Legislative Committee Says Kansas STAR Bonds Program Needs More Study, Possible Changes

Dec 6, 2017

Kansas lawmakers studying economic development policies say the Legislature should consider changes to a major incentives program next year.

During a meeting Wednesday at the Statehouse, a special committee recommended more study of the STAR bonds program, and members of both parties said they want more oversight.

Sen. Julia Lynn, an Olathe Republican, said there hasn’t been enough accountability in the program. She wants the state to use formulas that determine whether proposed projects will create enough economic development to outweigh their costs.

“If they cannot prove that they can produce a positive return on investment, then either you have to go back and look at the project again or you don’t do the project,” Lynn said.

Under the STAR bonds program, local governments issue bonds to help pay for development projects. Tax collections from the development projects are diverted away from state and local governments and used to pay back the bonds.

The program has been used for some high-profile developments, including the Kansas Speedway, as well as smaller projects. The redevelopment of the Heartland Park racetrack outside Topeka is a less-successful example. A bank eventually took over the track and sold it to a new owner.

The committee also heard about changing shopping trends that are creating struggles for brick-and-mortar retailers.

Sen. Tom Holland, a Baldwin City Democrat, said legislators should consider limiting STAR bonds to tourist destination projects and avoid retail developments. He said retail developments around a tourist attraction could be financed by private developers.

“If that kills the deal, then maybe it shouldn’t have lived in the first place,” Holland said.

Rep. J.R. Claeys, a Salina Republican, was hesitant to recommend any specific changes right away. He called the STAR bonds program “wildly successful.”

Claeys said lawmakers need more information, including input from local economic development officials, before proposing changes.

“We need to have measurement,” Claeys said. “I don’t want to make recommendations that might have unintended consequences by stopping a project from going forward that has merit.”

Kansas lawmakers reauthorized the STAR bonds program earlier this year, but only for a three-year period. They also put a one-year moratorium in place on any new projects while lawmakers study the issue.

Stephen Koranda is Statehouse reporter for Kansas Public Radio, a partner in the Kansas News Service. Follow him on Twitter @kprkoranda.