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Whitewater group explains how $70 million Clinton Lake project would be funded; it involves help from the public and a new shopping center

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During this Valentine’s Day season everything is expected to be sugarcoated — the food, the sentiments and the “explanation” about how the flat screen TV got broken during last night’s wild KU game. (I think it was Cupid’s arrow.) One guy who is not engaging in the sugarcoating ritual, though, is the leader of a group who wants to build a whitewater rafting facility at Clinton Lake State Park.

Yesterday I provided you an update on the project, and some takeaways from a conversation I had with the leader of the North Carolina-based U.S. National Whitewater Center. Yesterday’s conversation was about the environment. Today’s is about money. When it comes to that subject, the group is not sugarcoating the key point: The facility — which would have whitewater courses, zip lines, an amphitheater, restaurant, beer garden and other amenities — is expected to cost at least $70 million to build, and the U.S. National Whitewater Center doesn’t plan to pay much, if any, of that cost.

“We don’t want to pretend the project can do something it can’t do,” said Jeff Wise, CEO of the U.S. National Whitewater Center, which operates in Charlotte a manmade whitewater rafting course and adventure park that is similar to what is proposed for Clinton Lake. “We’re being honest that the project can only support so much capital expense.”

If this project is to get done, state and local officials are going to have to figure out how to finance its construction.

That sure sounds like it could be a deal-killer to a significant segment of the Lawrence population that is tired of giving incentives to private development companies. Wise seems to have two counterpoints to that argument. The first one is that the U.S. Whitewater Center really isn’t a development company. Technically, it is a 501(c)3 nonprofit. There are no shareholders, and people like Wise get paid a salary for their work but don’t own any part of the development.

The proposed Kansas Outdoor Lifestyle Center at Clinton Lake would be a 1,500-acre facility hosting outdoor activities such as whitewater rafting and kayaking, zip lines, biking, running, hiking, climbing and paddle boarding.

The proposed Kansas Outdoor Lifestyle Center at Clinton Lake would be a 1,500-acre facility hosting outdoor activities such as whitewater rafting and kayaking, zip lines, biking, running, hiking, climbing and paddle boarding.

The second point Wise makes is that the whitewater center doesn’t plan to ask the city, the county or the state for any guaranteed money. Based on the results in Charlotte, Wise is confident the facility will make more than enough to cover its operating expenses. Instead, the project envisions using STAR bonds to finance the construction.

Here is a simplified version of how STAR bonds work. A local government issues STAR bonds to pay for an economic development project. Bond buyers — think banks, investment funds, institutional investors — buy the bonds. The proceeds from the bond sale fund the construction of the center.

The whitewater center begins selling tickets, concessions, food and other items. It charges a sales tax. Instead of the state, city and county getting those sales tax dollars for their budgets, the sales tax proceeds instead are used to pay back the bond buyers.

Here is where this project has a twist. Wise concedes that the whitewater center won’t generate enough sales tax revenues to pay back the bond buyers. Instead, a second project is going to be needed to help generate enough sales tax revenue. The project will need the sales tax revenue from another shopping district to make the numbers work. Where would that shopping district be? Those details aren’t clear, or at least, haven’t been publicly announced.

But we can guess. The first guess is it likely won’t be at Clinton Lake State Park. I think it would be unlikely that you would find anybody willing to build a shopping center at the park.

Other locations in Lawrence are more likely. The Mercato development near Rock Chalk Park is zoned and ready for retail development. It, however, has set vacant for several years, as retailers have chosen to expand on south Iowa Street instead. But because of its zoning and shovel-ready nature, the Mercato development is one possible place to house the STAR bond district.

The other area that has been proposed for a shopping district is the property south of the SLT and Iowa Street interchange. City officials have rejected a rezoning request for that property, and the Charlotte-based development group that proposed it is now suing the city. Supposedly, though, there has been a significant number of big-box retailers interested in locating at that site. If approved, it could perhaps generate enough sales tax dollars to pay off the STAR bonds. But it is anybody’s guess whether city commissioners have any interest in reconsidering their previous denial of the shopping center.

Of course, a third possibility is there is another site out there to house a shopping center, and it hasn’t been publicly disclosed yet.

The last thing to figure out about STAR bonds is what happens if the project doesn’t work? Who pays off the bonds then? As the STAR bond law is currently written, governments are not required to provide a financial guarantee on the bond. If the project does not generate enough sales taxes to pay off the bonds, the people who bought the bonds are left holding the bag.

So, the city, county or state wouldn’t ever be liable for paying off the STAR bonds if the project failed. But that doesn’t mean there is no risk to government. The biggest risk is the loss of future of revenue. Lawrence likely needs its sales tax revenues to grow over the next couple of decades to adequately fund city government. One way it will grow is through new retail development. But if Lawrence’s largest new retail center is dedicated to paying for the whitewater project, it won’t be adding to the city’s coffers.

