1152             1997 Session Laws of Kansas             Ch. 162

An Act concerning tourism activity; expanding the availability of tax increment financing
in support thereof; amending K.S.A. 1996 Supp. 12-1771 and 12-1774 and repealing the
existing sections.

Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 1996 Supp. 12-1771 is hereby amended to read as
follows: 12-1771. (a) No city shall exercise any of the powers conferred
by K.S.A. 12-1770 et seq., and amendments thereto, unless the governing
body of such city has adopted a resolution finding that the specific project
area sought to be redeveloped is a blighted area, a conservation area, a
major tourism area as defined in K.S.A. 12-774 and amendments thereto
or was designated prior to July 1, 1992, as an enterprise zone pursuant
to K.S.A. 12-17,110 prior to its repeal, and the conservation, development
or redevelopment of such area is necessary to promote the general and
economic welfare of such city. Enterprise zones designated prior to July
1, 1992, may be enlarged by the city to an area not exceeding 25% of the
city's land area upon a finding by the secretary of the department of
commerce and housing that a redevelopment project proposed by the city
which requires the enlargement is of statewide importance and that it
will meet the criteria specified in K.S.A. 12-1774 (a)(1)(D), and amend-
ments thereto. For the purpose of this subsection, the term ``blighted
area'' means an area which: (1) Because of the presence of a majority of
the following factors, substantially impairs or arrests the sound develop-
ment and growth of the municipality or constitutes an economic or social
liability or is a menace to the public health, safety, morals or welfare in
its present condition and use: (A) A substantial number of deteriorated
or deteriorating structures; (B) predominance of defective or inadequate
street layout; (C) unsanitary or unsafe conditions; (D) deterioration of site
improvements; (E) diversity of ownership; (F) tax or special assessment
delinquency exceeding the fair value of the land; (G) defective or unusual
conditions of title; (H) improper subdivision or obsolete platting or land
uses; (I) the existence of conditions which endanger life or property by
fire and other causes; or (J) conditions which create economic obsoles-
cence; or (2) has been identified by any state or federal environmental
agency as being environmentally contaminated to an extent that requires
a remedial investigation, feasibility study and remediation or other similar
state or federal action; or (3) previously was found by resolution of the
governing body to be a slum or a blighted area under K.S.A. 17-4742 et
seq., and amendments thereto.

For the purpose of this subsection, conservation area means any im-
proved area within the corporate limits of a city in which 50% or more
of the structures in the area have an age of 35 years or more, which area
is not yet blighted, but may become a blighted area due to the existence

Ch. 162             1997 Session Laws of Kansas             1153

of a combination of two or more of the following factors: (i) Dilapidation,
obsolescence or deterioration of the structures; (ii) illegal use of individual
structures; (iii) the presence of structures below minimum code stan-
dards; (iv) building abandonment; (v) excessive vacancies; (vi) overcrowd-
ing of structures and community facilities; or (vii) inadequate utilities and
infrastructure. Not more than 15% of the land area of a city may be found
to be a conservation area.

(b) The powers conferred upon cities under the provisions of K.S.A.
12-1770 et seq., and amendments thereto, shall be exercised by cities, as
determined by resolution adopted pursuant to K.S.A. 12-1772, and
amendments thereto, (1) in enterprise zones designated prior to July 1,
1992, including any area added to such enterprise zone after July 1, 1992,
pursuant to subsection (a), (2) in blighted areas of cities and counties
described by subsection (a)(2), (3) in conservation areas of cities, (4) in
major tourism areas as defined in K.S.A. 12-1774 and amendments thereto
or (4) (5) in blighted areas of cities, as determined by resolution adopted
pursuant to K.S.A. 17-4742 et seq., and amendments thereto.

