Approved:       3-14-07           

Date

MINUTES OF THE SENATE COMMERCE COMMITTEE


The meeting was called to order by Chairperson Nick Jordan at 8:15 A.M. on February 15, 2007 in Room 123-S of the Capitol.


All members were present.


Committee staff present:

Amy Deckard, Kansas Legislative Research Department

Kathie Sparks, Kansas Legislative Research Department

Jackie Lunn, Committee Assistant


Conferees appearing before the committee:

Bob North, Department of Commerce

Mike Hutfles, Schlitterbauhn

Larry Baer, League of Kansas Municipalities

Bud Burk, City of Olathe

Michael Wilkes, City of Olathe

Carol Lehman, Mayor of City of Gardner

Dorthea Riley, City of Lenexa & Wichita & Gardner

Erik Sartorius, City of Overland Park

Mike Scanlon, City of Mission


Others attending:

See attached list.


SB 316--Codifying STAR bond financing separately from tax increment financing


Chairperson Jordan introduced Kathie Sparks, Legislative Research, to explain SB 316. Ms. Sparks stated the Joint Committee on Economic Development interim charge was to divide TIF and STAR Bonds into separate statutes. In the bill sections one (1) through twenty (20) are STAR Bonds and everything else is TIF. Ms. Sparks referred the Committee to a memo regarding the History of TIF and STAR Bonds. (Attachment 1)


Chairperson Jordan opened the hearing on SB 316 and introduced Bob North, Department of Commerce to give his testimony as a proponent of SB 316. Mr. North presented written copy. (Attachment 2) Mr. North stated The Department of Commerce would like to offer the following amendments for SB 316.


            • To allow counties to initiate STAR bond applications and projects.


            • Clarification on the nature of the funding sources to be pledged to repay STAR bonds.

 

• To limit the amount of STAR bonds that can be utilized on any particular projects to no more than 50% of project costs.


In closing he stated these amendments would make STAR bonds more accessible and clarify issues regarding funding resources and legislative intent.


Questions and discussion followed.


Chairperson Jordan introduced Mike Hutfles representing Schlitterbauhn to give his testimony as a proponent of SB 316. Mr. Hutfles presented written testimony. (Attachment 3) Mr. Hutfles stated that Schliterbauhn supported SB 316 and would like to offer the following amendments.

 

• On page 4, they would like to strike “located adjacent to a river” from the “River walk canal facilities” definition.


            • They would also like clarification on the New Section 18.


Questions followed.


Chairperson Jordan introduced Larry Baer representing the League of Kansas Municipalities to give his testimony as a proponent of SB 316. Mr. Baer presented written copy. (Attachment 4) Mr. Baer stated the League of Kansas Municipalities has long supported legislation to permit the use of both tax increment financing and STAR bonds on a statewide basis. The League believes that the division of the TIF and STAR bond procedures that is proposed in SB 316 clarifies the procedures and should simplify their application.


Questions followed.


Chairperson Jordan introduced Michael Wilkes, City Manager, City of Olathe to give his testimony as a proponent of SB 316. Mr. Wilkes presented written copy. (Attachment 5) Mr. Wilkes stated they are in support of the bill and would like to request that the bill contain language to allow that STAR bond proceeds be used to finance any costs, including privately-owned buildings and structures, necessary for a project except for certain prohibited uses that are contained in current law so long as at least 50% of the project is not being financed with STAR bonds.


Questions followed.


Chairperson Jordan introduced Mayor Carol Lehman with the City of Gardner to give her testimony as a proponent of SB 316. Mayor Lehman presented written copy. (Attachment 6) Mayor Lehman stated a KC Logistics Hub site is adjacent to current city boundaries of Gardner and it makes good sense for the City of Gardner to have control over the planning and development of this area. The City of Gardner does not have the resources to fund the project. The area needs expensive public improvements, and in order for the City of Gardner to do what they need to do, they need a new mechanism to capture future tax dollars off the site. Therefore, Gardner would like to request the Committee to consider adding intermodal transportation areas as an additional eligibility within the TIF statutes. This would give the City of Gardner an added economic development tool to aid in making the project a success for everyone.

 

Mayor Lehman introduced Melissa Mundt, Assistant City Administrator, of the city of Gardner to give her testimony as a proponent of SB 316. Ms. Mundt presented written copy. (Attachment 7) She stated the City of Gardner is requesting a change in the TIF legislation to provide financing the massive amount of public infrastructure required to support the intermodal project. She asked for the following additions to SB 316:

 

            • Adding “intermodal transportation area” as a new category to the types of eligible TIF areas

 

• Adding a definition of “intermodal transportation area” to mean an area of not less than 800 acres to be developed primarily to handle the transfer, storage and distribution of freight through railway and trucking operations.

 

• Permitting redevelopment project costs for intermodal transportation areas to include the acquisition of land for, and the construction and installation of, publicly-owned infrastructure improvements which serve an intermodal transportation area but may be located outside of the TIF District.

 

Ms. Mundt introduced Dottie Riley, Bond Counsel for the City of Gardner to give her testimony. She did not have written copy. Ms. Riley stated she would like to clarify what the City of Gardner is requesting. The City of Gardner is requesting that the Committee add to the list of eligible areas regarded as TIF areas the ability for cities to form a TIF district in intermodal transportation areas. Specifically the intermodal transportation area would be an area of not less than 800 acres to be developed primarily to handle the transfer, storage, and distribution of freight through railway and trucking operations. With the addition of that as an eligible area the city would have the option to create a TIF district for this intermodal area and would ask for an additional change to the TIF statute for use of the local revenue which would permit the city to utilize the TIF revenue generated from the intermodal area to finance publically owned infrastructure that is necessary to serve this intermodal development. These additions in the two statutes would provide the city with a helpful financing tool to begin to have a vehicle to offset some of the expense associated with the infrastructure they will need to support for this project.

 

Questions followed.

 

Chairperson Jordan called on Dottie Riley, Kutak Rock LLP, again, this time representing the cities of Lenexa and Wichita, to give her testimony as a proponent of SB 316. Ms. Riley submitted written copy. (Attachment 8) Ms. Riley offered an amendment on behalf of the City of Lenexa and the City of Wichita to provide cities with a better tool to encourage development for the benefit of conservation of land as well as the promotion of economic development which is attached to her testimony. The amendment would allow cities to use TIF revenue to finance multilevel parking facilities that are owned by or leased to developers.

 

Questions followed.

 

Chairperson Jordan introduced Erik Sartorius representing the City of Overland Park to give his testimony as a proponent of SB 316. Mr. Sartorius presented written testimony. (Attachment 9) Mr. Sartorius stated the City of Overland Park is in support of SB 316. Overland Park is in favor of an amendment which addresses the multilevel parking facilities.

 

Chairperson Jordan introduced Mike Scanlon, City Administrator of the City of Mission to give his testimony as a proponent of SB 316. Mr. Scanlon presented written copy. (Attachment 10) Mr. Scanlon stated they are in support of an amendment to broaden the definition for TIF reimbursable costs to include multi-level parking structures.

 

Questions and discussion followed.

 

With no further testimony, questions, or discussion Chairperson Jordan closed the hearing on SB 316 and stated the Committee would be working the bill in the meeting tomorrow.

 

Chairperson Jordan adjourned the meeting at 9:22 a.m. with the next scheduled meeting February 16th at

8:30 a.m. in room 123 S.