TIF Expertise: Common Pitfalls for Kansas Municipal Finance Advisors to Avoid

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.

Hageman Capital works alongside Kansas financial advisors at no cost. Request a meeting with Whitney Peterson for a technical consultation.