The counter argument, though, is the center and its estimated 700,000 visitors will pump money into other parts of the Lawrence economy, which we will all benefit from. The even larger argument is that the whitewater center will do something to transform Lawrence’s image. To hear Wise and state officials — who have been the catalyst for this project — the facility will help Lawrence gain a national reputation as a vibrant, outdoor-loving community. Would this facility help Lawrence become the Outdoor Capital of the Great Plains? Is that a brand that would create prosperity for the city?

The future of this project probably hinges on whether Lawrence leaders think such statements are sugarcoating or the real deal.

Comments

Alex Landazuri 6 months ago

they need to find a new location. clinton lake needs to be left as it is.

Joe Blackford II 6 months ago

Either this "not a water park" is a pig in a poke, or I have heard this faerie tale before.

Bob Smith 6 months ago

Yeah, and I've got some beachfront property in Utah to sell you.

Mark Jakubauskas 6 months ago

No. No. No. No more corporate subsidies. No more stupid projects that suck down sales tax funds.

Chris Imming 6 months ago

This article highlights the latest from the STAR bond cult: bond consultants and Kansas Dept of Commerce clan bag of tricks.

The main attraction can't support repaying the needed STAR bonds so they have to attach themselves to another retail development. In many cases they are tying into existing retail nodes to siphon off the sales tax from an existing retail operation. This is how how the Governors horse manure manufacturing facility aka the American Royal at the Legends is being financed via STAR bonds. In this Whitewater fiasco it looks like an even riskier proposition is being considered in that they are looking at new retail development to generate the sales tax.

The other trick to look for is for "local government guaranteed STAR bonds" As the article notes local governments are not normally responsible for defaults on STAR bonds. However the STAR bond cult has recently convinced the City of Salina to sign on as guarantor of their downtown project STAR bonds.

Don't be fooled, siphoning sales tax for these projects reduces the amount of revenue going to the Kansas general fund and local units that would other wise be available for schools, highways and other legitimate public needs.

Dorothy Hoyt-Reed 6 months ago

Looks to me like conservatives, moderates and liberals can unite against this project. If they want to risk their own money, let them. But don't put it at Clinton Lake. Why not use that man made lake east of town on 10. But no money from taxes, period. If it's worth the risk, then they should take it.

Alex Landazuri 6 months ago

agreed! ive not seen this much agreement in the comment section in a while...

Bill McGovern 6 months ago

Doesn't sound like a good plan at all. "In order to fund this project, we have to build a shopping center!" Where did the 700,000 number come from? Did he pull it out of a hat? This Jeff Wise fella reminds me of the monorail salesman from the Simpsons - he should keep his business in Charlotte.

Gary Pomeroy 6 months ago

As a sidelight, do we really want something around here with the word :Whitewater" in it?

Kathy Roberts 6 months ago

It's Whitewater for Clinton Lake. That makes it even worse. Is Kenneth Starr going to oversee the project?

Wayne Kerr 6 months ago

What a great idea. I always wanted to my own private sales tax district and for a little money I can finally own shares in one. Instead of helping to pay for our schools, roads, police, fire department, and other city services I can stuff my pockets with sale tax money like I'm a big time Lawrence developer.

But seriously, how many times are we going to be sold the same scam? Why doesn't someone tell these guys we're broke? Don't they know that we've already spent all our money on a new recreation center and we'll be lucky to have the money to pay for the maintenance and upkeep of it.

Chuck Wehner 6 months ago

Seems just about no one wants this including me. Just another corporate handout from the people to make some one percenter richer.

Bob Forer 6 months ago

The plan sounds like socialism. But there is nothing democratic about it.

Bernie would say no, no and no. I'm with Bernie.

Bob Smith 6 months ago

If his wife stood to make a lot of money by selling out Douglas County, Bernie would be on this like white on rice.

Eric Kirkendall 6 months ago

So they are proposing that our tax dollars pay for this development. No No No.

For more background on this hair-brained scheme and their other brain-eating infested whitewater site (no I am not kidding), please visit my Facebook page or tinyurl dot com /whitewater-scheme

Andrea Zuercher 6 months ago

We are losing so many natural spaces to development. Let's keep that beautiful lake the way it is. I know, it was human-created, but it has become a peaceful place for humans and wildlife. Why throw that away for an uber-commercial "Outdoor Lifestyle Center"? Learn to cultivate an outdoor lifestyle on your own! Camp, fish, hike, sit by the lake, boat, bike, breathe. And yes, the brain-eating amoeba is a thing -- a thing I want no part of.

Richard Heckler 6 months ago

This whole concept is off the wall. Where do these fast talking developers get the idea taxpayers have money to spend on such a nonsensical idea? These folks are full of rhetoric not substance.

Another shopping center? Lawrence is over stored face it. Why would taxpayers want to turn existing shopping areas into empty boarded up buildings?

Hey my friends the taxpayers let's not get duped again!!! This is a shakedown that will increase our taxes. No way can this venture pay for itself.

Patrick Grassy 6 months ago

For anyone who might, for any reason, be enchanted by this inexplicable proposal, just revisit the cautionary tale that was, "Wild West World". Do some "Google-fu" if you need to be reminded.

