to provide direct tax relief to Kansas taxpayers,” Gov. Kelly said. “That relief will come specifically through proposals like axing the food tax and offering a one-time $250 tax rebate for Kansas families.”

Individual income tax collections were $355.2 million. That is $35.2 million more than the estimate and $48.5 million, or 15.8%, more than the previous December.

Corporate income tax collections were $132.0 million, which is $22.0 million more than the estimate. That is 33.1%, or $32.8 million, more than the same month of the previous year.

Retail sales tax collections were $224.3 million for December. That is $4.3 million, or 2.0%, more than the estimate and 11.1%, or $22.4 million, more than December 2020.

Compensating use tax collections were $69.2 million. That is $2.2 million, or 3.3%, more than the estimate. Those collections are also $17.0 million, or 32.7%, more than the previous December.

According to figures from the Kansas Department of Revenue, retail sales tax revenue distributions in Wyandotte County for December 2021 were $2.77 million, a 21.9 percent increase from December 2020’s figure of $2.27 million.

For the calendar year 2021, retail sales tax revenue distributions increased 15 percent in Wyandotte County, from $25.59 million in 2020 to $29.42 million in 2021, according to KDOR figures.

Sales tax revenue distributions for Kansas City, Kansas, were $4.2 million for December 2021 as compared to $3.38 million in December 2020, according to KDOR figures, a 26.3 percent increase. For the calendar year of 2021, sales tax revenue distributions in Kansas City, Kansas, were $42.1 million, an increase of 11.8 percent over $37.6 million in 2020.

Statewide tax collection figures are at https://governor.kansas.gov/wp-content/uploads/2022/01/06_December_Revenue_FY2022_01-03-2022_Final.pdf.

Congresswoman favors ‘common sense’ approach to legislation

Opinion column

by Murrel Bland

U.S. Rep. Sharice Davids, D-3rd Dist., said she is part of a group of “common sense” Democrats in Congress who carefully spend taxpayers’ dollars. This was a comment she made at a luncheon meeting of the Congressional Forum Friday, Dec. 17, at Children’s Mercy Park.

Good roads and bridges are important to business and industry, Rep. Davids said. In a prepared news release, Rep. Davids said, “The Kansas Third is home to vital trucking and logistics and we are growing fast…” Good roads are important getting goods to market, she said.

Rep. Davids was the only member of the Kansas Congressional delegation to vote for the infrastructure bill. Rep. Davids is the only Democrat member of the delegation. The infrastructure bill will fund improvements to the I-435 and State Avenue intersection. The state of Kansas will receive more than $500 million in federal funds for road and bridge repair.

The Unified Government hopes to receive federal aid to fund its storm water program. Storm water is a particularly acute problem in the eastern areas of Wyandotte County.

Rep. Davids spoke in favor of President Joe Biden’s Build Back Better bill, which passed the U.S. House, but is stalled in the U.S. Senate. Rep. Davids said the child care provision of the bill would help lessen the shortage of workers.

Recently elected Mayor Tyrone Garner introduced his chief-of-staff. She is Dr. Mildred Edwards, a business consultant who received her doctorate in community psychology from Wichita State University. She is an adjunct faculty member at the Public Management Center of the University of Kansas.

The Congressional Forum is part of the Kansas City, Kansas, Area Chamber of Commerce. The next meeting of the forum will be at 11:30 a.m. Friday, Jan. 21, at Children’s Mercy Park.

Murrel Bland is the former editor of The Wyandotte West and The Piper Press. He is executive director of Business West.