Olathe arena project faces funding dilemma

Commerce secretary approves $50 million in sales-tax revenue

Olathe ? Kansas’ secretary of commerce has approved $50 million in special financing for the first phase of Olathe’s arena project, less than a third of what the city requested.

The funding is contingent on the city complying with eight requirements by Secretary of Commerce Howard Fricke, who determines whether projects are eligible for sales-tax revenue, also known as STAR, bonds.

In a letter to Mayor Michael Copeland, Fricke said approval of bonds for the first phase did not guarantee additional STAR bond money.

The city released the letter, dated Sept. 15, this week.

Of the overall project, Fricke said less than half of the $339 million costs were eligible for STAR bonds.

City spokesman Tim Danneberg said developers and the city were working to identify the necessary steps and conditions to get more state support.

“Without the additional STAR bond capacity, it would be very problematic for the success of the development,” he said.

To qualify for the $50 million for the first phase, Fricke said the city must provide, among other things:

    Plans for an arena project in Olathe call for:¢ 625,000 square feet of retail space, with a 125,000-square-foot lead retailer.¢ 9,000-seat arena with 200 or more events annually.¢ 250-room hotel.¢ $339 million in total capital investment.¢ $242 million in total annual sales.¢ 4,000 new jobs, with $64 million in annual wages/benefits.¢ 6.6 million visitors.
  • Assurance that the lead destination retailer would occupy at least 125,000 square feet of the 625,000 shopping center adjacent to the arena. Other stores also must be confirmed.
  • Written proof that either Compass Facility Management, an arena management company based in Ames, Iowa, or International Facilities Group, a Northbrook, Ill.-based company that manages the United Center and U.S. Cellular Field in Chicago, would manage the arena.
  • A list of specific sources and uses of all funds.

The city initially requested $159 million in STAR bonds, which would pour retail sales tax revenues back into the project. Developers have said from the beginning that STAR bond financing was necessary for the project to succeed.