Jayhawk Racing Properties v. City of Topeka, 484 P.3d 250

Background

Heartland Park Raceway (private motorsports facility) had STAR bonds issued earlier; City of Topeka took ownership for a term while Jayhawk retained a reversionary interest.
Due to revenue shortfalls, the City in 2014 negotiated an MOU and Workout Agreement with Jayhawk to purchase Jayhawk's reversionary interest (~$2.4M) and to expand the STAR bond district; City Council adopted Ordinance No. 19915 authorizing up to $5M in additional STAR bonds.
A taxpayer (Imming) filed a petition seeking referendum/repeal of the Ordinance; in City of Topeka v. Imming the Court of Appeals treated the Ordinance as legislative and found the STAR statute’s protest process controlled the challenge.
After a change in City Council membership in 2015, the new Council declined to pursue the bond issuance; Jayhawk and Heartland sued the City for breach of contract seeking damages.
The district court dismissed the breach claims, holding the MOU/Ordinance involved governmental/legislative functions and a successor council could not be bound; the Court of Appeals reversed, treating the agreement as proprietary and enforceable.
The Kansas Supreme Court granted review, held the MOU/Ordinance was governmental (policy-making) and therefore not enforceable to bind successor councils, and affirmed the district court.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Classification: Was the MOU/Ordinance a governmental (legislative) or proprietary (administrative) act?	MOU dealt with property acquisition and project development and thus was proprietary/administrative and enforceable.	City: it was a policy decision about economic development and funding mechanisms—a governmental/legislative act.	Governmental: the decision to promote/finance the revitalization was legislative, not a proprietary administrative act.
Enforceability: Can a city contractually bind successor councils to perform governmental decisions (e.g., issue bonds)?	Jayhawk: MOU created contractual obligations and damages are recoverable if City backs out.	City: one council may not bind a successor on governmental/policy choices; such promises are not legally enforceable.	Held for City: a council cannot bind its successor on governmental policy decisions; no breach remedy.
Contract to issue bonds: Did the MOU constitute a binding promise to issue STAR bonds (despite statutory issuance steps)?	Jayhawk: MOU obligated City to pursue and issue bonds per its terms.	City: bond issuance is tightly statutory and contingent on approvals; MOU did not and could not obligate the City to issue bonds.	Held for City: MOU did not and could not be enforced as a contract to issue bonds governed by statute.
Applicability of revenue-bond precedent (Brown-Crummer): Does prior authority about bonding make the project proprietary?	Jayhawk/Ct. App.: Brown-Crummer shows bond-funded public works can create enforceable obligations.	City: Brown-Crummer involved revenue bonds payable solely from project income; here the decision to initiate and fund the public project was a legislative policy choice.	Held for City: Brown-Crummer is distinguishable; payment mechanism vs. the decision to initiate/finance a public project are separate analyses.

Key Cases Cited

Kansas Public Employees Ret. Sys. v. Reimer & Koger Assocs., Inc., 262 Kan. 635 (1997) (defines governmental vs. proprietary functions)
McAlister v. City of Fairway, 289 Kan. 391 (2009) (provides multifactor test to classify ordinances)
City of Topeka v. Imming, 51 Kan. App. 2d 247 (2015) (Court of Appeals treated the Ordinance as legislative in resolving referendum challenge)
Brown-Crummer Inv. Co. v. Arkansas City, 125 Kan. 768 (1928) (distinguishes revenue-bond payment/administration from initiation of public projects)
Blevins v. Bd. of Douglas County Comm'rs, 251 Kan. 374 (1992) (city cannot contractually bind future bodies on political decisions such as holding binding elections)
State ex rel. Hawks v. City of Topeka, 176 Kan. 240 (1954) (one council cannot bind successor to rebuild/repair public facilities; political decisions are noncontractual)
Board of Education v. Phillips, 67 Kan. 549 (1903) (one legislature cannot prohibit subsequent legislatures from exercising their duties; public-interest rejection can override prior commitments)
Marco Dev. Corp. v. City of Cedar Falls, 473 N.W.2d 41 (Iowa 1991) (municipalities cannot contract away governmental functions; private parties contract at their peril)