Mayor's Community Update

Mayor’s Community Update:

What are STAR bonds?  What is a STAR Bond District?  What will the STAR bonds be used for?  How will it be paid for?  How will this affect my taxes?  These are many of the questions which may be circulating in conversations around Colby.  In this “Mayor’s Community Update” I will share information about the proposed STAR bond project and will answer these, as well as other, questions regarding the STAR bond project.

Sales Tax and Revenue (STAR) bonds were developed by the State Legislature in 1999 and are a way to aid Kansas municipalities to fund projects that support development of major commercial, entertainment, and tourism projects. The intent of these bond projects is to increase regional and national visitation to Kansas.  As the STAR bond project attracts new visitors to the area, increased (incremental) sales tax is generated.  The incremental sales tax, along with sales tax generated from new businesses that are developed within the STAR bond district, will be used to pay off the bonds for the project.  

The incremental sales tax is not generated throughout all the city limits of Colby.  Rather, it is generated in a specifically designated area called a STAR Bond District.  A twelve-month look back will be used to determine the base amount of sales tax that has been generated in the STAR bond district and that base amount of taxes will still go to the State, City, and County as it always has, but any additional sales tax generated in the STAR bond district, above that base amount, will be utilized to pay off the bonds.  STAR bonds carry a maximum term of 20 years.  Once the bonds are paid off, the district terminates, and all sales taxes generated within the district return to the local government and the state.

For the proposed project, the STAR Bond District includes most of the businesses from Dillons south along Range Ave. and east along Willow Ave. to Walmart.  South of the interstate, the district includes OASIS, the two new hotels, the area around City Limits Bar and Grill, the Red Roof businesses, and the land west of highway 25 where the project will be built.

The main attraction of the proposed STAR bond project is a multi-purpose arena and equestrian center that would be located south of Interstate 70 and west of the Red Roof businesses.  The project is slated to also include an RV park, a variety of indoor entertainment activities, an educational center, a restaurant and retail space.  The arena will be able to host any type of equestrian event, livestock event, or any kind of an event that can be done indoors and on a dirt surface.  The flexibility of the arena will facilitate the opportunity to host a plethora of events that will attract significant visitors to our community.

There are many steps and key factors that must be met in the process to have a STAR bond project approved.   A STAR bond district must be established.  A feasibility study must be completed, and that study must indicate that the project will generate significant positive economic benefits to the area and State.  The project must be a statewide and regional destination that will generate significant out-of-state tourism.  It must provide high-quality entertainment, and it needs to improve the quality of life for the community and region.  After completion of the feasibility study, a STAR bond project plan summarizing the results of the feasibility study and describing the improvements to be constructed in the district must be approved by the City and State.  To date, the STAR bond district has been created, and the results of the critical feasibility study should be available soon.

The feasibility study must show that the project will generate enough sales tax dollars within the STAR bond district to support repayment of the bonds.  This is essential, because property taxes will never be used to pay off the bonds.  STAR bonds have no impact on property taxes, nor will they have any impact on the sales taxes that consumers would pay at the point of sale.  STAR bonds are paid solely through sales tax generated by augmented sales generated from increased out-of-town traffic that comes to Colby because of the project.

Taxpayers are never going to be on the hook to pay for the STAR bonds.  The bonds are not general obligations of the city, and the bond buyer bears all of the risk if the revenues are not sufficient to pay the bonds.

Colby Investment Group, LLC is the “Developer” of the project, and they have worked closely with the City of Colby and are the ones who initiated the opportunity to build this unique attraction in Northwest Kansas.  Once all the information from the feasibility study is analyzed and positive results are realized, the City and the Kansas Department of Commerce must approve the project.  If approved, steps toward plan design, selling of the bonds, and construction will continue.  It is a long process, but necessary as we continue “Working together for a more prosperous community.”

-Mayor Lee Leiker