Wichita's STAR bonds will finance ballpark
DALLAS – Wichita, Kansas, will use $42 million of sales tax and revenue bonds to build an $80 million minor league baseball stadium on the site of a previous ballpark on the city’s Arkansas River walk.
The bonds, authorized by the state and by the Wichita City Council, were issued Nov. 1, and priced to yield between 2.625% for a 2023 maturity and 4.1% for the $20.7 million 2038 maturity. Wichita finance director Shawn Henning called pricing “very favorable, given the market conditions and security that we had.”
Henning told the council about the sale at a meeting Tuesday, five days after the sale. The bonds were originally authorized Oct. 16 with another vote Nov. 6 to confirm that.
On October 25, 2018, Moody's Investors Service assigned its Aa3 rating to the bonds with a stable outlook.
“Sales tax trends are favorable, exhibiting only small declines during the great recession and modest increases through the subsequent economic recovery,” Moody’s analyst Denise Rappmund wrote. “Despite a high debt service coverage, the profile is constrained by the annual non-appropriation risk as well as the less essential nature of the project.”
In December 2016, the city council approved the expansion of the East Bank Redevelopment District to include Lawrence Dumont Stadium and portions of the west bank of the Arkansas River. The council amended the River District STAR Bond Plan and adopted the Phase II Project Plan to provide STAR Bond funding for stadium improvements, a sports museum, improvements to the west bank of the Arkansas River and construction of a pedestrian bridge connecting the stadium area with the Century II block.
To qualify for STAR bonds, a project must be a statewide and regional destination that will attract tourism dollars and be sustainable, according to state law. Cities sell bonds and turn over the proceeds to a developer of a project, with incremental sales tax revenue paying the debt service.
The tax increment is calculated by determining a base level of sales for the district. Then, as new development begins the increased sales tax over the base is diverted to pay the STAR bonds.
STAR bonds have been used for an auto racetrack in Kansas City, Kansas, a sporting goods store and other projects.
In Wichita, the new ballpark near downtown would have seating for 10,000 fans, which is 3,600 more than 84-year-old Lawrence-Dumont Stadium. The Triple-A Pacific Coast League's New Orleans Baby Cakes will move to Wichita when the stadium opens in 2020.