TIF Financing Options: The Pros and Cons for Kansas Developers

When a Kansas developer secures a TIF Bond, they have options for monetizing it. Understanding these options helps municipal leaders have more informed conversations with the developers proposing projects in their communities. Here is a breakdown of the three primary paths and why selling the bond to Hageman Capital typically delivers the best outcome for everyone involved.

Option 1: Hold the Bond and Collect Increment Over Time

A developer can hold the TIF Bond and receive payments as tax increment is collected each year. This captures the full face value over time, but the developer does not receive capital when they need it most — during construction. Kansas TIF bonds can run up to 20 years, meaning the developer would wait two decades for full repayment while construction costs are front-loaded. For most developers, tying up capital in a long-duration receivable is financially inefficient.

Option 2: Borrow Against the Bond

A developer can use the TIF Bond as collateral for a loan. This provides some upfront liquidity but at a discount — lenders will not advance full value, and interest on the loan adds cost. The developer retains the ongoing loan relationship and the bond’s value is subject to the lender’s risk assessment. This approach introduces complexity that many developers prefer to avoid when a cleaner option exists.

Option 3: Sell the Bond to Hageman Capital

Hageman Capital purchases developer-backed TIF Bonds, providing the developer with upfront cash at closing. No ongoing loan to manage, no interest accruing, no uncertainty about future collections. The developer trades a 20-year receivable for day-one capital that can be applied to the construction budget. Kansas’s multi-revenue-stream TIF framework — ad valorem increment, local sales tax, and franchise fees — can enhance the bond’s value, and the Taxpayer Agreement Act’s enforceable guarantees support competitive purchase pricing.

Why This Matters for Municipal Leaders

When a developer plans to sell their TIF Bond to Hageman Capital, it signals several positive things: the deal has a clear capital strategy, the bond structure is sound enough to attract a third-party purchaser, and the project has financing certainty at closing. For municipalities, a completed project that generates assessed value and increment on schedule is the best outcome — and the financing path that maximizes that likelihood is the one where the developer has upfront capital.

The Taxpayer Agreement Strengthens Every Option

HB 2737’s taxpayer agreement creates enforceable security that supports the bond regardless of which path the developer chooses — but it is especially valuable for bond sales, where the developer guarantee directly supports the purchase price. Hageman Capital works with both municipalities and developers to structure Kansas TIF Bonds that maximize value for all parties. Connect with our team to learn more.