SESSION OF 2021
SUPPLEMENTAL NOTE ON HOUSE SUBSTITUTE FOR
SENATE BILL NO. 124
As Amended by House Committee of the Whole

Brief*
House Sub. for SB 124, as amended, would
supplement, amend, and reauthorize the Sales Tax and
Revenue (STAR) Bonds program (program).

Restriction on Financial Benefits
The bill would state that no state or local government
official shall be employed by a STAR Bond project developer
or manager through direct employment or through work as an
independent contractor.
The bill would define a “state or local government
official” as:
● A member of the Legislature;
● An appointed or elected official or officer of a state
agency, office, board, commission, authority, or
institution; and
● An appointed or elected official, officer, or member
of the governmental authority of a city, county,
township, school district, special district, board, or
commission.

____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
Definitions
The bill would add “major business facility” to the list of
terms defined as “eligible areas” for the program. A “major
business facility” would be defined as a significant business
headquarters or office building that is designed to draw a
substantial number of new visitors to Kansas. The term
“substantial” would not be defined. The bill would require
major business facilities to meet sales tax increment revenue
requirements established by the Secretary of Commerce
(Secretary) independent of associated retail businesses
located in the STAR Bond project district and to agree to
provide visitor tracking data, including aggregate visitor
residence zip code data to the Secretary.
The bill would also add the term “rural redevelopment
project” to the list of eligible costs for which a STAR Bond
project could expend funds. A “rural redevelopment project”
would be defined as a project that is not in a city with a
population of more than 50,000; has regional importance; has
a minimum of $3.0 million in capital investment; and would
enhance the quality of life in the community and region. The
bill would not define what is considered an enhancement of
quality of life for the community and region.
The definition of “STAR Bond project district” would be
amended to state if a project is in a metropolitan statistical
area, as defined by the federal Office of Management and
Budget, then the district must be a contiguous parcel of real
estate.
The bill would amend the definition of “commence work”
to require the work to be done pursuant to an approved plan
of construction. The bill would amend the definition of
“developer” to include, for reporting purposes, the names of
the owners, partners, officers, or principals of the developer.


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Eligibility
The bill would alter the eligibility requirements for a
project under the program by increasing the minimum
required capital investment and projected gross annual sales
amounts from $50.0 million each to $75.0 million each or
$40.0 million each if the project is in a metropolitan area with
a population between 50,000 and 75,000 and the project is
deemed of high value by the Secretary. It would also include
rural redevelopment projects, as defined in the bill, as being
eligible to utilize the program.

Project Proposal
The bill would clarify and expand requirements that must
be fulfilled prior to consideration or approval of a project
under the program.
A city or county wishing to propose a project would be
required to first have a feasibility study conducted by one or
more consultants. The bill would require these consultants to
be selected and approved by the Secretary, and the costs
paid by the developer, city, or county in question. The bill
would also give the Secretary control and oversight over the
scope of the project. The Secretary would also be allowed to
establish a list of preapproved consultants and preapproved
study parameters and methods.
The “visitation expectations” element of the proposal
would be required to contain a plan detailing how the project’s
number of visitors would be tracked and reported to the
Secretary on a yearly basis. The plan would require the
reporting of visitor zip code data to the Secretary in an
aggregate manner without personal identifying information.
The bill would require the economic impact portion of a
feasibility study for a STAR Bond project to include the
anticipated effects of the project on the regional and
statewide economies.
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 The bill would also require a net return on investment
analysis; a summary of community involvement, participation,
and support for the project; and a full disclosure of all federal,
state, and local tax incentives applicable to the STAR Bond
district be included in the proposal. The information
concerning tax incentives would also be required to be
provided at the public hearing considering the adoption of the
STAR Bond project plan.
The bill would add rural redevelopment projects to the
program for areas outside cities with a population of at least
50,000. Rural redevelopment projects would have a capital
investment floor of $3.0 million and allow for vertical building
and rehabilitation. Rural redevelopment projects would not be
required to issue General Obligation Bonds, but could finance
projects from sales tax revenues annually up to $10.0 million.
The bill would require that the resolution and ordinance
required upon a city or county establishing a STAR Bond
project district include a description of all federal, state, and
local tax incentives applicable to the STAR Bond district and
any business located in the district.
The bill would clarify that a developer would have one
year to resubmit a project to the Secretary if the developer
has not commenced work on the project within two years of
approval of the STAR Bond project plan.

Financing
Rural redevelopment projects would not be required to
issue special obligation bonds unless the amount to be
financed exceeds $10.0 million for each project.
The bill would also state all projects established after
July 1, 2021, with existing sales tax revenue would be
allowed to pledge only 90.0 percent of new state sales tax
collections in excess of the existing base sales tax revenue.

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Reporting and Website Links
The bill would require the annual STAR Bond report
provided by the Department of Commerce to the Legislature
to include information on gross annual sales, gross annual
sales projected pursuant to the STAR Bond project plan and
feasibility study, and gross annual sales required to meet
bond debt service requirements and other expenses. The
report would also be required to include visitor tracking plan
data, including zip code residence data and a description of
all federal, state and local tax incentives applicable within the
STAR Bond district or to any business located in the district.
The bill would require cities, counties, and developers to
provide all information requested by the Secretary for the
Department of Commerce Economic Development Incentive
Program Database.
The bill would require cities and counties who have
websites to include on the first page of their websites notice
for the public hearing to consider the establishment of a
STAR Bond district, the ordinance or resolution, including the
STAR Bond project district plan and legal description of the
district, and any information concerning public hearing
records and feasibility studies for STAR Bond projects.
Additionally, the bill would require direct links to information
for each STAR Bond project within the Department of
Commerce Economic Development Incentive Program
Database.

