Tag Archives: Carl Brewer

Wichita Mayor Carl Brewer

Questions for the next Wichita city attorney: Number 1

Wichita City Hall SignWichita’s city attorney is retiring soon, and the city will select a replacement. There are a few questions that we ought to ask of candidates, such as the following.

Here’s a section from the Wichita city code as passed in 2008 (full section below):

“[Council members] shall refrain from making decisions involving business associates, customers, clients, friends and competitors.”

Wichita city attorney candidate, here’s a question: If a member of the Wichita city council had a business relationship with a person, and then that person was involved in a matter that the city council was called to vote on, how would you advise the council member?

It’s not a hypothetical question. Last year the Wichita city council had to make a decision regarding two development teams that had applied to build a project. (See Wichita contracts, their meaning (or not) for video.) It included various forms of subsidy. Here are some facts that no one disputes:

Warren Theater Brewer's Best 2013-07-18

1. Wichita Mayor Carl Brewer is a member of the Wichita City Council and was in position to make a decision.

2. Bill Warren was one of the parties applying for the project.

3. Bill Warren also owns movie theaters.

4. Wichita Mayor Carl Brewer owns a company that manufactures barbeque sauce.

5. Brewer’s sauce was sold at Warren’s theaters.

It seems straightforward, doesn’t it? The mayor should not have participated in a decision involving his business partner. That seems to be the clear meaning of the city code. But the mayor proceeded to participate in the discussion and vote.

Now, I don’t know what happened behind the scenes. Did the mayor ask the city attorney for his opinion on whether he should abstain from voting? If so, what did the city attorney say? Did the mayor follow or disregard the advice?

Wichitans ought to be interested in the tenor of the advice the next city attorney will provide to council members and the city’s staff of bureaucrats. Will the next city attorney ignore the plain meaning of laws in order to provide legal cover for the council and staff? Or, will the attorney provide advice that respects citizens and the rule of law?

We probably won’t ever know.

Here’s the Wichita city code:

Sec. 2.04.050. — Code of ethics for council members.

Council members occupy positions of public trust. All business transactions of such elected officials dealing in any manner with public funds, either directly or indirectly, must be subject to the scrutiny of public opinion both as to the legality and to the propriety of such transactions. In addition to the matters of pecuniary interest, council members shall refrain from making use of special knowledge or information before it is made available to the general public; shall refrain from making decisions involving business associates, customers, clients, friends and competitors; shall refrain from repeated and continued violation of city council rules; shall refrain from appointing immediate family members, business associates, clients or employees to municipal boards and commissions; shall refrain from influencing the employment of municipal employees; shall refrain from requesting the fixing of traffic tickets and all other municipal code citations; shall refrain from seeking the employment of immediate family members in any municipal operation; shall refrain from using their influence as members of the governing body in attempts to secure contracts, zoning or other favorable municipal action for friends, customers, clients, immediate family members or business associates; and shall comply with all lawful actions, directives and orders of duly constituted municipal officials as such may be issued in the normal and lawful discharge of the duties of these municipal officials.

Council members shall conduct themselves so as to bring credit upon the city as a whole and so as to set an example of good ethical conduct for all citizens of the community. Council members shall bear in mind at all times their responsibility to the entire electorate, and shall refrain from actions benefiting special groups at the expense of the city as a whole and shall do everything in their power to ensure equal and impartial law enforcement throughout the city at large without respect to race, creed, color or the economic or the social position of individual citizens.

Wichita develops plans to make up for past planning mistakes

On several issues, including street maintenance, water supply, and economic development, Wichita government and civic leaders have let our city fall behind. Now they ask for your support for future plans to correct these mistakes in past plans.

Wichita/Sedgwick County Community Investment Plan logo.
Wichita/Sedgwick County Community Investment Plan logo.

In February the City of Wichita held a workshop where the Community Investments Plan Steering Committee delivered a progress report to the city council. The amounts of money involved are large, and portions represent deferred maintenance. That is, the city has not been taking care of the assets that taxpayers have paid for. When Wichita city leaders ask for more taxes to pay for this lack of stewardship, citizens need to ask for better accountability than what they’ve received.

The time frame of this planning process is the period 2013 to 2035. Under the heading “Trends & Challenges” we find some troubling information. Wichita Mayor Carl Brewer hinted at the problem last year in his State of the City Address when he said the city would need to spend $2.1 billion over 30 years on maintenance and replacement of water and sewer systems. The city’s performance measure report also told us that our pavement condition index has been deteriorating, and is projected to continue to decline.

So if we’ve been paying attention, it should not have been a surprise to read this in the presentation: “Decades of under-investment in infrastructure maintenance … 38% of Wichita’s infrastructure is in ‘deficient/fair’ condition.”

The cost to remedy this lack of maintenance is substantial. The document says that on an annual basis, Wichita needs to spend $180 million on infrastructure depreciation/replacement costs. Currently the city spends $78 million on this, the presentation indicates.

The “cost to bring existing deficient infrastructure up to standards” is given as an additional $45 to $55 million per year.

This is a lot of money. To place these numbers in context, here are some figures that help illustrate Wichita city finances:

Property tax collected in 2013: $105 million
Budgeted 2014 expenditures for fire department: $44 million
Budgeted 2014 expenditures for police department: $79 million

The amounts by which the city is deficient in maintaining its assets is staggering, compared to other expenses the city has. The size of the deficiency overwhelms possible sources of new revenue. A one cent per dollar increase in sales tax would not cover the deficiencies in maintaining our current assets. Then, remember the things Wichita wants to increase spending on — a new library, economic development, expanded public transit, new convention center, economic development, and perhaps other things.

The report lists three scenarios for future growth: Maintaining current trends, constrained suburban growth, and suburban and infill growth mix. Whenever we see words like “constrained” we need to be cautious. We need to be on guard. The Wichita Eagle reported this: “In the city’s recently completed series of 102 public meetings, citizens were clear, City Manager Robert Layton said: Redevelop the core. We’ve had enough suburban growth for awhile.”

It’s unclear how closely the findings from the public meetings reflects actual citizen preference. Cynics believe that these meetings are run in a way that produces a predetermined outcome aligned with what city officials want to hear. At any rate, when you ask people about their preferences, but there is no corresponding commitment to act on their proclaimed preferences, we have to wonder how genuine and reliable the results are.

There is a very reliable way to find out what people really want, however. Just let them do it. If people want to live downtown on in an inner city neighborhood, fine. If they want suburban-style living, that’s fine too. Well, it should be fine. But reading between the lines of city documents you get the impression that city planners don’t think people should live in suburban-style settings.

Community input

The survey that Wichita used has its own problems. Here’s an example of a question respondents were asked to agree or disagree with: “Local government, the school district, community organizations and the business community should work together to create an investment climate that is attractive to business.”

The meaning of an attractive investment climate means different things to different people. Some people want an investment climate where property rights are respected, where government refrains from meddling in the economy and transferring one person’s property to another. An environment free from cronyism, in other words. But the Wichita way is, unfortunately, cronyism, where government takes an active role in managing economic development. We in Wichita never know when our local government will take from us to give to politically-favored cronies, or when city hall will set up and subsidize a competitor to your business.

Wichita flights compared to the nation.
Wichita flights compared to the nation.

Sometimes the questions are misleading. A question relating to the subsidy program at the Wichita airport read “I’m willing to pay increased taxes or fees to support investment … that uses public dollars to reduce the cost and increase the number of commercial flights at Mid-Continent Airport.”

This is an example of a question which has a false premise. Since the subsidy programs have been in place, the number of flights from the Wichita airport has declined, not increased as the question would lead readers to believe. See Wichita flight options decrease, despite subsidies and Wichita airfare subsidy: The negative effects.

Leadership of city officials

On these and other issues, the Wichita Eagle quoted mayor Brewer: “We’ve put them off for too long. We didn’t want the challenges. We didn’t want the tax bills. But now, to maintain our quality of life, we’ve got to catch up.”

It’s almost as if the mayor is speaking as a bystander. But he’s been mayor for nearly seven years, and was on the city council before that time. During that time, he and other city leaders have boasted of not increasing property taxes. While the property tax rate has been (fairly) stable, property tax revenue has increased due to development of new property and rising assessment values. Still, of this, the city has a huge backlog of deferred maintenance. The way to interpret this is that the city has really been engaging in deficit spending under Brewer’s leadership. We didn’t spend what was needed to maintain our assets, and now the mayor tells us we need to increase spending to make up for this.

The economist Milton Friedman told us that it’s more important to look at government spending rather than the level of taxation. That’s because spending must eventually be paid for, either through current taxes or future taxation. The federal government generate deficits and can pay for spending through creating inflation. Fortunately, cities and states can’t do that.

But, as we’ve seen, cities like Wichita can incur costs without paying for them. This is a form of deficit spending. By deferring maintenance of our infrastructure, the city has pushed spending to future years. The report released in February gives an idea of the magnitude of this deferred spending: It’s huge.

This form of deficit spending is “off the books” and doesn’t appear in city financial statements. But it’s real, as the mayor now admits. The threat to our freedom to live where we want is real, too. We must be watchful and diligent.

Wichita not good for small business

The Wichita Business Journal reports today:

When it comes to having good conditions to support small businesses, well, Wichita isn’t exactly at the top of the list, according to a new ranking from The Business Journals.

In fact, the Wichita metro area’s small-business vitality score is nearly at the bottom — 99th out of the 101 U.S. metro areas included in the study. (Wichita near bottom for small-business vitality score, April 2, 2014)

Many in Wichita don’t want to recognize and confront the bad news about the performance of the Wichita-area economy. Last year, when presenting its annual report to local governmental bodies, the leaders of Visioneering Wichita would not present benchmark data to elected officials.

wichita-peer-job-growth-1990-2014-01

So what is the record of the Wichita metropolitan area regarding job creation, that seeming to be the most popular statistic our leaders cite and promote? I’ve prepared statistics from the Bureau of Labor Statistics, U.S. Department of Labor for Wichita and a broad group of peer cities. I included our Visioneering peer cities, cities that Visioneers traveled to on official visits, and a few others. The result, shown nearby, is not pretty. (Click on charts for larger versions, or click here to use the interactive visualization)

wichita-peer-job-growth-2007-2014-01

If we look at job creation starting in 1990, Wichita lags behind our Visioneering peers, but not behind all the peer cities that I selected. Wichita does better than Springfield, Illinois, for example. I chose to include that as a peer metropolitan area because that’s the immediate past city that Gary Plummer worked in. He was president of that city’s Chamber of Commerce, and is now president of the Wichita Chamber. Note the position of Springfield: Last place.

In next-to-last place we see Wichita Falls, Texas. I chose to include it because it is the immediate past home of Tim Chase. He was the head of Wichita Falls Economic Development Corporation. He’s now president of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development for the Wichita area.

In second-to-last place we see Pittsburgh, which I added because Visioneering leaders recently made a visit there.

Then, we come to Wichita.

If we look at job creation since 2007 we find Wichita in a common position: Last place in job creation, and by a wide margin except for two cities. One is Wichita Falls, where our present GWEDC president recently worked. The other city that barely out-performs Wichita is Chattanooga, which I included because Visioneering civic leaders recently traveled there to learn from that city.

Over the decades in which Wichita has performed poorly, there have been a few common threads. Carl Brewer has been council member or mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for decades. At Sedgwick County, manager William Buchanan has held that position for more than two decades. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. It is these officials who have presided over the dismal record of Wichita.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s becoming part of the legacy of Wichita’s efforts in economic development.

toolbox-29058_640

These leaders often complain that Wichita does not have enough “tools in the toolbox” to compete with other cities in economic development. Wichita does, however, have and use incentives. The State of Kansas regularly offers incentives so generous that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

Incentives: We have them. They haven’t worked for us.

It is nearly certain that this year Wichitans will be asked to approve a higher sales tax in order to pay for many things, including the more aggressive approach to job creation that Brewer mentioned. Based on the track record of our elected officials and bureaucrats, we need to do this: Before approving the tax and expenditures, Wichitans need to take a long look at the people who have been in charge, and ask what will be different going forward.

Wichita City Council fails to support informing the taxed

Example of a Community Improvement District sign on the door of a merchant.
Example of a Community Improvement District sign on the door of a merchant.
It’s enlightening to look back at some examples of discussion at the Wichita City Council so that we remember the attitudes of council members and city bureaucrats towards citizens. In the following example, the council was considering whether Wichitans and visitors should be notified of the amount of extra sales tax — or even the existence of extra tax — they will pay when shopping at merchants located within Community Improvement Districts (CIDs). Did the council side with special interests or citizens?

At its December 7, 2010 meeting, the Wichita City Council considered whether stores in CIDs should be required to post signs warning shoppers of the amount of extra tax being charged. Some, including myself, felt that shoppers should have this information before deciding to shop in such a store.

In discussion from the bench, Jeff Longwell, who was Vice Mayor at the time, said it is important that we disclose these “types of collections” as they are taxing the public. But in a convoluted stretch of reasoning, he argued that posting a sign with a specific tax rate would be confusing to citizens: (View video below, or click here to view at YouTube.

“I was leaning to putting a percentage on there, but again if we have a website that spells out the percentage, I think that’s important. And number two, I guess I would be a little bit concerned how we would work through it — if you put a percentage on a development over here in downtown that’s only collecting one percent and someone walks in and sees a CID tax collected of one percent and just assumes every CID tax is one percent it would be confusing when they go to the next one, and it may scare them off if they see one that’s two percent, they’ll never go to one that’s maybe only one percent. So I think that proves an additional concern for some confusion. So having something on the front door that says we are financing this with a CID tax, where they’re made well aware that it’s collected there, I think to try and include a percentage might even add some confusion as we collect different CID taxes around the city.”

Longwell is content to tell people as they enter a store that they’re being taxed, but not how much tax they’re required to pay. We can summarize his attitude as this: Giving citizens too much information will confuse them.

Wichita City Council Member Sue Schlapp
Wichita City Council Member Sue Schlapp
Council Member Sue Schlapp (who left office in 2011 after reaching the city’s limit on length of service) said she supported transparency in government:

“Every tool we can have is necessary … This is very simple: If you vote to have the tool, and then you vote to put something in it that makes the tool useless, it’s not even any point in having the vote, in my opinion. Either we do it, and we do it in a way that it’s going to be useful and accomplish its purpose. … I understand totally the discussion of letting the public know. I think transparency is absolutely vital to everything we do in government. So I think we’re doing that very thing.”

Wichita City Council Member Lavonta Williams
Wichita City Council Member Lavonta Williams
Schlapp understood and said what everyone knows: That if you arm citizens with knowledge of high taxes, they’re likely to go somewhere else to shop. Well, maybe except for women, as Council Member Lavonta Williams (district 1, northeast Wichita), noted that women would still want to shop at a store in a CID if it is “very unique.”

Mayor Carl Brewer said he agreed with Schlapp and the other council members.

In the end, the council unanimously voted for requiring signage that reads, according to minutes from the meeting: “This project made possible by Community Improvement District Financing and includes the website.”

This sign doesn’t mention anything about the rate of extra sales tax that customers of CID merchants will pay. In fact, reading the sign, shoppers are not likely to sense that they’ll be paying any additional tax. The sign almost makes the Community Improvement District seem benevolent, not predatory.

Contrary to Schlapp’s assertions, this is not anything like government transparency.

Here’s what is really troubling: What does it say about Wichita’s economic development strategy that if you fully inform citizens and visitors on what they’re asked to pay, it renders the tool “useless,”as Schlapp contended?

It’s just another example of the council and staff being totally captured by special interests, preferring advancing the interests of their cronies rather than protecting citizens.

WichitaLiberty.TV: For whose benefit are elections, school employment, wind power, unions, unemployment

Wichita City HallIn this episode of WichitaLiberty.TV: The controversy over the timing of city and school board elections provides an insight into government. Then: Can a candidate for governor’s claims about Kansas school employment be believed? Wind power is expensive electricity, very expensive. A Wichita auto dealer pushes back against union protests. Finally, what is the real rate of unemployment in America? Episode 36, broadcast March 23, 2014. View below, or click here to view at YouTube.

During Sunshine Week, here are a few things Wichita could do

Wichita City Budget Cover, 1960The City of Wichita says it values open and transparent government, but the city could improve several areas of providing information and records to citizens.

The City of Wichita is proud to be an open and transparent governmental agency, its officials say. Wichita Mayor Carl Brewer often speaks in favor of government transparency. For example, in his State of the City address for 2011, he listed as an important goal for the city this: “And we must provide transparency in all that we do.” When the city received an award for transparency in 2013, a city news release quoted Wichita City Manager Robert Layton:

“The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

Attitude

Despite the proclamations of the mayor and manager, the city needs a change of attitude towards government transparency. Here’s perhaps the most glaring example of how the city goes out of its way to conduct public business in secret.

Citizen watchdogs need access to records and data. The City of Wichita, however, has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Wichita Downtown Development Corporation, Go Wichita Convention and Visitors Bureau, and Greater Wichita Economic Development Coalition. Each of these agencies refuses to comply with the Kansas Open Records Act, using the reasoning that they are not “public agencies” as defined in the Kansas law that’s designed to provide citizen access to records.

