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

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.
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 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.