Kansas Attorney General Opinion 2016-004

March 2, 2016
ATTORNEY GENERAL OPINION NO. 2016- 4
Nick Jordan, Secretary
Kansas Department of Revenue
915 SW Harrison Street
Topeka, Kansas 66612-1588
Re: 	Cities 	and 	Municipalities—Buildings, 	Structures 	and 	Grounds—
Development 	and 	Redevelopment 	of 	Areas 	in 	and 	Around 	Cities—
Definitions; 	Base 	Year 	Assessed 	Valuation; 	Revision 	of 	Base 	Year
Assessed 	Valuation; 	Taxing 	Subdivision 	and 	Real 	Property 	Taxes
Defined; Assessment and Distribution of Taxes; Pledge of Proceeds of
Bonds
Synopsis: 	The Tax Increment Finance Act does not require or authorize the “base
year assessed valuation” as defined in K.S.A. 2015 Supp. 12-1770a(b) to
be revised when a taxpayer obtains a reduction in the assessed valuation
of such taxpayer's real property for the year in which the redevelopment
district was established.
If the “base year assessed valuation” is not revised, a city may adopt a
redevelopment 	project 	plan 	or 	an 	ordinance 	that 	specifies 	that 	the
percentage or amount of increment pledged from the redevelopment
district will be calculated using an adjusted base value that is higher than
the “base year assessed valuation.” 	Cited herein: K.S.A. 2015 Supp. 12-
1770; 12-1770a; 12-1771; 12-1774; 12-1775; Kan. Const. Art. 11, § 5.
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Nick Jordan
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Dear Secretary Jordan:
As Secretary of the Kansas Department of Revenue, you raise two issues regarding the
Tax Increment Finance Act (TIF Act):1
I. 	Whether the “base year assessed valuation” as defined in K.S.A. [2015
Supp.] 12-1770a(b) may be revised when a taxpayer obtains a reduction in
the assessed valuation of such taxpayer's real property for the year in which
the redevelopment district was established.
II. 	Whether a city may adopt a project plan that specifies that the amount or
percentage of increment from the redevelopment district will be calculated
using an adjusted base value (a finite agreed-upon value) that is higher than
the 	“base 	year 	assessed 	valuation” 	as 	indicated 	on 	the 	real 	property
assessment rolls for the property in the redevelopment district.
Some background on the TIF Act might be helpful. The TIF Act is a financing tool which
allows a city2 to pledge future tax revenues for up to 20 years, 3 in order to finance
immediate municipal redevelopment projects 4 in a redevelopment district 5 to promote,
stimulate and develop the general and economic welfare of the state of Kansas and its
communities. 6 	Generally 	speaking, 	the 	redevelopment 	projects 	may 	be 	financed
through the issuance of full faith and credit tax increment bonds 7 or special obligation
bonds in one or more series. 8 	The TIF Act presumes the assessed property value in
the redevelopment district will increase because of the redevelopment project financed
by the bonds and that the positive tax increment 9 will be captured to repay the bonds.
The TIF Act defines “base year assessed valuation” as “the assessed valuation of all
real 	property 	within 	the 	boundaries 	of 	a 	redevelopment 	district 	on 	the 	date 	the
redevelopment district was established. 10 The purpose for establishing the base year
assessed valuation is to establish the tax revenue increment to be pledged by the city
for the financing of the redevelopment district, as distinguished from the tax revenue
1 K.S.A. 12-1770 et seq.
2 In Kansas, the TIF Act is limited to cities. K.S.A. 2015 Supp. 12-1770.
3 K.S.A. 2015 Supp. 12-1775(b)(2).
4 “‘Redevelopment project’ means the approved project to implement a project plan for the development
of the established redevelopment district.” K.S.A. 2015 Supp. 12-1770a(r).
5 “‘Redevelopment district’ means the specific area declared to be an eligible area in which the city may
develop one or more redevelopment projects.” K.S.A. 2015 Supp. 12-1770a(p).
6 K.S.A. 2015 Supp. 12-1770.
7 K.S.A. 2015 Supp. 12-1774(b)(1). See also K.S.A. 2015 Supp. 12-1770.
8 K.S.A. 2015 Supp. 12-1774(a)(1). See also K.S.A. 2015 Supp. 12-1770.
9 “‘Tax increment’ means that amount of real property taxes collected from real property located within the
redevelopment district that is in excess of the amount of real property taxes which is collected from the
base year assessed valuation.” K.S.A. 2015 Supp. 12-1770a(u).
10 K.S.A. 2015 Supp. 12-1770a(b) (emphasis added).