The city backs this interpretation. When legislation was introduced to bring these agencies under the umbrella of the Kansas Open Records Act, cities — including Wichita — protested vigorously, and the legislation went nowhere. Now, just this week the City of Wichita added a new tax to hotel bills that may generate $3 million per year for the convention and visitors bureau to spend. Unless the city changes its attitude towards citizens’ right to know, this money will be spent in secret.

Another example of the City of Wichita’s attitude towards citizens and open government took place at a Kansas Legislature committee hearing last year. I had asked for email to or from a certain official for a certain period of time. The response from the city was that my request would encompass some 19,000 email messages, and the city denied the request as too burdensome. Fair enough.

But the city’s lobbyist told legislators that my request for 19,000 emails was an example of abuse of the Kansas Open Records Act, and cited it as evidence as to why reform was not needed. But I did not request 19,000 email messages. I made a request for messages meeting a certain criteria, and I had no way of knowing in advance how many email messages this would entail. The City of Wichita denied this request as burdensome, so there was either no cost or very little cost for the city. No harm, no foul.

But the City of Wichita used this incident and a similar incident involving the Kansas Policy Institute as reasons that the Kansas Open Records Act needs no reform. This illustrates a problem with the attitude of Wichita city government towards citizens’ right to know.

This attitude may be noticed by the citizenry at large. Survey respondents were asked to rate “the job Wichita does at welcoming citizen involvement.” The results are shown in the nearby chart created from data in the most recent version of the Wichita Performance Measure Report. The numbers are the percent of respondents giving “excellent” or “good” as their response to the question.

Citizens rate “the job Wichita does at welcoming citizen involvement."
Citizens rate “the job Wichita does at welcoming citizen involvement.”

The report says this performance is “much below” a benchmark set by the National Research Center National Citizen Survey.

Website

An important way governments can communicate with their subjects is through their websites. Wichita moved to a new website early in 2013. With the launching of the new City of Wichita website, the city has actually taken a step backwards in providing information to citizens.

From the former version of the City of Wichita website, showing budgets available for many years.
From the former version of the City of Wichita website, showing budgets available for many years.

Here’s an example. The old city website had budgets going back a long way, back to the budget for 1960 — 1961. The oldest budget I can find on the present website is for 2006.

Looking for minutes of important boards such as the Metropolitan Area Planning Commission, we find similar results. On the old website, minutes of MAPC were available back to 1999. The new version of the website seems to have minutes back to only 2012.

Also, something that had been very useful is missing, and hasn’t been replaced: MyWichita.

mywichita_logo

As described here, MyWichita was a useful service. By using it, you could receive by email notices of new press releases, city council agendas and minutes, district advisory board agenda and minutes, agendas and minutes of other boards, and other items. Using MyWichita was much easier than having to check multiple sections of the city’s website looking for newly-released agendas, minutes, etc.

This email reminder service was very valuable. It’s a basic customer service feature of many commercial and governmental websites. But MyWichita didn’t survive the conversion to the new website, and there’s nothing that replaces its function. When I asked about this missing functionality, the city said it was working on a replacement that should be available in a month or two. It’s been almost a year since I asked.

Spending data

Many governmental agencies post their checkbooks on their websites. Sedgwick County does, and also the Wichita school district. Not so the City of Wichita.

Wichita spending data.
Wichita spending data.

Even after asking for checkbook spending data, Wichita can supply data of only limited utility. What was supplied to me was data in pdf form, and as images, not text. It would be difficult and beyond the capability of most citizens to translate the data to useful format. Even if someone translated the reports to computer-readable format, I don’t think it would be very useful. This is a serious defect in the city’s transparency efforts.

Legal notices

Kansas law requires that local government agencies publish legal notices for a variety of topics. Presently these are published in the Wichita Eagle at great cost to taxpayers. These notices could also be published on the city’s website, where they could be searched and archived. This would increase the usability of these documents at very little cost to the city.

Publish requests

When governmental agencies like the City of Wichita fulfill records requests, they could also publish the records on their websites. Most of the time the records are supplied electronically, so this is an additional simple (and low cost) step that would leverage the value of the city’s effort.

Leveraging our lobbyists

What do lobbyists, including taxpayer-funded lobbyists, do in Topeka? One thing they do is testify before committees, in both verbal and written form. Another thing they do is to prepare reports for the clients, advising them on upcoming legislation, analyzing how it affects them, and what the prospects for the bill might be. They also meet with legislators and their clients, which are your elected officials.

Here’s a proposal that will help citizens make best use of their taxpayer-funded lobbyists:

I see nothing in the Kansas Open Records Act that allows local governmental units in Kansas to refuse to disclose these documents: testimony, reports by lobbyists to their government clients, and the lobbyists’ calendars (or billing records for contract lobbyists). Instead of making citizens ask for these records, possibly paying fees to obtain what they’re already paying for, why don’t local governments post these documents immediately on their websites?

Citizens could then benefit from the activities of the lobbyists they’re paying for. They could learn more about legislation as it works its way through the process. Citizens could judge whether the positions taken by the government lobbyists they’re paying for are aligned with their policy preferences.

If the actions taken by taxpayer-funded lobbyists are truly in the public interest, you’d think that cities, counties, and school boards would already be making this information easily available. In any case, there should be no resistance to starting this program.

WichitaLiberty.TV: Wichita’s missing water, beyond politics and special interests

In this episode of WichitaLiberty.TV: The people of Wichita have told officials that water is an important issue. What has the city done in this regard? Then, Wichita Mayor Brewer Carl says it’s time to put politics and special interests aside. Is our political leadership capable of this? Episode 34, broadcast March 9, 2014. View below, or click here to view at YouTube.

Regulation failure leads to tragedy in Wichita

wichita-taxi regulations

When the Wichita City Council passed new taxicab regulations in 2012, the focus was on dirty cabs and slovenly drivers who were not acting as goodwill ambassadors for the city. Mayor Carl Brewer said he was “tired” of hearing complaints about drivers.

So the council passed new regulations regarding taxicabs, including the requirement that drivers attend customer service training provided by Go Wichita Convention and Visitors Bureau. Other regulations determine taxicab office staffing levels and level of supervision.

Bryon Scott Spohn, a taxi driver accused of raping a passenger.

But something very important slipped through the cracks. The Wichita Eagle has reported the city didn’t competently enforce regulations designed to protect passenger safety:

A Wichita taxicab driver now in prison for raping a passenger last year shouldn’t have been allowed to operate a taxi in the first place.

That’s because at the time Bryon Scott Spohn applied for a taxi driver’s license in late 2012, he was on a state sex offender registry for possession of child pornography. A city ordinance that went into effect in July 2012 says a taxi driver’s license shall not be issued to anyone who “is now or has ever been registered as a sexual offender with any state, county or local government.”

Spohn shouldn’t have received a taxi license but did because the new change banning registered sex offenders wasn’t communicated to staff members doing background checks on taxi driver applicants, city officials told The Eagle on Friday. The city has fixed the problem that led to the oversight in Spohn’s case, they said. Taxi driver in prison for raping passenger was on sex offender registry, March 3, 2014

The regulations regarding customer service training were implemented. But the really important regulations? Lack of oversight, says the city.

I wonder: Who is regulating the regulators?

WichitaLiberty.TV: Government planning, taxes, and carbon

In this episode of WichitaLiberty.TV: The City of Wichita held a workshop where the Community Investments Plan Steering Committee delivered a progress report to the city council. The document holds some facts that ought to make Wichitans think, and think hard. Then: What is the purpose of high tax rates on high income earners? Finally: Advances in producing oil and natural gas make for a more competitive and carbon-efficient economy. Episode 33, broadcast March 2, 2014. View below, or click here to view on YouTube.

Wichita planning documents hold sobering numbers

Wichita/Sedgwick County Community Investment Plan logo.
Wichita/Sedgwick County Community Investment Plan logo.

This week the City of Wichita held a workshop where the Community Investments Plan Steering Committee delivered a progress report to the city council. The documents hold information that ought to make Wichitans think, and think hard. The amounts of money involved are large, and portions represent deferred maintenance. That is, the city has not been taking care of the assets that taxpayers have paid for.

The time frame of this planning process is the period 2013 to 2035. Under the heading “Trends & Challenges” we find some troubling information. Wichita Mayor Carl Brewer hinted at the problem last year in his State of the City Address when he said the city would need to spend $2.1 billion over 30 years on maintenance and replacement of water and sewer systems. The city’s performance measure report also told us that our pavement condition index has been deteriorating, and is projected to continue to decline.

So if we’ve been paying attention, it should not have been a surprise to read this in the presentation: “Decades of under-investment in infrastructure maintenance … 38% of Wichita’s infrastructure is in ‘deficient/fair’ condition.”

The cost to remedy this lack of maintenance is substantial. The document says that on an annual basis, Wichita needs to spend $180 million on infrastructure depreciation/replacement costs. Currently the city spends $78 million on this, the presentation indicates.

The “cost to bring existing deficient infrastructure up to standards” is given as an additional $45 to $55 million per year.

This is a lot of money. To place these numbers in context, here are some figures that help illustrate Wichita city finances:

Property tax collected in 2013: $105 million
Budgeted 2014 expenditures for fire department: $44 million
Budgeted 2014 expenditures for police department: $79 million

It’s thought that an additional one cent per dollar city sales tax would generate around $80 million per year.

The amounts by which the city is deficient in maintaining its assets is staggering, compared to other expenses the city has. The size of the deficiency overwhelms possible sources of new revenue. A one cent per dollar increase in sales tax would not cover the deficiencies in maintaining our current assets. Then, remember the things Wichita wants to increase spending on — a new library, economic development, expanded public transit, new convention center, economic development, and perhaps other things.

The report lists three scenarios for future growth: Maintaining current trends, constrained suburban growth, and suburban and infill growth mix. Whenever we see words like “constrained” we need to be cautious. We need to be on guard. The Wichita Eagle reported this: “In the city’s recently completed series of 102 public meetings, citizens were clear, City Manager Robert Layton said: Redevelop the core. We’ve had enough suburban growth for awhile.”

It’s unclear how closely the findings from the public meetings reflects actual citizen preference. Cynics believe that these meetings are run in a way that produces a predetermined outcome aligned with what city officials want to hear. At any rate, when you ask people about their preferences, but there is no corresponding commitment to act on their proclaimed preferences, we have to wonder how genuine and reliable the results are.

There is a very reliable way to find out what people really want, however. Just let them do it. If people want to live downtown on in an inner city neighborhood, fine. If they want suburban-style living, that’s fine too. Well, it should be fine. But reading between the lines of city documents you get the impression that city planners don’t think people should live in suburban-style settings.

Sometimes we don’t have to read between the lines. Sometimes the attitude of planners is explicit. In 2010 the city — actually the Wichita Downtown Development Corporation — employed Goody Clancy, a Boston-based planning firm, to help plan the revitalization of downtown Wichita. In the article Goody Clancy market findings presented to Wichita audience I reported on some of what the planners said. For example, David Dixon, the Goody Clancy principal for this project, told how that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is found only at the core. “Have dinner someplace, pass a cool shop, go to a great national music act at the arena, and then go to a bar, and if we’re lucky, stumble home.”

This idea that only downtown people are socially and culturally rich is an elitist attitude that we ought to reject. By the way, when I presented to the Wichita City Council on this topic, I noted that no council members, except for possibly one, lived in neighborhoods that might be described as in “the core.”

Other speakers from Goody Clancy revealed a condescending attitude towards those who hold values different from this group of planners. One presenter said “Outside of Manhattan and Chicago, the traditional family household generally looks for a single family detached house with yard, where they think their kids might play, and they never do.”

This, again, is an elitist attitude. No, it’s worse than that. It’s condescending. It reveals that the professional planning class thinks that the ordinary people of Wichita can’t decide for themselves what they really want. Somehow, people are duped into buying homes that don’t really meet their needs, and they’re not smart enough to realize that. That is the attitude of the professional planning class. It’s an elitism that Wichitans ought to reject.

The planning process

The planners tells us that the process is based on data. “Data-driven” is a term they use. But when we look under the covers at the data, we realize that we need to be very skeptical of claims.

Returning to the Goody Clancy plan for downtown Wichita, the principal planner used Walk Score in a presentation delivered in Wichita. Walk Score is purported to represent a measure of walkability of a location in a city. Walkability is a key design element of the master plan Goody Clancy has developed for downtown Wichita.

Walk Score is not a project of Goody Clancy, as far as I know, and Dixon is not responsible for the accuracy or reliability of the Walk Score website. But he presented it and relied on it as an example of the data-driven approach that Goody Clancy takes.

Walk Score data for downtown Wichita, as presented by planning firm Goody Clancy. Click image for a larger version.
Walk Score data for downtown Wichita, as presented by planning firm Goody Clancy. Click image for a larger version.

The score for 525 E. Douglas, the block the Eaton Hotel and Wichita Downtown Development Corporation is located in and mentioned by Dixon as a walkable area, scored 91, which means it is a “walker’s paradise,” according to the Walk Score website.

But here’s where we can start to see just how bad the data used to develop these scores is. For a grocery store — an important component of walkability — the website indicates indicates a grocery store just 0.19 miles away. It’s “Pepsi Bottling Group,” located on Broadway between Douglas and First Streets. Those familiar with the area know there is no grocery store there, only office buildings. The claim of a grocery store here is false.

There were other claimed amenities where the data is just as bad. But the chairman of the Wichita Downtown Development Corporation at that time said that Walk Score has been updated. I should no longer be concerned with the credibility of this data, he told me through a comment left on my website.

He was correct in one regard: Walk Score had been updated. For the same location the walk score was revised to 85%, which is considered “very walkable.” The “grocery store” is no longer the Pepsi Bottling Group. It’s now “Market Place,” whose address is given as 155 N. Market St # 220.

Someone strolling by that location would notice that address, 155 N. Market number 220, is the management office for an office building whose name is Market Place.

Still no grocery store. Nothing even resembling a grocery store.

I looked this week at the Walk Score website. It’s been updated and redesigned. Now for the same block in the heart of downtown Wichita the walk score is 74, which is “very walkable,” according to the site. In a narrative explanation, the site says this: “The closest grocery stores are Ray Sales Co, Market Place and The Hot Spot Detox Shop.”

Ray Sales Co., in the shadow of Intrust Bank Arena.
Ray Sales Co., in the shadow of Intrust Bank Arena.

I don’t know if you’ve been to Ray Sales, but it’s a tiny store with a very limited product selection. It’s not the type of place that will attract people to downtown Wichita. We know that because officials say a grocery store is one of downtown’s most pressing needs, despite the existence of Ray Sales.

Market Place is listed again as evidence of a grocery store in downtown Wichita. Remember, Market Place is the name of an office building located on Market Street. It’s not a grocery store.

The third location listed as a grocery store is a shop that sells kits to help people pass drug tests. It’s nothing like a grocery store.

Again, David Dixon and Goody Clancy did not create the Walk Score data. But they presented it to Wichitans as an example of the data-driven, market-oriented approach to planning that they use. Dixon cited Walk Score data as the basis for higher real estate values based on the walkability of the area and its surrounding amenities. But anyone who relies on the evidence Dixon and Goody Clancy presented would surely get burnt unless they investigated the area on their own.

Keep in mind that the presentation of this Walk Score data was made after Goody Clancy staff had spent considerable time in Wichita. That someone there could not immediately recognize how utterly bogus the data is: That should give us cause for concern that the entire planning process is based on similarly shoddy data and analysis.

Constraining growth

Returning to the city’s presentation: How does the city “constrain” suburban growth? By taking away the freedom for people to live where they want. Why would the city want do that? City leaders say that suburban development is expensive. It’s not sustainable. Suburban living depends on the personal automobile. And remember the attitude of the professional planners Wichita Downtown Development Corporation hired: People can’t be trusted to know what they really want for themselves.

Special taxes paid on a residential home.
Special taxes paid on a residential home.

If it really is more expensive to develop new suburban areas, the city should simply charge what it costs. To some extent this already happens. Anyone who builds a new home in a new area will pay for the residential street and other infrastructure through special taxes. If the city feels it needs to charge for building arterial streets to serve new suburban areas, it should do so. But the city should realize that people spending their own money to buy or rent a residence — this is the best indication of their true preferences. What people say in focus groups or on paper survey forms is nowhere near as reliable.

Community input

The survey that Wichita used has its own problems. Here’s an example of a question respondents were asked to agree or disagree with: “Local government, the school district, community organizations and the business community should work together to create an investment climate that is attractive to business.”

The meaning of an attractive investment climate means different things to different people. Some people want an investment climate where property rights are respected, where government refrains from meddling in the economy and transferring one person’s property to another. An environment free from cronyism, in other words. But the Wichita way is, unfortunately, cronyism, where government takes an active role in managing economic development. We in Wichita never know when our local government will take from us to give to politically-favored cronies, or when city hall will set up and subsidize a competitor to your business.

