Kansas cities are increasingly looking toward STAR bonds—Sales Tax and Revenue bonds—to fuel ambitious development projects, from sports arenas to entertainment districts. While the tool offers the promise of revitalization and economic growth without raising local taxes, critics warn that if projections fall short, cities may be left footing the bill—just like what happened with Kansas City’s Power & Light District.
What Are STAR Bonds?
STAR bonds are a financing mechanism that allows municipalities in Kansas to issue bonds for development projects and repay them using future sales tax revenue generated within the designated redevelopment area. The idea is simple: build something that attracts people and commerce, and use the resulting tax money to cover the costs.
In theory, it’s a win-win: the city doesn’t take on new taxes or general obligation debt, and private developers get the upfront capital needed to break ground. However, this model hinges on a single risky assumption—that the project will generate enough sales tax revenue to repay the bonds.
The Power & Light Lesson
Take Kansas City’s Power & Light District, a sprawling entertainment zone that was largely financed through similar revenue-backed bonds. Promised as a transformation of downtown, the project instead delivered mounting debt. When sales taxes failed to meet projections, Kansas City taxpayers had to cover the shortfall—ultimately costing the city more than $10 million per year in general fund support.
Even though Power & Light is located in Missouri, the lesson resonates across the Kansas border: if the revenue doesn't materialize, someone still has to pay.
Risks for Kansas Cities
Today, cities like Wichita and Overland Park are turning to STAR bonds for everything from minor league stadiums to youth sports complexes and lifestyle centers. But the risk profile remains:
Overly Optimistic Revenue Projections
Many proposals rely on best-case-scenario projections. STAR bond districts often assume a high volume of tourists and out-of-state shoppers, which may not materialize in a saturated market.
Changing Consumer Behavior
With e-commerce growth and post-pandemic shifts in spending, relying on in-person retail and tourism to sustain a STAR bond district is risky business.
Public Bailouts
If the sales tax revenue comes in lower than expected, cities may end up diverting money from other public services like schools, roads, or public safety to make up the difference.
Could It Happen Again?
Absolutely. Take a hypothetical city in Kansas that builds a $200 million sports-and-retail complex using STAR bonds. If revenue projections fall short by 30% due to a recession or mismanagement, the city will either default on the bonds or pay from its general fund.
This is precisely what happened with Power & Light, and it could happen again. In fact, internal audits in past Kansas STAR bond projects have shown inconsistent oversight, vague tourism metrics, and questionable long-term benefits.
Transparency and Guardrails Needed
For STAR bonds to truly benefit communities, Kansas lawmakers and city leaders must enforce:
Transparent feasibility studies
Independent economic impact reviews
Realistic revenue modeling
Clawback clauses and safeguards for the public
Without these protections, STAR bonds may serve more as a subsidy for developers than a tool for public good.
Conclusion: Shine Carefully
STAR bonds can work—but only when managed with extreme care and transparency. The excitement of shiny new developments shouldn't blind cities to the very real financial risks. As Kansas continues to wield this powerful tool, it should remember Power & Light: a district meant to pay for itself, but ultimately paid for by the people.
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