12-17,169.   Special obligation bonds and full faithand credit tax increment bonds; procedure for issuance; limitations; payment;exempt from taxation; refunding of bonds; status reports.(a) (1) Any city or county shall have the power to issuespecial obligation bonds in one or more series to finance the undertaking ofany STAR bond project in accordance with the provisions of this act. Suchspecialobligation bonds shall be made payable, both as to principal and interest:

      (A)   From revenues of the city or county derived from or held in connectionwith the undertaking and carrying out of any STAR bond project or projectsunder this act including historic theater sales tax increments;

      (B)   from any private sources, contributions or other financial assistancefrom the state or federal government;

      (C)   from a pledge of 100% of the tax increment revenue received by the cityfrom any local sales and use taxes, including the city's share of any countysales tax, which are collected from taxpayers doing business within thatportion of the city's STAR bond project district established pursuant toK.S.A. 2009 Supp.12-17,165, and amendments thereto, occupied by a STARbond project, except for amounts committed toother uses by election of voters or pledged to bond repayment prior to theapproval of the STAR bond project;

      (D)   at the option of the county in a city STAR bond project district, from apledge of all of the tax increment revenues receivedby the county from any local sales and use taxes which are collected fromtaxpayers doing business within that portion of the city's STAR bond projectdistrict established pursuant toK.S.A. 2009 Supp.12-17,165, andamendments thereto, except for amounts committed to other uses by election ofvoters or pledged to bond repayment prior to the approval of a STAR bondproject;

      (E)   in a county STAR bond project district, from apledge of 100% of the tax increment revenue received by the county from anycounty sales and use tax, but excluding any portions of such taxes that areallocated to the cities in such county pursuant to K.S.A. 12-192, andamendments thereto, which are collected from taxpayers doing business withinthat portion of the county's STAR bond project district established pursuanttoK.S.A. 2009 Supp.12-17,165, and amendments thereto, occupied by a STAR bondproject;

      (F)   from a pledge of all of the tax increment revenue received from any statesales taxes which are collected from taxpayers doing business within thatportion of the city's or county's STAR bond project district occupied by a STARbond project;

      (G)   at the option of the city or county and with approval of the secretary,from all or a portion of the transient guest tax of such city or county;

      (H)   at the option of the city or county and with approval of the secretary,(i) from a pledge of all or a portion of increased revenue received by the cityor county from franchise fees collected from utilities and other businessesusing public right-of-way within the STAR bond project district; or (ii) from apledge of all or a portion of the revenuereceived by a city or county from local sales taxes or local transient guestand local use taxes; or

      (I)   by any combination of these methods.

      The city or county may pledge such revenue to the repayment of such specialobligation bonds prior to, simultaneously with, or subsequent to the issuanceof such special obligation bonds.

      (2)   Bonds issued under paragraph (1) of this subsection shall not be generalobligations of the city or the county, nor in any event shall they give rise toa charge against its general credit or taxing powers, or be payable out of anyfunds or properties other than any of those set forth in paragraph (1) of thissubsection and such bonds shall so state on their face.

      (3)   Bonds issued under the provisions of paragraph (1) of this subsectionshall be special obligations of the city or county and are declared to benegotiable instruments. Such bonds shall be executed by the mayor and clerk ofthe city or the chairperson of the board of county commissioners and the countyclerk and sealed with the corporate seal of the city or county. All detailspertaining to the issuance of such special obligation bonds and terms andconditions thereof shall be determined by ordinance of the city or byresolution of the county.

      All special obligation bonds issued pursuant to this act and all income orinterest therefrom shall be exempt from all state taxes except inheritancetaxes. Such special obligation bonds shall contain none of the recitals setforth in K.S.A. 10-112, and amendments thereto. Such special obligation bondsshall, however, contain the following recitals: (i) The authority under whichsuch special obligation bonds are issued; (ii) such bonds are in conformitywith the provisions, restrictions and limitations thereof; and (iii) that suchspecial obligation bonds and the interest thereon are to be paid from the moneyand revenue received as provided in paragraph (1) of this subsection.

      (4)   Any city or county issuing special obligation bonds under the provisionsof this act may refund all or part of such issue pursuant to the provisions ofK.S.A. 10-116a, and amendments thereto.

      (b) (1)   Subject to the provisions of paragraph (2) of this subsection, anycity shall havethe power to issue full faith and credit tax increment bonds to finance theundertaking,establishment or redevelopment of any major motorsports complex, as defined insubsection (k)ofK.S.A. 2009 Supp.12-17,162, and amendments thereto. Such full faith andcredit tax incrementbonds shall bemade payable, both as to principal and interest: (A) From the revenue sourcesidentified inparagraph (1) of subsection (a) or by any combination of these sources; and (B)subject to theprovisions of paragraph (2) of this subsection, from a pledge of the city'sfull faith and credit touse its ad valorem taxing authority for repayment thereof in the event allother authorized sourcesof revenue are not sufficient.