Wichita flights compared to the nation.
Wichita flights compared to the nation.

Sometimes the questions are misleading. A question relating to the subsidy program at the Wichita airport read “I’m willing to pay increased taxes or fees to support investment … that uses public dollars to reduce the cost and increase the number of commercial flights at Mid-Continent Airport.”

This is an example of a question which has a false premise. Since the subsidy programs have been in place, the number of flights from the Wichita airport has declined, not increased as the question would lead readers to believe. See Wichita flight options decrease, despite subsidies and Wichita airfare subsidy: The negative effects.

Leadership of city fathers

On these and other issues, the Wichita Eagle quoted mayor Brewer: “We’ve put them off for too long. We didn’t want the challenges. We didn’t want the tax bills. But now, to maintain our quality of life, we’ve got to catch up.”

It’s almost as if the mayor is speaking as a bystander. But he’s been mayor for nearly seven years, and was on the city council before that time. During that time, he and other city leaders have boasted of not increasing property taxes. While the property tax rate has been stable, property tax revenue has increased due to development of new property and rising assessment values. In spite of this, the city has a huge backlog of deferred maintenance. The way to interpret this is that the city has really been engaging in deficit spending under Brewer’s leadership. We didn’t spend what was needed to maintain our assets, and now the mayor tells us we need to increase spending to make up for this.

The economist Milton Friedman told us that it’s more important to look at government spending rather than the level of taxation. That’s because spending must eventually be paid for, either through current taxes or future taxation. The federal government generate deficits and can pay for spending through creating inflation. Fortunately, cities and states can’t do that.

But, as we’ve seen, cities like Wichita can incur costs without paying for them. This is a form of deficit spending. By deferring maintenance of our infrastructure, the city has pushed spending to future years. The report released this week gives an idea of the magnitude of this deferred spending: It’s huge.

This form of deficit spending is “off the books” and doesn’t appear in city financial statements. But it’s real, as the mayor now admits. The threat to our freedom to live where we want is real, too. We must be watchful and diligent.

Kansas Open Records Act and the ‘public agency’ definition

Update: The bill has been referred to another committee, and the February 19 hearing is canceled.

File folder and documents

Despite the City of Wichita’s support for government transparency, citizens have to ask the legislature to add new law forcing the city and its agencies to comply with the Kansas Open Records Act.

Open records laws allow citizens to ask government agencies for records. While these laws are valuable, we find that in practice governmental agencies find many ways to avoid filling records requests. Because the City of Wichita does not live up to the standards of open government — even through it proclaims its support for government transparency — citizens are working to have the law changed.

Locally, the City of Wichita is proud to be an open and transparent governmental agency, its officials say. Wichita Mayor Carl Brewer often speaks in favor of government transparency. For example, in his State of the City address for 2011, he listed as an important goal for the city this: “And we must provide transparency in all that we do.” When the city received an award for transparency in 2013, a city news release quoted Wichita City Manager Robert Layton:

“The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

Contrary to what the mayor and manager say, when we look at some specific areas of government transparency, we find that the city’s efforts are deficient. That’s a problem, because citizen watchdogs and journalists need access to records and data.

The City of Wichita has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Go Wichita Convention and Visitors Bureau, Wichita Downtown Development Corporation, and Greater Wichita Economic Development Coalition.

I have asked each organization for checkbook-level spending data. Each has refused to comply, using the reasoning that they are not “public agencies” as defined in the Kansas Open Records Act. But consider the WDDC: At the time I made my records request, its percent of revenue derived from taxes was well over 90 percent in every year but one. In many years the only income WDDC received was from taxes and a small amount of interest earned.

The Wichita city attorney backs these organizations and their interpretation of the law. So do almost all city council members. After 14 months investigating this matter at my request, the Sedgwick County District Attorney agreed with the city’s position.

So what is the next step? The Kansas Attorney General is of no help in this matter. His office refers all cases to the local District Attorney. That’s a problem right there, and there is some talk that the AG may open a small bureau to work with records requests problems.

One course of action open to me as a citizen watchdog is to raise thousands of dollars to fund a lawsuit. The irony of this is that citizens will find their own tax dollars being used against them as the city and other agencies defend secrecy.

Another course of action is persuading the city and these agencies to release the records. While these agencies believe the law doesn’t require them to release the records, the law does not prohibit or restrict releasing the records. They could fulfill requests if they wanted to. That would be in line with what the mayor and city manager say they want for Wichita. I and others have tried that.

But that didn’t work. The true attitude of the city was expressed eloquently by Wichita Vice Mayor Pete Meitzner last month in a television news story about the inability of citizens to see how their money is being spent by these organizations. Meitzner said “The public doesn’t need to know about day-to-day spending.”

The vice mayor also told the reporter that these organization have review boards. Therefore, citizen oversight is not necessary. These boards, however, are usually filled with insiders whose interests may not be aligned with the interests of citizens and promoting good government.

Another course of action is to change the law, and that’s what I and others are trying to do. This week a committee of the Kansas House of Representatives will hear testimony on HB 2567, which will expand the definition of public agency.

The current law says this in defining what agencies are subject to the open records law: “‘Public agency’ means the state or any political or taxing subdivision of the state or any office, officer, agency or instrumentality thereof, or any other entity receiving or expending and supported in whole or in part by the public funds appropriated by the state or by public funds of any political or taxing subdivision of the state.”

The proposed law contains this additional definition: “Further, on and after July 1, 2014, ‘public agency’ shall include any nonprofit organization supported in whole or in part by public funds, which organizations are engaged in economic development, tourism or general marketing activities for the state or any political or taxing subdivision of the state or any office, officer, agency or instrumentality thereof.”

This language, if passed into law, would appear to bring the three problematic agencies under the Kansas Open Records Act. That doesn’t mean that they’ll have to turn over all and any records that are asked for, as the Kansas Open Records Act contains many exclusions. But we should be able to get spending data and other records that will help citizens oversee the operation of their government and the spending of tax dollars.

It’s a little distressing that citizens have to pass new legislation in order to get government to behave well. Citizens have to resort to these measures even though city leaders say they value open and transparent government.

Following is the testimony I will deliver this week.

Testimony to house of Representatives Committee on Judiciary as proponent of HB 2567, concerning public records.
Bob Weeks, February 19, 2014

Chairman Kinzer and members of the Committee:

Thank you for this opportunity to present testimony in support of HB 2567, regarding the Kansas Open Records Act.

Cities and other local governmental bodies have set up non-profit organizations to conduct business such as economic development. These agencies, as in the case of the Wichita Downtown Development Corporation, may in some years receive as much as 98 percent of their revenue from taxation. They often have only one client, that being the governmental agency that provides their tax revenue. They perform functions that are governmental in nature. Yet the Sedgwick County District Attorney says they are not public agencies for purposes of the Kansas Open Records Act. Based on that, these agencies, particularly the WDDC, have refused to fulfill my records requests. This flies in the face of the Legislature’s declared intent in the preamble of the Act: “It is declared to be the public policy of the state that public records shall be open for inspection by any person unless otherwise provided by this act, and this act shall be liberally construed and applied to promote such policy.”

There can be large amounts of money involved. The City of Wichita may soon add a 2.75 percent tax to hotel bills as a “City Tourism Fee.” These new taxpayer-provided funds, estimated at $2.5 million per year, would be spent by Go Wichita Convention and Tourism Bureau. This agency, despite receiving nearly all its revenue from taxation, maintains that it is not a public agency as defined by the Kansas Open Records Act. It refused to fulfill my records request.

Citizen watchdogs and journalists need the ability to examine the spending of tax money. When government creates quasi-governmental bodies that are almost totally funded through taxes and then refuses to disclose how that money is spent, we have to wonder why the city doesn’t want citizens to know how this money is spent.

Recently the vice mayor of Wichita told a television news reporter that these organization have review boards. Therefore, citizen oversight is not necessary. These boards, however, are usually filled with insiders whose interests may not be aligned with the interests of citizens and promoting good government.

There is much that Kansas can, and should do, to strengthen its Open Records Law to give citizen watchdogs and journalists better access to records and documents. Restricting the ability of local governments to erect a protective wall under the guise of non-profit corporations that are almost totally funded by taxation is an important step.

I have additional information about the Kansas Open Records Act and its problems at wichitaliberty.org/open-records.

Respectfully submitted,
Bob Weeks

Wichita Chamber of Commerce: Why these panelists?

wichita-chamber-commerce-2013-11-05

Last week the Wichita Metro Chamber of Commerce conducted a panel discussion about economic development and job creation in Wichita. The experts selected as panelists tells us a lot about why the Wichita economy has suffered.

In case anyone is not aware of the performance of the Wichita-area economy, the Wichita Eagle reported “Exhibit No. 1 in their presentation was a Chamber of Commerce chart showing that, five years after the recession ended, Wichita had regained few, if any, jobs from the depths of the economic downturn — while other cities across the region have rebounded strongly.” (Wichita must step up efforts to attract jobs, civic leaders say, Thursday, February 6, 2014)

Wichita Chamber presentation. Click for larger version.
Wichita Chamber presentation. Click for larger version.

On the same event, the Wichita Business Journal reported “But the luncheon opened with a somber look at Wichita’s ranking among peer cities in the Midwest region. The chart shows Wichita area employment growth since January 2005 well below the other cities, barely above its 2005 employment.” (Chamber luncheon speakers: Wichita needs to compete better for jobs)

The news about the poor performance of Wichita in this regard is no surprise to readers of this site, although I’m not sure that those in charge, such as Wichita Mayor Carl Brewer, believe the numbers. Brewer, along with Dave Unruh and Chamber president Wayne Chambers were the three panelists on Wichita economic development.

What is surprising is that Brewer and Unruh were selected as experts in this field, given the city’s poor performance and the tenure of these two leaders. Brewer has been mayor for nearly seven years, and has served on the city council 2001. Unruh has been in office since 2003, and has been chair of the commission several times, as he is currently.

Brewer — after 13 years holding city office — had this to say, according to the Eagle: “Brewer said the Wichita City Council will look at the results of a recent community engagement survey to see how high a priority to place on economic development.”

Imagine that. Our city’s longtime leader, as he enters the last year of his mayorality: Now he’s going to get serious about economic development, and will do so by relying on a citizen survey.

To use interactive visualizations that explore the Wichita economy, see Wichita’s growth in gross domestic product and For Wichita’s economic development machinery, failure.

Wichita considers policy to rein in council’s bad behavior

city-council-chambers-sign-b

When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.
— P.J. O’Rourke

Your principle has placed these words above the entrance of the legislative chamber: “whosoever acquires any influence here can obtain his share of legal plunder.” And what has been the result? All classes have flung themselves upon the doors of the chamber crying:
“A share of the plunder for me, for me!”
— Frederic Bastiat

Update: The council deferred this item to a later date.

Tomorrow the Wichita City Council considers a policy designed to squelch the council’s ability to issue no-bid contracts for city projects. This policy is necessary to counter the past bad behavior of Wichita Mayor Carl Brewer and several council members, as well as their inability to police themselves regarding matters of ethical behavior by government officials.

The proposed policy is problematic. For some projects the developer will have to pay for “a third party expert to verify construction estimates and contracts with respect to reasonable market costs and appropriate allocation of costs between public and private funding.”

Why are measures like this necessary? The impetus for this policy is the no-bid contract awarded to Key Construction for the construction of the garage near the Ambassador Hotel, originally called Douglas Place, now known as Block One.

A letter of intent passed by the council on August 9, 2011 gives the cost of the garage: “Douglas Place LLC will administer the construction of the garage and urban park on behalf of the City and the City will pay the cost of designing and constructing the same at a cost not-to-exceed $6,800,000.” Of that, $770,000 was for the urban park, leaving about $6 million cost for the garage. The motion to approve the letter of intent passed with all council members except Michael O’Donnell voting in favor.

By the time the item appeared for consideration at the September 13, 2011 city council meeting, city documents gave the cost of the constructing the garage structure at an even $6 million. The motion to spend that amount on the garage passed with all members except O’Donnell voting in favor, except Brewer was absent and did not vote.

Then the city manager decided that the project should be put to competitive bid. Key Construction won that competition with a bid of about $4.7 million. Same garage, same company, but $1.3 million saved.

The Wichita Eagle tells the story like this: “The Ambassador garage at Douglas Place, awarded at $4.73 million to Key Construction — a partner in the hotel project and the project’s contractor — came in about 20 percent under estimates provided the City Council, on the heels of some city-financed downtown parking garages that spiraled over budget.” (“Wichita City Council to consider bidding policy extension”, Wichita Eagle, Sunday, February 2, 2014)

Reading the Eagle story, citizens might conclude that due to excellent management by Key Construction, the garage was built at a 20 percent savings under “estimates.”

But that’s not at all what happened. It’s not even close to what really happened.

Without the intervention of O’Donnell, the city manager, and — according to press reports — city council member Pete Meitzner, the garage would have been built for $6 million. That was the intent of a majority of the council. The $6 million price tag for the no-bid contract was in the ordinance that passed, and in the letter of intent that passed a month before. There were no “estimates” as the Eagle reported. There was only the expressed desire of the council to spend $6 million.

So there were no “estimates” that Key Construction bested. But there was an objectionable no-bid contract that the council agreed to. Fortunately for Wichita, a few people objected and overrode the council’s bad decision.

We’re left to wonder why the Eagle retold the story with Key Construction in the role of hero. That’s about 180 degrees away from the role this company plays.

Key Construction is intimately involved in city politics. Its principals and executives contribute heavily to mayoral and city council election campaigns. Company president David Wells is a personal friend of the mayor.

Did Key’s political involvement and campaign contributions play a role in the council awarding the company a no-bid garage contract? Key Construction executives and their spouses are among a small group who routinely make maximum campaign contributions to candidates. These candidates are both liberal and conservative, which rebuts the presumption that these contributions are made for ideological reasons, that is, agreeing with the political positions of candidates. Instead, Key Construction and a few companies are political entrepreneurs. They seek to please politicians and bureaucrats, and by doing so, receive no-bid contracts and other taxpayer-funded benefits. This form of cronyism is harmful to Wichita taxpayers, as shown by the Ambassador Hotel garage.

The harm of pay-to-play

When it is apparent that a “pay-to-play” environment exists at Wichita City Hall, it creates a toxic and corrosive political and business environment. Companies are reluctant to expand into areas where they don’t have confidence in the integrity of local government. Will I find my company bidding against a company that made bigger campaign contributions than I did? If I don’t make the right campaign contributions, will I get my zoning approved? Will my building permits be slow-walked through the approval process? Will my projects face unwarranted and harsh inspections? Will my bids be subjected to microscopic scrutiny?

We need laws to prohibit Wichita city council members from voting on or advocating for decisions that enrich their significant campaign contributors. The Ambassador Hotel garage contract is just one example. Citizens are working on this initiative on several fronts. Some find the actions of these candidates so distasteful and offensive that they are willing to take to the streets to gather thousands of signatures to force the Wichita City Council to act in a proper manner.

That huge effort shouldn’t be necessary. Why? The politicians who accept these campaign contributions say it doesn’t affect their voting, and those who give the contributions say they don’t give to influence votes.

If politicians and contributors really mean what they say, there should be no opposition to such a “pay-to-play” law. Citizens should ask the Wichita City Council to pass a campaign finance reform ordinance that prohibits voting to enrich significant campaign contributors.

There is a law, sort of

Citizens who believe that city council members ought not to vote on matters involving their friends and business associates, we already have such a law. Sort of. Here’s a section from the Wichita city code as passed in 2008 (full section below):

“[Council members] shall refrain from making decisions involving business associates, customers, clients, friends and competitors.”

Mayor Carl Brewer voted for this law, by the way. When asked about a specific application of this city law, the Wichita city attorney supplied this interpretation:

Related to the Mayor’s participation in the item, yes, City Code advises Council members to “refrain from making decisions involving business associates, customers, clients, friends and competitors. … ” but the Code does not provide definitions or limits to these broad categories of constituents. Further, the City Code clearly requires Council members to “vote on all matters coming before the City Council except in those particular cases of conflict of interest. …” The city Code does not define what constitutes a conflict but the Council has historically applied the State law for that definition.

Applying that State law specific to local municipalities, the Mayor does not have any substantial interest in Douglas Place LLC, and therefore no conflict. Under the State ethics law, there was no requirement that the Mayor recuse himself from voting on the Ambassador Project.

So we have statutory language that reads “shall refrain,” but the city attorney interprets that to mean “advises.”

We also have statutory language that reads “business associates, customers, clients, friends and competitors.” But the city attorney feels that these terms are not defined, and therefore the mayor and city council members need not be concerned about compliance with this law. We’re left to wonder whether this law has any meaning at all.

Be advised: If you ask the mayor to adhere to this law, he may threaten to sue you.

If the city attorney’s interpretation of this law is controlling, I suggest we strike this section from the city code. Someone who reads this — perhaps a business owner considering Wichita for expansion — might conclude that our city has a code of ethics that is observed by the mayor and council members and enforced by its attorneys.