Jim Phillips 6 months ago

Isn't it a bit ironic to use the names Whitewater and Clinton in the same headline? Is history repeating itself?

George Bures 6 months ago

First thing that popped into my brain when I saw the headline. LOL.

Mark Kostner 6 months ago

I think it's wonderful idea but some questions: Where are you getting 1500 acres? I was there in December and the ran ger told me the proposal is for the middle undeveloped area of the park.The entire park might be 1500 acres. That's over 2 square miles. You can easily tell how big 2 square miles is on Google Earth as the country roads are laid out on square mile grids. No doubt the Charlotte shopping center developer and Charlotte park developer are working together though I am surprised that if the shopping center is paying the park's way it isn't proposed for the park's area along K-10 at 6th, the best spot or near the park entrance at Clinton Parkway or Bob Bullings exits. For that matter I'm surprised some master planned community on the north side of the park boundary with hotel and golf course wasn't thrown in the mix by the Tar Heels.

Dennis Garrett 6 months ago

Reminds me of the "Oz" theme park they wanted to build in Johnson county, at the old Sunflower ammo plant 20 years ago. When's that supposed to start ?

Deborah Snyder 6 months ago

WHY did this "technically 501C3" overlook the Sunflower Plant site, which was considering an OZ theme park?

Could Mr. Lawhorn cite who, specifically, approached Mr. Wise as a representative of KDWP or the governor's office to consider this project?

Can Mr. Lawhorn cite when this invitation occurred? Who was at this meeting? Has there been any subsequent meetings with state officials regarding this invitation to develop state parkland into entertainment areas?

Why, Mr. Lawhorn, wasn't such a proposal put in front of other cities in Kansas with state parklands, such as Wichita, or Hays, or Manhattan, etc.??

As a comparison, Mr. Lawhorn, what would officials in those cities have to say about such a project being proposed on or near state park lakes which serve as water sources for that city?

Not conjecture. Not opinion by editorial boards at the Topeka, Kansas City or Lawrence newspapers in support of this project, and thus biased. Facts. Are state officials going on record as having invited Mr. Wise? Does such an invitation mean the state will build infrastructure to support 700,000 visitors to this theme park?

BY THE WAY, have any LJW reporters considered walking around large manufacturing or retail businesses in town to look at the condition of storm water management runoff?

There is more trash in those areas than the city could collect. That's environmental issues already existing; not addressed, and certainly not managed by those businesses. To compare the dismissive statement by Mr. Wise that water resources would remain unaffected is easily refuted by factual evidence.

Who contacted Mr. Wise?

David Holroyd 6 months ago

Ms. Snyder, Mr. Lawhorn may not likely do too much inquiring. You see even the Simons family wants the use of STAR bonds to develop their property downtown, long on the market.

btw, there is no storm water management downtown, not even grease management downtown. Look at the alleys behind restaurants.

Kendall Simmons 6 months ago

Thanks!! Have you sent this link directly to Chad Lawhorn? And to our City Commissioners?

Clara Westphal 6 months ago

Maybe I should make a sign that says "No water park. Save Clinton Lake."

Suzan Hampton 6 months ago

Very much opposed to this, ah..."plan" on a number of levels.

Suzan Hampton 6 months ago

This developer built the same type of waterpark in Charlotte, North Carolina in 2006. From the online publication Creative Loafing Charlotte: "The center, which opened in 2006, features a large man-made river for kayaking and rafting that is situated on 300 acres 10 miles from the Center City. The non-profit that runs it recently defaulted on $38 million in loans for the second year in a row."

The article lists the key backers of the plan to hold them accountable for the financial disaster. One of these backers, lawyer and businessman Jeff Wise (whom the developer made CEO) and quoted above, underestimated the number of rafters who would use their waterpark by 60,000 per year in his business plan. Now those local governments are on the hook for $12 million. Ouch.

One ploy the developer used to talk the local governments into voting for it was that the park would address their "identity crisis" and "separate them from other vanilla mid-sized cities."

Anybody smell a rat?

Richard Heckler 6 months ago

Tell Whitewater to go home as in hit the road you white collar frauds.

Dorothy Hoyt-Reed 6 months ago

There was one supporter of this plan who said that it would be great if the kids had something to do in this town. If a kid comes from a family with money, they already have enough to do - movies, art center classes, arcade, shopping, rec centers, sports, etc. Lawrence does better than most for kids who don't have money, because the rec centers are free, an active boy's and girls club, scouting, etc.

The water park would only serve kids with money, period. Most of the places cost a lot, often over $30 for a day pass. Even if I had a lot of money, I wouldn't pay for my child to go but once a year, and many families would find cheaper ways to entertain their kids.

Jason Johnson 5 months, 3 weeks ago

NO NO NO. I'm happy to see that many of the people I disagree with on other issues are very much in agreement on this issue.

If a developer wants to put something, then THEY need to fund it 100%. If it's such a good idea, then let them put their money where their mouth is. I'm tired of developers looking for handouts and then profiteering off the public.

Clinton Lake is fine how it is. It has a nice marina, nice camping facilities, and is otherwise untouched (as it should be) for nature.

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