Nuances of Developer Backed TIF Deployment in Kansas

Kansas has long been one of the most developer-friendly TIF environments in the region, with a statutory framework under KSA 12-1770 et seq. that allows cities to capture ad valorem property tax increment, local sales tax, and franchise fee revenue to fund eligible public infrastructure costs. In April 2026, Governor Laura Kelly signed House Bill 2737 — the Taxpayer Agreement Act — adding a powerful new layer to this already strong foundation. For municipal leaders across Kansas, this legislation opens the door to developer-backed TIF Bonds with enforceable guarantees that shift financial risk decisively away from the municipality.

What the Taxpayer Agreement Act Changes

Kansas cities have issued special obligation TIF bonds under KSA 12-1774(a) for years — bonds payable solely from pledged increment and other revenues, without backing from the city’s general credit. What HB 2737 adds is the taxpayer agreement: a voluntary, binding contractual obligation where the developer guarantees payments in connection with ad valorem taxes on the project area. Delinquent payments under a taxpayer agreement are enforceable with the same priority as delinquent real estate taxes — the strongest collection remedy available under Kansas law. The Act also authorizes conduit bond issuance, where the city has no obligation to advance funds, levy taxes, or appropriate money for repayment.

How Kansas TIF Compares to Other State Incentives

Kansas municipalities have access to a robust incentive toolkit. STAR Bonds can finance major tourism and entertainment destinations with sales tax revenue. Industrial Revenue Bonds provide tax-exempt financing for manufacturing and industrial projects. The PEAK program offers income tax credits for job creation. Tax abatements reduce property tax obligations for qualifying businesses. Each tool has a specific niche, but developer-backed TIF Bonds offer advantages the others do not: TIF generates long-term tax base growth rather than reducing it, captures revenue that would not exist without the project, and under HB 2737 carries zero municipal credit exposure. Unlike STAR Bonds, TIF is available for a wide range of project types beyond tourism. Unlike tax abatements, TIF does not reduce revenue flowing to schools and services.

Special Obligation Bonds vs. Full Faith and Credit

Kansas TIF law authorizes both special obligation bonds and full faith and credit bonds. Special obligation bonds — the focus of developer-backed transactions — are payable solely from pledged revenues. If the increment falls short, the city is not obligated to cover the gap from its own resources. Full faith and credit bonds pledge the city’s general taxing power as additional security, offering lower interest rates but exposing the municipality to financial risk. For individual developer-driven projects, special obligation bonds with taxpayer agreements provide the optimal balance: enforceable developer guarantees without municipal credit exposure.

Evaluating Project Feasibility

Kansas requires a feasibility study before TIF can be approved, demonstrating the project would not proceed “but for” TIF assistance. The study must include projected TIF-eligible costs, estimated tax increment revenues, a cost-benefit analysis, and a relocation assistance plan. The governing body must adopt the project plan by a two-thirds supermajority — a higher threshold reflecting the significance of the decision. For developer-backed transactions, the feasibility analysis should also evaluate the developer’s financial capacity to honor the taxpayer agreement guarantee and confirm the projected increment provides adequate debt service coverage.

Working With Developers on Terms

The redevelopment agreement is the central contract. Key provisions include the developer’s construction obligations and timeline, TIF-eligible cost caps (remembering that Kansas TIF cannot fund privately owned building construction), the taxpayer agreement terms, and default remedies. HB 2737 requires written consent from each existing mortgage holder before a taxpayer agreement is executed — a practical step that should be addressed early in negotiations to avoid closing delays.

TIF as a Community Growth Engine

Developer-backed TIF Bonds create a repeatable model for turning blighted, conservation, or aging areas into productive tax base. Every completed project adds assessed value that, after the 20-year TIF period ends, flows permanently to all taxing jurisdictions — with school district and state mill levies protected throughout. Hageman Capital is the capital provider that purchases these bonds, and we serve as a free resource for Kansas municipal leaders navigating this new framework. Connect with our team to explore what developer-backed TIF Bonds can do for your city.