Giving that impression, though, would be false — and unethical.

Here’s the Wichita city code:

Sec. 2.04.050. — Code of ethics for council members.

Council members occupy positions of public trust. All business transactions of such elected officials dealing in any manner with public funds, either directly or indirectly, must be subject to the scrutiny of public opinion both as to the legality and to the propriety of such transactions. In addition to the matters of pecuniary interest, council members shall refrain from making use of special knowledge or information before it is made available to the general public; shall refrain from making decisions involving business associates, customers, clients, friends and competitors; shall refrain from repeated and continued violation of city council rules; shall refrain from appointing immediate family members, business associates, clients or employees to municipal boards and commissions; shall refrain from influencing the employment of municipal employees; shall refrain from requesting the fixing of traffic tickets and all other municipal code citations; shall refrain from seeking the employment of immediate family members in any municipal operation; shall refrain from using their influence as members of the governing body in attempts to secure contracts, zoning or other favorable municipal action for friends, customers, clients, immediate family members or business associates; and shall comply with all lawful actions, directives and orders of duly constituted municipal officials as such may be issued in the normal and lawful discharge of the duties of these municipal officials.

Council members shall conduct themselves so as to bring credit upon the city as a whole and so as to set an example of good ethical conduct for all citizens of the community. Council members shall bear in mind at all times their responsibility to the entire electorate, and shall refrain from actions benefiting special groups at the expense of the city as a whole and shall do everything in their power to ensure equal and impartial law enforcement throughout the city at large without respect to race, creed, color or the economic or the social position of individual citizens.

WichitaLiberty.TV February 2, 2014

In this episode of WichitaLiberty.TV: A Kansas college professor claims that college costs are rising only a tad faster than inflation. We’ll take a look at the actual numbers. Then, this week Wichita Mayor Carl Brewer delivered the annual State of the City address. A few things deserve comment. Episode 30, broadcast February 2, 2014. View below, or click here to view at YouTube.

The state of Wichita, 2014

Wichita city hall

Wichita Mayor Carl Brewer delivered the annual State of the City address. He said a few things that deserve discussion.

This week Wichita Mayor Carl Brewer delivered his annual State of the City address. We expect a certain amount of bragging and over-the-top community pride, things like “Wichita is the BEST place to work and raise a family!” That’s good, to a point. Because if we take these boasts seriously, and if they are not based on factual information, then we have a problem. We may believe that everything is fine in Wichita. But if the actual state of the city is otherwise, we may take unwise action that ultimately is harmful.

(While the city took prominent measures to promote the mayor’s speech, so far the text has not been made available on the city’s website. But you may click here to read it.)

Here’s an example, and perhaps the most important. The mayor said “Our community partnerships have helped us overcome the challenges of the great recession — which brought layoffs to many sectors of our economy.” But the problem is that we haven’t overcome the recession.

wichita-peer-job-growth-1990-2014-01

If we take a look at job growth in Wichita over the last two decades, we see Wichita performing very poorly. That’s not only on an absolute basis, but relative to our self-chosen peer cities. The relative part is important, because the recession was nation-wide. All cities suffered. Note that there are a few cities over which Wichita ranked higher: Springfield, Illinois, and Wichita Falls, Texas. These cities are relevant because we recently hired people from these cities to lead our economic development efforts.

wichita-chamber-job-growth-2013-12

I’ve shown data like this to the city council. I don’t think they believed me. I can understand their reluctance, as it’s not easy to admit things like this. Few like to admit failure. But that doesn’t excuse a reluctance to face facts. I also believe that some council members think that city hall critics take joy in presenting these figures. At least for me, that’s not true. I realize that these statistics tell a story of human hardship. So for those who don’t believe or trust my research, here’s a chart prepared by the Wichita Metro Chamber of Commerce for a presentation to its leadership committee. It uses a different time frame and a slightly different set of peers for comparison, but the results are the same: Wichita lags behind in terms of job growth.

Greater Wichita Economic Development Coalition

Despite this evidence, the mayor thinks we’re doing well, and he is proud of our economic development efforts. In his address, he told the audience this: “For the past five years — the Greater Wichita Economic Development Coalition has helped generate nearly 10,000 jobs and more than 400 million in capital investment.”

That sounds like a lot of jobs. But we have to temper that number. We know that we don’t update our job statistics to reflect jobs that didn’t last for very long. We also must realize that some of these jobs would have been created without the involvement of our economic development agencies. We also must realize that these economic development efforts have a cost, and that cost is harmful to our economy and job creation.

But even if we give our economic development agencies sole credit for these 10,000 jobs, let’s apply a little arithmetic to provide some context. The Bureau of Labor Statistics tells us that the labor force in the Wichita Metropolitan area is about 302,000 people. that number, by the way, has been declining since 2009. If we take the 10,000 jobs — recognizing that was for five years — that averages to 2,000 jobs per year. That’s in the neighborhood of six percent of the labor force.

Does that represent a significant factor in the Wichita area economy? Remember, that calculation gives government more credit that it deserves. When we combine this with Wichita’s lackluster performance in creating jobs compared to our peers, I really don’t think we should be proud of our government’s economic development efforts.

In his State of the City Address, Wichita Mayor Carl Brewer also said we need to “continue to diversify our economy.” But we’re not doing that. Our economic development programs heavily favor the aviation industry, which makes it more difficult for aspiring companies in other diverse industries to start and thrive.

wichita-airport-dashboard-2013-07-29

The mayor told the audience that “We will also continue to support our successful affordable airfares program.” This is the program whereby Wichita and the state of Kansas pay a discount airline to provide service in Wichita. It was AirTran, but is now Southwest. It is thought that if one airline has low fares, others will reduce their fares to match. That’s probably the case. But I’ve done the research, and there is another effect. As can be seen in the nearby chart, the number of flights and the number of available seats is declining in Wichita. These measures are also declining on a national level, but they are declining faster in Wichita than for the nation.

The mayor also asked for cooperation in using Southwest Airlines, advising the audience: “So when you make your corporate travel plans, please remember our community’s commitment to supporting low-cost carriers.” Well. How would you feel if you worked for one of our air carriers that don’t receive a subsidy, such as American, United, and Delta? How would you feel if you owned stock in one of these airlines, as does nearly everyone who holds broad-based index funds in their retirement or investment accounts?

In the past, the subsidized discount carrier has carried around ten percent of Wichita’s passengers. So we are vitally dependent on the legacy, or major, airlines, and we don’t need to insult them, as I believe the mayor did.

(To help you explore Wichita airport data, I’ve created an interactive visualization. Click here to open the visualization in a new window. You may add or remove any number of airports. Or, if you’d like to watch a video, click on Wichita Airport statistics: The video.)

Water was another topic that the mayor touched on. He told the audience: “The city has also invested in the second phase of the aquifer storage and recovery project known as ASR. New construction was completed in time to help with the drought. More than 100 million gallons were diverted from the little Arkansas River directly to customers.” 100 million gallons sounds like a lot of water. But what is the context? Well, 100 million gallons is about how much water we use on a single hot summer day.

And what about the ASR, or aquifer storage and recovery program? Its cost, so far for Phases I and II, is $247 million. Two more phases are contemplated. Despite this investment, and despite the plan’s boasts, Wichitans were threatened with huge fines for excessive water usage. The Wichita City Council also started a rebate program so that citizens were forced to pay for other people to buy low-water usage appliances. Expensive city decorative fountains were dry for a time.

Why were these measures necessary? A document created in March 2013 — that’s just as Wichita realized the city was running out of water — is titled “Wichita Area Future Water Supply: A Model Program for Other Municipalities.” It states: “In 1993 the Wichita City Council adopted an Integrated Local Water Supply Plan that identified cost effective water resources that would be adequate to meet Wichita’s water supply needs through the year 2050.” This squares with what former mayor Bob Knight recently told the Wichita Pachyderm Club, that when he was in office, Wichita had sufficient water for the next 50 years. He was told that about 10 years ago.

Just to give you an idea of how seriously we should take the claims made in speeches like this, here’s what the mayor told us in his 2009 State of the City Address: “We will continue work on the state-of-the art water supply system, known as the ASR project. It will provide the Wichita area with sufficient water for the next 50 years. Economic Development is not possible without an adequate water supply.” The mayor’s right. We need an adequate water supply. But it appears that despite huge expense and the boasts of city officials — including the mayor — we don’t have a secure water supply.

The mayor also addressed transit. He asked the community to answer a few questions, such as:

Should we have more stops to drop off and pick up riders?
Should we run later hours during the week and on the weekends?
Should we find new partners to extend our service area and help with costs?

The problem with questions like these are that citizens don’t have all the information needed to make an informed answer. Would we like to have more bus service? Who could answer no to such a question?

But if the mayor had told us that the cost per passenger mile for Wichita transit buses is 95 cents, or that only 30 percent of the operating costs are paid by fares, people might answer these questions differently. (That 30 percent would be lower if we included the cost of capital, that is, the cost of the buses.) And when the mayor asked citizens to weigh in at the Activate Wichita website: I looked, and there’s no topic for transit.

But even if citizens were informed of these costs, their answers are still not fully reliable. That’s because of the disconnect between the payment for the service and the actual bus service. Because so much of the cost of providing bus service is paid for someone else, we don’t really see the total cost of a bus trip. That’s often a problem with services provided by the government. Since someone else is paying, there’s not the same concern for receiving value as there is when people spend their own money.

activate-wichita-rate-this-idea

The Activate Wichita website, by the way. When citizens are asked to rate ideas, to express their approval or — well, that’s the problem. Your choices for voting on an idea are: “I Love It!” … “I Like It!” … “It’s OK.” … “Neutral.” That’s it. There’s no voting option for expressing disagreement or disapproval with an idea. “Neutral” is as much dissent as Wichitans are allowed to express in this system. On this system that city leaders say they rely on for gathering citizen input, there needs to be a voting selection that expresses disagreement or disapproval with an idea. Otherwise when votes are tallied, the worst that any idea can be is “neutral.” City planners may get a false impression that all these ideas a fine and dandy.

wichita-citizen-involvement-2012

On the topic of citizen involvement: The mayor also told us this: “A few weeks ago – the city launched the Office of Community Engagement.” That’s something that the city needs, based on data the city has gathered. The Wichita Performance Measures Report holds some data from a survey called the National Research Center National Citizen Survey. Survey respondents were asked to rate “the job Wichita does at welcoming citizen involvement.” The results are shown in the nearby chart I created from data in the most recent version of the Wichita Performance Measure Report. The numbers are the percent of respondents giving “excellent” or “good” as their response to the question. The values for the last three administrations of the survey are between 35 percent and 39 percent. The report says this performance is “much below” a benchmark set by the National Research Center. The report tells us that the city expects to re-survey citizens in 2014. For that year, the city has given itself the lofty target of 40 percent of citizens rating the job Wichita does at welcoming citizen involvement as excellent or good. Maybe an Office of Community Engagement will help.

Last year the city conducted an extensive survey of residents. Of this survey, the mayor said: “We learned that more than 70% of our residents are willing to rise above their personal interests to do what’s best for the community.”

The problem with this is that it relies on the false concept of a conflict between personal interests and what is good for the community. In the marketplace, which is the opposite of government, people advance their self-interest in one legitimate way: By finding out the goods and services that others want, and then providing them. If you can do this well and efficiently, you can earn profits. It’s the quest for profits — that’s self interest — that drives people to figure out what others want, and then to work hard to provide that. Everyone benefits.

This quest for profits could, and should, apply to areas that are under the control of government. But people are so afraid that someone will earn a profit by serving their fellow man. Recently John Stossel spotlighted a park in New York City that is run by a private corporation with the aim of earning a profit. People are happy with the new park. They feel safe, even though the park doesn’t discriminate and still lets homeless people stay there. There’s commerce going on, selling food, for example. People like that, and evidence of that is the profit being earned. But Stossel’s guest was critical and unhappy because someone was earning a profit, even though park patrons were happy with the park and most were unaware of its private sector operation.

So when the park was operated by the city — for the common good, that is — not many people used it. It was dirty and trashy, and people didn’t feel safe. Under the profit motive, people like the park and they use it. So where is the conflict between personal interest and what is good for the community?

Now, not everything government does is bad. But when government dabbles in areas that the private sector can do very well, we see problems. As an example, the city wants to help real estate developers, but the city handled a recent situation so badly that the mayor apologized in his address, saying “We are also taking steps to ensure we have integrity and openness when we solicit proposals for development in the core area.”

Citizens that pay attention at city hall also note there are several small groups that contribute heavily to campaigns. Then the mayor and council members vote to give financial benefits to these people. These are not isolated incidents. This behavior is repeated over and over. Some cities have laws against this type of behavior. But in Wichita, while we’re being encouraged to put “what is good for the community” above our personal self-interest, we see city hall run over by cronyism. That is, by people using city government for their own interests. In the name of the “common good,” of course.

At the end of his speech, the mayor asked citizens to “get into the game,” saying: “We need you to be a player — not a spectator — to win a better and brighter tomorrow.”

But we’ve seen what happens when people want to be involved, but not in the way the mayor and council want. Do you remember the chart of airport data? Last year I presented that information to the city council. It so happened that Sedgwick County Commissioner Karl Peterjohn had appointed me to the Airport Advisory Board, and later in that same meeting the city council voted on my appointment. I was rejected. Only one council member voted in my favor. The Wichita Eagle reported: “Mayor Carl Brewer was clear after the meeting: The city wants a positive voice on the airport advisory board, which provides advice to the council on airport-related issues.” A positive voice is more valued than a critical voice, it seems.

Council members shall refrain 01

You may also remember how Susan Estes of Americans for Prosperity testified at a meeting of the Wichita City Council. She cited a section of the Wichita City Code that says council members shall refrain from making decisions involving, among other things, friends and business associates. She asked the mayor to observe that part of the city code. But the mayor lashed out at Estes and others and threatened a lawsuit.

At least this year the mayor didn’t mention the importance of open and transparent government, as he usually does. Because based on Activate Wichita — where there is no disagreement allowed, to rejecting board appointments simply because someone might be critical of the city’s programs, to threatening those who ask the mayor and council members to follow the laws that they passed, to the city’s hostile attitude towards the citizen’s right to know: The message we get is this: The city welcomes your involvement, but only up to a point. Question the authority, and you’re not welcome.

That’s the state of Wichita government, that government to be distinguished from the many wonderful people who live here. We can be thankful for the difference.

For Wichita’s economic development machinery, failure

Delano Clock Tower, WichitaCompared to a broad group of peer metropolitan areas, Wichita performs very poorly. As Wichita embarks upon a new era of economic development, we need to ask who to trust with this important task.

The good news: In a recent op-ed, Wichita Mayor Carl Brewer wrote that the city needs to make a decision regarding “A more aggressive approach to job creation.” (Carl Brewer: Wichita can have a great next year, December 22, 2013 Wichita Eagle)

The bad news: Wichita has performed very poorly in job creation in recent decades, and even if we decide on a more aggressive approach, pretty much the same crew is in charge.

Many in Wichita don’t want to recognize and confront the bad news about the performance of the Wichita-area economy. Last year, when presenting its annual report to local governmental bodies, the leaders of Visioneering Wichita would not present benchmark data to elected officials.

Some, however, have recognized the severity of the problem. In 2008 Harvey Sorensen, who has been chair of Visioneering Wichita, chair of the Wichita Metro Chamber of Commerce, and has held other civic leadership positions, wrote in the pages of the Wichita Eagle: “We are losing ground competitively with our peer communities.” (Community Needs a Common Vision, August 24, 2008 Wichita Eagle)

wichita-peer-job-growth-1990-2014-01

So what is the record of the Wichita metropolitan area regarding job creation, that seeming to be the most popular statistic our leaders cite and promote? I’ve prepared statistics from the Bureau of Labor Statistics, U.S. Department of Labor for Wichita and a broad group of peer cities. I included our Visioneering peer cities, cities that Visioneers traveled to on official visits, and a few others. The result, shown nearby, is not pretty. (Click on charts for larger versions, or click here to use the interactive visualization)

wichita-peer-job-growth-2007-2014-01

If we look at job creation starting in 1990, Wichita lags behind our Visioneering peers, but not behind all the peer cities that I selected. Wichita does better than Springfield, Illinois, for example. I chose to include that as a peer metropolitan area because that’s the immediate past city that Gary Plummer worked in. He was president of that city’s Chamber of Commerce, and is now president of the Wichita Chamber. Note the position of Springfield: Last place.

In next-to-last place we see Wichita Falls, Texas. I chose to include it because it is the immediate past home of Tim Chase. He was the head of Wichita Falls Economic Development Corporation. He’s now president of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development for the Wichita area.

In second-to-last place we see Pittsburgh, which I added because Visioneering leaders recently made a visit there.

Then, we come to Wichita.

If we look at job creation since 2007, the year before Sorensen wrote his op-ed, we find Wichita in a common position: Last place in job creation, and by a wide margin except for two cities. One is Wichita Falls, where our present GWEDC president recently worked. The other city that barely out-performs Wichita is Chattanooga, which I included because Visioneering civic leaders recently traveled there to learn from that city.

