Tag Archives: Downtown Wichita revitalization

Articles about the redevelopment of downtown Wichita and its impact on the economic freedom of Wichitans.

Our Downtown Wichita launched

As part of an effort to provide information about the Douglas Place project, a proposed renovation of a downtown Wichita office building into a hotel, Americans for Prosperity, Kansas has created a website.

The site is named Our Downtown Wichita, and it’s located at dtwichita.com.

Many people, myself included, feel that this project — with its multiple layers of taxpayer subsidy — represents crony capitalism at its pinnacle. It’s also the first project to come through Wichita’s Project Downtown evaluation process, which represents new advances in centralized government planning in Wichita.

As the site’s motto says: “Limited government and free markets in Downtown Wichita benefit everyone. Centralized planning and crony capitalism benefit only a few.”

The Our Downtown Wichita site contains information about the many forms of public subsidy that are proposed for the project. You’ll learn that public involvement is much more than what the City of Wichita claims in its presentations.

You’ll also learn about the people involved in Douglas Place, including David Burk of Marketplace Properties and his misrepresentation of himself as an agent of the City of Wichita in order to cut his taxes.

The site also contains a compilation of campaign contributions made to Mayor Carl Brewer and current city council members from people who will financially benefit from the Douglas Place project.

Then, there’s suggestions as to how citizens can get involved if they are concerned about this project.

The site also contains two videos by urban planning expert Cato Institute Senior Fellow Randal O’Toole made during his visit to Wichita last year.

For Wichita’s Project Downtown, goal keeps slipping

In selling a plan for the revitalization of downtown Wichita, promoters started with a promise of much private investment for just a little public investment. But as the plan proceeded, the goal kept slipping, and the first project to be approved under the final plan will probably not come close to meeting even the modest goals set by the Wichita City Council.

At the time agitation for a downtown plan started in 2008, research indicated that the ratio of private to public investment in downtown was approximately one to one. A March 2009 document hinted that we could do better, noting “Cities with successful downtown turnarounds have shown that for every $1 of public investment there will be $10 to $15 of private money invested.”

Soon after that Mayor Carl Brewer and others started promoting a 15 to one ratio of private to public investment. At a city council meeting in October 2009, Council Member Janet Miller (district 6, north central Wichita) said “I’ve heard the city manager talk about moving us toward a return more in the neighborhood of 15 to one, private contribution to public.” She described this as an “important benchmark.”

Before long, some may have realized that a 15 to one ratio was unrealistic. In the briefing city officials gave the city council in December 2010 when it approved the Project Downtown plan, the information presented to the council called for “$500 million in private-sector capital investment over the next 15-20 years.” The plan also called for “An estimated $100 million in parking, streets, and parks/open space improvements,” establishing a five-to-one ratio of private investment to public investment. The document also gave officials a lot of wiggle room, as the $500 million of private investment is qualified: “As much as $500 million.”

It seems that some didn’t get the message and still pitched the original promise. In his January 2011 State of the City Address, Mayor Brewer said “In efforts to keep people working, the completion of the community-driven Downtown Master Plan will lead us to a point where ultimately the private investment exceeds public investment by a 15 to 1 ratio.”

Then in May 2011 the council approved a document titled “City of Wichita Downtown Development Incentives Policy.” This policy calls for “Minimum private to public capital investment ratio of 2 to 1.”

So we’ve gone from 15, to five, to two.

Now, for the first project to be considered under the new plans and polices: Douglas Place, a downtown Wichita hotel being proposed by a development team led by Wichitan David Burk.

According to minutes of the August 9 meeting of the Wichita city council, Allen Bell, Wichita’s Director of Urban Development, said that the ratio of private to public investment for this project, as calculated by his office, was 2.2 to one.

I’m not quite sure how they arrived at that value, as at the same council meeting Bell presented information that the total developer costs were $21,640,000, and the city investment would be $7,710,000. That’s a ratio of 2.8 to one.

This calculation, however, does not come close to capturing the total public investment in this project. For example, it leaves out the $7,300,000 in tax credits the developers will receive. It doesn’t include the benefit of allowing the hotel to keep 75 percent of the guest tax it generates, or the two percent extra sales tax the city will let it charge and keep. It doesn’t include the revenue the developers will get from renting out retail space the city provides to them at a cost of $1.00 per year. It doesn’t include $600,000 in sales tax exemptions the city will grant the hotel. It doesn’t include the value of 125 parking spaces reserved for the hotel’s exclusive use at below market rent.

