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Kan. extends major development tool for 5 years

Published on -5/29/2012, 6:33 AM

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TOPEKA, Kan. (AP) -- Legislators extended the life of a development incentive that allowed Kansas to beat out Missouri for Kansas Speedway and Sporting Kansas City.

A bill approved near the end of the last day of the session permits Kansas to authorize bonds for projects backed by sales tax revenues through June 2017. Such STAR bonds helped finance the NASCAR track and the new stadium for the Major League Soccer team, both located in the Village West area at the junction of Interstates 70 and 435 in western Wyandotte County.

Gov. Sam Brownback has until June 4 to decide whether he'll sign the measure, and his spokeswoman said only that he would review it carefully.

STAR bonds made up the bulk of the $750 million worth of incentives authorized by Kansas and Missouri over the past five years to lure businesses to their respective sides of the Kansas City metropolitan area, according to records obtained from both states. But the bonds also have been used for projects in other areas.

"It's a tool that we've obviously used to great effect," said Dan Lara, a spokesman for the Kansas Department of Commerce.

Had lawmakers not acted, authority to issue STAR bonds would have ended July 1. Some legislators and state and local officials consider the bonds valuable because they're paid off with sales tax revenues generated within a district surrounding each project. After the state authorizes the bonds, local governments issue them.

Supporters have argued that the revenues backing the bonds wouldn't exist without the projects -- so state and local governments really aren't giving up any tax dollars.

It's also a tool Missouri doesn't have, and using the STAR bonds for a new stadium lured the pro soccer team and also attracted a new office complex for Cerner Corp., a medical computer systems firm. Two of the company's executives who are part owners of Sporting Kansas City.

But critics insist state government shouldn't pick winners and losers in the economy.

Rep. Clay Aurand, a Belleville Republican who voted against the extension, said he'd rather keep taxes low for everyone than favor big, individual projects.

"There's a mom and pop store, and nobody notices, and it goes out of business down the road," Aurand said, describing what can happen.

STAR bonds are most visible in Kansas City, Kan., because its Unified Government with Wyandotte County has issued $445 million worth for the Village West area since 2001, including $150 million in the past five years. The Unified Government has paid off some bonds faster than scheduled, thanks to the Legends shopping district, the Schlitterbahn water park and a minor league baseball team.

The Unified Government can issue another $225 million in bonds for a retail complex around the Schlitterbahn park, though they've been on hold during the recession.

The state also has authorized $66 million in bonds for a museum and shopping complex in Overland Park and $63 million in bonds for a complex with an aquarium, other entertainment venues and shopping in Mission. STAR bonds helped finance the Flint Hills Discovery Center museum in Manhattan and the Underground Salt Museum in Hutchinson.

The state also authorized nearly $15 million in STAR bonds for development along the Arkansas River in Wichita.

"STAR bonds are one of those tools the city of Wichita thinks it's important to have as it pursues economic development," said Dale Goter, who lobbies for the city at the Statehouse, adding that the extension "put everybody's minds at ease."

Sen. David Haley, a Kansas City Democrat, acknowledged Village West is a source of pride for his area, but worries STAR bonds subsidize the wealthy over average Kansans. He voted against the extension, and opposed issuing bonds for Kansas Speedway.

"There are many people who have not been touched by the new employment," he said. "There are many people who can't afford the new entertainment venues. There are many people who haven't seen their taxes go down."

And Rep. Scott Schwab, an Olathe Republican, who voted for the extension, said, "We're getting to the end of using STAR bonds."

"We just need to finish the projects we have going," he said.

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STAR bonds extension was Senate Sub for HB 2382.

Online:

Kansas Legislature: http://www.kslegislature.org

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Follow John Hanna on Twitter at www.twitter.com/apjdhanna

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