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State approves STAR bond feasibility; council given breakdown of how $13.5M in STAR bonds would be allocated
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Summary
City staff said the Kansas Department of Commerce approved key feasibility steps for a STAR bond district; staff described a $44 million project with about $13.5 million in STAR bond proceeds allocated to local projects including the Cosmosphere and Memorial Hall, and said future council actions are required before bonds are issued.
HUTCHINSON, Kan. — Hutchinson staff told residents that the Kansas Department of Commerce has approved initial feasibility and visitation studies required for a STAR bond district and outlined how the proposed $44 million project would be financed.
Dave Sotelo, director of strategic growth, said Commerce approved the visitation and feasibility steps and that the next steps — a development agreement and the actual bond issuance — will return to the city council for approval. "After those steps come through that process, those decisions always come to city council," Sotelo said.
Sotelo provided a breakdown of the STAR bond portion of the project: roughly $13.5 million in STAR bond funding of a $44 million total project, with an approximate allocation of $5,000,000 to the Cosmosphere, $3,500,000 to the Landmark project, $4,000,000 to Memorial Hall, and $1,000,000 toward embracing Hutchinson’s "space identity," an item requested by the lieutenant governor’s office during review.
Sotelo also clarified that, according to bond counsel and the way the feasibility work was approved, the proposed 0.75 percentage-point sales tax that will appear on the March ballot is not expected to be applied to STAR bond repayment. "When we bake in the financials of this project... the answer is no," Sotelo said when asked whether the new sales tax would be levied into the STAR bond district to pay bond debt.
The STAR bond program places limits on how much of a project the bond proceeds can fund; Sotelo said STAR bonds cannot finance more than 50% of total project costs and that bond issuance requires a separate feasibility analysis by a bond issuer before any bonds are sold.
Council members and staff stressed that Commerce’s approval does not finish the process: council must still approve district formation steps, any development agreement and the eventual issuance of bonds. Residents asked whether the STAR bond decisions were "a done deal;" staff answered that Commerce approval is an early but necessary step and that subsequent council-level approvals remain.
Next steps: staff will continue to work with Commerce, bond counsel and the city council as the project moves toward any development agreements and bond issuance. Those future council actions will be required to advance the STAR bond component beyond feasibility.
