Archive for Monday, May 28, 2012

Kansas extends major development tool for 5 years

May 28, 2012


— Legislators extended the life of a development incentive that allowed Kansas to beat out Missouri for Kansas Speedway and Sporting Kansas City.

A bill approved near the end of the last day of the session permits Kansas to authorize bonds for projects backed by sales tax revenues through June 2017. Such STAR bonds helped finance the NASCAR track and the new stadium for the Major League Soccer team, both located in the Village West area at the junction of Interstates 70 and 435 in western Wyandotte County.

Gov. Sam Brownback has until June 4 to decide whether he’ll sign the measure, and his spokeswoman said only that he would review it carefully.

STAR bonds made up the bulk of the $750 million worth of incentives authorized by Kansas and Missouri over the past five years to lure businesses to their respective sides of the Kansas City metropolitan area, according to records obtained from both states. But the bonds also have been used for projects in other areas.

“It’s a tool that we’ve obviously used to great effect,” said Dan Lara, a spokesman for the Kansas Department of Commerce.

Had lawmakers not acted, authority to issue STAR bonds would have ended July 1. Some legislators and state and local officials consider the bonds valuable because they’re paid off with sales tax revenues generated within a district surrounding each project. After the state authorizes the bonds, local governments issue them.

Supporters have argued that the revenues backing the bonds wouldn’t exist without the projects — so state and local governments really aren’t giving up any tax dollars.

It’s also a tool Missouri doesn’t have, and using the STAR bonds for a new stadium lured the pro soccer team and also attracted a new office complex for Cerner Corp., a medical computer systems firm. Two of the company’s executives who are part owners of Sporting Kansas City.

But critics insist state government shouldn’t pick winners and losers in the economy.

Rep. Clay Aurand, a Belleville Republican who voted against the extension, said he’d rather keep taxes low for everyone than favor big, individual projects.

“There’s a mom and pop store, and nobody notices, and it goes out of business down the road,” Aurand said, describing what can happen.

STAR bonds are most visible in Kansas City, Kan., because its Unified Government with Wyandotte County has issued $445 million worth for the Village West area since 2001, including $150 million in the past five years. The Unified Government has paid off some bonds faster than scheduled, thanks to the Legends shopping district, the Schlitterbahn water park and a minor league baseball team.

The Unified Government can issue another $225 million in bonds for a retail complex around the Schlitterbahn park, though they’ve been on hold during the recession.

The state also has authorized $66 million in bonds for a museum and shopping complex in Overland Park and $63 million in bonds for a complex with an aquarium, other entertainment venues and shopping in Mission. STAR bonds helped finance the Flint Hills Discovery Center museum in Manhattan and the Underground Salt Museum in Hutchinson.

The state also authorized nearly $15 million in STAR bonds for development along the Arkansas River in Wichita.

“STAR bonds are one of those tools the city of Wichita thinks it’s important to have as it pursues economic development,” said Dale Goter, who lobbies for the city at the Statehouse, adding that the extension “put everybody’s minds at ease.”

Sen. David Haley, a Kansas City Democrat, acknowledged Village West is a source of pride for his area, but worries STAR bonds subsidize the wealthy over average Kansans. He voted against the extension, and opposed issuing bonds for Kansas Speedway.

“There are many people who have not been touched by the new employment,” he said. “There are many people who can’t afford the new entertainment venues. There are many people who haven’t seen their taxes go down.”

And Rep. Scott Schwab, an Olathe Republican, who voted for the extension, said, “We’re getting to the end of using STAR bonds.”

“We just need to finish the projects we have going,” he said.

STAR bonds extension was Senate Sub for HB 2382.


Richard Heckler 5 years, 12 months ago

Another viewpoint:

Now, in this country right now, we are spending $2 billion a year subsidizing the big four sports: baseball, basketball, football and hockey. It accounts for all of the profits of that industry and more. Now, there may be individual teams that make money, but the industry as a whole is not profitable. And that’s astonishing because the big four leagues are exempt from the laws of competition. By the way, irony is not dead, because here are people who are in the business of competition on the field who are exempted by law from the rules of economic competition.

If you go to England and you want to start a soccer team, they have to let you join the soccer league. There are thirteen commercial soccer teams in the London area. New York City, the biggest city in the country, there are two baseball teams, because there’s no free entry into the market. In Los Angeles, there’s no football team. And the owners use this power to prevent others from owning teams, to prevent municipal governments from owning teams, to prevent nonprofits from owning teams, to extract money from the taxpayers to build them new stadiums.

At the same time that we’re doing this, we are starving our public parks for money. And I show in Free Lunch how the rise of urban gangs and now suburban gangs is connected to this.

