TOPEKA (KSNT) – A legislative audit, released Wednesday, into the City of Topeka’s proposed issuance of additional STAR bonds to purchase the Heartland Park racetrack finds the city’s plan meets state law.
The audit was requested by several state legislators who questioned whether the proposed purchase would shift repayment of those bonds from the City of Topeka to the state, or whether if failed to meet other state laws.
The city issued $10.4 million in STAR bonds in 2006, and proposes issuing another $5 million in bonds to complete the purchase in order to improve the area surrounding the financially troubled track.
In its 37 page audit, the Legislative Division of Post Audit (LDP) looked into seven questions raised by lawmakers, and while it found some unanswered questions it determined the city was within state law governing the issuance and repayment of STAR bonds.
One issue was whether the city could legally amend its original plans to redevelop the area surrounding Heartland Park to include actually purchasing the track and then hiring a third party to manage it for the city or lease it from the city. The report concluded the plan meets the requirements of the law “…although it is not clear the Legislature envisioned using the bonds to save an existing attraction.”
Another concern was whether two studies submitted as part of the current proposal to buy the racetrack accurately reflect the economic activity generated by the park. The audit determined that the two economic impact studies meet state law, they “…do not represent an independent assessment of the proposal’s economic impact…”and the LDP had other concerns about the process used to determine that impact. The audite notes…the methodology suggest the most recent report significantly overstates the park’s impact” on revenue projections.
As for repaying the bonds, the audit notes that recent increases in state sales taxes would account for about $4 million in revenue, which would be applied towards the debt payments. It did not, however, that unless the new park operator does not invest an additional $5 million in improvements to the park “…the law does not have a provision that would require the city to pay any amount back to the state.
City Manager Jim Colson stated last week the city would expect any group awarded management of the park to invest about $7 million in improvements including parking structures and banquet and/or convention facilities.
While the state Department of Commerce gave its preliminary approval to the purchase plan and issuance of the additional bonds in September of last year, the entire project has been put on hold pending an appeal before the Kansas Court of Appeals on a petition to require a public vote on the purchase.
That appeal was argued February 26th and is still under review by the court.
In the agency response, the audit noted the “Department of Commerce and City of Topeka officials generally agreed with the report’s findings and conclusions.