KSHB 41 reporter Charlie Keegan covers politics in Kansas, Missouri and at the local level. Share your story idea with Charlie.
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Plans to pay off a bond used to fund the Prairiefire shopping center in Overland Park, Kansas, hit a snag in December.
UMB Bank, the trustee for the community improvement district [CID] bond, confirmed with KSHB 41 News it alerted bondholders that a payment was missed. The Prairiefire project previously defaulted on a STAR bond payment.
The project used STAR bonds, or sales tax and revenue bonds, to cover more than $60 million in 2012. The CID bond added several million dollars to the project.
Kansas has used the STAR bond funding model for the Kansas Speedway, Sporting Park, and other projects. It plans to use the same approach on paying for the Chiefs new stadium in Kansas.
STAR and CID bonds rely on sales taxes generated in and around the new development to pay off the bond.
A commercial real estate agent told KSHB 41 News Prairiefire has frankly experienced bad luck. A grocery store backed out of plans to open, leaving a vacant storefront. Pinstripes filed for bankruptcy nationally, resulting in closing its location at Prairiefire. And the COVID pandemic changed in-person shopping.
Fred Merrill of Merrill Companies, which owns Prairiefire, said business is operating as usual at the shopping center; saying the missed payments have no impact on the shopping center.
Merrill said 810 Entertainment will replace the Pinstripes location in February or March and the property is 98 percent rented.
“I’m a big supporter and I hope everyone else is too because we want it to succeed,” explained Susan Heenan, who was seeing a movie at the Prairiefire theater Friday.
City and state leaders said they are not responsible for covering any missed or delayed payments. They say bondholders shoulder the risk if it takes projects longer to pay back the loan or if projects are unable to pay back the bond.
“The bonds will be sold, the STAR bonds, so you'll have bondholders, they're the ones that have the liability, not the taxpayer,” Senate President Ty Masterson (R - Andover) explained.
A statement from the city of Overland Park reiterated that approach.
“The City is aware of the default of the Prairiefire CID Bonds due to outstanding principal debts. The CID bonds are not a general obligation bond, nor are they a City debt. The City does not have an obligation to repay these bonds. The trustee for the Prairiefire CID Bonds will direct all actions related to the defaulted bonds.”
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