(c) Within that portion of the city described in subsection (b), the
governing body of a city may establish a district to be known as a ``rede-
velopment district''. Within that portion of a city and county described in
subsection (b) excluding paragraph (3) of subsection (b), the governing
body of the city, upon written consent of the board of county commis-
sioners, may establish a district inclusive of land outside the boundaries
of the city to be known as a redevelopment district. In all such cases, the
board of county commissioners, prior to providing written consent, shall
be subject to the same procedure for public notice and hearing as is
required of a city pursuant to subsection (d) for the establishment of a
redevelopment district. One or more redevelopment projects may be un-
dertaken by a city within a redevelopment district after such redevelop-
ment district has been established in the manner provided by subsection
(d).

(d) Any city proposing to establish a redevelopment district shall
adopt a resolution stating that the city is considering the establishment
of a redevelopment district. Such resolution shall:

(1) Give notice that a public hearing will be held to consider the
establishment of a redevelopment district and fix the date, hour and place
of such public hearing;

(2) describe the proposed boundaries of the redevelopment district;

(3) describe a proposed comprehensive plan that identifies all of the
proposed redevelopment project areas and that identifies in a general
manner all of the buildings and facilities that are proposed to be con-
structed or improved in each redevelopment project area;

(4) state that a description and map of the proposed redevelopment
district are available for inspection at a time and place designated;

1154             1997 Session Laws of Kansas             Ch. 162

(5) state that the governing body will consider findings necessary for
the establishment of a redevelopment district.

Notice shall be given as provided in subsection (c) of K.S.A. 12-1772,
and amendments thereto.

(e) Upon the conclusion of the public hearing, the governing body
may adopt a resolution to make any findings required by subsection (a)
and may establish the redevelopment district by ordinance. Such reso-
lution shall contain a comprehensive plan that identifies all of the pro-
posed redevelopment project areas and identifies in a general manner all
of the buildings and facilities that are proposed to be constructed or im-
proved in each redevelopment project area. The boundaries of such dis-
trict shall not include any area not designated in the notice required by
subsection (d). Any addition of area to the redevelopment district or any
substantial change to the comprehensive plan shall be subject to the same
procedure for public notice and hearing as is required for the establish-
ment of the district.

(f) No privately owned property subject to ad valorem taxes shall be
acquired and redeveloped under the provisions of K.S.A. 12-1770 et seq.,
and amendments thereto, if the board of county commissioners or the
board of education levying taxes on such property determines by reso-
lution adopted within 30 days following the conclusion of the hearing for
the establishment of the redevelopment district required by subsection
(d) that the proposed redevelopment district will have an adverse effect
on such county or school district.

(g) Any redevelopment plan undertaken within the redevelopment
district may be in separate development stages. Each plan shall be
adopted according to the provisions of K.S.A. 12-1772, and amendments
thereto, and shall fix a date for completion. Except as provided herein,
any project shall be completed within 20 years from the date of the es-
tablishment of the redevelopment district. Projects relating to environ-
mental investigation and remediation under subsection (i) shall be com-
pleted within 20 years from the date a city enters into a consent decree
agreement with the Kansas department of health and environment or the
United States environmental protection agency.

(h) Any increment in ad valorem property taxes resulting from a re-
development district undertaken in accordance with the provisions of this
act, shall be apportioned to a special fund for the payment of the cost of
the redevelopment project, including the payment of principal and inter-
est on any special obligation bonds or full faith and credit tax increment
bonds issued to finance such project pursuant to this act and may be
pledged to the payment of principal and interest on such bonds. The
maximum maturity on bonds issued to finance projects pursuant to this
act shall not exceed 20 years. For the purposes of this act, ``increment''
means that amount of ad valorem taxes collected from real property lo-
cated within the redevelopment district that is in excess of the amount

Ch. 162             1997 Session Laws of Kansas             1155

which is produced from such property and attributable to the assessed
valuation of such property prior to the date the redevelopment district
was established, as determined under the provisions of K.S.A. 12-1775,
and amendments thereto.

(i) The governing body of a city, in contracts entered into with the
Kansas department of health and environment or the United States en-
vironmental protection agency, may pledge increments receivable in fu-
ture years to pay costs directly relating to the investigation and remedi-
ation of environmentally contaminated areas. The provisions in such
contracts pertaining to pledging increments in future years shall not be
subject to K.S.A. 10-1101 et seq. or 79-2925 et seq., and amendments
thereto.

