Kansas’s Taxpayer Agreement Act (HB 2737) introduces instruments that materially change the risk analysis for TIF-supported projects. For municipal financial advisors evaluating bond structures, this overview covers the key statutory provisions under both the existing TIF Act and the new legislation.
Kansas TIF Framework at a Glance
Special obligation bonds under KSA 12-1774(a) are payable from ad valorem increment, local sales and use tax increment, franchise fees, and redevelopment agreement payments. The 20 mills for school districts and 1.5 mills for the state are excluded from capture. Eligible areas include blighted areas, conservation areas (50%+ structures 35+ years old), buildings 65+ years old, and several specialized categories. A feasibility study and two-thirds supermajority vote are required.
What HB 2737 Adds
Taxpayer agreements create binding developer guarantees enforceable as delinquent real estate taxes. Written consent from existing mortgage holders is required before execution. Conduit bonds are payable solely from pledged security with no city obligation to advance funds. These instruments do not constitute public debt or count against statutory debt limitations. For your analysis, this means developer-backed TIF bonds under HB 2737 carry zero municipal recourse, with enforceable security that traditional special obligation bonds lacked.
Key Modeling Considerations
Your projections should model ad valorem increment, any pledged sales tax and franchise fee revenue, development timeline risk, assessment appeals, and the developer’s financial capacity to honor the taxpayer agreement guarantee. Coverage ratios should account for the multi-revenue-stream nature of Kansas TIF. The feasibility study requirement provides a formal framework for documenting these projections.
Hageman Capital as a Technical Resource
We work alongside Kansas financial advisors as a specialized TIF resource at no cost. Connect with our team for a technical consultation.
For Kansas municipal financial advisors, structuring a TIF Bond that a capital provider can purchase is the technical exercise that determines whether a developer-backed transaction delivers its intended benefits. Here is the framework for structuring special obligation TIF Bonds under KSA 12-1774(a) with taxpayer agreements under HB 2737 that Hageman Capital can purchase.
Bond Structure Requirements
Hageman Capital purchases special obligation bonds structured as private placements — non-recourse to the city, payable from pledged ad valorem increment (excluding 20 mills for school districts and 1.5 mills for the state), local sales tax increment, franchise fees, and secured by a taxpayer agreement. Key parameters include amortization schedule, interest rate, maturity (within the 20-year TIF period), and coverage ratio. Kansas’s multi-revenue-stream framework provides layered security that enhances the bond’s value — but each stream must be modeled independently with conservative assumptions.
The Taxpayer Agreement as Security
Under HB 2737, the taxpayer agreement creates a binding guarantee enforceable as delinquent real estate taxes. Written consent from existing mortgage holders is required before execution. The agreement does not constitute public debt, does not pledge the city’s credit, and does not count against debt limitations. For capital provider underwriting, the key evaluation points are the developer’s financial capacity, the guarantee calculation methodology, and the enforceability provisions. The mortgage holder consent requirement should be factored into your closing timeline.
Increment Modeling for Multi-Stream Revenue
Your model should project ad valorem increment (excluding protected mill levies), local sales tax increment (if pledged — at the governing body’s discretion), and franchise fee revenue separately. Account for development timeline risk, assessment lag, sales tax volatility, and tenant occupancy assumptions. The feasibility study must document these projections and demonstrate the but-for case. Hageman Capital’s underwriting team reviews projections independently, but a well-documented, conservative model streamlines the process.
Coordinating Bond Documents
Documentation includes the bond resolution, the bond or note, the redevelopment agreement, the taxpayer agreement, the security agreement pledging revenues, and bond counsel’s opinion. The two-thirds supermajority vote must adopt the project plan before bonds are issued. Bond counsel should verify statutory compliance with both KSA 12-1770 and HB 2737, including the eligible area designation, feasibility study requirements, and taxpayer agreement recording provisions.
Engage Hageman Capital During Structuring
Having the capital provider at the table during structuring prevents costly rework after governing body approval. Hageman Capital provides guidance on coverage expectations, multi-stream revenue pledging, taxpayer agreement terms, and timing — at no cost to the municipality. Connect with Whitney Peterson for a technical consultation on the transaction in front of you.