Over the decades in which Wichita has performed poorly, there have been a few common threads. Brewer has been council member or mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for decades. At Sedgwick County, manager William Buchanan has held that position for more than two decades. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. It is these officials who have presided over the dismal record of Wichita.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s becoming part of the legacy of Wichita’s efforts in economic development.

toolbox-29058_640

These leaders often complain that Wichita does not have enough “tools in the toolbox” to compete with other cities in economic development. Wichita does, however, have and use incentives. The State of Kansas regularly offers incentives so generous that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

Incentives: We have them. They haven’t worked for us.

It is nearly certain that this year Wichitans will be asked to approve a higher sales tax in order to pay for many things, including the more aggressive approach to job creation that Brewer mentioned. Based on the track record of our elected officials and bureaucrats, we need to do this: Before approving the tax and expenditures, Wichitans need to take a long look at the people who have been in charge, and ask what will be different going forward.

WichitaLiberty.TV January 5, 2014

In this episode of WichitaLiberty.TV: A look back at a few problematic issues regarding ethical government in Wichita in 2013. Topics include: Campaign contributions, the timing of city and school board elections, Mayor Carl Brewer’s integrity and threats, the need for campaign finance reform, the firing of a television news reporter, the apparently non-transparent way the city formulates policy, and the useless feedback systems the city relies on. Episode 26, broadcast January 5, 2014. View below, or click here to view at YouTube.

Wichita’s policymaking on display

Wichita city hall logo

When asked to provide documents that establish the city’s proclaimed policy, Wichita city hall is not able to do so, leaving us to wonder just how policy is made.

At an April meeting of the Wichita City Council, both Urban Development Director Allen Bell and Wichita city manager Robert Layton explained that for downtown projects, the city’s policy that the debt service fund must show a cost-benefit ratio of 1.3 to one or better doesn’t apply. (Video of Bell explaining this policy is here, and of Layton doing the same, here. Meeting minutes are here.)

More about this policy is available in In Wichita, economic development policies are questioned.

In that article, I mentioned that I attempted to find a document that states this policy. I asked the city to provide this document, or perhaps tell me when the city council acted to approve this policy, just as it has approved other similar policies.

After two days of searching, city officials have said that there is no such document that establishes this policy.

The people of Wichita ought to ask city hall just when this policy was made. City officials say Wichita has a transparent, open government. The Public-Private Partnership Evaluation Criteria for the redevelopment of downtown Wichita states “The business plan recommends public-private partnership criteria that are clear, predictable, and transparent.”

But in the first project to be approved under this plan, the city finds itself apparently making policy on the fly to fit the needs of a group of politically-connected developers. This is not economic development. Instead, it’s cronyism.

Some have said that we should just shrug this off as an innocent oversight. But this project is steeped in cronyism. It is the poster child for why Wichita and Kansas need pay-to-play laws so that city council members are prohibited from voting to send millions to their significant campaign contributors and the mayor’s fishing buddy.

Soon the city will probably ask Wichitans to trust it with more tax revenue so the city can do more for its citizens. The city commissioned a survey to justify this. Also, the mayor wants a dedicated stream of funding so that the city can spend more on economic development.

In other words, the city wants its citizens to trust their government. But in order to gain that trust, the city needs to avoid episodes like this.

Wichita economic development: Worth higher taxes?

In this excerpt from WichitaLiberty.TV: Wichita city and business leaders are likely to ask Wichitans to support a higher sales tax in order to support additional economic development efforts. Should Wichitans vote in favor of this? View below, or click here to view at YouTube.

Another thing that a tax increase in Wichita might be used for is for economic development. That is, paying subsidies to companies so that they will provide jobs in Wichita.

wichita-chamber-job-growth-2013-12
It’s felt that Wichita needs to step up its economic development efforts because things haven’t been going well lately. Not that everyone agrees. You’ve seen the charts I showed you, showing the growth of jobs in Wichita and also other economic indicators. When we compare Wichita with the nation as a whole and with our Visioneering peer cities, Wichita is almost always in last place. When I presented this data to the Wichita city Council, the Council members did not believe these numbers. So here’s a chart that was presented recently at a Wichita Metro Chamber of Commerce meeting. It uses the same data source that I use, the Bureau of Economic Analysis, and it shows the same data using the same methodology. It comes to the same conclusion: Wichita performs poorly.

Our chamber of commerce and its leadership will use this poor performance to argue that Wichita needs to spend more money on economic development. And that’s a problem.

Your chamber of commerce radio buttons
Very often, local chambers of commerce support principles of crony capitalism instead of pro-growth policies that allow free enterprise and genuine capitalism to flourish.

Now you may be confused. Most people probably think that local chambers of commerce, since their membership is mostly business firms, support pro-growth policies that embrace limited government and free markets. But that’s not always the case. Here, in an excerpt from his Wall Street Journal article “Tax Chambers” Stephen Moore explains:

“The Chamber of Commerce, long a supporter of limited government and low taxes, was part of the coalition backing the Reagan revolution in the 1980s. On the national level, the organization still follows a pro-growth agenda — but thanks to an astonishing political transformation, many chambers of commerce on the state and local level have been abandoning these goals. They’re becoming, in effect, lobbyists for big government.

“In as many as half the states, state taxpayer organizations, free market think tanks and small business leaders now complain bitterly that, on a wide range of issues, chambers of commerce deploy their financial resources and lobbying clout to expand the taxing, spending and regulatory authorities of government. This behavior, they note, erodes the very pro-growth climate necessary for businesses — at least those not connected at the hip with government — to prosper. Journalist Tim Carney agrees: All too often, he notes, state and local chambers have become corrupted by the lure of big dollar corporate welfare schemes.”

This is the argument that the Wichita Chamber of Commerce and the city council will be making: We don’t spend enough on business welfare. Capitalism and the free market: These things don’t work, they will tell us. Only government can save Wichita from decline. Business leaders will tell us we need more taxes for more spending on economic development. But be careful here:

There’s a difference between “business leaders” and “capitalists.”

Last year Charles Koch explained the difference in an article in the Wall Street Journal. He wrote:

“Far too many businesses have been all too eager to lobby for maintaining and increasing subsidies and mandates paid by taxpayers and consumers. This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundations of our culture.”

He continued:

“The effects on government are equally distorting — and corrupting. Instead of protecting our liberty and property, government officials are determining where to send resources based on the political influence of their cronies. In the process, government gains even more power and the ranks of bureaucrats continue to swell.”

In his article, Koch makes an important observation when he defines cronyism: “We have a term for this kind of collusion between business and government. It used to be known as rent-seeking. Now we call it cronyism. Rampant cronyism threatens the economic foundations that have made this the most prosperous country in the world.”

You regular viewers know that we have a problem with cronyism in Wichita. This is exemplified by incidents like where a mayor votes to send millions of taxpayer dollars to a man who owns movie theaters, and then the mayor sells his barbeque sauce in those theaters. It’s when a real estate developer lists the mayor and city manager as business references when bidding for a city project and thinks that no one will care or notice. It’s when a city council member receives thousands in campaign contributions from an out-of-state construction company right at the time he votes to award a contract to that company. It’s when the city council votes to give over-priced no-bid construction contracts to their significant campaign contributors.

In other words, instead of allowing people to direct resources to where they believe they will be most useful, our local government direct resources to their cronies. Where it’s useful for their political careers.

I’m of the opinion that it has harmed Wichita’s economic growth. It’s one of the reasons why Wichita is the bottom line in the charts we’ve seen. But many of our business leaders, and almost all of our political leaders, propose more of the same.

That’s right. Instead of focusing on things like water and sewer pipes, government wants to raise taxes so that it can direct more of our economy. Having neglected our water and sewer infrastructure to the point where the mayor says we need to spend at the rate of $70 million dollars per year for the next 30 years, our city leaders are going to ask us for more tax money so that they can try to fix the Wichita economy.

Returning to Stephen Moore’s article. Here he quotes Jon Caldera of the Independence Institute. “I used to think that public employee unions like the National Education Association were the main enemy in the struggle for limited government, competition and private sector solutions. I was wrong. Our biggest adversary is the special interest business cartel that labels itself ‘the business community’ and its political machine run by chambers and other industry associations.”

Let’s ask our business and political leaders some questions. First, will we acknowledge Wichita’s poor economic performance, or will we continue to ignore the facts and statistics? Second: Will we realize that the cozy relationship between city hall and a small group of insiders — Wichita’s cronies, if you will — is harmful and corrosive? Third: Will we realize that free enterprise and capitalism work better than cronyism?

Wichita can advocate for government transparency, or not

Wichita City Hall

Government should be responsive to citizens when they make legitimate requests for records. Wichita should not hide behind non-profit entities and tortured interpretations of the law in order to keep records secret.

When the Wichita City Council considers renewing its contract with Go Wichita Convention and Visitors Bureau, the council has another opportunity to decide whether it is truly in favor of open government and citizen access to records.

Go Wichita, along with the Wichita Downtown Development Corporation and Greater Wichita Economic Development Coalition, contends that it is not a “public agency” as defined in Kansas law, and therefore does not have to fulfill records requests. Mayor Carl Brewer and most council members are comfortable with this tortured interpretation of the law. Inexplicably, the Sedgwick County District Attorney agreed with the city.

I, along with many others, believe the city’s interpretation of the law is incorrect. So do many in the Kansas Legislature, and action may be taken there to eliminate the ability of Wichita to keep public records from the public. We can call it Gary’s Law, after Wichita City Attorney Gary Rebenstorf, who provides the legal advice the city relies upon.

The legal stance of the City of Wichita certainly isn’t good public policy. Citizens should be able to learn how taxpayer money is spent. Agencies like Go Wichita, WDDC, and GWEDC need to open their check registers as has Sedgwick County, for example.

In the meantime, there is nothing to prevent the city from asking Go Wichita to act as though it was a public agency as defined in the Kansas Open Records Act and to fulfill records requests. This would let Wichitans know that the city is truly interested in open and transparent government.

It’s easy to bluster about open government. In one of his “State of the City” addresses, Mayor Brewer promoted the city’s efforts in accountability and transparency, telling the audience: “We must continue to be responsive to you. Building on our belief that government at all levels belongs to the people. We must continue our efforts that expand citizen engagement. … And we must provide transparency in all that we do.” Many other city documents mention transparency as a goal for the city.

Earlier this year, the city won an award for government transparency regarding the city’s website. In a statement, the city manager said the city “will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

Until the city asks that these quasi-governmental organizations subject themselves to the Kansas Open Records Act, the message from the City of Wichita is clear: Accountability and transparency is provided on the city’s terms, not on citizens’ terms and the law.

Why open records are important

labette-community-college-donationHere’s an example as to why this issue is important: In 2009 Mike Howerter, a trustee for Labette Community College, noticed that a check number was missing from a register. Based on his inquiry, it was revealed that the missing check was used to reimburse the college president for a political contribution. While it was determined that the college president committed no crime by making this political contribution using college funds, this is an example of the type of information that citizens may want regarding the way public funds are spent.

This is the type of information that I have requested. It is what is needed to perform effective oversight. It is what the City of Wichita has decided to avoid.

This item in the past

Two years ago I asked that the city council approve the contract with Go Wichita only after adding a provision that Go Wichita consider itself a public agency under the Kansas Open Records Act. Following are a few notes from the meeting (video may be viewed here or at the end of this article):

Discussion of this matter at the meeting reveals that city staff believes that the annual reports filed by Go Wichita along with periodic checks by city staff are sufficient oversight.

City Attorney Gary Rebenstorf cited the law regarding enforcement of the Kansas Open Records Act, stating that the Kansas Attorney General or the courts is the next step to seek enforcement of KORA. While Rebenstorf is correct on the law, the policy of the Kansas Attorney General is to refer all cases to the local district attorney. The Kansas AG will not intervene in this matter.

Randy Brown, who is chair of the Kansas Sunshine Coalition for Open Government and former opinion page editor of the Wichita Eagle was at the meeting and spoke on this matter. In his remarks, Brown said “It may not be the obligation of the City of Wichita to enforce the Kansas Open Records Act legally, but certainly morally you guys have that obligation. To keep something cloudy when it should be transparent I think is foolishness on the part of any public body, and a slap in the face of the citizens of Kansas. By every definition that we’ve discovered, organizations such as Go Wichita are subject to the Kansas Open Records Act.”

Brown said that he’s amazed when public officials don’t realize that transparency helps build trust in government, thereby helping public officials themselves. He added “Open government is essential to a democracy. It’s the only way citizens know what’s going on. … But the Kansas Open Records Act is clear: Public records are to be made public, and that law is to be construed liberally, not by some facile legal arguments that keep these records secret.”

He recommended to the council, as I did, that the contract be contingent on Go Wichita following the Kansas Open Records Act.

Misunderstanding the scope of KORA

In remarks from the bench Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) asked the city manager a series of questions aimed at determining whether the city was satisfied with the level of service that Go Wichita has provided. He then extended that argument, wondering if any company the city contracts with that is providing satisfactory products or service would be subject to “government intrusion” through records requests. Would this discourage companies from wanting to be contractors?

First, the Kansas Open Records Act does not say anything about whether a company is providing satisfactory service to government. That simply isn’t a factor, and is not a basis for my records request to Go Wichita. Additionally, the Kansas Open Records Act contains a large exception, which excepts: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.” So companies that sell to government in the ordinary course of business are not subject to the open records law. Go Wichita is distinguished, since it is almost entirely funded by taxes and has, I believe, just a single client: the City of Wichita.

Finally, we should note that the open records law does not represent government intrusion, as Clendenin claimed. Open records laws offer citizens the ability to get an inside look at the working of government. That’s oversight, not intrusion.

Is the city overwhelmed with records requests?

Wichita City Council Member Pete Meitzner (district 2, east Wichita) asked that there might be a workshop to develop a policy on records requests. He expressed concern that departments might be overwhelmed with requests from me that they have to respond to in a timely fashion, accusing me of “attempt to bury any of our departments in freedom of information acts [sic].”

In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I have made one request this year to the city citing the open records act. It was denied. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.

As to his concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is typical of elected officials — disdain for providing records to citizens. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent. The city should not hide behind non-profit entities and torture the law in order to keep records secret.

Wichita’s attitude towards citizens

Randy Brown’s remarks are an excellent summation of the morality and politics of the city’s action and attitude regarding this matter.

The council ought to be wary of taking legal advice from city attorney Gary Rebenstorf. He has been wrong several times before when issuing guidance to this council regarding the Kansas Open Meetings Act, which is similar to the Open Records Act. He’s taken the blame and apologized for these violations. He was quoted in the Wichita Eagle as saying “I will make every effort to further a culture of openness and ensure that like mistakes are avoided in the future.”

But Rebenstorf’s attitude, as gauged accurately by Randy Brown, is to rely on facile legal arguments to avoid complying with the clear meaning and intent of the law.

Why city council members would be opposed to what I have asked is unknown. Perhaps they know that among the public, issues relating to open records generally aren’t that important. Citizens ought to note the actions of Mayor Brewer. The mayor could easily put this matter to an end. He speaks of wanting to have open and transparent government, but when it comes time to make a tough call, his leadership is missing.

It’s becoming evident that Kansans need a better way to enforce compliance with the Kansas Open Records Act. It seems quite strange that local district attorneys are placed in a quasi-judicial role of deciding whether citizen complains are justified. If citizens disagree — and nearly everyone I’ve talked to thinks that the opinion issued by the Sedgwick County District Attorney is this matter is nonsensical and contrary to the letter and spirit of the law — they find themselves in the position of suing their government. That is costly, and citizens soon realize their own taxpayer dollars are used against them.

Wichita logic open records

WichitaLiberty.TV November 24, 2013

WichitaLiberty.TV.09In this episode of WichitaLiberty.TV: Host Bob Weeks takes a look at proceedings of a Wichita City Council meeting and uses it to illustrate some of the reasons why the Wichita-area economy is not growing very rapidly. Episode 21, broadcast November 24, 2013. View below, or click here to view at YouTube.

Wichita economic development, a few issues

wichita-chamber-commerce-2013-11-05What should we conclude when the incoming chair of the Wichita Metro Chamber of Commerce uses the threat of moving his company out of Wichita to extort tax breaks from the Wichita City Council?

What lesson should we learn when the Wichita Metro Chamber of Commerce is likely to recommend higher taxes for Wichitans, but its incoming chair asks to be excused from paying these taxes?

What example do we establish when the incoming chair of the Wichita Metro Chamber of Commerce asks for tax breaks on office space he will rent, thereby giving him an advantage over other downtown landlords that do pay their full share of taxes?

Should we ask how Wichita Mayor Carl Brewer will achieve his goal of building the tax base when people ask to be excused from contributing to that base?

These are some of the issues the council should weigh tomorrow. For more on this matter, see In Wichita, the case for business welfare.

Downtown Wichita tax base: Growing?

IMG_1956

There’s been much investment in downtown Wichita, we’re told, but the goal of increasing the tax base is farther away rather than closer.