(I’m sure we’ll hear explanations that the tax credits aren’t paid for by Wichita taxpayers. They’re paid for by state and federal taxpayers. This is the type of reasoning we’re accustomed to from the mayor and city council.)

So in just two years the plans for downtown Wichita have gone from a lofty promise of $15 dollars in private investment for each $1 of public investment, down to $5, then down to $2. And an honest evaluation of the first project under the plan would find that it, almost certainly, doesn’t meet the $2 threshold.

In Wichita, historic preservation tax credits an inefficient form of developer welfare

As part of the subsidy plan for Douglas Place, a downtown Wichita hotel being proposed, developers plan to make extensive use of historic preservation tax credits to fund their project. This form of developer welfare, besides being inefficient, is largely hidden from public view.

According to Allen Bell, Wichita’s Director of Urban Development, the project’s team, which is lead by David Burk, plans to tap $3.8 million in state tax credits and $3.5 million in federal tax credits, for a total of $7.3 million in this form of subsidy.

Tax credits may be a mystery to many, but there is no doubt as to their harmful effect on state and federal budgets. When using tax credits, the government, conceptually, issues a slip of paper that says something like “The holder of this document may submit it instead of $500,000 when making a tax payment.”

This is a direct cost to the government, according to both reason and the Kansas Division of Legislative Post Audit. Last year, after conducting an audit of Kansas tax credit programs, auditors explained: “Tax credits, which the government offers to try to induce certain actions by the taxpayer, reduce income tax revenues because they are subtracted directly from the amount of taxes due.” (emphasis added)

The audit found that in 2001, when the Kansas historic preservation tax credit program was started, the anticipated cost to the state was about $1 million per year. By 2007, the actual cost to the state was reported at almost $8.5 million.

Further, the audit found what many already knew: tax credit aren’t an efficient way of transferring subsidy to developers. Most of the time, the developers sell the credits to someone else at a discount, as the audit explains: “The Historic Preservation Tax Credit isn’t cost-effective. That credit works differently than the other three because the amount of money a historic preservation project receives from the credit is dependent upon the amount of money it’s sold for. Our review showed that, on average, when Historic Preservation Credits were transferred to generate money for a project, they only generated 85 cents for the project for every dollar of potential tax revenue the State gave up.”

The audit concluded this is not efficient: “That’s not a cost-effective means of generating funds for these projects because 15% of the money gets pulled out and never actually goes for preservation activities.”

(Besides this efficiency problem the audit also found that the Kansas Department of Revenue was not accurately tracking the tax credits after their issue. See Kansas historic preservation tax credits audit reveals inefficiency, data problems.)

In the case of the Douglas Place project in Wichita, the inefficiencies that Legislative Post Audit found are present. According to Bell, the developers plan to sell the tax credits for 87 cents on the dollar. So they’re doing a bit better than the average project.

Still, Kansas taxpayers will give up $3.8 million in tax revenue in order to give Burk and his team about $3.3 million cash. Federal taxpayers will give up $3.5 million in order to give Burk $3 million.

And it is a gift. It’s not an exemption from paying property or sales taxes, or letting a hotel keep 75 percent of the guest tax it generates, or tax increment financing for a garage, or the state charging customers extra sales tax that the hotel keeps, or sweetheart lease deals. Burk and his partners are getting all that, too.

The tax credits stand out as a direct transfer of money from taxpayers to private parties. But being accomplished through the tax system shrouds the process in mystery. And, no direct action is required by any legislative body. The tax credit program is in place. The developer applies, and if accepted, the credits are granted. No one — at least no one elected by and accountable to voters — votes to grant the specific credits.

The historic preservation tax credit program, in a short time, has grown from a program designed to help spruce up a few old buildings here and there to a developer welfare program on steroids. The Drury Plaza Hotel Broadview in downtown Wichita benefited from this program too, costing Kansas taxpayers over $4 million to pay for its tax credits, and that’s on top of other forms of subsidy.

