(Editor's Note: The is the first of two articles about Monday's approval of the Great Bend STAR Bond Project Plan. As Phase 1 of the proposed plan involves improvements at the SRCA Dragstrip, the second article will highlight comments made Monday regarding the dragstrip).
By MIKE COURSON
Great Bend Post
A giant project continues to move forward in Great Bend. Monday night, needing a two-thirds majority vote to move forward on the Great Bend STAR Bond Project Plan, the council voted 7-0 to proceed toward a $56 million phase one of the project. City Administrator Logan Burns closed a lengthy presentation with the scope of the project.
“This project represents one of the most significant economic development opportunities in Great Bend’s history,” Burns said. “It builds upon existing community assets, creates jobs, attracts new visitors, supports local businesses, and positions Great Bend as a premier destination for sports, entertainment, and tourism in Kansas.”
Monday’s vote was non-binding in that the city can hit the stop button at any moment. Any future financial decisions about the project will return for a council vote, and Great Bend voters will have the opportunity to approve a 0.25 percent sales tax initiative in November. Phase 1 of the project includes construction of an 80-room Hampton Inn and two restaurants near the Great Bend Events Center on 10th Street and improvements at the SRCA Dragstrip west of town.
“Phase 1 includes improvements at the SRCA Dragstrip,” said Burns, “including grandstands, a museum, concessions, restrooms, lighting, and other amenities; and construction on a multi-use athletic complex and banquet hall, with courts capable of hosting a variety of tournaments and events.”
The project is intentionally divided into phases with priority given to facilities expected to generated the greatest economic activity and visitor traffic. Future phases would not advance until the first phase demonstrates success. Future phases would construction of an outdoor amphitheater with seating up to 4,000 guests, a new airport hangar, and restaurant amenities, as well as the construction of an indoor livestock arena and adjacent outdoor rodeo arena, each seating approximately 2,500 guests.
“We already have the Expo Complex, the SRCA Dragstrip, the airport, and a long history of hosting regional events,” Burns said. “The goal is not simply to construct new facilities. The objective is to create a year-round destination capable of hosting racing events, indoor sports tournaments, concerts, conventions, banquets, trade shows, and community events that generate tourism, support local business, create jobs, and increase economic activity throughout the community.”
Since submitting the plan, the Kansas Department of Commerce has approved the project as it qualifies as a rural development project in a major commercial entertainment and tourism area. The Department of Commerce also approved up to $21.89 million in STAR bond financing for eligible project costs. The council was presented a 187-page document outlining the project, though Burns covered the highlights during his presentation.
A feasibility study reviewed by the state of Kansas indicates the project will:
- Result in 433 construction jobs during construction
- Result in 400-425 permanent jobs once fully operational
- Annual payroll of those jobs would be $14-15 million.
- Visitors will also support local hotels, restaurants, retailers, and other businesses throughout Great Bend.
The new developments would bring in:
- 341,000 to 482,000 visitors a year
- 40-44 percent of visitors will travel at least 100 miles
- 20-22 percent of visitors will travel from outside of Kansas
Financing for the project includes:
- A Phase 1 investment of approximately $56 million, to be funded through STAR bonds, incremental sales tax, and approximately $23 million in private investment tied to the new hotel and two restaurants on 10th Street.
- The city of Great Bend is projected to issue $30 million in temporary notes to fund construction while the project is being completed, which could take up to four years.
- During that time, the city would make interest-only repayments.
- Approximately $12 million in STAR bond proceeds would be generated once projects are constructed, generating revenue to be applied toward temporary note balances.
- The city’s estimated long-term general obligation bond principal is estimated at $16.9 million.
- After accounting for projected revenues from the SRCA Dragstrip and Events Center, together with required debt-coverage ratios, the estimated annual general obligation bond payment is approximately $1.3 million, to be paid with the new 0.25 percent sales tax.
- If Great Bend voters do not approve the new sales tax, it is recommended that the city not move forward with the project.
“The purpose of this dedicated revenue source is to provide a funding mechanism that helps avoid future property tax increases, while allowing the visitors who come to Great Bend to help fund these community improvements through the sales taxes they generate,” Burns said of the proposed tax.
Burns further explained that STAR bonds are not repaid with property taxes, and city of Great Bend has no obligation to covering shortfalls or defaults associated with STAR bond payments. Instead, they are repaid through incremental revenues above baseline sales generated within STAR bond districts, which would include the Expo Complex and near the Events Center. Revenues include state sales tax generated within the district, city sales tax within the district, county sales tax generated within the district subject to county participation, CID revenues, and transient guest tax revenues.
“As visitors come to Great Bend and spend money within the district, those revenues are used to repay the STAR bonds,” Burns said. “Any revenues generated outside of the district will continue to flow normally to the state, county, and city.”
STAR bond proceeds are expected to grow over time. When they become sufficient to cover general obligation bond payments, the 0.25 percent sales tax reserved for repayment could be reallocated for water infrastructure improvements city-wide.
The state’s approval of the project includes several safeguards. STAR Bond proceeds may only be used for eligible project costs. KS dept of commerce must approve final project budget. STAR Bond proceeds cannot exceed 50 percent of the total eligible project investment. Visitor tracking and reporting will verify tourism performance throughout life of the project. Any other future financing actions, including bond issuance, must return before the city council for approval.
The state’s approval of the project also includes several important safeguards. STAR bond proceeds may only be used for eligible project costs, and the Kansas Department of Commerce must approve final project budget. STAR bond proceeds cannot exceed 50 percent of the total eligible project investment, and visitor tracking and reporting will verify tourism performance throughout life of the project.