Wichita city leaders have promoted public investment in downtown Wichita as wise because it will increase the tax base.

In his State of the City Address for 2013, Wichita Mayor Carl Brewer told the audience (based on his prepared remarks):

As you know, revitalizing downtown has been a key part of growing our community in recent years, recognizing that a healthy and thriving downtown improves our ability to attract new business, keep our young people here, and expand our tax base. With $100 million in completed downtown projects in 2012 and another $115 million starting this year, we’ve made extraordinary progress toward having the downtown that Wichitans have dreamed of. … As development continues downtown, we are closer to reaching our goals of increased pride, an increased tax base, and bringing more businesses and jobs to Wichita.

ssmid-investment-quote-2013

In its report on the economics of downtown Wichita redevelopment, the Wichita Downtown Development Corporation says:

The Downtown SSMID (Self Supported Municipal Improvement District — shown above) has seen a ten-year total amount of $396,850,538 in public investment and $564,776,159 in private investment. SSMID property values have increased over $300 million in the last ten years.

The Wichita Downtown Development Corporation sold the planning process to Wichitans by making the argument that “it will grow existing tax base revenues.”

Wichita downtown self-supporting municipal improvement district (SSMID) boundary map

To evaluate the success of the city’s efforts, we might look at the change in assessed property valuation in downtown Wichita over past years. A way to do that is to look at the valuations for property in the Wichita downtown self-supporting municipal improvement district (SSMID). This is a region of the city that pays an additional property tax to fund the activities of the Wichita Downtown Development Corporation. Its boundaries are roughly the Arkansas River east to Washington, and Kellogg north to Central.

Assessed valuation is the basis for levying property tax. The process starts with an appraised value, which is targeted to be fair market value for the property. Then, that is multiplied by 25 percent for commercial property, or by 11.5 percent for residential property. This produces the assessed value. Multiply that by the sum of the several mill levy rates that apply to the property, and you have the total property tax for that property.

With all the new projects coming online in downtown Wichita, we should expect that the assessed valuation is rising. As someone converts an old, dilapidated property into something more valuable, appraised and assessed values should rise. As new buildings are built, new appraised and assessed value is created where before there was none (or very little). This process is the success story that Mayor Brewer and boosters of public investment in downtown trumpet, as the mayor did twice in one paragraph in his State of the City Address.

So what has happened to the assessed valuation of property in downtown Wichita, using the SSMID as a surrogate?

The answer is that after a period of increasing values, the assessed value of property in downtown has has been declining. The peak was in 2008. The nearby table holds the figures.

This is the opposite of what we’ve been promised. We’ve been told that public investment in downtown Wichita builds up the tax base.

Some might excuse this performance by noting there’s been a recession. That’s true. But according to presentations, there has been much activity in downtown Wichita. Hundreds of millions of dollars in worth, we are told.

So why isn’t the assessed valuation rising? Why is it falling during the time of huge successes?

Wichita downtown self-supporting municipal improvement district (SSMID) assessed property valuation

Data can be viewed here.

Curious Wichita ethics enigmas

Wichita City Hall

As he has done previously, Wichita Mayor Carl Brewer decided not to vote on a matter involving Spirit Aerosystems at the November 5, 2013 meeting of the Wichita City Council.

The mayor didn’t give a reason for recusing himself, but it’s probably because he was formerly an employee at Spirit. So it’s good that he did this. But if we’re going to observe ethics protocols like this — and we should — let’s do them correctly. The mayor should have announced at the start of this item that he had to recuse himself, and then he should have left the bench and probably also the council chambers. Instead, Brewer presided over the presentation and discussion of the item, and then stated he wouldn’t be voting. It’s a small matter, but we might as well do things right.

What is much more important — and curious — is this: Brewer feels he can’t vote on an item involving a company where he was an employee. But, he has no such compunction about voting on matters that send taxpayer money to his fishing buddy, even via no-bid contracts.

Even more curious: Brewer thought it was ethical to vote to send taxpayer money to the movie theater owner who also sells his barbeque sauce.

Add to this confusing mix of ethical judgment calls: The mayor feels he can’t shop for his personal automobile in Wichita because he doesn’t want to be accused of getting a “special deal,” in his words.

If someone can explain this line of reasoning by the mayor and/or the city, I’d appreciate being enlightened.

It’s good to know that this mayor is concerned about ethical behavior when shopping for a car or voting on matters concerning his former employer. But I’m surprised, as this concern for virtue doesn’t match the behavior of the mayor and many members of the Wichita City Council. Shall we run down the list?

Exhibit 1: In August 2011 the Wichita City Council voted to award Key Construction a no-bid contract to build the parking garage that is part of the Ambassador Hotel project, now known as Block One. The no-bid cost of the garage was to be $6 million, according to a letter of intent. Later the city decided to place the contract for competitive bid. Key Construction won the bidding, but for a price $1.3 million less.

Wichita mayor Carl Brewer with major campaign donor Dave Wells of Key Construction.

The no-bid contract for the garage was just one of many subsidies and grants given to Key Construction and Dave Burk as part of the Ambassador Hotel project. Both of these parties are heavy campaign contributors to nearly all city council members. Brewer and the head of Key Construction are apparently friends, embarking on fishing expeditions.

What citizens need to know is that Brewer and the Wichita City Council were willing to spend an extra $1.3 million of taxpayer money to reward a politically-connected construction firm that makes heavy campaign contributions to council members. Only one council member, Michael O’Donnell, voted against this no-bid contract. At the time, no city bureaucrats expressed concern about this waste of taxpayer money.

Exhibit 2: In July 2012 Brewer participated in a decision to award the large contract for the construction of the new Wichita airport to Key Construction, despite the fact that Key was not the low bidder. The council was tasked to act in a quasi-judicial manner, to make decisions whether discretion was abused or whether laws were improperly applied. Brewer’s judgment was in favor of Key Construction, even though its bid had the same defect as the lower bid. This decision cost taxpayers and airport users an extra $2 million, to the benefit of a major campaign donor and fishing buddy.

Exhibit 3: In a Wichita Eagle story that reported on “city-financed downtown parking garages that spiraled well over budget” we learned this: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.”

Despite this personal experience, Brewer wrote a letter recommending Key Construction (and only Key), observing “Key is known for their consistent quality construction, budget control and on schedule delivery.”

Exhibit 4: In 2008 the Wichita City Council approved a no- and low-interest loan to movie theater owner Bill Warren and his partners. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

Warren Theater Brewer's Best 2013-07-18

Warren’s theaters have received other financial benefits from the city under Brewer’s leadership, too. Then — and I swear I am not making this up — when Brewer started manufacturing and selling barbeque sauce, it was sold at Warren’s theaters.

Really. It happened.

What can we say about a mayor who is concerned about the appearance of impropriety when voting on economic development incentives for his former employer, but is not able to understand the problems with his own behavior in office?

That he feels he needs to shop for a car outside the city, but at the same time has no problem voting for overpriced no-bid contracts for campaign contributors and friends?

That he feels he can’t vote to give a tax break to his former employer, but votes to give millions to a campaign contributor, and then sells his barbeque sauce in that person’s business?

It’s difficult to understand or reconcile these decisions.

WichitaLiberty.TV November 3, 2013

In this episode of WichitaLiberty.TV: Host Bob Weeks notices a recent Kansas City Star editorial made the case for higher school spending in Kansas, but is based on a premise that doesn’t exist in fact. Bob wonders if the City of Wichita is concerned with measuring and managing its economic development efforts. Amanda BillyRock illustrates another chapter of “Economics in One Lesson” titled “Fetish of Full Employment.” Episode 19, broadcast November 3, 2013. View below, or click here to view at YouTube.

Wichita economic development not being managed

The Wichita Eagle has reported that Wichita has increased its granting of property tax exemptions in recent years. (Wichita doubles property tax exemptions for businesses, October 20, 2013) Buried in the story is the really important aspect of public policy. In his reporting, Bill Wilson wrote:

The Eagle asked the city last week for an accounting of the jobs created over the past decade by the tax abatements, a research project that urban development staffers have yet to complete.

“It will take us some time to pull together all the agenda reports on the five-year reviews going back to 2003. That same research will also reveal any abatements that were ‘retooled’ as a result of the five-year reviews,” city urban development director Allen Bell said. “I can tell you that none of the abatements were terminated.”

wichita-economic-development

One might have thought that the city was keeping records on the number of jobs created on at least an annual basis for management purposes, and would have these figures ready for immediate review. But apparently that isn’t the case.

We need to recognize that because the city does not have at its immediate disposal the statistics about job creation, it is evident that the city is not managing this effort. Or, maybe it just doesn’t care.

This is a management problem at the highest level. In January when the city council awarded city manager Robert Layton a large raise, the praise from council members was effusive. This means one of several things: (a) that the mayor and city council have not asked for these job creation numbers, or (b) city council members don’t care about the numbers, or (c) they’re not interested in knowing the numbers. There could be other explanations, but all point to a lack of bureaucratic management and political oversight.

I wonder why the city officials didn’t explain that according to their analysis and way of thinking, these tax abatements don’t have a cost. When presented to the council, each abatement opportunity is generally accompanied by a benefit-cost analysis that purports to show that the city, county, school district, and state gain more in tax revenue than they forego from the abatement. Does this extra government revenue create jobs?

In any case, the number of jobs stemming from our economic development efforts is small. In his State of the City Address for 2012, Mayor Carl Brewer said that the city’s efforts in economic development had created “almost 1000 jobs.” While that sounds like a lot of jobs, that number deserves context. According to estimates from the Kansas Department of Labor, the civilian labor force in the City of Wichita for December 2011 was 192,876, with 178,156 people at work. This means that the 1,000 jobs created accounted for from 0.52 percent to 0.56 percent of our city’s workforce, depending on the denominator used. This minuscule number is dwarfed by the normal ebb and flow of other economic activity. (The mayor didn’t mention job creation figures in his 2013 address.)

The case of InfoNXX

Here’s an example of property tax abatements granted for which the city received little in return. In 2005, with great fanfare, the city announced that its economic development recruitment efforts had landed InfoNXX, an operator of call centers. The council agenda report of November 15, 2005 recommended that the council approve a letter of intent for tax abatements. The report stated this:

The Greater Wichita Economic Development Coalition has worked with a national site consultant to recruit a new company to Wichita. InfoNXX, Inc., major provider of telephone directory assistance and enhanced information services to leading communications companies, businesses and consumers located principally in the United States, United Kingdom, France, and Italy. As a result of the recruitment effort, InfoNXX will locate a large customer service center in the former MCI Building, near Rock Road and K-96 in northeast Wichita, and hire over 900 customer care representatives. As an economic development incentive, the City offered InfoNXX Industrial Revenue Bonds (IRBs) and property tax abatement on equipment and furnishings, subject to City Council approval.

RECOMMENDED ACTION: Approve a Letter of Intent to InfoNXX Inc. for Industrial Revenue Bonds in an amount not-to-exceed $6 million, subject to the Letter of Intent conditions, for a term of six-months, approve a 100% tax abatement on all bond-financed property for an initial five-year period plus an additional five years following City Council review, and authorize the application for a sales tax exemption on bond-financed property.

On December 13, 2005 the council approved the ordinance granting the tax abatements.

Fast forward to the February 15, 2011 council agenda packet. The five year initial property tax abatement granted in 2005 was over, and the council could extend it for another five years if the committed goals had been met. The agenda report gave this summary for capital investment: “Purchase furniture, fixtures and equipment for a capital investment of $6 million.” Results, according to city documents, were “Invested $7,331,379 million [sic] in FF&E.”

For job creation, the 2005 commitment was “Create 944 new jobs in five years.” Results, according to city documents, were “Created 870 new jobs; current job level is 185.”

InfoNXX was short of its job creation commitments, but the city used a loophole to grant a one-year extension of the tax abatement. That one-year extension was never the subject of further consideration, as InfoNXX changed its name, and in January 2012 closed the Wichita facility that was the subject of these incentives.

It’s unfortunate for Wichita and the InfoNXX employees that the facility closed. The important public policy consideration is that we learn from this. So, when Wichita counts the number of jobs created, does it adjust for short-lived jobs like these?

The answer, I believe, is no. We don’t adjust our job creation statistics, and we don’t learn.

gwedc-office-operations

In fact, we don’t even keep current. GWEDC — that’s the Greater Wichita Economic Development Coalition credited with recruiting InfoNXX to Wichita — doesn’t update its website to reflect current conditions. InfoNXX closed its facility in Wichita in 2012, and as we saw above, city documents said that at its peak the company employed 870 in Wichita. As of today, here’s what GWEDC says on a page titled Office Operations:

Wichita hosts over a dozen customer service and processing centers – including a USPS Remote Encoding Center (985 employees), InfoNXX (950), T-Mobile (900), Royal Caribbean (700), Convergys (600), Protection One (540), Bank of America (315) and Cox Communications (230.) (emphasis added)

So the official Wichita-area economic development agency proclaims the existence of a company that no longer exists in Wichita, and claims a job count that the company never achieved. This is beyond careless negligence. This is malpractice.

The USPS Remote Encoding Center mentioned? It’s being closed this year.

Going forward

In his State of the City address for 2013 the Wichita mayor lamented the fact that Wichita has no dedicated funding source for economic development. It’s likely that Wichitans will be asked to approve increased taxes for economic development, as well as for many other things we want like a new central library, new water and sewer pipes, improved public transit, and downtown development.

But before Wichita officials ask for more taxes so there can be more spending, they need to convince us that they care about measuring and managing results. They haven’t shown this so far.

Wichita contracts, their meaning (or not)

Is the City of Wichita concerned that its contracts contain language that seems to be violated even before the contract is signed?

This week the Wichita City Council approved a development agreement for the apartments to be built on the west bank of the Arkansas River. The development agreement the council contemplated included this language in Section 11.06, titled “Conflicts of Interest.”

section-1106

No member of the City’s governing body or of any branch of the City’s government that has any power of review or approval of any of the Developer’s undertakings shall participate in any decisions relating thereto which affect such person’s personal interest or the interests of any corporation or partnership in which such person is directly or indirectly interested.

At Tuesday’s meeting I read this section of the contract to the council. I believe it is relevant for these reasons:

Warren Theater Brewer's Best 2013-07-18

1. Wichita Mayor Carl Brewer is a member of a governing body that has power of approval over this project.

2. Bill Warren is one of the parties that owns this project.

3. Bill Warren also owns movie theaters.

4. Wichita Mayor Carl Brewer owns a company that manufactures barbeque sauce.

5. Brewer’s sauce is sold at Warren’s theaters.

The question is this: Does the mayor’s business relationship with Warren fall under the prohibitions described in the language of section 11.06? Evidently not. After I read section 11.06 I asked the mayor if he sold his sauce at Warren’s theaters. He answered yes. But no one — not any of the six city council members, not the city manager, not the city attorney, not any bureaucrat — thought my question was worthy of discussion.

(While the agreement doesn’t mention campaign contributions, I might remind the people of Wichita that during 2012, parties to this agreement and their surrogates provided all the campaign finance contributions that council members Lavonta Williams and James Clendenin received. See Campaign contributions show need for reform in Wichita. That’s a lot of personal interest in the careers of politicians.)

I recommend that if we are not willing to live up to this section of the contract that we strike it. Why have language in contracts that we ignore? Parties to the contract rationalize that if the city isn’t concerned about enforcing this section, why should they have to adhere to other sections?

While we’re at it, we might also consider striking Section 2.04.050 of the city code, titled “Code of ethics for council members.” This says, in part, “[Council members] shall refrain from making decisions involving business associates, customers, clients, friends and competitors.”

That language seems pretty clear to me. But we have a city attorney that says that this is simply advisory. If the city attorney’s interpretation of this law is controlling, I suggest we strike this section from the city code. Someone who reads this — perhaps a business owner considering Wichita for expansion — might conclude that our city has a code of ethics that is actually observed by the mayor and council members and enforced by its attorneys.

Wichita does it again

Government takes and gives

Wichita never seems to learn. Its government, that is.

The last time Key Construction was awarded a no-bid contract for building a parking garage in Wichita, it almost cost Wichita taxpayers an extra 27 percent. Now the Wichita City Council has done it again, awarding Key another no-bid contract for a project paid for by taxpayers.

In August 2011 the Wichita City Council voted to award Key Construction a no-bid contract to build the parking garage that is part of the Ambassador Hotel project, now known as Block One. The no-bid cost of the garage was to be $6 million, according to a letter of intent. Later the city decided to place the contract for competitive bid. Key Construction won the bidding, but for a price $1.3 million less.

Today the council voted to award Key another no-bid contract. City officials said that the garage is too intertwined with the rest of the project to be put out to bid. They said that in 2011, too.

After the 2011 incident, Wichita city manager Robert Layton told the Wichita Eagle that he would seek a policy change against no-bid contracts. But that didn’t happen today.

So taxpayers are likely to overpay again, and for a project benefiting a politically-connected firm.

