Construction continues within Kansas University's Central District on Monday, Feb. 29 2016. The city plans to rebuild much of 19th Street, at right, between Iowa Street, not pictured, and Naismith Drive, including the intersection of 19th Street and Ousdahl Road, bottom right.

Topeka ? The Kansas House advanced a bill Friday that would create an oversight commission to review state agency construction projects, such as Kansas University’s Central District development, that are financed using public-private partnerships.

KU received intense criticism earlier in the session over its decision to issue $327 million in bonds to finance the Central District project by going through a Wisconsin public finance agency, instead of the Kansas Development Finance Authority, which would have required legislative approval.

The university was able to do that because it had formed a third-party, nonprofit corporation called the KU Campus Development Corporation, which was the actual issuer of the bonds.

But lawmakers were still upset, arguing that eventually the buildings constructed would become state buildings and the state of Kansas would ultimately be liable if anything were to go wrong with the project.

In response, they inserted a proviso into a budget bill for next year that puts strict limits on KU’s ability to spend money from previously unrestricted funds, including tuition, student housing and campus fees.

The bill would establish a Public Private Partnership Commission that would meet over the next several months and make recommendations for future legislation to govern such arrangements.

In the meantime, it would prohibit most state agencies from issuing bonds, entering other types of loan agreements or contracting with a third party for construction projects costing more than $2 million unless they receive legislative approval.

Rep. Mark Hutton, R-Wichita, who serves on the House Appropriations Committee that recommended the bill, said the intent was not to stop the use of public-private partnerships but instead to put controls on them.

“The world is changing, and the project-delivery lines between public and private are blurring,” he said. “So we need to modernize our statutes to accommodate this new project-delivery method.”

Hutton said the bill would also put controls on other types of state construction projects that have stirred controversy recently, such as an attempt this year by Gov. Sam Brownback’s administration to relocate a heating and air-conditioning “power plant” that serves the Capitol Area Complex in Topeka in order to clear the way for demolition of the Docking State Office Building.

That deal involved a lease-purchase agreement the administration signed with Bank of America, and pledging the Landon State Office Building as collateral.

The bill would require legislative approval before any agency could enter a lease obligation where the terms call for $1 million a year or more in payments over more than five years. It would also require legislative approval before any agency could pledge any state-owned institution, facility, property or future rental stream as collateral.

Hutton said the motivation behind the bill involved more than just limiting how much the state spends on construction projects.

“It was really about, let’s not spend more money and not tell the state about it,” he said.

The House gave first-round approval to the bill on a voice vote. Final action is expected Monday.