Three years ago the Kansas Department of Legislative Post Audit evaluated the STAR Bonds program overseen by the Kansas Department of Commerce and discovered that the program largely fails to meet its goals.
Sales Tax and Revenue (STAR) Bonds — a tool intended to help Kansas municipalities finance the development of major commercial, entertainment, and tourism projects — and, theoretically, paid off through increased sales tax revenue generated by the development simply failed to do what it was designed to do.
In fact, a 2020 analysis of STAR Bond projects in Wichita, commissioned by the Sentinel’s parent company, Kansas Policy Institute, found that they mostly shifted economic activity and jobs to other parts of the city rather than create any new jobs or activity.
Now, according to a report from the Americans for Prosperity Foundation, a follow-up audit finds that — even using the Commerce Department’s preferred metric — the program still doesn’t work.
“The Kansas Legislative Division of Post Audit released a follow up to its 2021 audit of the STAR Bonds program, and the findings reveal that even allowing the Department of Commerce to pick and choose its favored metrics — improving local quality of life — doesn’t show a program that benefits taxpayers,” the report reads. “The problem with their favored metric is that ‘Commerce officials expect STAR bond districts to improve local quality of life, but they haven’t defined or measured this.’ The findings add more evidence that the STAR Bonds program should be allowed to sunset in July 2026.”
According to AFPF, the audit found that not only was Commerce failing to define or measure “local quality of life,” but it was also not even a top priority among its target demographic of college-educated adults:
- “Commerce officials expect STAR bond districts to improve local quality of life, but they haven’t defined or measured this.”
- “Commerce officials told us they want districts to improve their local areas’ quality of life and encourage people to live in Kansas. They said they care about all demographic groups but focus especially on attracting younger, college-educated adults because they’re important for the state’s economic future. However, Commerce officials haven’t defined what “quality of life” means or how to measure it.”
- “However, graduates that responded to our surveys indicated social and economic factors other than amenities were most important to them when deciding where to live. For example, job prospects and proximity to family were rated as more important factors in influencing whether they stayed in or left Kansas.”
Commerce has a history of poor oversight of economic development programs
Indeed the 2021 audit found a startling lack of oversight in STAR bonds.
AFPF’s Director of Investigations Kevin Schmidt filed requests for documents relating to the program under the Kansas Open Records Act in November of 2021 and more than a year later was still waiting on some of them.
Schmidt said one of his records requests included a follow-up to a request from the Sentinel.
The Sentinel, on November 14, 2019, requested reports done internally or contracted out since January 2017 examining the efficacy of Promoting Employment Across Kansas (PEAK), TIF, STAR bonds, and the High-Performance Incentive Program (HPIP). Ryan Brinker, the Public Information Officer for the Kansas Department of Commerce, replied, “We are currently working to identify and review any records which may be responsive to your request and will need additional time to complete that review. The earliest date records may be available to you is November 26, 2019.” Neither AFPF or the Sentinel ever received a substantive response to our requests.
“It’s not surprising that STAR bonds only exist in Kansas and two other states,” the AFPF report reads. “There is no evidence that the program can achieve any of its stated goals.”
In fact, a recent records request by the Sentinel found that Commerce either does not have — or refuses to admit it has — a list of who has received funds or how much.
On September 9, 2024, the Sentinel sent Commerce a request under the Kansas Open Records Act for “All Kansas Department of Commerce administered or awarded grants to cities or counties and dollar amount for the last 10 years.”
Nearly a month-and-a-half later, on Oct. 22, 2024, Commerce Department Attorney Samuel Blasi, responded, denying the request entirely — and pointing the Sentinel at their “transparency database.”
“After reviewing your request and doing an initial search for responsive records, Commerce will decline to fulfill your KORA request pursuant to K.S.A. 45-218(e),” Blasi wrote. “This particular subsection allows Commerce to decline to fulfill a request that imposes an unreasonable burden upon Commerce to produce the requested records. This was not a decision Commerce came to lightly. This unreasonable burden comes as a result of the nature and scope of your request. Commerce does not maintain a record that is essentially a list of the grant and the grant amount.
This suggests two possibilities — either Commerce is lying about not maintaining a list or is grossly incompetent.
Dave Trabert, CEO of the Kansas Policy Institute, said there is a third possibility.
“The Kansas Department of Commerce has a pattern of not having routine information available, like a report listing grant history. That pattern suggests Commerce officials may be deliberately not creating reports to avoid Open Records requests. Commerce officials surely have ready access to the information; they just don’t want the public to see it.”