There is hope for the taxpayers, however. After the 2011 award to Key, then-council member Michael O’Donnell objected. It’s said that Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita) also objected. That’s when the city decided to put the garage out to competitive bid and saved taxpayers $1.3 million.

It’s possible this could happen again. Meitzner was absent for today’s vote. New council member Jeff Blubaugh now represents the same district that O’Donnell did two years ago. Maybe Wichita taxpayers can ask O’Donnell to talk to Blubaugh about this. Perhaps as Meitzner prepares his bid to be the next mayor, he could use this as an opportunity to exercise leadership in favor of taxpayer stewardship instead of protecting the system of cronyism.

Key Construction and Mayor Carl Brewer

Should Mayor Carl Brewer have participated in voting on this matter? Here’s a section from the Wichita city code as passed in 2008:

“[Council members] shall refrain from making decisions involving business associates, customers, clients, friends and competitors.”

Wichita mayor Carl Brewer with major campaign donor Dave Wells of Key Construction.

This no-bid contract for the garage is just one of many subsidies and grants given to Key Construction and its partners at taxpayer expense. Key, its executives, and their spouses are heavy campaign contributors to nearly all city council members. Brewer and the head of Key Construction are apparently friends, embarking on fishing expeditions.

What citizens need to know is that Brewer and the Wichita City Council were willing to spend an extra $1.3 million of taxpayer money to reward a politically-connected construction firm that makes heavy campaign contributions to council members. Only one council member, Michael O’Donnell, voted against this no-bid contract. At the time, no city bureaucrats expressed concern about this waste of taxpayer money.

Then, in July 2012 Brewer participated in a decision to award the large contract for the construction of the new Wichita airport to Key Construction, despite the fact that Key was not the low bidder. The council was tasked to act in a quasi-judicial manner, to make decisions whether discretion was abused or whether laws were improperly applied. Brewer’s judgment was in favor of Key Construction, even though its bid had the same defect as the lower bid. This decision cost taxpayers and airport users an extra $2 million, to the benefit of a major campaign donor and fishing buddy.

In a Wichita Eagle story that reported on “city-financed downtown parking garages that spiraled well over budget” we learned this: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.”

Despite this personal experience, Brewer wrote a letter recommending Key Construction (and only Key) for a project, observing “Key is known for their consistent quality construction, budget control and on schedule delivery.” The mayor’s recommendation is not consistent with the reality of Key’s experience with the City of Wichita.

Lavonta Williams and James Clendenin

Although city code has no prohibition against council members voting to enrich their significant campaign contributors with no-bid contracts, there ought to be such a law. And when the recipient company is a very significant contributor, we can’t help but wonder about the wisdom and stewardship exhibited by the council.

In 2012, as incumbent council members Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) and Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) were preparing to run for re-election, their campaigns, that year, were financed entirely by two sources. One of these was a group of principals and executives of Key Construction.

Those associated with Key Construction gave a total of $7,000. Williams received $4,000, and $3,000 went to Clendenin. For Williams, this was the only campaign money she received in 2012.

With relationships like these, can we have and confidence that the mayor and council are looking out for the interests of the citizens of Wichita, or for the interests of the significant campaign contributors and fishing buddies?

Wichita performs a reference check, the video

Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. The video below explains, or click here to view in HD on YouTube. For an article on this topic, see Wichita performs a reference check, sort of.

Wichita performs a reference check, sort of

Wichita city hall logoFor a video presentation of this material, click on Wichita performs a reference check, the video.

Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. Cronies, if you will.

A recent application filed with Wichita City Hall regarding the West Bank Development Project raises two questions: Did the government officials listed as references give their permission, and were any of the references contacted to learn what they knew about the applicants?

The application filed by the River Vista development team shows this: The team, consisting of George Laham, Dave Wells, Dave Burk, and Bill Warren listed numerous local, state, and federal officials as references. Here’s the list of officials that appeared one or more times:

Wichita city manager Robert Layton
Wichita Mayor Carl Brewer
Wichita City Council Member Jeff Longwell (district 5, west and northwest Wichita)
Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita)
Sedgwick County District Attorney Marc Bennett
Sedgwick County Sheriff Jeff Easter
Sedgwick County Commissioner Dave Unruh
Sedgwick County Commissioner Tim Norton
Kansas Governor Sam Brownback
U.S. Representative Mike Pompeo

Except for Jeff Easter, none of these officials gave permission for their names to be used in this way. (We didn’t get a response regarding Tim Norton.)

Furthermore, none of these officials were contacted by the evaluation committee whose job it is to vet these potential city partners.

A few questions: First, do you think it is appropriate for the city manager to be listed as a reference, given that anyone who reads this document would take it as an endorsement? No, of course it is not appropriate.

Related: Do you think it’s appropriate for the city manager to endorse one of the applicants? We don’t know if the presence of the city manager’s name as a reference implies an endorsement, because George Laham did not ask the city manager if he could be listed as a reference. We know this because we asked.

Further, the committee that evaluated the development teams did not call the city manager to inquire about George Laham. We asked about this, too. But making inquiries of references: Isn’t that what an evaluation committee or vetting team should do? But we know that the evaluation committee did not contact even one of these officials that were listed as references.

These applicants likely knew that the evaluation committee would not contact these references. Therefore, they freely listed these government officials. Which makes us wonder — what is the point of having an evaluation committee?

Even further: Is it appropriate for the city to partner with people who think it’s proper to list the city manager as a reference without asking if that was permissible, knowing that the manager wouldn’t be contacted? Same question regarding the mayor, governor, our U.S. Congressman, and district attorney?

In light of this — numerous government officials listed as references without their permission or knowledge, an evaluation committee that never contacted these officials, and the information that these references could have provided: Do you think the evaluation committee fulfilled its duty to perform due diligence on behalf of the interests of the people of Wichita?

What the evaluation committee might have learned

If the evaluation committee had contacted these references, here’s what might have been learned.

Dave Wells: Wells is president of Key Construction. Last year the Wichita Eagle reported on “city-financed downtown parking garages that spiraled well over budget.” Noting the cost overruns, reporter Bill Wilson wrote: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.” (Wichita city manager proposes eliminating no-bid construction projects.)

Also, two years ago Key Construction proposed — and was awarded by the city council — a no-bid contract for a parking garage. But the city later put the contract to competitive bid. Key, which first bid $6 million, later bid $4.7 million. If the desire of the majority of the city council, including Mayor Carl Brewer, had been realized, Wichita taxpayers would have sent an extra — and unnecessary — $1.3 million to a politically-connected construction company.

By the way, the mayor’s relationship with Wells means he should not have voted on this matter.

Dave Burk, Dave Wells: These two were original partners in WaterWalk, which has received over $40 million in subsidy, with little to show for results.

Dave Burk: He’s received many millions from many levels of government, but still thinks he doesn’t get enough. This is what we can conclude by his appeal of property taxes in a TIF district. Those taxes, even though they are rerouted back to him for his benefit, were still too high for his taste, and he appealed. The Wichita Eagle reported in the article (Developer appealed taxes on city-owned property): “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

rebenstorf-quote-dave-burkA number of Wichita city hall officials were not pleased with Burk’s act. According to the Eagle reporting, Burk was not authorized to do what he did: “Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

Council member Jeff Longwell was quoted by the Eagle: “‘We should take issue with that,’ he said. ‘If anyone is going to represent the city they obviously have to have, one, the city’s endorsement and … two, someone at the city should have been more aware of what was going on. And if they were, shame on them for not bringing this to the public’s attention.'”

In a separate article by the Eagle on this issue, Wichita city manager Robert Layton said that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.'”

The manager’s quote is most directly damaging. In a tax increment financing (TIF) district, the city borrows money to pay for things that directly enrich the developers, in this case Burk and possibly his partners. Then their increased property taxes — taxes they have to pay anyway — are used to repay the borrowed funds. In essence, a TIF district allows developers to benefit exclusively from their property taxes. For everyone else, their property taxes go to fund the city, county, school district, state, fire district, etc. But not so for property in a TIF district.

This is what is most astonishing about Burk’s action: Having been placed in a rarefied position of receiving many millions in benefits, he still thinks his own taxes are too high. Now he wants more city taxpayer subsidy.

warren-bailout-poses-dilemma

Bill Warren: In 2008 the Old Town Warren Theater was failing and its owners — Bill Warren being one — threatened to close it and leave the city with a huge loss on a tax increment financing (TIF) district formed for the theater’s benefit. Faced with this threat, the city made a no-interest and low-interest loan to the theater. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

Besides Warren, you may — or may not — be surprised to learn that the theater’s partners included Dave Wells and Dave Burk, the same two men mentioned above. Also, Mayor Brewer’s relationship with Warren means he should not have voted on this matter.

It hasn’t worked, but Wichita will do it again

man-digging-coinsTomorrow the Wichita City Council will, in all likelihood, issue more business welfare in an effort to create jobs in Wichita.

The applicant company is asking for relief from paying property taxes under the city’s Economic Development Exemption (EDX). The city’s economic development policy has a formula that determines how much tax can be excused, based on job creation and capital investment. In this case, according to city documents, “WSM Industries qualifies for a 59%, five-plus-five year tax exemption.” Not 50 percent, and not 60 percent. Precisely 59 percent is what the city judges.

Here’s how the tax savings breaks down among the various taxing jurisdictions:

City of Wichita: $4,500
Sedgwick County: $4,081
USD 259: $7,920
State of Kansas: $209
Total: $16,710

An analysis performed for the city indicates a favorable benefit-cost ratio for these incentives. This inspires a question: If we really believe in this benefit to the city (and similar benefits to the county, school district, and state), why doesn’t the city make more investments like this? Surely there are other worthy companies could expand if not for the burden of property taxes. And that’s what tomorrow’s contemplated action means, if we are to believe it is anything but cronyism and business welfare: Property taxes in Wichita are what prevented this company from expanding. Erase 59 percent of the company’s property tax burden, and it is able to make new capital investment and jobs.

If it really is so easy to promote economic growth and job creation, we should be doing things like this at every city council meeting. Several times each meeting, don’t you think?

I also wonder about companies that made expansions as did this applicant company, but did not ask the city for incentives. What is their secret?

The reality is that these economic development incentives don’t work, if we are willing to consider the effect on everyone in the region instead of just this applicant company, and also if we are willing to consider the long-term effects instead of only the immediate.

Peer-reviewed research on economic development incentives — this is the conclusion of all the studies — find business location decisions to be favorably influenced by targeted tax incentives. That’s not a surprise. But the research also finds that the benefits to the communities that offered them were less than their costs.

Wichita and Peer Job Growth, Total Employment

If peer-reviewed research is not convincing, let’s take a look at the record of Wichita.
Here is a chart of job growth for Wichita, the nation, and our Visioneering peers. (Click it for a larger version, or click here for the interactive visualization, or here to watch a video.) The data shows that Wichita hasn’t been doing well.

So if we believe that an active role for government in economic development is best, we have to also recognize that our efforts aren’t working. Several long-serving politicians and bureaucrats that have presided over this failure: Mayor Carl Brewer has been on the city council or served as mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for many years. At Sedgwick County, manager William Buchanan has held that position for more than two decades. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. It is these officials who have presided over the dismal record of Wichita.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s becoming part of the legacy of Wichita’s efforts in economic development.

For Wichita, more districts, more taxes, more bureaucracy

red-tape-person-upset

Tomorrow the Wichita City Council will consider formation of a Tourism Business Improvement District. Actually, the council will formation of a planning committee to determine boundaries, parameters, budgets, and how to fund the budget.

The impetus behind the TBID, according to city documents, is “Go Wichita has proposed that a TBID be created to enhance its marketing efforts.” Go Wichita is the Wichita Convention and Visitors Bureau. The source of its funds, again from city documents: “A fee is assessed to each of these properties based on room night sales. This fee is usually determined as a percentage of the room rate or as a flat dollar amount per night. The funds collected in the district are spent exclusively for the benefit of the hotels and are usually programmed by the local convention and visitor’s bureau.”

What will be done with the money that is raised? “The funds generated from the district would be used to increase convention advertising in key meeting planner publications, convention sales initiatives in key markets and digital advertising. Additionally, a significant portion of the new funds would be earmarked for leisure marketing efforts.”

Tomorrow’s action contemplated by the council is just the formation of a planning committee, not he actual TBID. So there’s still time to think this through. Here’s what I hope the city considers:

First, is there any way to distinguish this “fee” from a tax? A tax that will probably be passed along to visitors to Wichita?

Second: Is there any way to characterize this as anything other than an expansion of bureaucracy in Wichita? I really wonder if the hotel operators know what they’re getting themselves mixed up in. If the hotels feel they need more marketing firepower to attract business to Wichita, I’m sure they’d do better to form a voluntary association to undertake this task. This would be nimble and flexible in way that a government bureaucracy can never be. But who will stand up to this expansion of our tourism bureaucracy? A hotel owner that wishes to receive referrals? Like most government bureaucrats, those who will run this new program “profit” from increasing their power and influence, and by expansion of their budgets, perks, and staffs. They won’t look favorably on those who don’t go along with the program.

Then: The members of the committee are appointed by the mayor. Hotel owners: Do you want Carl Brewer to be in charge of appointing people to oversee something important to your business?

Finally, the people of Wichita need to realize that pursuit of convention and tourism business is not the wisest path to follow. Wall Street Journal reporting from last year concluded with:

“Mr. Sanders, the University of Texas professor, predicts the glut of convention space will only get worse, because a number of cities continue to push expansions. He blames cities’ hired consultants, who he said predict “all these people are going to come and do wonderful things to your economy.”

“But the problem is they aren’t coming anymore, because there are lots of other convention centers … that desperately want that business,” he said. “So Atlanta steals from Boston, Orlando steals from Chicago and Las Vegas steals from everywhere.”

The “Mr. Sanders” referred to in the Journal reporting is Heywood T. Sanders, who is professor in the Department of Public Administration at the University of Texas at San Antonio. He is a noted critic of public efforts to chase convention business for economic development. His 2005 report report Space Available: The Realities of Convention Centers as Economic Development Strategy was published by the left-leaning think tank The Brookings Institution. It provides a look at the realities of the convention trade.

Sanders writes that convention center business has been on the decline, and it started well before the terrorist attacks in 2001. In a section titled “Trends: Portrait of a Faltering Industry” we can read that attendance is down, exhibit space demand is down, and hotel room demand in cities has fallen too.

The author notes that the decline in convention business is a structural decline: “[Reasons for decline] are the product of industry consolidation, particularly in the hardware and home improvement industry, reductions in business travel in the face of increasing cost and difficulty, and alternative means of conveying and gathering information.” These are not cyclical trends that are likely to reverse in the future.

Despite shrinking demand, cities are building more convention space: “Despite diminishing demand, the last few years have seen a remarkable boom in the volume of exhibit space in U. S. convention centers.” The building of larger convention centers in many cities means that more cities are able to host the larger events, or, cities can now host several smaller events simultaneously. The result, says the author, is fierce competition for both large and small events.

What about the costs? The author introduces a section on costs with: “The studies that justify both the new center space and the publicly-owned hotels paint a picture of tens of thousands of new out-of-town visitors and millions of dollars in economic impact. Despite that rhetoric, these projects carry real risks and larger potential costs, particularly in an uncertain and highly competitive environment.”

The convention center is just the start of costs: “A new [convention] center is thus often followed by a subsidized or fully publicly-owned hotel.” Wichita, of course, has a fully publicly-owned hotel, the large 303-room Hyatt. Now Wichita has been providing, and will probably continue, subsidy programs to other downtown hotels. None of the hotels alone provide as many rooms as Wichita convention planners say the city needs, so we are likely to see proposals for a subsidies to hotels continue.

In fact, until Wichita has as many hotel rooms as our nation’s largest convention cities have, there is always a larger goal — a next step on the ladder. Can you imagine our city leaders ever proclaiming that we have enough hotel rooms in downtown Wichita?

Other things Sanders says that are likely to be proposed are a sports arena. Wichita, of course, recently opened a taxpayer-financed and government-owned facility, the Intrust Bank Arena. After a brief honeymoon fling with good financial performance, the arena has settled down to a less-acceptable level of revenue production. Residents of Sedgwick County, which owns the arena, should be cautioned that the financial results hailed by the county don’t include depreciation costs, so the true financial picture is not anywhere near complete.

Entertainment, retail, and cultural attractions are often proposed, Sanders writes, and Wichita downtown planners have indicated their desire for these.

The conclusion to this paper describes Wichita’s current situation and foreshadows what is likely for the future of Wichita:

But if taxing, spending, and building have been successful, the performance and results of that investment have been decidedly less so. Existing convention centers have seen their business evaporate, while new centers and expansions are delivering remarkably little in terms of attendance and activity.

What is even more striking, in city after city, is that the new private investment and development that these centers were supposed to spur — and the associated thousands of new visitors — has simply not occurred. Rather, city and convention bureau officials now argue that cities need more space, and more convenience, to lure those promised conventions. And so underperforming convention centers now must be redeemed by public investment and ownership of big new hotels. When those hotels fail to deliver the promises, then the excuse is that more attractions, or more retail shops, or even more convention center space will be needed to achieve the goal of thousands of new visitors.

