This is an economic development incentive evaluation that satisfies the requirements in K.S.A. 46-1137. STAR bonds allow local governments to use future sales tax revenue to help pay for development or redevelopment projects. As of November 2020, about $873 million in mostly state sales tax revenue has gone toward retiring $1.1 billion in STAR bonds. We used a tourism analysis and a break-even analysis to estimate Sales Tax and Revenue (STAR) bonds' economic and fiscal impact to the state. Tourism is a key component of the STAR bonds program. The Department of Commerce would like each attraction to draw 20% of visitors from outside Kansas and 30% of visitors from at least 100 miles away. Only 3 of the 16 STAR bond attractions we reviewed met those goals in one or both years we reviewed. We also estimated that it will take the state decades to recoup the sales tax revenue it gave up in 3 STAR bond districts (Hutchinson Underground Salt Mine, Overland Park Prairiefire, and Wichita Sports Forum) based on revenues from out-of-state visitors. We estimate it might take the state 43-118 years after bond repayment to break even on Hutchinson, 13-71 years to break even on Overland Park, and 5-49 years to break even on Wichita.

In 2014, the City of Topeka developed a proposal to expand an existing STAR bond redevelopment district and issue new bonds to purchase the Heartland Park racetrack. We evaluated eight areas of the city’s proposal and found all eight areas appeared to meet the requirements of the STAR Bond Financing Act. However, we also identified several issues based on that review. For example, we noted concerns about whether the current Heartland Park STAR bond proposal is the type of project the Kansas Legislature envisioned for STAR bonds and about the independence and reliability of the studies that demonstrate Heartland Park’s statewide economic impact. Additionally, we identified several areas where current statutes could be strengthened or made clearer.

As of December 2004, the Unified Government of Wyandotte County and Kansas City, Kansas, had authorized $305 million in STAR bonds for the Kansas Speedway and Village West redevelopment projects. The Unified Government’s cost of issuing the STAR bonds was in line with other bond issues we looked at. We found about $1.5 million in unallowable uses of STAR bond moneys, most of which was money the Unified Government withdrew from the bond accounts to cover expenditures, but never spent. Another $28 million in actual or planned expenditures appeared to go beyond what legislators envisioned, including payments for museum exhibits, electronic dinosaurs, and payments to consultants hired by the businesses locating in the redevelopment. We also found that the Unified Government had entered into a number of questionable agreements that, among other things, essentially have resulted in the State and local governments paying the cost of building Cabela’s store. Businesses in the development provided discounts on food, merchandise, and hotel rooms to employees of the Unified Government and the Board of Public Utilities. Officials from the Unified Government also have had free use of suites and hospitality tents at the Speedway and Community America Ballpark. Finally, we noted that the proposed cost of constructing a movie theater in the development greatly exceeds typical theater construction costs, and the company that will manage the theater gets half the net income even though it has no significant financial risk.