(j) Before any redevelopment project is undertaken, a comprehensive
feasibility study, which shows the benefits derived from such project will
exceed the costs and that the income therefrom will be sufficient to pay
for the project shall be prepared. Such feasibility study shall be an open
public record.

Sec. 2. K.S.A. 1996 Supp. 12-1774 is hereby amended to read as
follows: 12-1774. (a) (1) Any city shall have the power to issue special
obligation bonds to finance the undertaking of any redevelopment project
in accordance with the provisions of this act. Such special obligation bonds
shall be made payable, both as to principal and interest:

(A) From property tax increments allocated to, and paid into a special
fund of the city under the provisions of K.S.A. 12-1775, and amendments
thereto;

(B) from revenues of the city derived from or held in connection with
the undertaking and carrying out of any redevelopment project or projects
under this act;

(C) from any private sources, contributions or other financial assis-
tance from the state or federal government;

(D) from a pledge of a portion or all of the revenue received by the
city from transient guest, sales and use taxes collected pursuant to K.S.A.
12-1696 et seq., 79-3601 et seq., 79-3701 et seq. and 12-187 et seq., and
amendments thereto, and which are collected from taxpayers doing busi-
ness within that portion of the city's redevelopment district established
pursuant to K.S.A. 12-1771, and amendments thereto, occupied by a re-
development project if there first is a finding by the secretary of com-
merce and housing that the redevelopment project is of statewide as well
as local importance or will create a major tourism area for the state. In
making such a finding that a redevelopment project is of statewide as well
as local importance, the secretary must conclude at least: (i) That capital
improvements costing not less than $300,000,000 will be built in the state
for such redevelopment project; and (ii) not less than 1,500 permanent
and seasonal employment positions as defined by K.S.A. 74-50,114, and

1156             1997 Session Laws of Kansas             Ch. 162

amendments thereto, will be created in the state by such redevelopment
project. In making a finding that a redevelopment project will create a
major tourism area within the state, the secretary must conclude at least:
(i) That capital improvements costing not less than $100,000,000 will
be built in the state to construct a project for such major tourism area;
and (ii) that the project constructed will be designated within the stan-
dard industrial classification code 7948-0201;

(E) (i) from a pledge of a portion or all increased revenue received
by the city from franchise fees collected from utilities and other busi-
nesses using public right-of-way within the redevelopment district; (ii)
from a pledge of a portion or all of the revenue received by the city from
sales taxes collected pursuant to K.S.A. 12-187, and amendments thereto;
or

(F) by any combination of these methods.

The city may pledge such revenue to the repayment of such special
obligation bonds prior to, simultaneously with, or subsequent to the is-
suance of such special obligation bonds.

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

(3) Bonds issued under the provisions of paragraph (1) of this sub-
section shall be special obligations of the city and are declared to be
negotiable instruments. They shall be executed by the mayor and clerk
of the city and sealed with the corporate seal of the city. All details per-
taining to the issuance of such special obligation bonds and terms and
conditions thereof shall be determined by ordinance of the city. All special
obligation bonds issued pursuant to this act and all income or interest
therefrom shall be exempt from all state taxes except inheritance taxes.
Such special obligation bonds shall contain none of the recitals set forth
in K.S.A. 10-112, and amendments thereto. Such special obligation bonds
shall, however, contain the following recitals, viz., the authority under
which such special obligation bonds are issued, they are in conformity
with the provisions, restrictions and limitations thereof, and that such
special obligation bonds and the interest thereon are to be paid from the
money and revenue received as provided in paragraph (1) of this subsec-
tion.

