Our Vision

City Commission Considering STAR Bond District for K-10 Development

On Tuesday, Oct 13, the City Commission will be discussing a potential STAR bond district that bundles two very large, separate developments: the 1059 project at K-10 and Iowa, and the Beacon Landing project at K-10 and 6th St.  STAR (sales tax and revenue) bonds allow developers to take out municipal bonds to pay for the infrastructure needed for their development, and the developer is proposing $182 million in STAR bonds for these projects.

Sales taxes - New sales tax revenue generated in a STAR bond district is used to pay these bonds back. The benefit of this program is that most of that sales tax revenue would normally go to the State, and instead this sales tax revenue would be diverted directly to Lawrence to build roads and utilities for these new developments. The drawback of these bonds is that the City's portion of this new sales tax would also be diverted to this project for up to 20 years, rather than going to the City's general fund that supports the whole community. 

The City depends heavily on sales tax revenue. It makes up more than half of the City's tax revenues that pay for services required to maintain new development, such as police, fire, and road maintenance. The City has also struggled to collect enough new sales tax revenue to even keep up with inflation. They only anticipated a 2% increase in sales tax revenue this year, yet their revenues are actually down 0.7% from last year, while inflation has been 3.4% so far this year.

Costco sales tax - The Lawrence Journal World estimated that the City could expect to receive between $2 and $4 million in new annual revenue from Costco. The K-10 Development Group is requesting that Costco be included in this STAR bond district, which would mean that all this new sales tax generated by the Costco would be diverted from the City's general fund for up to 20 years. This revenue would instead be committed to paying for infrastructure that supports the K-10 Development Group's sprawling proposed development, estimated to be worth $1.3 billion. 

Costco is expected to open in a few short weeks and generate sales tax for Lawrence, regardless of the proposed STAR bond area. But the development group has asked the City to quickly form the STAR bond district before Costco opens, because the timing determines how much of Costco’s sales tax the district would capture.  

The City’s 2027 budget is predicated on receiving new sales tax revenue from Costco. The City anticipated 4% more sales tax in 2027 than it estimated in 2026, and the City isn't hitting this year's estimates (see above). 

The City has had to cut services multiple years in a row while also raising the property tax rate 6% in the last two years, increasing utility fees substantially, and receiving significantly more property tax revenue because of valuation increases since 2020. These facts beg the question -- can the City afford to forego Costco’s sales tax revenues for 20 years and divert them to this new development instead? 

Bundling two developments - The developer's tax incentive request bundles two developments that are miles apart, connecting them only by a thin, zig-zag line along City streets.

The southern 1059 project is proposed for the same location as the former New Boston Crossing proposal, which stalled for several years largely because it proposed building in a 100-year floodplain. Concerns about developing this area include increased risk of flooding, maintaining public infrastructure in a flood-prone area with a high water table, and impact on the adjacent Haskell-Baker wetlands. Additionally, the proposals for this area have not aligned with the City-County Comprehensive Plan, called Plan 2040, which will guide community growth for the next 14 years. 

The western Beacon Landing project carries far fewer of these risks and promises residential development that our community needs, yet the K-10 group's tax incentive application states that they would not begin development in this area until after the 1059 development was completed.

Bundling these two developments into one STAR bond district locks them together, which could pressure the City to accept both together rather than evaluate each one separately. Each development has its own proposed tourist attraction, which is an eligibility requirement for STAR bonds, so each area could be considered as an independent STAR bond district. Separating these two developments would let the City evaluate and vote on each development's tax incentives independently. For more info, read our coalition's analysis of their full tax incentive request submitted in June.

If you have opinions about this issue you'd like to share with the Commission, please email them before noon on Tuesday.