When a TIF Bond resolution comes before your Kansas city council, the structuring details determine whether the deal delivers real value while protecting public funds. Understanding how TIF Bonds are structured for capital provider purchase helps you evaluate the deal in front of you.
How Developer-Backed TIF Bond Sales Work in Kansas
The city issues a special obligation bond to the developer, who sells it to Hageman Capital for upfront construction cash. The bond is repaid from ad valorem increment, sales tax, and franchise fees. The developer’s taxpayer agreement under HB 2737 guarantees any shortfall — enforceable as delinquent real estate taxes. The city issues the bond as a conduit with no obligation to advance funds. No public debt is created.
What to Look for Before Your Vote
Focus on several elements: Does the feasibility study demonstrate a genuine but-for case? Does the projected multi-stream revenue cover debt service with a reasonable cushion? Has the developer signed a taxpayer agreement with clear guarantee terms? Has written mortgage holder consent been obtained? Has a capital provider been identified? Is the project plan consistent with the city’s comprehensive plan, as confirmed by the planning commission? You do not need to evaluate the modeling yourself, but you should confirm that qualified professionals are satisfied with the structure.
Why the Capital Provider’s Involvement Matters
When Hageman Capital is willing to purchase the bond, it means an independent third party has validated the deal’s soundness. That should give you additional confidence. The two-thirds supermajority threshold exists because TIF decisions are significant — the involvement of experienced capital providers helps ensure that significance is matched by quality structuring.
Hageman Capital provides free educational support to Kansas council members. Connect with Whitney Peterson for a no-obligation conversation before your next vote.
For Kansas ED Directors, structuring a TIF Bond that a capital provider can purchase is where your deal-making expertise has the most impact. Here is how to structure special obligation TIF Bonds under KSA 12-1774(a) with taxpayer agreements under HB 2737 that Hageman Capital can purchase.
Structural Requirements for Bond Purchase
The bond should be a private placement issued by the city directly to the developer, non-recourse to the city, secured by pledged ad valorem increment, sales tax, franchise fees, and a taxpayer agreement. The feasibility study must demonstrate the but-for case, and the projected multi-stream revenue must provide adequate debt service coverage. The developer needs financial capacity to support the guarantee, and written mortgage holder consent must be obtained per HB 2737.
Building the Redevelopment Agreement
The redevelopment agreement should include clear TIF-eligible cost identification (remembering Kansas prohibits funding private building construction), enforceable construction milestones, a strong taxpayer agreement with explicit shortfall calculations, financial reporting obligations, and default remedies. The planning commission must find the project plan consistent with the comprehensive plan before the governing body votes.
Engage Hageman Capital During Structuring
The most efficient deals have the capital provider at the table from the start. Hageman Capital provides guidance on coverage ratios, amortization structures, taxpayer agreement terms, and multi-revenue-stream pledging during the negotiation phase — preventing costly restructuring after the two-thirds supermajority vote.
The Competitive Advantage
ED Directors who can offer developers a clear, tested path from incentive approval to day-one capital win projects that other cities lose. Hageman Capital is available as a free structuring resource. Connect with Whitney Peterson to discuss your pipeline.
For Kansas mayors championing TIF-supported development, the ultimate goal is a completed project that grows the tax base without exposing your city to risk. Achieving that depends on whether the TIF Bond is structured so a capital provider like Hageman Capital can purchase it from the developer. Here is what that means for your role.
What Makes a Kansas TIF Bond Purchasable
Hageman Capital purchases special obligation TIF Bonds structured as private placements, non-recourse to the city, secured by pledged increment and a taxpayer agreement under HB 2737. The projected revenue (ad valorem, sales tax, and franchise fees) must demonstrate sufficient coverage over debt service. The developer must have financial capacity to honor the taxpayer agreement guarantee, and written mortgage holder consent must be obtained. When these elements are in place, the developer receives competitive upfront capital at closing.
