By SCOTT AUST, FCEDC Director of Communications
GARDEN CITY – Garden City’s “Sports of the World” STAR Bond project took a major step forward on Tuesday, Nov. 20, with the approval of the project’s development agreement, which spells out the responsibilities of the city and the developer, GC Investments Inc., for building the facility.
The estimated $37 million-plus project will be financed by a combination of private capital and $25.4 million in STAR Bonds.
A STAR Bond is a tax increment financing program that allows city governments to issue special revenue bonds that are repaid by local sales and use taxes within a designated district. The district establishes a baseline of tax receipts. As retail business increases within the district, the higher sales tax revenue above the baseline is called an increment and is used to finance the STAR Bond.
In 2014, the City of Garden City established a STAR Bond district covering about 312 acres of land, including the Schulman Crossing retail development, which includes 515,000 square feet of national and regional retailers, four restaurants, a 96 room hotel and an indoor water park. Since establishing the district, retail sales within the district grew from about $39.5 million in 2014 to $72.1 million in 2016.
The project, which will be located along Schulman just east of Parrot Cove water park and Old Chicago, and south of Schulman Crossing and Menards, will be built in two phases.
Phase 1will include two full size and six partial indoor soccer fields, four indoor basketball/eight volleyball courts, an indoor trampoline park, indoor baseball cages, four outdoor sand volleyball courts, four pickle ball courts, four corn hole courts, and the necessary infrastructure such as parking, needed to serve the property. In addition, phase 1 will include tournament/conference/service amenities including, but not limited to, indoor seating for soccer/basketball courts, breakout conference rooms, locker rooms, event rooms and full service restaurant (not eligible for STAR Bond funding) and concession facilities.
Phase 2 will be negotiated at a later date for other elements of the Sports of the World project and may include additional commercial development and an expanded project area.
The agreement was negotiated between the city and GCI, the project developer. There were some modifications negotiated compared to the initial memorandum of understanding approved in July. City attorney Randy Grisell highlighted the differences for the city commission during Tuesday’s meeting of potential other funding options the developer could use in addition to STAR Bond revenues.
Grisell said the agreement sets out other funding options available for use but it doesn’t mean necessarily that they will be used.
- Industrial Revenue Bonds (IRB) basically to use exemptions from the retailer sales tax on certain parts of the construction, like materials used in construction, equipment or furnishings. It does not provide for any abatement of property taxes.
- Community Improvement District (CID), which allows a developer to establish an additional sales tax within their facility to pay clearly delineated project costs. There would be a separate process the developer would have to go through with the city to impose a CID.
- The city will provide the developer credits against the developer’s city utility bills for electric, water, wastewater and solid waste service for a period of three years. In each of those years, the city would grant $100,000 of credit to offset charges for city-provided utility services.
City Manager Matt Allen indicated providing the utility credits for the first three years essentially allows time to optimize the facility’s operation. As a new sports tourism/ events venue it may need that time to fully understand the utility demands.
Grisell said the development agreement also states the city would have no financial liability in the project should there be some kind of default by the developer in the future; holds back the first $800,000 of STAR Bond proceeds for use a different project within the district; and includes language for reviewing and approving project costs by a committee.
The STAR Bonds will be issued by the City by private placement. The bond proceeds will be held by a Trustee who will make all principal and interest payments to the bond holders and also process reimbursement of eligible expenditures after receiving authorization from the City. The developer will submit monthly requests for reimbursement to the City. A committee comprised of City staff and developer representatives will meet to review the requested reimbursement documentation, after which City staff will submit authorization to pay the approved expenditures.
According to the agreement, construction must begin no later than Jan. 16, 2020. However, that doesn’t mean the developer intends to take that long to begin the project.
Allen said like most agreements, the document includes safeguards in case things don’t go as planned, in order to protect the public interest, like requiring the project to start within a year.
Kristin Czubkowski with Kansas City-based law firm Polsinelli, which is representing the developer, said the dates included were statutorily required deadlines, and suggested they were not meant it would take that long to break ground.
Regarding the utility credits, Czubkowski said the developer was seeking something to assist during the ramp up period to optimize operations of “what’s going to be a unique and special facility in Garden City.”
“I think this is a very exciting step because this really lays out the specifics of what’s going to be happening in the future,” Czubkowski said about the development agreement. “What you see in the agreement is a lot of collaboration and cooperation with the city, both in terms of cost certifications and going through the normal development process.”