City Council approves steps for hotel, Expo (2024)

What are STAR Bond projects?

Sales Tax and Revenue (STAR) Bonds are a way for Kansas municipalities to develop major commercial, entertainment and tourism destinations. (Learn more online at https://www.kansascommerce.gov/program/community-programs/star-bonds/). They are not a new tax and do not raise taxes. They use increased sales tax revenue realized by projects to pay the bonds.

The first STAR Bond project was for the Kansas Speedway. A more recent project issued the bonds for the Prairiefire project in Overland Park.

STAR Bond projects don’t have to be for urban areas. Dodge City prepared a STAR Bond project plan to redevelop its Heritage Area and later expanded it to include the Power Center Area. Hutchinson’s Underground Salt Museum used STAR Bonds in 2006 and paid them off three years early in 2013.

At present there are 16 STAR Bonds active in Kansas; others include the River District in Wichita, Downtown Salina, and the Amelia Earhart Hangar Museum in Atchinson. The Hutchinson Tribune reports the Hutchinson City Council plans a public hearing to establish three more STAR Bond districts in downtown Hutch, around the Cosmosphere and the construction area of a new hotel north of 17th and Waldron Street.

What is a CID incentive?

In a Community Incentive District (CID), there is an additional sales tax imposed. This proposal suggests a 2% tax. For example, if a restaurant opens in the district, customers would pay the normal sales tax plus an additional 2%. The added revenue would be used to reimburse the developer for eligible costs.

The City of Great Bend has established other CIDs, each with a 1% additional tax in the district. These include Sutherlands, Cinema 6 and the Holiday Inn.

With a Memorandum of Understanding (MOU) and resolutions calling for two public hearings, the Great Bend City Council took preliminary steps Monday that will help a developer build an 80-room hotel and one or more restaurants on 10th St. The actions are also aimed at making the Great Bend Expo Complex a destination for tourism and entertainment using STAR Bonds. Improvements might include a drag racing museum and more seating at the drag strip; a banquet hall with multi-purpose courts for sporting events; an amphitheater; improvements to the existing rodeo grounds; and an additional hangar/restaurant.

City Administrator Logan Burns introduced each topic Monday, with additional comments from Sara Arnberger, executive director of Great Bend Economic Development (GBED).

The MOU establishes incentives for the developer.

“These are all very common tools in the development toolbox,” she said.

Great Bend Lodging LLC

Rev Development, a real estate developer based in Nebraska, has created Great Bend Lodging LLC for the hotel project. (Arnberger said GBED met with approximately 15 developers before settling on Rev Development.) The MOU approved Monday included the City of Great Bend, Great Bend Lodging and GBED.

In 2022, GBED bought the former Highland Hotel property at 3017 10th St. with plans to develop a new hotel on the site, which is next to the Great Bend Events Center. The old hotel was later razed and GBED looked for a developer.

This MOU establishes a Community Improvement District (CID), the establishment of a Tax Increment Financing district (TIF), and the issuance of one or more series of Industrial Revenue Bonds (IRBs) to enable a sales tax exemption on construction materials. It also uses a $500,000 grant from the remaining monies of the Loft Grant program for construction costs.

• The MOU establishes the parties’ intentions but is non-binding. A contract is yet to be developed and will require the council’s approval.

• The scope of this project includes an approximately 80-room hotel with development costs of approximately $14 million. Reading from prepared materials, Burns said the hotel will be “affiliated with a nationally recognized brand, specifically Hampton Inn or a brand of comparable quality and stature. The scope would also include one or more restaurants with anticipated development costs of approximately $5 million.”

• Great Bend Lodging LLC will negotiate terms of the real estate purchase from GBED for the aggregate purchase price of $700,000 ($250,000 for the back 2.2 acres and $450,000 for the frontage 2.2 acres).

• The parties will cooperate to establish one or more CIDs, including the imposition of a 2% add-on CID sales tax for 22 years. Then, 100% of these “CID revenues” will be used to reimburse the developer for eligible costs.

Public hearing: Creation of TIF District

As part of the incentive package, a public hearing shall be set to consider a TIF district at 3017 St. for the new proposed hotel and restaurant(s). Projects financed through TIF involve the creation of an “increment” in real estate property tax income. The property will be taxed for 20 years at its assessed value prior to development. Meanwhile, the City and the rest of the taxing jurisdiction will see an increase in assessed value. As the new development increases the value of existing properties in the area, public improvements in the area will be funded by the growth.

Tax increment financing may be used to pay for eligible costs such as site preparation, demolition, public infrastructure improvements (such as streetscape, public parking, utility extension, landscaping, pedestrian and bike paths and public plazas). Except as specifically provided by the plan, increment financing may NOT be used for the construction of any buildings owned by or leased to a private, nongovernmental entity.

• The public hearing to create a TIF District for 10th St. shall occur on Nov. 18 during the regular City Council meeting that typically starts at 6:30 p.m. at City Hall.

Public hearing: Creation of Great Bend STAR Bond District

Arnberger said staff at GBED have been working with the State of Kansas on a proposed STAR bond project at the Expo complex in conjunction with the proposed improvements on 10th St.

• Sales Tax and Revenue (STAR) Bonds are a way for Kansas municipalities to develop major commercial, entertainment and tourism destinations. STAR Bonds aren’t a new tax and won’t raise taxes, Burns and Arnberger stressed.

“Taxpayers are never on the book for bond payments,” Arnberger said.

The bonds are purchased by private investors. STAR Bond project costs are repaid through the increased sales tax revenue created by the improvement. The purchased bonds would be paid off in 20 years and Great Bend residents will never be responsible for the bond payments.

Bond financing must be less than 50% of the total project.

• The public hearing to create a Great Bend STAR Bond District shall occur on Oct. 21 during the regular City Council meeting.

What’s next?

The State will establish how much revenue increased sales taxes can feasibly generate to pay off the bonds. So, while the concept for the Expo included a drag racing museum, eateries, concert area and a venue that will be used year-round, the project may look different when plans are drawn up.

“Not everything in the concept plan will be developed as envisioned now,” she said. “I hope you all see as much as I do: This is a catalyst project.”

Problems at the dragstrip

After a $1.6 million reconstruction of the dragstrip in 2021, there were problems with the surface not meeting required standards. The Sunflower Rod and Custom Association, which operated the dragstrip at the Expo for years, had to suspend races, and canceled its entire season in 2023 and again in 2024. The rebuilding of the track with substantial repairs is in arbitration.

With that in mind, an audience member asked how this can be a realistic project while the drag strip remains closed.

“We are taking that into consideration,” Arnberger said, adding the settlement is “still in legal negotiations.”

Dream big

Mayor Cody Schmidt thanked Arnberger and her team at GBED for the years of work that have gone into developing these projects.

“It’s a dream and we’re chasing it — and why not?” Schmidt said.

City Council approves steps for hotel, Expo (2024)
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