Your Role in Getting the Structure Right
You will not draft bond documents — that is the work of your ED team, financial advisors, and bond counsel. Your role is to ensure the right professionals are engaged, the feasibility study is thorough, and the governing body has the information needed for the two-thirds supermajority vote. When Hageman Capital is identified early as the capital provider, it gives everyone involved — the developer, the lender, and your council — certainty that the deal has been vetted by professionals who purchase these bonds for a living.
The Outcome
When structured correctly: the developer sells the bond to Hageman Capital and receives upfront cash, the city issues the bond as a conduit with zero credit exposure, the project gets built, and the tax base grows. School district and state mill levies are protected throughout. When the 20-year TIF period ends, all revenue flows permanently to every taxing jurisdiction.
Hageman Capital helps Kansas mayors ensure their TIF projects achieve this outcome — at no cost. Connect with Whitney Peterson to get the structure right for your community.
Kansas’s Taxpayer Agreement Act introduces enforceable developer guarantees and conduit bond authority that strengthen the financial advisor’s toolkit — but careful analysis remains essential. Here are the pitfalls Hageman Capital sees financial advisors encounter most frequently.
Pitfall 1: Over-Relying on Multi-Revenue-Stream Projections
Kansas TIF uniquely allows pledging ad valorem increment, local sales tax, and franchise fees. While multiple revenue streams strengthen the bond, each stream carries different risk characteristics. Sales tax revenue is more volatile than property tax increment and depends on tenant mix and consumer spending patterns. Model each stream independently with conservative assumptions rather than blending them into an overly optimistic aggregate projection.
Pitfall 2: Not Evaluating the Developer’s Capacity for the Taxpayer Agreement
The taxpayer agreement is enforceable as delinquent real estate taxes — but collection depends on the developer having assets to collect against. Evaluate the developer’s balance sheet, existing commitments, and capacity to service the guarantee alongside their other obligations. A taxpayer agreement from an undercapitalized developer provides less practical security than the statutory framework implies.
Pitfall 3: Overlooking the Mortgage Holder Consent Requirement
HB 2737 requires written consent from each existing mortgage holder before a taxpayer agreement is executed. If this is not factored into your timeline, it can delay closing significantly. Flag this requirement early and verify compliance before the bond issuance date.
Pitfall 4: Ignoring the Protected Mill Levy Carve-Outs
The 20 mills for school districts and 1.5 mills for the state cannot be captured by TIF. Your increment projection must exclude these amounts — failure to do so will overstate available revenue and undermine the feasibility analysis. Verify the applicable levy rates with the county before finalizing projections.
Pitfall 5: Treating the Feasibility Study as a Formality
The feasibility study is a statutory requirement that the governing body and public will scrutinize. It must genuinely demonstrate the but-for case, project costs and revenues accurately, and include a cost-benefit analysis. A weak study creates legal risk and undermines the governing body’s confidence in your recommendation.
Kansas requires a two-thirds supermajority to approve a TIF project plan — reflecting the significance of the decision. Before casting that vote, here are the common pitfalls council members should watch for.
Pitfall 1: Voting Without Understanding the Structure
TIF is complex, and the Taxpayer Agreement Act adds new instruments. Before voting, make sure you understand how the increment is calculated, what the taxpayer agreement guarantees, how the conduit bond structure insulates the city, and what the feasibility study demonstrates. Ask for a briefing if the materials are unclear.
Pitfall 2: Believing TIF Hurts Schools
In Kansas, the 20 mills for school districts and 1.5 mills for the state are explicitly protected from TIF capture. Base year taxes continue flowing to all jurisdictions. TIF captures only the new increment — revenue that would not exist without the project. If a constituent claims TIF takes money from schools, this is the fact that corrects the misconception.
Pitfall 3: Not Reviewing the Feasibility Study
The feasibility study is your primary analytical tool. It must demonstrate the project would not proceed without TIF, project the increment, estimate costs, and include a cost-benefit analysis. If the study is weak or the but-for case is unconvincing, that is a red flag — regardless of how attractive the project appears.
Pitfall 4: Ignoring Constituent Communication
Public hearings are required before both the redevelopment district and project plan votes. Use these as opportunities to educate, not just comply. Prepare talking points that address the most common concerns: no new taxes, school funding protected, developer bears the risk, city carries no debt.
