A STAR bond district is simply a geographical area associated with an entertainment venue of some sort. In a STAR bond district, sales taxes being collected by both the City and State within the district are diverted to the City to address STAR bonds issued in relation to the venue. To have a STAR bond district, you must have a plan that is approved by the State of Kansas. In this case, the plan is acquisition of real property, which is the land and racing facility known as Heartland Park Topeka.
Once the City Manager identified Heartland Park as a significant financial issue for the City, conversations began with the State of Kansas to expand the current district. By expanding the district, you expand the amount of State sales tax that can be diverted to the City to address debt associated with Heartland Park. Through months of negotiations, the State agreed to expand the district north from Heartland Park on Topeka Boulevard all the way to Croix. This is a significant expansion of the current district. Based on the existing sales tax being collected, the expanded district will generate $16.4 million in new revenue to the City to address debt service over the life of the disctrict. Without the expanded district, the City will have an $8 million deficit. This deficit is the result of the current district generating approximately $203,000 in yearly revenue, versus $1 million in yearly debt service.
As stated earlier, to have an expanded district, you must have an approved plan. The only plan the State would approve was acquisition of Heartland Park by the City of Topeka in a manner that provides the City with clear title to the property. The plan is to issue $5 million in new STAR bonds to acquire the property and pay off the debt associated with the property. By issuing the new STAR bonds it brings the STAR bond debt from approximately $10 million to approximately $15 million. That total amount of debt will be paid by the $16.4 million in new revenue generated by the district.
In the simplest terms, the City is purchasing Heartland Park for $5 million dollars, and in exchange, is receiving $16.4 million dollars in sales tax revenue from the State. The State is willing to do this because they recognize Heartland Park as having a “significant economic impact on the state attracting people inside and outside the State of Kansas.” This economic impact also allows the all Kansans to assist with debt service, rather than just the citizens of Topeka.
This plan is similar to the expansion of the T-Bones STAR bond district to incorporate portions of the legends in Kansas City to address the debt service associated with the construction of the T-Bones stadium. The Unified Government of Wyandotte County purchased the T-Bones Stadium and in exchange the state allowed them to expand the district to increase revenue to address debt service. This is a mechanism that has been used statewide for projects from the salt mine museums in Hutchinson to the NASCAR facility in Kansas City. It is a mechanism that allows for local use of state sales tax dollars to encourage local economic development.
Many people have seen this as the City getting into the racing business which is in no way the plan of the City. To repeat: the City of Topeka has no interest or plans to run a racetrack. The City is in the process of identifying a management group with expertise in the racing industry and the financial ability to effectively manage the track. The City has been contacted by three different entities interested in managing the facility. All three entities have expertise in racing and the financial ability to manage the facility. The selection will go through a public and competitive Request for Proposal process and the best organization will be identified by a committee of internal and external experts in racing, finance and entertainment venues.
One of the most exciting aspects of this plan is that the NHRA has committed to continuing their relationship with Heartland Park for an additional 3 years if the STAR bond plan is completed. They have also committed to devoting their extensive marketing and promotional department to assist in making sure the event is as successful as possible. The ability to identify a first class organization to manage Heartland Park and garner $16.4 million in new revenue for the City to address debt service with the full support of the NHRA is a unique and exciting opportunity for the City.
CoreFirst will most likely foreclose on the property and the property will be sold pursuant to foreclosure. The foreclosure by CoreFirst would most likely be a long, protracted process and might result in substantial additional litigation. The district would not be expanded creating an $8 million deficit in the City budget. If the current plan put forth is executed, the STAR bond district will be expanded, and $16.4 million in state sales taxes will be allocated to the City to address the STAR bond debt associated with Heartland Park. The $16.4 million is not a tax increase, it is simply taking sales tax money currently being collected by the state and diverting it to the City.
In 1988, Lario Enterprises deeded the land commonly known as Heartland Park to the City. The City issued $7.5 million in general obligation bonds for improvements and construction on the land.
From 2015 to 2025, over the life of the district.
The opinion of Lathrop in Gage was approved administratively on October 2, 2014. The opinion was originally given on October 14, 2014, and no payment was made for the opinion. As Mr. Imming stated in his public comments to the Council, it is the responsible thing to do and the right thing to do to protect the validity of any ballot measure.
If/When the city sells the track, will the STAR bond district end earlier, since the city will have been reimbursed for the expenditure of buying the track and should be able to pay down that debt?
The STAR bond district will collapse once the debt service has been paid related to Heartland Park.
Why all the hand wringing over the loss of revenue for the area from Heartland Park? It has been stated repeatedly that the economic impact of Heartland Park is $160M. Comparing that to the GDP for the Topeka area of $7.5B (excluding government functions) it seems the value of the track is minimal compared to the money spent to keep it operational.
In 2005, an additional $5 million in general obligation bonds was issued, along with the original $10 million in STAR bonds.
Yes, they are all public documents.
The boundaries were developed through a year-long negotiation with the State of Kansas.
The State has to approve of the district. There was a significant amount of negotiation between the City and the State related to the District and the final district is the result of those negotiations.
The City Manager has put together a team of professionals both internally and externally to review the RFP process. Once we have a judicial determination regarding the petition, the RFP process will move forward. Three separate entities have come forward expressing significant interest in managing or purchasing the property. The City has no plans to manage the property.
Yes, we have a signed contract from NHRA to continue their current commitment to Heartland Park for three more years. The contract is contingent on the current STAR bond plan being executed.
Catherine Logan from Lathrop & Gage, LLP, is representing the City, along with Shelly Starr, the City’s Chief of Litigation. The City wanted a third party to review the petition and provide an opinion. Lathrop & Gage have worked with petition cases in the past. They bring an objective opinion and specialized knowledge of the case.
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