We used to have all sorts of programs in this country after World War II for young men and young women on Saturdays and during the summer and school holidays, where even if you didn’t have any money — didn’t matter that your parents didn’t have any money, because — and I know this because I did it as a child — you could go to any one of a half-dozen different places, and there were organized activities to keep you out of trouble.

After all, idle hands are the devil’s workshop is not exactly a radical new idea. Well, we’ve cut and cut and cut those programs to fund two different subsidies: one to sports teams’ owners, one that goes to Tyco, General Electric, Honeywell and some other big companies.

And, lo and behold, we’ve had a big rise in urban violence because of the vacuum being filled by young people who no longer have these organized activities.

"Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You with the Bill)"

jhawkinsf 5 years, 12 months ago

I was listening to NPR during last year's World Series. They said that the sales tax generated at each game in St. Louis was $500,000. They said it resulted in 14 city employees being saved from furlough. There are times when helping big business also helps the city/county/state/country. We should strive to find those win/win situations, rather than knee jerk reactions against business.

deec 5 years, 12 months ago

So are you arguing that the only reason pro sports have fans is because they are subsidized by taxpayers? Would teams not have just as rapid of fans if the teams were paying their own way?

jhawkinsf 5 years, 12 months ago

I'm not certain they would. The bottom line is that if St. Louis doesn't subsidize the team, some other city certainly would. We see it all the time. And then you've created a lose/lose situation. I can't think of a good reason to do that when a win/win situation is at hand.

just_another_bozo_on_this_bus 5 years, 12 months ago

This assumes that all the money that fans spent would otherwise go unspent if there weren't any baseball games to go to.

jhawkinsf 5 years, 12 months ago

The report I listened to specifically said that 14 city jobs that were set to be furloughed could be saved with each World Series game. Clearly, they were suggesting that the "extra" spending caused by the games meant jobs. Simply compare sales tax revenue here in Lawrence for 2008 vs. other years and you will see a dramatic increase in spending. Didn't our basketball team do something dramatic in 2008?

just_another_bozo_on_this_bus 5 years, 12 months ago

I think that discretionary spending is generally going to happen just because folks like to spend a little money to have a good time. It might spike around certain events, but there's no evidence that they wouldn't just spend it somewhere else, some other time.

And the existence of spikes around professional sporting events is poor justification for throwing $billions in corporate welfare at billionaire owners and millionaire players.

jhawkinsf 5 years, 12 months ago

Maybe we should poll those 14 workers in St. Louis. Or maybe the restaurant workers and T-shirt sellers here in Lawrence. I hear the mantra about jobs, well here it is.
Maybe that money will buy a K.U. T-shirt here. Maybe they will buy an Izod shirt in Overland Park. Maybe they'll just go to a casino in Missouri. But it does go to show that we are in a competition for that discretionary money. And unless every community in the world agrees not to compete, then we can either compete or watch that money being spent elsewhere. And we'll see the jobs going elsewhere.
And of course if throwing a certain amount of money towards "corporate welfare" generates a greater amount in return, then a better term might be a "wise investment".

just_another_bozo_on_this_bus 5 years, 12 months ago

"Maybe we should poll those 14 workers in St. Louis."

While you're taking the poll, why not take a poll of the millions of unemployed folks out there who might have jobs if discretionary spending weren't directed by corporate welfare towards millionaires and billionaires.

"And unless every community in the world agrees not to compete, "

Why, yes, unless we're just as stupid as the next community, we'll feel all inadequate because they have shiny new stadiums (but crumbling schools and potholed streets.)

jhawkinsf 5 years, 12 months ago

If you go to any city that has built a new stadium, you will likely see entire neighborhoods transformed into entertainment districts. Restaurants, bars, upscale stores. Jobs for many. And what are these workers doing with their money? Spending it in stores that then hire more people. More jobs. It's shortsighted for communities not to invest in businesses that will then generate revenue and jobs into a community. Many times I've advocated for just this type of investment if it makes economic sense for the individual community. I've called for independent analysis to make that determination. Maybe it makes sense for Minneapolis to build a stadium (they recently decided to build a new stadium) while it doesn't make sense for San Francisco (the 49er's will be moving to just outside San Jose). It won't make sense always. But if it does, it would be foolish to pass on it just because you are philosophically opposed to it.

Flap Doodle 5 years, 12 months ago

Ooooh, a 4 year-old link that's already been posted dozens, if not hundreds, of times on this award-winning website! (from a source)

just_another_bozo_on_this_bus 5 years, 12 months ago

But the wart on the butt couldn't care less that the linked story is very relevant to the conversation.

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