Nick Jordan
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allocated to taxing subdivisions 11 levying real property taxes on property within the
redevelopment district. 	The base year assessed valuation is known by the taxing
subdivisions on the date the redevelopment district is established and prior to the time
of the public hearings that are required when adopting a redevelopment project plan. 12
The distribution of tax revenue is accomplished by a statutory formula utilizing the base
year assessed valuation, which satisfies the constitutional requirement that the object of
the tax be specified. 13 According to the statutory formula for distribution of tax revenue,
the taxes paid at the time of the establishment of the redevelopment district continue to
be distributed to the taxing subdivisions as done prior to the establishment of the
redevelopment district.14 The tax increment, which is based on the base year assessed
valuation, is deposited into a special fund 15 to repay the redevelopment project costs, 16
including the principal and interest on the bonds. 17
With this background information presented, we now will discuss your questions in turn.
Revision of Base Year Assessed Valuation
In your first question, you ask whether the base year assessed valuation may be
revised when a taxpayer 18 obtains a reduction in the assessed valuation of such
taxpayer's 	real 	property 	for 	the 	year 	in 	which 	the 	redevelopment 	district 	was
established. We believe the answer to this question is no.
In determining whether a reduction in the base year assessed valuation is required or
authorized under the TIF Act when a taxpayer successfully obtains a reduction in the
assessed valuation of such taxpayer’s real property, we must determine legislative
intent.
11 “‘Taxing subdivision’ means the county, city, unified school district and any other taxing subdivision
levying real property taxes, the territory or jurisdiction of which includes any currently existing or
subsequently created redevelopment district including a bioscience development district.” 	K.S.A. 2015
Supp. 12-1770a(v).
12 “‘Redevelopment project plan’ means the plan adopted by a municipality for the development of a
redevelopment project or projects which conforms with K.S.A. 12-1772, and amendments thereto, in a
redevelopment district.” K.S.A. 2015 Supp. 12-177a(s). See generally K.S.A. 2015 Supp. 12-1771(a) and
Attorney General Opinion No. 2011-1 for the procedure to establish a redevelopment district.
13 The distribution of taxes pursuant to statutory formula satisfies the constitutional requirement that an
object of the tax be specified. See Kan. Const. Art. 11, § 5 and State ex rel. Schneider v. City of Topeka,
227 Kan. 115, 121 - 125 (1980).
14 K.S.A. 2015 Supp. 12-1775(b)(1).
15 K.S.A. 2015 Supp. 12-1775(b)(2).
16 The term "redevelopment project costs" is defined in K.S.A. 2015 Supp. 12-1770a(o).
17 K.S.A. 2015 Supp. 12-1774(a)(1)(A).
18 The TIF Act defines “taxpayer” to mean “a person, corporation, limited liability company, S corporation,
partnership, 	registered 	limited 	liability 	partnership, 	foundation, 	association, 	nonprofit 	entity, 	sole
proprietorship, business trust, group or other entity that is subject to the Kansas income tax act, K.S.A.
79-3201 et seq., and amendments thereto.” K.S.A. 2015 Supp. 12-1770a(kk).

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An appellate court must first attempt to ascertain legislative intent through
the 	statutory 	language 	enacted, 	giving 	common 	words 	their 	ordinary
meanings. When a statute is plain and unambiguous, an appellate court
does not speculate as to the legislative intent behind it and will not read
into the statute something not readily found in it. Where there is no
ambiguity, the court need not resort to statutory construction. Only if the
statute's language or text is unclear or ambiguous does the court use
canons 	of 	construction 	or 	legislative 	history 	or 	other 	background
considerations to construe the legislature's intent.19
We will apply this same rule specifically to K.S.A. 2015 Supp. 12-1770a(b) and
generally to the TIF Act. 	K.S.A. 2015 Supp. 12-1770a(b) defines “base year assessed
valuation” to mean the assessed valuation of all real property within the boundaries of a
redevelopment district on the date the redevelopment district was established. 20 	The
language used by the Legislature plainly intended to establish a base or a certain and
actual 	date 	from 	which 	assessed 	valuation 	would 	be 	definitively 	set 	for 	revenue
distribution. That date is “the date the redevelopment district was established.” Further,
within the definition, there is no provision for a mandatory or discretionary adjustment of
that base. 	Thus, the plain reading of the statutory definition of “base year assessed
valuation” requires us to conclude that an adjustment subsequent to the date the district
was established cannot be made unless the Legislature made provision for such an
adjustment somewhere else in the TIF Act.
In this case, there is no language in any other provision of the TIF Act that provides for
a mandatory or discretionary reduction in assessed valuation based on a successful
taxpayer appeal. By contrast, the Legislature does provide for revision of the base year
assessed valuation under circumstances specified in K.S.A. 2015 Supp. 12-1771(f)
through (h). 	Under these provisions, a city is authorized to revise the base year
assessed valuation when adding real property to the redevelopment district,21 removing
more than a de minimus amount of real property from the redevelopment district 22 or
dividing 	real 	property 	in 	the 	redevelopment 	district 	into 	separate 	redevelopment
districts.23 In these enumerated situations, it is significant that the city must affirmatively
seek a major change in the redevelopment project in order to invoke the authorization to
revise the base year assessment. 	The Legislature did not provide for revision based
upon a circumstance outside of the control of the city such as a subsequent change in
the assessed valuation of the real property due to a successful taxpayer appeal. 	Thus,
it is apparent that the Legislature could have enacted such an exception to the general
rule but did not do so with regard to successful taxpayer appeals.
19 State v. Keel, 302 Kan. 560, 572 (2015) (internal citations omitted).
20 Emphasis added.
21 K.S.A. 2015 Supp. 12-1771(f).
22 K.S.A. 2015 Supp. 12-1771(g).
23 K.S.A. 2015 Supp. 12-1771(h).

