MULVANE, Kansas – On March 17, the Mulvane City Council approved the payment of $200,000 to the Kansas Star Casino from the city’s transient guest tax fund. It’s the first of multiple installments expected to add up to $3.8 million over the next decade.
KSN wanted to know why the city is paying that money.
In early 2011, it was determined that the casino developer needed to spend $14 million for necessary infrastructure improvements, including various projects to water and sewer services. To “soften the impact” of the cost, city staff offered up the transient guest tax to the casino as an incentive to continue with development.
“It was an enticement to locate the casino there and help soften the blow,” said Mulvane city administrator Kent Hixon. Hixon told KSN the funds are incomparable. “We’re paying them $2 million, $3.8 million when they have to pay back $14 million plus interest,” said Hixon.
Mulvane city councilors passed Resolution #2011-9 to the Charter Ordinance #26, which established a 5 percent transient guest tax. The resolution defined how the tax money would be used. According to official documents obtained from the city administrator, it should be disbursed “for support that will likely result in increased lodging facility occupancy within the city (i.e. paid overnight stays).” With the construction of the Hampton Inn on site, the casino has the right to the first $2 million of the generated tax revenue. With the addition of 150 hotel rooms, which are expected to be completed at the end of 2014, Kansas Star gets the first $3.8 million of that tax revenue.
KSN talked with Mulvane residents. We learned that gaming revenue is a primary concern.
“They’re making money hand over fist… if they make their machines play a little better, that might change their mind about things, but they should have to pay for it,” said Lonny Travis, a resident of Mulvane.
The city of Mulvane, along with Sumner and Sedgwick Counties all receive 1 percent of gaming revenue from the Kansas Star Casino. For Mulvane, in both 2012 and 2013, that revenue totaled nearly $2 million. The casino receives 72 percent of the gaming revenue.
“That’s Mulvane’s money, not the casino’s,” said Cynthia Love.
Other residents believe the money is due back to the casino because of the improvements that have come from it.
“It wouldn’t hurt Mulvane to chip in a little bit. After all, they want this place to grow and they settled here. They’ve been doing good,” said Joe H. Stewart.
KSN reached out to representatives of the casino for comment. They emphasized the purpose of the transient guest tax fund.
“It’s a pretty routine use of these room tax funds. It’s about helping to support events that benefit the entire market. The scale of our facility – we are able to host events that have a meaningful impact for the entire community,” said David Strow, the director of corporate communications for Boyd Gaming Corporation, the new owner of the Kansas Star Casino.
The installment money is expected to be paid to the casino annually.