OVERLAND PARK, Kan. — Construction of a multimillion-dollar sports complex is expected to begin later this fall now that the developer has secured funding from the City of Overland Park.
The Overland Park City Council approved multiple tax incentives on Monday to support the completion of the Bluhawk Sports Complex at 159th Street and U.S. 69 Highway.
The city council approved more than $49 million in Sales Tax and Revenue (STAR) Bonds to support the first phase of construction for a multisport facility within the Bluhawk complex.
Using STAR Bonds allocated by the state, cities can sell the bonds to developers to cover the cost of new development. That money is then paid back over the next 20 years using sales tax generated by the new development.
In 2019, the city council voted to allocate up to $77 million in STAR bonds to Overland Park-based developer Price Brothers Management to help build the facility.
Last June, the council approved an amendment to the development agreement with Price Brothers to adjust the site plan and reduce the amount of STAR bonds to $70.6 million. That plan was amended again by the council in March to give the developer access to other local tax incentives if the Kansas Commerce Department doesn’t approve the remaining $21.4 million in STAR bonds for the second half of the project.
The 277-acre development will be built out in two phases and the first wave of STAR bonds will be issued in two installments.
The first phase will include the construction of the first 240,000 square feet of the proposed 435,000-square-foot multisport complex. The initial phase will also include the construction of an ice rink with up to 1,500 movable stadium seats; four basketball courts that can be converted to pickleball or volleyball courts with up to 4,000 movable stadium seats; a fitness center, and associated locker rooms.
Phase two would add a second ice rink, four basketball courts, a turf field and about 134,000 square feet of retail space. The first phase of the multisport facility is estimated to cost roughly $85,394,000 to complete.
The first half of the 2022 STAR Bonds will be sold by Wells Fargo Securities and will be paid for using city and state sales tax revenue generated within the Bluhawk complex.
The second half of the bonds will be held by the developer and paid for through an annual appropriation from the state.
“While we are in the midst of planning this financing, the state legislature also made a decision to eliminate the sales tax on food and food ingredients,” Deputy City Manager Kristy Stallings said. “Sixty-thousand square feet of the retail within the Bluhawk STAR bond district is a grocery store that would have been subject to those state sales taxes that would have been applied towards the repayment of the debt.”
Stallings said the state legislature has approved an appropriation structure to ensure funding for the STAR bonds while the state works to phase out the food sales tax.
Developers estimate it will cost roughly $438.9 million to build out the entire Bluhawk complex. Once complete the ecomplex will feature a 435,000 square foot multisport complex, 675,000 square feet of retail and restaurant space, 80,000 square feet of office space, an apartment complex and multiple hotels.
Stallings said a majority of the complex is expected to be privately funded. Stallings said roughly 70% of the project is privately funded; 16% is to be financed with STAR bonds; about 10% will be paid for with revenue from the established Transportation Development District (TDD) on the property, and 6% will be covered by revenue from the Community Improvement District (CID).
The council also approved the issuance of up to $113.5 million in Economic Development Revenue Bonds (EDRB) to help build out the entire project over multiple phases.
Approximately $83.5 million in EDRBs will be issued to support the first phase of the multisport facility. By issuing the bonds, the developer will also receive a 10-year tax abatement for the multisport complex.
Price Brothers will now make a fixed payment in lieu of taxes (PILOT) to offset the 10-year tax abatement. The developer will provide $700,000 in PILOT for the first five years of the project. For the final five-year period, Price Brothers will provide approximately $750,000 PILOT payments.
No one spoke during the public hearing Monday night. Scott Hamblin and Dr. Faris Farassati were the only two councilmembers to vote against the tax incentives for the development.
“When we competed for this, we competed off what now is broken promises. We competed off of which city had the higher likelihood of securing a professional hockey team. At that time, we had a cosmosphere, a professional hockey team standalone arena, and we had a multisport complex, and because of all that, we needed a parking garage. We competed on all that,” Hamblin said. “The cosmosphere I believe bailed first. The hockey team was never a reality. Now we are down to the multisport arena and all we’re doing is making a deal that they only have to build half.”
Farassati said he doesn’t support the city’s pattern of overusing tax incentives to spur development, and instead feels the city should let the market run its course.
“If the market economy says that piece of land needs to stay greenfield until the numbers work out without an injection in terms of tax giveaways, then that is what the market economy is going to dictate and that is what we should pursue,” Farassati said
“The state sales tax money that would have gone to Topeka; that then would have gone to western Kansas or to northwestern Kansas. We are saving here and putting in work to create an amenity. An amenity we competed for, because the state and this council and the residents of Overland Park thought that that was an important amenity to add to our community,” Overland Park Mayor Curt Skoog said.
Councilmember Melissa Cheatham said she voted in favor of the incentives because the city has already committed to the Bluhawk project.
“I think it’s our obligation as a city to carry out our end of the deal on this project. There’s been substantial investment already. Things are underway, so I’m not going to get in the way of any completion of the deal,” Cheatham said.
The first phase of development at Bluhawk is expected to open in the spring of 2024.