A theme park spotlighting famous toys including the Barbie brand and Hot Wheels is slated to come to Kansas powered by the state’s sales tax incentive for major developments.
Bonner Springs officials in October approved a large tax incentive package to help the $540 million development of Mattel Adventure Park in Wyandotte County.
The park will be built near an entertainment district in Kansas City, Kansas. That area already features shopping and sports venues, and it will likely be the new home of the Kansas City Chiefs new $3 billion stadium.
It’s another major development project to which the state has committed future tax revenue through the Sales and Tax Revenue incentive, also known as STAR bonds. Those are loans secured by a municipality that are paid off through state and local sales tax revenue generated by the project. Sales taxes collected in the special district go to paying back the bonds instead of being collected by governments.
But if a project were to fail, municipalities do not have to guarantee the bonds, meaning the investors who provided the loan may ultimately be on the hook for them — not taxpayers or the developers. That’s what happened when a STAR bond project in Overland Park defaulted on its loan, according to the Kansas City Star.
State officials have also argued that STAR bonds create new tax revenue to fund the projects and do not use existing dollars.
But Zach Mohr, a public finance expert at the University of Kansas, said these kinds of major developments are still tying up the state’s future revenue.
“These projects are committing the state to lots and lots of money,” Mohr said.
Bonner Springs pledged about $220 million to the theme park construction, $175 million of that will come from STAR bonds.
Mayor Tom Stephens said the Bonner Springs community is cautiously optimistic about the project that could bring many thousands of visitors to the small community.
But the benefit to the city cannot be ignored. He said the city expects the project to nearly double its taxable property value.
“(It) will lead to a lot of property tax relief for our constituents out here in Bonner,” Stephens said.
Barbies and Hot Wheels
Developers told the city that the project consists of the theme park, an indoor rainforest, retail space and hotels.
The theme park will feature a Barbie Beach House, where visitors can build custom Barbie dolls, and a Hot Wheels rollercoaster, among several other toy-branded attractions. The developers estimate the development will create $190 million of annual revenue.
Stephens said construction may begin in 2027 and the theme park could open in 2031. That’s the same year the Chiefs expect to open a new stadium in the same area.
The project will be built on the northwest corner of Bonner Springs city limits, which is adjacent to The Legends, a regional shopping mall and commercial area in the Village West development in Kansas City, Kansas. That’s also the home of the Kansas Speedway and Sporting Kansas City’s soccer stadium — two other projects funded through STAR bonds.
Stephens said the location of the Mattel park should protect the core of Bonner Springs from losing its small-town identity. Yet, the city may benefit greatly from increased property tax revenue.
The city expects the entire property to reach a $500 million assessed value. Stephens said commercial real estate is taxed at 25% of its appraised value, so $125 million would be taxable by the city, county and school district. That would add a considerable amount of property tax revenue to each entity.
“The project would have not come to fruition had there not been incentives,” Stephens said, “which means you would have lost out on all of that.”
But the cost for the project must come from somewhere, and that will likely be diverting money from the state’s pocketbook.
Cost to Kansas
Mohr, an associate professor for the University of Kansas School of Public Affairs, said the state levies its sales tax at a higher rate than any one community, meaning its chunk of the tax will mostly cover the bond cost.
But the state is already on the hook for several other STAR bond projects.
The park may inspire visitors to purchase more toys made by Mattel, which would lead to an increase in sales tax revenue to help pay for the project. But the other projects have added to the state’s future costs.
The Kansas Department of Commerce reported last year that the state is paying off hundreds of millions of bonds for various projects throughout the state. Mohr said the state may soon hit a tipping point.
“Are we going to be able to continue to sustain projects not only of that size, but even larger?” he said. “I think that’s a real unknown."
Mohr said the tax incentive’s ability to capture increased sales tax may soon be outdated. He noted that the idea of the projects is to create more economic activity in the area around the projects.
But more consumers are turning to online shopping. That could lead to a significant number of theme parks visitors to purchase things like toys online — possibly even after they’ve already left the state.
That would result in Kansas missing out some of the expected increase in sales tax revenue.
“There is a lot of risk with all of these projects,” Mohr said.
Dylan Lysen reports on social services and criminal justice for the Kansas News Service. You can email him at dlysen (at) kcur (dot) org.
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