Controversial from the beginning, Kansas STAR Bonds have not done much to alleviate the critics’ concerns. As the Topeka Capital Journal’s Tim Carpenter observes in a largely positive article about STAR bonds, there has been more than one “bump on the STAR bond highway.”
The sale of State Tax Revenue bonds, a.k.a “STAR bonds,” give local governments a tool with which they can finance major for-profit enterprises with the understanding that the debt will be repaid with the state and local sales tax revenue the enterprises generate. This power endows municipalities with the authority to pick winners and losers but not the wisdom to pick them correctly.
Some of the picks leave observers wondering what civic leaders were smoking when they picked at least a few major boondoggles. A potentially classic boondoggle is the Museum at Prairiefire on 135th Street in Overland Park. The museum’s dinosaur may be a fitting symbol going forward. As Carpenter notes, the museum lost $2 million in 2015 and 2016 and continued to operate at a loss in 2017.
“Another bump,” according to Carpenter, was the Heartland Park Topeka motorsports complex. After being foreclosed on in 2015, management attempted to secure new STAR bond financing without success. New owners bought the park in 2016 and have reopened it.
The word “bump” does tragic injustice to the fate of Schlitterbahn Park in Kansas City, Kansas. The very public death of a 10-year-old boy on an attraction that was criminally under-tested and under-supervised has left the very future of the park and the STAR Bonds that paid for it in doubt.
The one success to which Carpenter points, “the flashy show-me example of the inducement as a platform for business growth and job development,” is Village West in Kansas City, Kansas. But even here there have been major problems.
In 2008, the Legends Shopping Center at the heart of the development declared for bankruptcy and had to restructure its debt. And at least twice, the Unified Government of Kansas City, Kansas/ Wyandotte County–the most unwieldy name of any city in the free world–has had to bail out the woeful T-Bone baseball enterprise.
After first buying CommunityAmerica Ballpark from the T-Bones, the UG has had to scrap a 20-year lease agreement and replace it with a with a new deal that puts the city’s overburdened taxpayers on the hook for the ballpark’s property taxes and utilities.
Then too, any conversation about Village West’s success cannot overlook its origins in one of the most brutal eminent domain seizures since President Jackson “bought out” the Cherokees.
As the history of STAR bonds confirms, what has made America great are entrepreneurs with skin in the game, their own skin.