      (2)   Except as provided in paragraph (3) of this subsection, before thegoverning body ofany city proposes to issue full faith and credit tax increment bonds asauthorized by thissubsection, the feasibility study required by subsection (b) of K.S.A. 2009Supp. 12-17,166, andamendments thereto,shall demonstrate that the benefits derived from the project will exceed thecost and that theincome therefrom will be sufficient to pay the costs of the project. No fullfaith and credit taxincrement bonds shall be issued unless the governing body states in theresolution required bysubsection (e) ofK.S.A. 2009 Supp.12-17,166, and amendments thereto, that itmay issue suchbonds to finance theproposed STAR bond project. The governing body may issue the bonds unlesswithin 60 daysfollowing the conclusion of the public hearing on the proposed STAR bondproject plan a protestpetition signed by 3% of the qualified voters of the city is filed with thecity clerk in accordancewith the provisions of K.S.A. 25-3601, et seq., and amendments thereto. If asufficient petition isfiled, no full faith and credit tax increment bonds shall be issued until theissuance of the bonds isapproved by a majority of the voters voting at an election thereon. Suchelection shall be calledand held in the manner provided by the general bond law. The failure of thevoters to approvethe issuance of full faith and credit tax increment bonds shall not prevent thecity from issuingspecial obligation bonds in accordance with this section. No such electionshall be held in theevent the board of county commissioners or the board of education determines,as provided inK.S.A. 2009 Supp.12-17,165, and amendments thereto, that the proposed STARbond project districtwill have anadverse effect on the county or school district.

      (3)   As an alternative to paragraph (2) of this subsection, any city whichadopts a STARbond project plan for a major motorsports complex, but does not state itsintent to issue full faithand credit tax increment bonds in the resolution required by subsection (e) ofK.S.A. 2009 Supp.12-17,166, andamendments thereto, and has not acquired property in the STAR bond project areamay issue fullfaith and credit tax increment bonds if the governing body of the city adopts aresolution statingits intent to issue the bonds and the issuance of the bonds is approved by amajority of the votersvoting at an election thereon. Such election shall be called and held in themanner provided bythe general bond law. The failure of the voters to approve the issuance of fullfaith and credit taxincrement bonds shall not prevent the city from issuing special obligationbonds pursuant toparagraph (1) of subsection (a). Any project plan adopted by a city prior tothe effective date ofthis act in accordance with K.S.A. 12-1772, and amendments thereto, shall notbe invalidated byany requirements of this act.

      (4)   During the progress of any major motorsports complex project in which theprojectcosts will be financed, in whole or in part, with the proceeds of full faithand credit tax incrementbonds, the city may issue temporary notes in the manner provided in K.S.A.10-123, andamendments thereto, to pay the project costs for the major motorsports complexproject. Suchtemporary notes shall not be issued and the city shall not acquire property inthe STAR bondproject area until the requirements of paragraph (2) or (3) of this subsection,whichever isapplicable, have been met.

      (5)   Full faith and credit tax increment bonds issued under this subsectionshall be generalobligations of the city and are declared to be negotiable instruments. Suchbonds shall be issuedin accordance with the general bond law. All such bonds and all income orinterest therefromshall be exempt from all state taxes except inheritance taxes. The amount ofthe full faith and credit tax increment bonds issued and outstanding whichexceeds 3% of the assessed valuation ofthe city shall be within the bonded debt limit applicable to such city.

      (6)   Any city issuing full faith and credit tax increment bonds under theprovisions of thissubsection may refund all or part of such issue pursuant to the provisions ofK.S.A. 10-116a, andamendments thereto.

      (c)   For each project financed with special obligation bonds payable from therevenues described in subsection (a)(1), the city or countyshall prepare and submit to the secretary by October 1 of each year, a reportdescribing the status of any projects within such STAR bond project area, anyexpenditures of the proceeds of special obligationbonds that have occurred since the last annual report and any expenditures ofthe proceeds of such bonds expected to occur in the future, including theamount of sales tax revenue, how such revenue has been spent, the projectedamount of such revenue and the anticipated use of such revenue. The departmentof commerce shall compile this information and submit a report annually to thegovernor, Kansas, Inc. and the legislature by February 1 of each year.

      (d)   A city or county may use the proceeds of special obligation bonds or anyuncommitted funds derived from sources set forth in this section to pay thebond project costs as defined inK.S.A. 2009 Supp.12-17,162, and amendmentsthereto, toimplement the STAR bond project plan.

      (e)   With respect to a STAR bond project district established prior to January1, 2003, for which, prior to January 1, 2003, the secretary made a finding asprovided in subsection (a) of this section that a STAR bond project wouldcreate a major tourism area for the state, such special obligation bonds shallbe payable both as to principal and interest, from a pledge of all of therevenue from any transient guest, state and local sales and use taxes collectedfrom taxpayers as provided in subsection (a) of this section whether or notrevenues from such taxes are received by the city.

      History:   L. 2007, ch. 179, § 10; July 1.