Kansas taxpayers will save up to $10 million over the next 16 years, thanks to an alternative STAR bond financing plan enacted by the City of Wichita.
Working with the Kansas Department of Commerce and the Kansas Department of Revenue, the City of Wichita has adopted a “pay as you go” payment plan that greatly reduces interest and financing costs for the $13 million river District Redevelopment District STAR bond issue approved by the state in 2007.
The District includes the Keeper of the Plains, the WaterWalk development, a “Waltzing Water Fountains” feature and riverfront improvements near the Broadview Hotel.
The accelerated payment schedule will retire the entire $13 million as early as 2016. Consequently, no further payments will be required for the duration of the 20-year STAR bond period ending in 2027, and the state treasury will be $10 million ahead at the end of the 20 years.
The new payment plan was authorized by a memorandum of understanding between the City of Wichita and the Kansas Department of Commerce. The proposal was also favorably reviewed by the Kansas Department of Revenue.
Although the primary beneficiary of the “pay as you go” plan is the State of Kansas, the City of Wichita will also benefit as the timely retirement of the debt validates the success of the project and encourages future growth.
STAR (sales tax revenue) bonds traditionally are issued for a 20-year repayment period. The bonds are repaid with the increased sales tax revenue that is generated from commercial activity within the benefit district.