House Status:
Senate Status:
Senate Status:
Minutes for SB434 - Committee on Commerce
Short Title
Amending STAR bonds by limiting financing to tourist attractions, limiting the state revenue contribution and limiting benefits for certain businesses.
Minutes Content for Thu, Mar 8, 2018
Chairperson Lynn continued the hearing on SB 434 and recognized Michael Wilkes, City of Olathe, and Tim McKee, Olathe Chamber of Commerce, who provided testimony in opposition to the bill. While there are opportunities to improve the legislation, STAR Bonds are a tool to ensure high quality development that encourages tourism. As currently drafted, the bill would undermine the tool's original intent.
Plans for a STAR Bond district in Olathe have been underway since 2016, and based on the current STAR Bond law, significant resources and private capital have been invested in its development. After the moratorium on STAR Bonds, the Olathe project was grandfathered and given a "green light" to continue moving forward. However, should SB 434 become law, the Olathe STAR Bond project would no longer be viable. The site of the former Great Mall of the Plains has been largely vacant for a number of years, and efforts to redevelop the property have been underway for over a decade with no success. However, a willing developer emerged based on opportunities available through STAR Bonds. Lacking a STAR Bond component including a regional tourism draw, the prospect of commercial retail/entertainment development in the next decade or two are slim to non-existent for the mall site without STAR Bonds. (Attachment 1)
Chairperson Lynn recognized Jason Gage, City of Salina, who provided testimony in opposition to the bill. This bill appears to add requirements that would likely end the use of STAR Bonds in Kansas. He said without a legislative exception, the bill would kill Salina's STAR Bond project and related downtown redevelopment efforts. The testimony included Salina's project timeline. If the Committee chooses to pass the bill, Mr. Gage requested the bill be amended to include an exception for current STAR Bond projects that have obtained district approval, but where bonds have not yet been issued. (Attachment 2)
Chairperson Lynn recognized Mike Taylor, Unified Government of Wyandotte County and Kansas City, who presented testimony in opposition to the bill. He concluded by saying SB 432 and SB 434 are designed to kill STAR Bonds, which are one of the most unique and effective economic development tools to be developed. (Attachment 3)
Chairperson Lynn recognized Amanda Stanley, The League of Kansas Municipalities (League), who presented testimony in opposition to the bill. The League believes the numerous new restrictions in SB 434 unduly hamper what has been a very successful state program and have the potential to cause cities and the state to miss opportunities for significant economic development. (Attachment 4)
Senator Olson asked what would happen to the potential redevelopment of the area formerly known as the Great Mall of the Great Plains if either of these bills would be passed. Mr. Wilkes referred Committee members to a developer statement. (Attachment 5)
Senator Baumgardner asked for clarification concerning potential ice arenas in projects under consideration in Olathe and Overland Park, Kansas. Mr. Wilkes said the market can only support one ice arena.
Senator Holland asked if a sports team was going to support the ice arena. Mr. Wilkes responded a hockey team would use the arena. There was discussion concerning the potential national or regional draw as a tourist attraction of the team utilizing the arena.
Senator Bollier urged Committee members to not lose sight of the potential for these projects and what could develop into a very positive outcome.
Senator Holland questioned why Kansas taxpayers should support developers who are bringing in generic projects for consideration as STAR Bond projects.
Senator Olson requested Tom Robinette, Overland Park Chamber of Commerce, to review the ice arena project being considered in Overland Park, Kansas.
Written only testimony in opposition to the bill was provided by:
Tom Robinett, Vice President of Public Policy and Advocacy, Overland Park Chamber of Commerce (Attachment 6)
Daniel Silva and Michael Smallwood, Kansas City, Kansas Chamber of Commerce (Attachment 7)
Cherise Tieben, City Manager, Dodge City, Kansas (Attachment 8)
Carl Gerlach, Mayor, City of Overland Park, Kansas (Attachment 9)
Jared Wasinger, Assistant to the City Manager, City of Manhattan, Kansas (Attachment 10)
Chairperson Lynn recognized Dr. Ken Kriz, Wichita State University, who provided testimony neutral to the bill. He discussed the following positives in the bill:
- Limitations on piggybacking
- Limitations on retail (Retail most usually does not generate new economic benefits, with the exception of retail areas that draw people from outside an area.)
- Attempt to define tourist attraction
- Limitations on state sales taxes pledged for debt service and project related cost
Dr. Kriz said the attempt to define a tourist attraction is not sufficient. As defined in the existing statute and proposed bill, the economic impact analysis is a financial/fiscal impact analysis. Only 7 states are completing a true economic impact analysis. Systematic evaluations of project results should be required. (Attachment 11)
Senator Suellentrop said the proposals in the bills are attuned to address the problems that have occurred in the past.
Senator Alley said Kansas needs to grow and needs jobs. There have been some abuses and unintended consequences with STAR Bond projects. He asked Dr. Kriz if he could provide information about the financing and success rate of the arena being used by the Missouri Mavericks.
Chairperson Lynn said she appreciated the discussion and encouraged anyone with suggestions to submit them for consideration. She requested Amy Kramer, Kansas Department of Revenue, to provide a brief overview of a document listing STAR Bond revenue by fiscal year for years 2001 through 2017. (Attachment 12)
Written only testimony neutral to the bill was submitted by:
Natalie Bright, Travel Industry Association of Kansas (Attachment 13)
Gary Anderson, Gilmore and Bell (Attachment 14)
Robert North, Interim Secretary, Kansas Department of Commerce (Attachment 15)
Chairperson Lynn closed the hearing on SB 434. The meeting was adjourned at 9:30 a.m. The next meeting is scheduled for March 9, 2018.