Sale of Land
Any transfer of ownership in real property acquired with
the proceeds of STAR Bonds under the program would
require authorization from the Secretary and, while STAR
Bonds remain outstanding, the disclosure of the sale price
and the name of the purchaser and any individual owner,
partner, officer, or principal of the purchaser.

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Sunset
The program would be authorized until July 1, 2026.

Background
The bill was introduced by the Senate Committee on
Commerce at the request of the Department of Commerce.

Senate Committee on Commerce
In the Senate Committee hearing, proponent testimony
was provided by representatives of the Department of
Commerce, the Greater Kansas City Chamber of Commerce,
the League of Kansas Municipalities, the Overland Park
Chamber of Commerce, and Polsinelli Law Firm. Written-only
proponent testimony was provided by representatives of the
City of Dodge City, the City of Manhattan, the City of Olathe,
the City of Overland Park, the Olathe Chamber of Commerce,
and the Travel Industry Association of Kansas, and by one
private citizen. The proponents generally stated the program
has led to significant projects and development, and the
changes contained in the bill would make the program more
viable in rural areas and a better tool overall.
Opponent testimony was provided by representatives of
Americans for Prosperity–Kansas and the Kansas Policy
Institute. The opponents generally stated the program leads
to an unfair advantage for businesses receiving the
incentives. They also stated the bill would expand the
program into areas that do not directly generate sales tax
revenue, such as offices, medical facilities, and rural projects.

Senate Committee of the Whole
The Senate Committee amended the bill to include a
prohibition on state and local government officials’ financial
benefit, directly or indirectly, from STAR Bond projects.
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House Committee on Commerce, Labor, and Economic
Development
In the House Committee hearing, proponent testimony
was provided by the Mayor of Goddard, Kansas, and
representatives of the Department of Commerce, the League
of Kansas Municipalities, the Overland Park Chamber of
Commerce, Polsinelli, the Unified Government of Wyandotte
County, and the Wichita Regional Chamber of Commerce.
Proponents indicated changes made by the bill would help to
limit projects to those that will have the highest economic
impact and improve the effectiveness of the program.
Written-only proponent testimony was provided by
representatives of the City of Olathe, the City of Overland
Park, the City of Wichita, the Olathe Chamber of Commerce,
and the Travel Industry Association of Kansas.
Opponent testimony was provided by a representative
of Americans for Prosperity–Kansas, who stated the program
creates an unfair advantage for a few privileged businesses
and developers while imposing costs on other businesses
and taxpayers.
Written-only opponent testimony was provided by a
representative of the Kansas Policy Institute
No additional testimony was provided.
The House Committee recommended the bill as a
substitute bill, after amending the bill to:
● Modify the prohibition against government officials
benefiting from STAR Bond projects by limiting
prohibition to employment;
● Exclude associated businesses from sales tax
increases for business headquarters projects;

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● Make metropolitan areas with a population
between 50,000 and 75,000 eligible for projects,
subject to certain conditions;
● Modify the definition of “rural redevelopment
projects” by replacing reference to Metropolitan
Statistical Area with an area with a population over
50,000;
● Modify the definition of “major business facility” by:
○ Requiring such facilities to meet sales tax
increment revenue requirements independent
of associated retail businesses; and
○ Limiting such facilities to those that have
agreed to provide visitor tracking data;
● Modify the definition of “developer” to include the
names of owners, partners, officers or principals;
● Clarify the definition of “commence work”;
● Clarify language requiring tax increment revenue to
be used in repayment of bonds;
● Clarify requirements and procedures for
submission of project plans;
● Require businesses to provide aggregated visitor
residence data, and to address this in the feasibility
study;
● Require applicable tax incentive information to be
included in the proposal, public hearing, and city
resolution and ordinance;
● Require the disclosure of the sale price and names
of any transferee and their owners, partners,
officers or principals in all required reports;
● Require the following to be published online;
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 ○ Notice of public hearings, and records of the
public hearing and feasibility study; and
○ Incentive data required to be collected
pursuant to KSA 2020 Supp. 74-50,227;
● Require reports to the Legislature to include:
○ Gross annual sales;
○ Gross annual sales projected pursuant to the
STAR Bond project plan and feasibility study;
○ Gross annual sales required to meet bond
debt service requirements and other
expenses;
○ A description of the data gathered pursuant to
the visitor tracking plan, including, but not
limited to, zip code residence data;
○ A description of all applicable tax incentives
that apply within the STAR Bond district or to
any business located in the district; and
● Require the annual report to the Governor to
include a description of applicable tax incentives.
House Committee of the Whole
The House Committee of the Whole adopted a technical
amendment related to STAR Bond districts in cities with a
population of more than 50,000.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill as introduced, the Department of
Commerce states there would be no fiscal effect on agency
operations. The agency does indicate the bill would increase
future tax revenues from all new projects under the program.
Any fiscal effect associated with the bill is not reflected in The
FY 2022 Governor’s Budget Report.
Commerce; economic development; STAR Bonds

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Statutes affected:
As introduced: 12-17, 79-3201
{As Amended by Senate Committee of the Whole}: 12-17, 79-3201
Version 3: 12-17, 79-3201
{As Amended by House Committee of the Whole}: 12-17, 79-3201
Enrolled: 12-17, 79-3201