The Rundown with Kansas Legislative Division of Post Audit
STAR Bonds Evaluation [August 2021]
Chapters
The Rundown with Kansas Legislative Division of Post Audit
STAR Bonds Evaluation [August 2021]
Aug 30, 2021
Legislative Post Audit

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.