An agency that would issue $270 million in bonds says significant issues remain unresolved about a proposed theme park and resort near DeSoto.
The Kansas Development Finance Authority will wait at least until October before voting on whether to authorize sales-tax and property-tax breaks to help finance the proposed Wonderful World of Oz theme park and resort in Johnson County.
"There are significant issues still unresolved," KDFA's general counsel Rebecca Floyd said Wednesday. "It's important that we get some of these issues nailed down so when we do initiate the process we are better able to address the public's questions."
The five-member KDFA board, which eventually would issue the estimated $272 million in bonds, had been expected to vote next week on a resolution of intent to create a redevelopment district.
Creating that district would allow developers to use new sales-tax and property-tax revenues to repay those bonds.
The Oz Entertainment Co. is trying to acquire all 9,065 of the former Sunflower Army Ammunition Plant near DeSoto to develop a theme and resort.
On Friday, the company submitted a redevelopment plan, a proposed redevelopment agreement and an outline of its financing proposal to KDFA.
But according to Floyd, KDFA still cannot approve creating the district until the Oz company provides third-party financial guarantees that environmental contamination on the property will be cleaned up.
Larry Winn, an attorney for Oz Entertainment, said Wednesday that he expects those guarantees to be substantially in place by the end of September.
"That's the issue where people are focusing most of their energy right now," Winn said. "There (will be) some $200 million in coverage. The Army, the General Services Administration and the Kansas Department of Health and Environment have all hired special insurance consultants to review the policies. Some of that review is going on now, and a great deal more will be going on this month."
In addition to getting KDFA's approval of its development plan, the Oz company also must get approval from the Johnson County Commission.
The revised financing plan submitted last week could make that more difficult, observers have said, because in addition to asking for sales-tax breaks to finance the project, Oz now is asking for about $6 million a year in property-tax breaks.
That's because instead of issuing the estimated $260 million sales-tax revenue, or STAR, bonds, as the company had suggested in earlier presentations, Oz now is asking the state to issue a combination of bonds backed by both sales taxes and property taxes totaling about $272 million.
The property-tax bonds, known as tax increment financing, or TIF bonds, would be repaid with new property taxes generated by the development, while STAR bonds would be repaid with all sales taxes collected within the redevelopment district.
Frank Lenk, research director at the Mid-America Regional Council in Kansas City, Mo., which has studied the economic impact that the proposed theme park would have on the area economy, said estimates he has been given put the net value of those property-tax breaks near $6 million a year.
As recently as this spring, Oz officials had said they did not intend to apply for property-tax bonds, even though they are permitted under a state law that authorizes the Oz project.
Winn, however, said recent interest rate increases and changes in the requirements for Oz to clean up environmental contamination forced the company to change its financing plan.
In the final days of the 1999 session, Kansas lawmakers passed a bill authorizing Oz Entertainment to collect an additional one-cent sales tax within the district to repay the bonds.
That bill also included a requirement that Oz provide third-party financial guarantees that contamination on the site would be cleaned up so the state of Kansas could not be held liable for that cost.
-- Peter Hancock's phone message number is 832-7144. His e-mail address is phancock@ljworld.com.
No comments
Commenting is turned off for this story.