Pitfall 5: No Ongoing Oversight
After approval, ensure the city monitors construction progress, increment performance, and compliance with the redevelopment agreement. Your oversight role continues after the vote.
Kansas Economic Development Directors now have one of the strongest TIF frameworks in the country. But deploying developer-backed TIF Bonds under HB 2737 effectively requires avoiding several common missteps. Here are the pitfalls Hageman Capital sees most often.
Pitfall 1: Skipping the Feasibility Study Details
Kansas’s feasibility study requirement is detailed — it must address the but-for test, project costs, projected increment, a cost-benefit analysis, and a relocation assistance plan. Treating this as a box-checking exercise rather than a genuine analysis undermines your credibility with the governing body and creates legal risk. Invest in a thorough study and use it as the foundation of your deal presentation.
Pitfall 2: Misunderstanding What TIF Can Pay For
Kansas TIF cannot fund construction of privately owned buildings — the most critical limitation in the statute. TIF is limited to public infrastructure and site preparation: land acquisition, demolition, streets, utilities, parking structures, environmental remediation, and similar costs. If the developer’s TIF-eligible costs are primarily vertical construction, the deal will not work under Kansas law. Confirm eligible costs early and ensure the developer understands this boundary.
Pitfall 3: Not Securing Mortgage Holder Consent Early
HB 2737 requires written consent from each existing mortgage holder before a taxpayer agreement is executed. If this is not addressed until late in the process, it can delay or derail closing. Identify all existing liens on the property and initiate the consent process as soon as the taxpayer agreement is being negotiated.
Pitfall 4: Failing to Prepare the Governing Body for the Supermajority Vote
The two-thirds supermajority requirement means you need broader support than a simple majority. Brief council members individually before the hearing, provide clear materials on the deal structure and community benefits, and prepare answers to the questions constituents will ask. A well-prepared governing body votes confidently; a surprised one does not.
Pitfall 5: Structuring Without a Capital Partner
A developer-backed TIF Bond only delivers upfront capital if a buyer is identified. Engaging Hageman Capital early ensures the bond is structured to meet purchase criteria from the start. Request a meeting with Whitney Peterson and let’s structure your next deal for success.
Kansas’s Taxpayer Agreement Act gives mayors a powerful TIF framework — but the details matter. Here are the common pitfalls Hageman Capital sees Kansas mayors encounter, and how to avoid them.
Pitfall 1: Approving TIF Without a Genuine “But-For” Justification
Kansas law requires a feasibility study demonstrating the project would not proceed without TIF. This is not a formality — the feasibility study is a statutory requirement reviewed by the governing body and available to the public. If the project would have happened anyway, you are giving away future increment unnecessarily. Insist on a genuine funding gap analysis before supporting TIF for any project.
Pitfall 2: Not Understanding Eligible Area Requirements
Kansas TIF can only be used in designated eligible areas — blighted areas, conservation areas, buildings 65+ years old, and several specialized categories. If the proposed project area does not meet these criteria, the entire TIF structure fails. Verify the eligible area designation early, before significant time and resources are invested in plan development.
Pitfall 3: Overlooking the Two-Thirds Supermajority Requirement
Kansas requires a two-thirds supermajority to adopt a redevelopment project plan — a higher threshold than most incentive approvals. This means you need broader council support than a simple majority. Build consensus early by briefing council members before the public hearing and ensuring they understand the developer-backed structure, the taxpayer agreement protections, and the community benefits.
Pitfall 4: Poor Communication About School District Revenue
Constituents often worry that TIF diverts money from schools. In Kansas, the 20 mills for school districts are explicitly protected from TIF capture. Lead with this fact in every public communication. The base year taxes continue flowing to all jurisdictions, and school funding is never reduced by TIF.
Pitfall 5: Going It Alone
The Taxpayer Agreement Act is new, and its interaction with existing TIF law adds complexity. Hageman Capital provides TIF structuring expertise to Kansas mayors at no cost. Request a meeting with Whitney Peterson, our Director – Government Relations, and make sure your city’s next TIF project starts on the right foundation.
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.
