Why This Matters for Topeka, Westridge Mall, and Crony Capitalism Concerns

Industrial Revenue Bonds (IRBs) and Their Tax Exemptions: A Deep Dive into Kansas Law, Mechanics, and Real-World Application

Industrial Revenue Bonds (IRBs) are a long-standing economic development tool in Kansas, authorized since 1961 for cities and 1981 for counties under K.S.A. 12-1740 et seq. On paper, they let local governments issue bonds to finance land, buildings, equipment, or renovations for private businesses in sectors like manufacturing, commercial, industrial, agricultural, hospital, or recreational development. In practice—especially for taxable IRBs like the $48 million Shawnee County issued in August 2025 for Westridge Mall’s redevelopment by Dream Big Partners LLC (tied to Advisors Excel)—they function primarily as a vehicle for targeted tax exemptions rather than traditional public borrowing. The government acts as a passive legal conduit; the private company repays everything and bears all risk.

How the Structure Actually Works (It’s Not What Most People Think)

1. A company (the “Tenant”) approaches a city or county (the “Issuer,” here Shawnee County).
2. The Issuer adopts a resolution of intent and later a bond ordinance/resolution.
3. The Issuer issues the bonds (often taxable, sold via private placement directly to the company itself).
4. Bond proceeds go into a trustee account and are used by the company to buy, build, renovate, or equip the facility.
5. The Issuer temporarily holds legal title to the financed portion of the property and leases it back to the company on a triple-net lease (company pays all taxes, insurance, maintenance).
6. Lease payments from the company exactly cover the bond principal + interest (plus fees). At the end of the term (often 10–15+ years), title transfers to the company for a nominal amount (e.g., $100).
7. The Issuer and taxpayers have zero financial liability—the bonds are not backed by general tax revenue. If the company defaults, bondholders go after the company’s assets, not the county.

This is why officials repeatedly emphasize “no taxpayer money is at risk” in the Westridge case. It’s self-financed by Advisors Excel/Dream Big Partners, who essentially buy their own bonds. The real value isn’t the “financing” (they could borrow conventionally); it’s the automatic eligibility for tax breaks that come with the IRB wrapper.

The Core Tax Exemptions (The Real Prize)

Kansas law layers three main benefits on top of the bond issuance. These apply to both taxable and (qualifying) tax-exempt IRBs:

• Sales Tax Exemption (K.S.A. 79-3606) This is the primary benefit Advisors Excel is getting on the Westridge project. Any building materials, labor, machinery, equipment, furniture, or fixtures purchased with IRB proceeds are exempt from state and local sales tax (currently ~6.5–8.5% depending on location, including Topeka’s add-ons).
  • A sales tax exemption certificate must be obtained from the Kansas Department of Revenue before spending the money.
  • On a $48 million renovation (HVAC, electrical, plumbing, reconfiguration for office space, etc.), this can save millions in upfront costs.
  • It applies even to commercial/retail redevelopment projects that don’t qualify for federal tax-exempt interest.
• Property Tax Abatement / Exemption (IRBX under K.S.A. 79-201a) The financed property can be fully or partially exempt from ad valorem (real estate) property taxes for up to 10 years, starting the year after issuance.
  • Local governments decide the percentage (0–100%) and duration.
  • Critical limitation: All commercial retail properties are ineligible for property tax abatement. Agricultural properties are also often excluded.
  • Many jurisdictions negotiate “payments in lieu of taxes” (PILOTs) so schools and other taxing districts still get some revenue.
  • In the Westridge Mall case, public records focus exclusively on the sales tax benefit; property tax abatement appears unavailable or not pursued for the retail/mixed-use portions.
• Interest Income Tax Exemption Interest paid on all Kansas IRBs is exempt from Kansas state income tax.
  • For qualifying manufacturing or certain nonprofit projects, interest can also be federally tax-exempt (lowering borrowing costs by ~2–2.5%).
  • Most commercial deals (like Westridge) use taxable bonds, so federal taxes apply—but the state exemption and sales tax break still deliver real savings.

Process typically takes 60+ days: inducement resolution → public hearing → bond documents → closing. The company must be creditworthy; the bonds are only as good as the tenant’s promise to pay.

Scale and Real-World Use in Kansas

• From 2005–2020, roughly 640 property tax abatements (IRBXs) were granted statewide, reducing local property tax collections by an estimated $1.2–1.5 billion total (~$100 million per year). Over half were in just three counties (Johnson, Sedgwick, Wyandotte).
• Sales tax exemptions are even harder to track but represent additional forgone revenue on every IRB project.
• Shawnee County has used them repeatedly—e.g., the same principals behind the AT&T building redevelopment also received IRB treatment. In February 2026 alone, the county authorized over $72 million more in IRBs for other projects.

The 2022 Legislative Post Audit: What the Numbers Actually Show

A Kansas Legislative Division of Post Audit review of eight representative IRBXs (property tax side only) found:

• Economic activity was generally positive: 7 of 8 projects generated more than $1 of broader economic output per $1 of taxes exempted (e.g., $5+ in some manufacturing cases).
• Tax revenues did not offset the cost: None generated enough new income/sales/property taxes to cover the forgone revenue (net losses in most modeled scenarios).
• Major data problems: Pre-project job and tax estimates submitted to the Board of Tax Appeals were often wildly inaccurate; no systematic tracking of actual outcomes after approval; statute sets no measurable goals or benchmarks for success.
• Conclusion: IRBXs produce some spillover benefits, but the fiscal return to taxpayers is negative in most cases. The audit recommended the Legislature add clear goals and success metrics.

The sales tax exemption was not part of that audit, but it works the same way: immediate, certain cost to the public treasury with uncertain, long-term economic payoff.

Why This Matters for Topeka, Westridge Mall, and Crony Capitalism Concerns

Advisors Excel/Dream Big Partners is a highly successful, profitable company. They bought a distressed mall at a market discount in 2023. The $48 million taxable IRB doesn’t “finance” anything they couldn’t do themselves—it simply wipes out sales tax on renovation costs while the county lends its name to make it legal. No new jobs are magically created that wouldn’t have happened anyway; the company already employs hundreds locally and was expanding. Retail redevelopment is exactly the kind of project that gets property tax abatement denied under statute, yet still qualifies for the sales tax carve-out.

Critics (including voices like yours) argue this is textbook cronyism: a connected, deep-pocketed player gets a special deal the mom-and-pop renovating a storefront or the average homeowner never sees. Defenders point to jobs, revitalized property values, and “no direct cost.” The audit data suggests the fiscal math is usually a net loss for public coffers, even before you factor in the sales tax exemption. The “good deeds elsewhere” defense doesn’t change the incentive structure—it just normalizes picking winners with taxpayer-backed tax breaks.

If you’re writing the essay, the pedophile-priest analogy is indeed too inflammatory (and risks alienating readers unnecessarily). A cleaner one: It’s like the city giving your wealthy neighbor a property-tax holiday to remodel his mansion while you pay full freight on your kitchen remodel. The mansion looks nicer, sure—but the rest of the block subsidized the upgrade.

This tool has been around for 60+ years and isn’t going away. Whether it’s “saving” Topeka or simply letting successful insiders upgrade their real estate portfolio on discounted terms is the real debate. The mechanics above show exactly how the exemptions flow—and why they’re not the free lunch they’re sometimes sold as.