(b) (1) Subject to the provisions of paragraph (2) of this subsection,
any city shall have the power to issue full faith and credit tax increment
bonds to finance the undertaking of any redevelopment project in accord-
ance with the provisions of K.S.A. 12-1770 et seq., and amendments
thereto other than a project determined by the secretary of commerce
and housing to be of statewide as well as local importance and to meet
the other criteria specified in K.S.A. 12-1774 (a)(1)(D), and amendments

Ch. 162             1997 Session Laws of Kansas             1157

thereto. Such full faith and credit tax increment bonds shall be made
payable, both as to principal and interest: (A) From the revenue sources
identified in paragraph (1)(A), (B), (C), (D) and (E) of subsection (a) or
by any combination of these sources; and (B) subject to the provisions of
paragraph (2) of this subsection, from a pledge of the city's full faith and
credit to use its ad valorem taxing authority for repayment thereof in the
event all other authorized sources of revenue are not sufficient.

(2) Except as provided in paragraph (3) of this subsection, before the
governing body of any city proposes to issue full faith and credit tax in-
crement bonds as authorized by this subsection, the feasibility study re-
quired by K.S.A. 12-1771, and amendments thereto, shall demonstrate
that the benefits derived from the project will exceed the cost and that
the income therefrom will be sufficient to pay the costs of the project.
No full faith and credit tax increment bonds shall be issued unless the
governing body states in the resolution required by K.S.A. 12-1772, and
amendments thereto, that it may issue such bonds to finance the proposed
redevelopment project. The governing body may issue the bonds unless
within 60 days following the date of the public hearing on the proposed
redevelopment plan a protest petition signed by 3% of the qualified voters
of the city is filed with the city clerk in accordance with the provisions of
K.S.A. 25-3601 et seq., and amendments thereto. If a sufficient petition
is filed, no full faith and credit tax increment bonds shall be issued until
the issuance of the bonds is approved by a majority of the voters voting
at an election thereon. Such election shall be called and held in the man-
ner provided by the general bond law. The failure of the voters to approve
the issuance of full faith and credit tax increment bonds shall not prevent
the city from issuing special obligation bonds in accordance with K.S.A.
12-1774, and amendments thereto. No such election shall be held in the
event the board of county commissioners or the board of education de-
termines, as provided in K.S.A. 12-1771, and amendments thereto, that
the proposed redevelopment district will have an adverse effect on the
county or school district.

(3) As an alternative to paragraph (2) of this subsection, any city which
adopts a redevelopment plan but does not state its intent to issue full
faith and credit tax increment bonds in the resolution required by K.S.A.
12-1772, and amendments thereto, and has not acquired property in the
redevelopment project area may issue full faith and credit tax increment
bonds if the governing body of the city adopts a resolution stating its intent
to issue the bonds and the issuance of the bonds is approved by a majority
of the voters voting at an election thereon. Such election shall be called
and held in the manner provided by the general bond law. The failure of
the voters to approve the issuance of full faith and credit tax increment
bonds shall not prevent the city from issuing special obligation bonds
pursuant to paragraph (1) of subsection (a). Any redevelopment plan
adopted by a city prior to the effective date of this act in accordance with

1158             1997 Session Laws of Kansas             Ch. 162

K.S.A. 12-1772, and amendments thereto, shall not be invalidated by any
requirements of this act.

(4) During the progress of any redevelopment project in which the
city's costs will be financed, in whole or in part, with the proceeds of full
faith and credit tax increment bonds, the city may issue temporary notes
in the manner provided in K.S.A. 10-123, and amendments thereto, to
pay the city's cost for the project. Such temporary notes shall not be issued
and the city shall not acquire property in the redevelopment project area
until the requirements of paragraph (2) or (3) of this subsection, which-
ever is applicable, have been met.

(5) Full faith and credit tax increment bonds issued under this sub-
section shall be general obligations of the city and are declared to be
negotiable instruments. They shall be issued in accordance with the gen-
eral bond law. All such bonds and all income or interest therefrom shall
be exempt from all state taxes except inheritance taxes. The amount of
the full faith and credit tax increment bonds issued and outstanding which
exceeds 3% of the assessed valuation of the city shall be within the bonded
debt limit applicable to such city.

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

Sec. 3. K.S.A. 1996 Supp. 12-1771 and 12-1774 are hereby repealed.

Sec. 4. This act shall take effect and be in force from and after its
publication in the Kansas register.

Approved May 9, 1997.

Published in the Kansas Register: May 15, 1997.