We already see some of this excuse-making taking place: Private investment in downtown Wichita has been weak, it is said, because there’s not yet a critical mass of development. It is promised by downtown boosters that given enough public money, critical mass will be achieved, and private investment will rush in. But since there is no definition of what constitutes critical mass, this excuse is always available to justify failure.

WichitaLiberty.TV August 18, 2013

WichitaLiberty.TV logo

In this episode of WichitaLiberty.TV, host Bob Weeks shows his “Prezi” that illustrates the disregard for the law shown by Wichita’s mayor. Then, Bob walks viewers through a visualization that illustrates the unintended consequences of government intervention at the Wichita Airport. Finally, Bob introduces Henry Hazlitt’s book “Economics in One Lesson,” which will be the topic of future episodes of WichitaLiberty.TV. Episode 9, broadcast August 18, 2013. View below, or click here to view on YouTube.

Wichita income is not keeping up

Visioneering Wichita uses per capita income growth as one benchmark of economic progress. What do the numbers say about the city’s progress? The following video illustrates. View below, or click here to view in higher resolution at YouTube, which may work better for some people.

For more in this, and to access the interactive visualization, see Wichita personal income growth benchmark.

WichitaLiberty.TV August 11, 2013

WichitaLiberty.TV logo

In this episode of WichitaLiberty.TV, host Bob Weeks asks if shoppers have ever paid extra sales tax in Wichita’s Community Improvement Districts, and describes efforts by the city to avoid disclosure of this tax. Then, are there similarities between Wichita and Detroit? Finally, a Sedgwick County Commissioner is worried about agriculture being driven out of the county, but Bob thinks he doesn’t need to worry. Episode 8, broadcast August 11, 2013. View below, or click here to view on YouTube.

Wichita job growth under the Visioneering/Brewer regime

Wichita has set ambitious goals in job growth, but it doesn’t seem that the Visioneering program has produced results. But apparently Wichita government officials are satisfied.

One of the benchmarks of Visioneering is “Exceed the highest of the annual percentage job growth rate of the U.S., Omaha, Tulsa, Kansas City and Oklahoma City.”

In May, Suzie Ahlstrand of the Wichita Chamber of Commerce presented Wichita City Council members with the benchmark documents, but didn’t elaborate on these in her presentation.

I can understand her reluctance to focus on these numbers. They’re not good. Tremendous opportunities have been lost and wasted, and people have suffered. Yet, city leaders seem satisfied. Thrilled, even.

An interactive visualization holding job numbers for Wichita and our Visioneering peers is available at Wichita job growth and Visioneering peers. Or, watch the video below (or click here to watch at YouTube, which may work better for some people).

More illumination of Wichita City Council ethics

Today on the Joseph Ashby Show, the host shines additional light on problems with the Wichita City Council.

Joseph Ashby Show, August 8, 2013 (excerpt).

Some background material:

Joseph Ashby on Wichita City Council

Kansas Affordable Airfares program: Benefits and consequences

Wichita airport statistics: The visualization

Wichita Airport statistics: The video

Wichita Eagle: Wichita City Council rejects conservative blogger for airport advisory board

WE Blog: Peterjohn’s comment was inappropriate

Joseph Ashby Show: Upcoming Wichita City Council meeting

It will be a busy Tuesday in Wichita

Fish, sauce, and the law: You make the call

Joseph Ashby on Wichita City Council

Today on the Joseph Ashby Show, the host shines light on some problems with the Wichita City Council.

Joseph Ashby Show, August 7, 2013 (excerpt).

Some background material:

Kansas Affordable Airfares program: Benefits and consequences

Wichita airport statistics: the visualization

Wichita Eagle: Wichita City Council rejects conservative blogger for airport advisory board

Joseph Ashby Show: Upcoming Wichita City Council meeting

It will be a busy Tuesday in Wichita

Fish, sauce, and the law: You make the call

Wichita’s evaluation of development team should be reconsidered

Dump truck carrying coinsIn an effort to avoid mistakes made in the past and inspire confidence in the process, parties wishing to receive economic development subsidies for projects in downtown Wichita are evaluated on a variety of measures. The evaluation matrix released for a project to be considered next week by the Wichita City Council, however, ought to be recalculated.

City documents describe one of two competing projects as this: “River Vista is proposed by River Vista LLC, a development group comprised of George Laham, Dave Burk, Dave Wells and Bill Warren.”

wichita-evaluation-matrix-2013-08

It’s this ownership team that ought to cause the city concern. Two of the evaluation criteria are “Past project experience with the City of Wichita” and “References, especially from other municipal partners.” This development team was awarded the maximum number of points possible for each (points being a positive measure). Here are a few things that the evaluation committee may not have considered when awarding these points.

Dave Wells: Wells is president of Key Construction. Last year the Wichita Eagle reported on “city-financed downtown parking garages that spiraled well over budget.” Noting the cost overruns, reporter Bill Wilson wrote: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.” (Wichita city manager proposes eliminating no-bid construction projects.)

Despite these two cost overruns on city projects, Wichita Mayor Carl Brewer wrote in a letter recommending Key Construction on a different matter: “Key is known for their consistent quality construction, budget control and on schedule delivery.” Maybe that’s what the evaluation committee relied on.

Also, two years ago Key Construction proposed — and was awarded by the city council — a no-bid contract for a parking garage. But the city later put the contract to competitive bid. Key, which first bid $6 million, later bid $4.7 million. This no-bid contract awarded to Key was cronyism in the extreme. If the desire of the majority of the city council, including Mayor Carl Brewer, had been realized, Wichita taxpayers would have sent an extra — and unnecessary — $1.3 million to a politically-connected construction company. See Campaign contributions show need for reform in Wichita for an example of how Key Construction has mastered political cronyism.

By the way, the mayor’s relationship with Wells means he should not participate in voting on this matter.

Dave Burk, Dave Wells: These two were original partners in WaterWalk, which has received over $40 million in subsidy, with little to show for results.

Dave Burk: He’s received many millions from many levels of government, but still thinks he doesn’t get enough. This is what we can conclude by his appeal of property taxes in a TIF district. Those taxes, even though they are rerouted back to him for his benefit, were still too high for his taste, and he appealed. The Wichita Eagle reported in the article (Developer appealed taxes on city-owned property): “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

rebenstorf-quote-dave-burkA number of Wichita city hall officials were not pleased with Burk’s act. According to the Eagle reporting, Burk was not authorized to do what he did: “Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

Council member Jeff Longwell was quoted by the Eagle: “‘We should take issue with that,’ he said. ‘If anyone is going to represent the city they obviously have to have, one, the city’s endorsement and … two, someone at the city should have been more aware of what was going on. And if they were, shame on them for not bringing this to the public’s attention.'”

Council member Lavonta Williams was not pleased, either, according to her quotations: “‘Right now, it doesn’t look good,’ she said. ‘Are we happy about it? Absolutely not.'”

In a separate article by the Eagle on this issue, we can learn of the reaction by two other city hall officials: “Vice Mayor Jim Skelton said that having city development partners who benefit from tax increment financing appeal for lower property taxes ‘seems like an oxymoron.’ City Manager Robert Layton said that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.'”

The manager’s quote is most directly damaging. In a tax increment financing (TIF) district, the city borrows money to pay for things that directly enrich the developers, in this case Burk and possibly his partners. Then their increased property taxes — taxes they have to pay anyway — are used to repay the borrowed funds. In essence, a TIF district allows developers to benefit exclusively from their property taxes. For everyone else, their property taxes go to fund the city, county, school district, state, fire district, etc. But not so for property in a TIF district.

This is what is most astonishing about Burk’s action: Having been placed in a rarefied position of receiving many millions in benefits, he still thinks his own taxes are too high. Now he wants more city taxpayer subsidy.

warren-bailout-poses-dilemma

Bill Warren: In 2008 the Old Town Warren Theater was failing and its owners — Bill Warren being one — threatened to close it and leave the city with a huge loss on a TIF district formed for the theater’s benefit. Faced with this threat, the city made a no-interest and low-interest loan to the theater. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

Besides Warren, you may — or may not — be surprised to learn that the theater’s partners included Dave Wells and Dave Burk, the same two men mentioned above. Also, Mayor Brewer’s relationship with Warren means he should not participate in voting on this matter.

With the history of these parties working in public-private partnerships, the Wichita City Council needs to question the matrix delivered by the evaluation committee.

Sedgwick County votes for harmful intervention

man-digging-coinsIt’s harmful when citizens are not armed with information and research. But when government officials and bureaucrats with the power to tax and plan our economies are uninformed, people suffer as our economy becomes less prosperous than it could be.

Today, in the name of creating jobs, the Sedgwick County Commission voted in favor of granting an economic development incentive to an expanding Wichita manufacturing firm. Commissioners Karl Peterjohn and Richard Ranzau voted against the award.

The action taken today is in addition to an award by the State of Kansas, and another likely to be awarded by the Wichita City Council. See Why is business welfare necessary in Wichita? for more background.

Intervention in the economy such as this does more harm than good, as we’ll see in a moment. It’s important that we learn the facts about incentives like these, as the Wichita area has the potential to become even more dependent on incentives and subsidies as a way of economic development.

For example, the president of Greater Wichita Economic Development Coalition recently broadcast an email with the subject heading “Investor Alert: WBJ outlines Mars Deal Development Incentives as one example of Aggressive Competition.” The email read as follows:

Dear Investors,

You are well aware of the Mars deal in Topeka and you are likely aware that no city outside the greater Kansas City Metro Area was given the opportunity to bid this project.

In my mind the take away from this Wichita Business Journal article is that our competition — local, state and international — have enormous tools to ensure economic development success.

The Mars project has the potential to receive $9.1 million in local incentives over the next five years not including the property tax abatement estimated at $10.0M.

Tim Chase

Messages like this — that we don’t have enough tools to compete — are common in Wichita. Politicians like Wichita Mayor Carl Brewer call for devoted revenue streams to fund economic development incentives.

What, though, is the track record of incentives? Those who, like myself, call for an end to their use: Don’t we want people to have jobs?

We need to decide what to believe. Should we believe our own eyes — that is, what we can easily see or are being told by our leaders — or something else?

Here’s a summary of the peer-reviewed academic research that examines the local impact of targeted tax incentives from an empirical point of view. “Peer-reviewed” means these studies were stripped of identification of authorship and then subjected to critique by other economists, and were able to pass that review.

Ambrosius (1989). National study of development incentives, 1969 — 1985.
Finding: No evidence of incentive impact on manufacturing value-added or unemployment, thus suggesting that tax incentives were ineffective.

Trogan (1999). National study of state economic growth and development programs, 1979 — 1995.
Finding: General fiscal policy found to be mildly effective, while targeted incentives reduced economic performance (as measured by per capita income).

Gabe and Kraybill (2002). 366 Ohio firms, 1993 — 1995.
Finding: Small reduction in employment by businesses which received Ohio’s tax incentives.

Fox and Murray (2004). Panel study of impacts of entry by 109 large firms in the 1980s.
Finding: No evidence of large firm impacts on local economy.

Edmiston (2004). Panel study of large firm entrance in Georgia, 1984 — 1998
Finding: Employment impact of large firms is less than gross job creation (by about 70%), and thus tax incentives are unlikely to be efficacious.

Hicks (2004). Panel study of gaming casinos in 15 counties (matched to 15 non-gambling counties).
Finding: No employment or income impacts associated with the opening of a large gambling facility. There is significant employment adjustment across industries.

LaFaive and Hicks (2005). Panel study of Michigan’s MEGA tax incentives, 1995 — 2004.
Finding: Tax incentives had no impact on targeted industries (wholesale and manufacturing), but did lead to a transient increase in construction employment at the cost of roughly $125,000 per job.

Hicks (2007a). Panel study of California’s EDA grants to Wal-Mart in the 1990s.
Finding: The receipt of a grant did increase the likelihood that Wal-Mart would locate within a county (about $1.2 million generated a 1% increase in the probability a county would receive a new Wal-Mart), but this had no effect on retail employment overall.

Hicks (2007b). Panel study of entry by large retailer (Cabela’s).
Finding: No permanent employment increase across a quasi-experimental panel of all Cabela’s stores from 1998 to 2003.

(Based on Figure 8.1: Empirical Studies of Large Firm Impacts and Tax Incentive Efficacy, in Unleashing Capitalism: Why Prosperity Stops at the West Virginia Border and How to Fix It, Russell S. Sobel, editor. Available here.)

In discussing this research, the authors of Unleashing Capitalism explained:

Two important empirical questions are at the heart of the debate over targeted tax incentives. The first is whether or not tax incentives actually influence firms’ location choices. The second, and perhaps more important question, is whether, in combination with firms’ location decisions, tax incentives actually lead to improved local economic performance.

We begin by noting that businesses do, in fact, seem to be responsive to state and local economic development incentives. … All of the aforementioned studies, which find business location decisions to be favorably influenced by targeted tax incentives, also conclude that the benefits to the communities that offered them were less than their costs.

So yes, business firms are influenced by incentives. But the cost of the incentives is greater than the benefit. This research shows, over and over, that the cost-benefit ratio analysis that decision makers use is not meaningful or reliable.

So why do we use incentives? Why do so few in government or the public understand? Continuing from Unleashing Capitalism:

Given serious doubts about the efficacy of tax incentives, why are they so popular? The answer is that businesses looking to expand their plants or to move to new locations have strong incentives to lobby for tax breaks and other subsidies that add to owners’ profits and, moreover, encouraging a bidding war between two or more state or local governments promises to increase the value of the incentives they can extract from any one of them. Politicians interested in re-election, in turn, have strong incentives to respond to private firms’ self-serving subsidy demands in order to take credit for enticing a high-profile company to town or to avoid blame for the jobs that would be lost if an existing employer moved to another location. The politicians will be supported on the tax-incentive issue by other groups having immediate financial stakes in the process, including local real estate developers, investment bankers (who float public bond issues and arrange financing for the incoming firm), and economic development officials whose livelihoods depend on success in chasing after ornaments to add to the local or state economy.

The special interests of subsidy-seeking private firms dominate the political process because voter-taxpayers are only weakly motivated to become informed about the costs of tax incentive programs and to organize in opposition to them. They see the jobs “created” at a new plant; they do not see the jobs that are lost elsewhere in the economy as a result of the higher tax burden imposed on other businesses and as a result of the economic resources reallocated from productive activities toward lobbying government to obtain these favors. Nor can they readily see the higher future tax bill they themselves will be required to pay in order to amortize and service the public debt issued to finance the subsidies diverted into the pockets of the owners of politically influential private companies.

“Politicians interested in re-election.” This describes almost all elected officials.

“Economic development officials whose livelihoods depend on success in chasing after ornaments.” This is Tim Chase and the other members of the economic development regime in Wichita.

Today, in explaining his vote in favor of granting a target economic development incentive, Sedgwick County Commissioner Dave Unruh recognized a “certain pragmatism that is required here.” He said we’re really concerned about jobs, and that jobs is the number one priority. Sometimes creating jobs requires us, he said, to compete in the practical world. It would be better if there were no incentives, he said. “But the truth of the matter is that we have to sometimes provide incentives, subsidies, abatements, whatever category it falls in, in order to compete and secure the jobs and company that we’re trying to win.”

This is the standard argument, even of politically liberal members of commissions and councils. Jobs, jobs, jobs. We don’t like to use incentives — they all say this, especially conservatives — but we learned that we must use incentives if we want jobs. This embrace of pragmatism is called “maturing in office.”

But I would ask these officials like Unruh this question: What about all the research that says incentives do more harm to jobs than good?

What do Commissioners Unruh, Skelton, and Norton believe phrases like these mean?

No evidence of incentive impact on manufacturing value-added or unemployment”

Small reduction in employment by businesses which received Ohio’s tax incentives”

No evidence of large firm impacts on local economy”

No permanent employment increase across a quasi-experimental panel of all Cabela’s stores”

“Employment impact of large firms is less than gross job creation (by about 70%)”

These research programs illustrate the fallacy of the seen and the unseen. It is easy to see the jobs being created by economic development incentives. I do not deny that jobs are created at firms that receive incentives, at least most of the time. But these jobs are easy to see, and government makes sure we see them. We’re going to endure the groundbreaking and ribbon-cutting ceremonies. It’s easy for news reporters to find the newly-hired and grateful workers, or to show video footage of a new manufacturing plant.

But it’s very difficult to find specific instances of the harm that government intervention produces. It is, generally, dispersed. People who lose their jobs usually don’t know the root cause of why they are now unemployed. Businesses whose sales decline often can’t figure out why.

But uncontroverted evidences tells us this is true: These incentives, along with other forms of government interventionism, do more harm than good.

We can understand the average citizen being susceptible to arguments make by the likes of GWEDC’s Chase and the three Sedgwick county commissioners that voted for this incentive. Citizens generally don’t have the education, the time, and the initiative to evaluate these matters.

But for economic development professionals and elected officials with the power to tax and spend? Not knowing this research is inexcusable, and ignoring it is deplorable.