A port authority is a legal entity created by a local government or governments to address local transportation-related issues. “Port” is statutorily defined for this purpose to mean a water-port facility, airport facility, terminal facility, land transportation facility, railroad facility, or industrial-use facility. A port authority is distinct from an airport authority. Statutes creating and enumerating the powers of a port authority are in KSA 12-3401 et seq.
Creation of a Port Authority
Under state law first enacted in 1969, a port authority may be created by a city or cities, a county or counties, or a combination of those, by ordinance, resolution, or both. Any port authority formed on or after April 1, 1981, must be approved by the Legislature via concurrent resolution. A cooperative agreement creating a joint port authority may be amended by the governing bodies without legislative approval.
Port authorities formed by legislative concurrent resolution include:
- Kansas City–Wyandotte County, Kansas, Joint Port Authority (1984);
- Butler County (1997);
- City of Pittsburg (2001);
- Grant, Morton, Stanton, and Stevens counties (2007); and
- Stafford County (2014).
The Mid-States Port Authority, one of the largest, was formed in 1980 by a joint cooperative agreement of the counties of Clay, Cloud, Decatur, Jewell, Norton, Phillips, Republic, Riley, Sheridan, Sherman, Smith, Thomas, Wabaunsee, and Washington to rehabilitate and use rail lines left by the Chicago, Rock Island, and Pacific Railroad after it declared bankruptcy in the late 1970s.
Subject to provisions for payment and performance of its obligations, a port authority may be dissolved by the entities that created it. Its properties would be transferred to the creating entity or entities as they agree. Obligations of the dissolved port authority are not obligations of the State or of any city or county unless that is approved by voters.
Powers of a Port Authority
A port authority must have a clear purpose for which it is created and the character of the work to be undertaken to accomplish that purpose as part of its official plan. A port authority is required to prepare or cause to be prepared plans for future development; this plan must be published and, if sufficient owners of contiguous real property object, hold a hearing on the plan.
To accomplish the goals of the plan, a port authority may purchase, acquire, construct, improve, equip, furnish, or maintain facilities within its area of jurisdiction and make contracts to do so; borrow money; apply for, receive, and participate in grants from the State or the federal government; change a watercourse during facility development; issue bonds; and exercise eminent domain over property needed to implement the plan under certain circumstances. It must fix rents, charges, and fees for the use of its buildings, services, and facilities that are sufficient to assure the prompt payment of principal and interest on bonds as they become due. It may have employees and professional help.
Subject to voter approval, any city or county creating or participating in the creation of a port authority may levy a tax for such authority. If approved, the levy may be used for repayment of bonds, and the port authority may spend funds not otherwise appropriated for surveys and other statutory purposes. Currently, no city or county levies a tax for purposes of financing a port authority.
A port authority may not change a lease, sale, or action taken by a governmental entity before creation of the port authority; spend more than $10,000 (unchanged since 1980) for construction, alteration, or repair of any improvement without notification in the Kansas Register at least 30 days before opening bids for the project, except in an emergency; or sell property without giving the current lessee the first right to purchase the property. It may not exercise eminent domain on property outside of the port authority without approval by resolution of the governing body, acquire a site for industrial use, or until all permits in the official plan have been obtained.
A port authority is to exercise its powers for the benefit of the people of Kansas, “for the increase of their commerce and prosperity, and for the improvement of their health and living conditions, and the activities and operations of a port authority will constitute the performance of essential governmental functions” (KSA 12-3418).
Bonding
With the approval, by resolution, of the governing body of the city or cities or county or counties composing such port authority, a port authority may issue negotiable notes, bonds, or other evidence of indebtedness in amounts deemed necessary by the board of the port authority to purchase, acquire, construct, improve, equip, furnish, or maintain facilities, and it must provide for their payment of the bonds. Those bonds may be issued for a maximum term of 40 years, subject to terms approved by official resolution of the board; may be sold for not less than par plus accrued interest to date of delivery; and may be sold at a public or private sale. A public sale must be advertised and the bonds sold to the best bidder, based on an open competitive public offering. The bonds are never a debt or obligation of the State or any city or county. The Attorney General must examine and certify all bonds as legal obligations of the issuing authority. Proceeds from the sale of bonds must be segregated and used solely for the purpose for which the bonds were issued. All entities doing banking business and all insurance companies and agencies may lawfully invest funds in these bonds.
The board may vest a trustee or trustees with the right to receive revenues pledged for bondholders. Any trustee must take an oath of office and be under a sufficient fidelity bond approved by the Attorney General. No trustee or beneficiary may be charged with liability except for willful or grossly negligent breach of trust.
Governance of a Port Authority
A port authority is governed by a board of no fewer than five members appointed by city or county commissioners or by the various subdivisions involved as they agree, to four-year terms. The appointing authority may at any time remove a director appointed by it for misfeasance, nonfeasance, or malfeasance in office, and only for cause. No board member may own land, other than a residence, or represent in a fiduciary capacity any land surveyed or examined for port locations. A user of the port facility may serve as a member.
The board’s meetings and records are public, and it is required to prepare an annual budget.
Tax Exemptions and Credits
An airport authority is exempt from ad valorem property tax only until the calendar year in which the property “is rented, leased, subleased, or developed and returns revenue to the authority in excess of the amount necessary to retire obligations of the authority and pay its administrative costs” (KSA 12-3418).
An airport authority is exempt from sales tax for tangible personal property or services used directly by the authority or for constructing, repairing, equipping, or furnishing port facilities other than an industrial-use facility.
The single city port authority income tax credit provides an income tax credit for 100.0 percent of retired debt of a single city port authority established prior to 2002, up to $500,000 in any one fiscal year. The credit is issued as a warrant by the Department of Revenue and is deemed to be a capital contribution. As written, the law applies only to the port authority created by the City of Pittsburg.
Airport Authorities
Airport authorities also have an economic development role, by developing, leasing, renting, or otherwise providing facilities used by business and industry. Airport authorities were statutorily created in the 1960s and 1970s to develop and manage air bases and other property declared surplus, usually by the federal government, such as deactivated World War II-era bases (KSA 27-315 et seq.). Statutes also created an airport authority for the City of Wichita in 1975 that assumed powers formerly held by a city board of park commissioners or the city governing body (KSA 3-162 et seq.) and for a county specified by 1979 population and valuation: Shawnee County (KSA 27-327 et seq.).
In general, the powers and duties of an airport authority are like those of a port authority. An airport authority is authorized by statute to levy mill levies of no more than 1, 1.85, or 3 mills depending on the purpose and under which statutes the airport authority was created. Airport authorities also may issue their own general obligation bonds, revenue bonds, industrial revenue bonds, and no-fund warrants as provided by statute.
By Jill Shelley and Eric Adell.
See State and Local Government for more.