The Garden City Commission on Tuesday approved a request for a one-year extension to Garden City's STAR bond project. If approved, the measure would mark the project's second extension.
In December, the city was given a six-month extension to the project that would facilitate extensive economic development opportunities within a boundary encompassing approximately 312 acres, including the Tangeman Sports Complex northeast of Schulman Crossing and undeveloped land spanning east of the shopping center to Jennie Barker Road.
The previous six-month extension expired today. The STAR Bond Act enabling use of the option requires the submission of a project plan for review through a local approval process subject to final review by the Kansas secretary of commerce within a two-year period, plus any granted extensions.
Hundreds of millions of dollars have been furnished through the statewide program that allows approved real estate developments to retain local and state unobligated sales taxes generated within the designated project district to cover eligible costs.
The STAR bond program in its entirety was set to expire July 1 after originally being used to finance the Kansas Speedway in Kansas City, Kan., in the late '90s.
The Kansas House granted preliminary approval in early May to House Bill 2184, which would have extended the program's sunset to 2022. After the House voted 112-11 in approval of the legislation, the bill moved through to the Kansas Senate Commerce Committee and lingered there.
But on Tuesday night, Kansas legislators voted to override Gov. Sam Brownback's veto of a tax bill that would repeal or roll back cuts to income tax.
The override, which the House voted 88-31 in support of and the Senate voted 27-13 in support of, included a provision that extends the STAR bond program by three years to July 1, 2020.
The bill also stipulates a one-year moratorium on the creation of new districts, but Garden City's STAR bond district already had been created and would not be affected, said City Manager Matt Allen.
A failed override could have negated prospects for Garden City's project, as well as projects in Wichita, Salina and Abilene that included a $130 million hotel, a museum and an initiative intended to revitalize a downtown portion of Salina.
STAR bonds usually are used to finance destination projects intended to attract at least 30 percent of visitors from 100 miles away or more.
According to city documents, the concept for Garden City's STAR bond has evolved since the extension approval by Commerce Secretary Antonio Soave in December. The project's concept has since been termed "Sports of the World," departing from its previous focus on soccer.
Finney County Economic Development Corp. President Lona DuVall said Wednesday that the new concept will bring in more sports that have been growing in popularity, with rugby being an example. The plan also would minimize the emphasis on large-scale tournament facilities while preserving smaller, club-level tournaments to include a larger portion of the broader population.
Though DuVall declined to go into specifics regarding the plan going forward due to a request by interested private investors, she said she anticipates making the project more public soon, should the extension request be approved.
The city's agenda packet noted a priority in retaining the STAR bond's December 2014 tax baseline. The bond will be financed using part of the state and city sales tax generated largely from retail operations at Schulman Crossing and Menards.
When the city approved the district parameters in 2014, a baseline sales tax number was set for the tax increment used in the financing calculation.
Allen said in December 2016 that the December 2014 baseline would divert any growth within district boundaries from that point in time to repay bonds used for STAR bond attractions.
Creating a new STAR bond district would nullify the impact of the growth that already has taken place in the existing district and establish a new baseline that would generate less money and potentially kill prospects for a project.
Thus far, the city commission has been using a portion of the STAR bond revenue to supplement the Downtown Development Fund, a program that reimburses downtown property owners a portion of the costs to improve their buildings, until an organized project is bonded with a private sector partner capable of sustaining the scale of the necessary facility or facilities.
The STAR bond has generated approximately $365,000 annually in city sales tax. The city diverted $250,000 to the DDF in 2015 and 2016.
The city set aside other revenues from the STAR bond in a fund with no property tax levy to be carried over later, instead of leaving the money in the general fund.
Allen said the December baseline and with attendant growth is calculated to be worth $20 million to $25 million for the project.
DuVall said Wednesday that she anticipates those numbers to stand going forward.
"We'll know more about that when the feasibility study is completed, and of course it all depends on what our private investors do," DuVall said. "Depending on how much they bring to the table, that will affect that bond amount certainly."
If the second extension is granted, the city will be charged with completing several steps necessary to presenting the project for final approval to KDOC.
The first step is the completion of a feasibility study commissioned to Canyon Research Southwest, Inc. by the FCEDC. The study in Garden City is already under way.
If the extension is not granted, the new STAR bond moratorium would prevent the city from designating a new district for one year, and an entirely new tax baseline would have to be implemented.