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We will not read into the statute a mandate or authorization to revise the base year
assessed valuation due to a successful taxpayer appeal when the language is clearly
absent. Based on the current language of the statute, we conclude that the TIF Act does
not mandate or authorize the base year assessed valuation to be revised when a
taxpayer obtains a reduction in the assessed valuation of such taxpayer's real property
for the year in which the redevelopment district was established.
Adjusted Base Value
In your second question, you ask whether a city may adopt a redevelopment project
plan that establishes a figure, described by you as an “adjusted base value”, that is
higher than the base year assessed valuation as the minimum value to be used to
calculate tax revenue distribution. Put simply, is the city allowed to pledge less than the
maximum amount of tax increment permitted by the TIF Act? 	Again, we look to the
language of the TIF Act to determine the answer to your question.
K.S.A. 2015 Supp. 12-1775(d) provides:
A city may adopt a project plan in which only a specified percentage or
amount of the tax increment realized from taxpayers in the redevelopment
district are pledged to the redevelopment project. The county treasurer
shall allocate the specified percentage or amount of the tax increment to
the treasurer of the city for deposit in the special fund of the city to finance
the redevelopment project costs if the city has other available revenues
and pledges the revenues to the redevelopment project in lieu of the tax
increment. Any portion of such tax increment not allocated to the city for
the redevelopment project shall be allocated and paid in the same manner
as other ad valorem taxes.
The 	language 	of 	the 	statute 	is 	plain 	and 	unambiguous. 	Cities 	may 	adopt 	a
redevelopment project plan or an ordinance for the redevelopment district 24 wherein
less than the maximum amount of tax increment permitted by the TIF Act is pledged to
the redevelopment project.25 	By not specifying the manner in which this amount is
determined, the Legislature left it to the city to determine the calculus in arriving at the
specified percentage or amount that will be paid from the tax increment revenue, as
long as the manner is in accordance with the TIF Act.
In your question, you did not provide a definition of an “adjusted base value.” 	If by
“adjusted base value” you mean that the base year assessed valuation is revised by an
arbitrary amount, we would conclude that this action is not authorized. 	The TIF Act
does not specifically provide for revision of the base year assessed valuation except as
provided for in K.S.A. 2015 Supp. 12-1771(f) through (h). Thus, for the same reasons
we stated in your first question, we conclude, unless authorized by K.S.A. 2015 Supp.
24 K.S.A. 2015 Supp. 12-1771(b).
25 K.S.A. 2015 Supp. 12-1775(d).

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12-1771(f) through (h), a revision to the base year assessed valuation would not be
authorized specifically by K.S.A. 2015 Supp. 12-1770a(b) and the TIF Act generally.
However, if by “adjusted base value” you mean an amount above the base year
assessed valuation that does not revise the base year assessed valuation but uses it as
the starting point to calculate an amount less than the maximum amount of tax
increment revenue permitted by the TIF Act, then we would conclude this action is
authorized by K.S.A. 2015 Supp. 12-1775(d). 	An “adjusted base value” defined in this
way has the effect of decreasing the amount of tax increment pledged to pay the bonds.
The difference between the base year assessed valuation and such “adjusted base
value” is captured and distributed in the same manner as other ad valorem taxes. 26
Consequently, the distribution to the taxing subdivisions within the redevelopment
district is higher than it would have been had the entire tax increment revenue been
distributed to pay the bond. 	Therefore, we conclude that a city is permitted to adopt a
redevelopment project plan or ordinance that contains an “adjusted base value” that is
higher than the base year assessed valuation, providing the base year assessed
valuation is not revised.
Our conclusion does not extend to allowing a city to set an “adjusted base value” that is
lower than the base year assessed valuation. 	Such action would decrease the
distribution of collected tax revenues to the taxing subdivisions in contradiction of the
TIF Act and would be void.
Sincerely,
Derek Schmidt
Attorney General
Athena E. Andaya
Deputy Attorney General
DS:AA:sb
26 K.S.A. 2015 Supp. 12-1775(d).