Intrust Bank Arena depreciation expense ignored

Reports that income earned by the Intrust Bank Arena is down sharply has brought the arena’s finances back into the news. The arena, located in downtown Wichita and owned by Sedgwick County, is deemed to be a success by the county and arena boosters based on “profit” figures generated during its first year of operations. But these numbers are not an honest assessment of the arena’s financial performance.

When the numbers were presented to Sedgwick County commissioners this week, commission chair Dave Unruh said that he is “pleased that we we still are showing black ink.”

He then made remarks that show the severe misunderstanding that he and almost everyone labor under regarding the nature of the spending on the arena: “I want to underscore the fact that the citizens of Sedgwick County voted to pay for this facility in advance. And so not having debt service on it is just a huge benefit to our government and to the citizens, so we can go forward without having to having to worry about making those payments and still show positive cash flow. So it’s still a great benefit to our community and I’m still pleased with this report.”

The contention of Unruh and other arena boosters is that the capital investment of $183,625,241 (not including an operating and maintenance reserve) on the arena is merely a historical artifact, something that happened in the past and that has no bearing today. This attitude, however, disrespects the sacrifices of the people of Sedgwick County and its visitors to raise those funds.

Since it is only one year old, presumably the arena could be sold for something near its building cost, less an allowance for wear and tear. If not, then the county has a lot of explaining to do as to why it built an asset that has no market value.

But even if the arena has no market value — and I suspect that in reality it has very little value — it still has an economic cost that must be recognized, that cost being the sales tax collected to pay for it. While arena boosters dismiss this as past history, the county recognizes this cost each year, and will continue to do so for many years.

The county, however, doesn’t go out of its way to present the complete and accurate accounting of the arena’s cost. Instead, the county and arena boosters trumpet the “profit” earned by the arena for the county according to an operating and management agreement between the county and SMG, a company that operates the arena.

This agreement specifies a revenue sharing mechanism between the county and SMG. Based on the terms of the agreement, Sedgwick County received payment of $1,116,442 for the 2010 year. While described as profit by many — and there was much crowing over the seemingly large amount — this payment does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “not intended to be a complete presentation of INTRUST Bank Arena’s financial position and results of operations and are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.”

That bears repeating: This is not a reckoning of profit and loss in any recognized sense. It is simply an agreement between Sedgwick County and SMG as to how SMG is to be paid.

Commissioner Karl Peterjohn has warned that these figures — and the monthly “profit” figures presented to commissioners — do not include depreciation expense. That expense is a method of recognizing and accounting for the large capital cost of the arena — the cost that arena boosters dismiss.

In April Sedgwick County released that depreciation number in its 2010 Comprehensive Annual Report. The number is pretty big: $4.4 million, some four times the purported “earnings” of the arena.

Any honest accounting or reckoning of the performance of Intrust Bank Arena must take this number into account. Unruh is correct in that this depreciation expense is not a cash expense that affects cash flow. That cash was spent during the construction phase of the arena.

But depreciation expense provides a way to recognize and account for the cost of long-lived assets like buildings over their lifespan. It recognizes and respects the investment of those who paid the sales tax. When we follow standard practices like recognizing the cost of capital assets through depreciation expense, we’re forced to recognize that there’s a $4.4 million gorilla in the room that arena boosters don’t want to talk about.

Using information about arena operations contained in the operations report, we can construct what an actual income statement for the arena would look like, following generally accepted business principles. According to the statement, total operating income for 2010 was $7,005,224. Operating expenses were $4,994,488. Subtracting gives a figure of $2,010,736. This number, however, is not labeled a profit in the report. Instead, the report calls it “Increase in Net Assets Arising from Operating Activities Managed by SMG.”

An accounting of profit would have to subtract the $4.4 million in depreciation expense. Doing that results in a loss of $2,389,264. This — or something like it — is the number we should be discussing when assessing the financial performance of Intrust Bank Arena.

Fiscal conservatives — and sometimes even liberals — often speak of “running government like a business.” As an example, Unruh’s campaign website from last year states “… as a business owner he works hard to apply good business principles to County government …”

But here’s an example of conservative government leaders ignoring a basic business principle in order to paint a rosy picture of a government spending project. Unruh is not alone in doing this.

Without honest discussion of numbers like these, we make decisions based on incomplete and false information. This is especially important as civic leaders agitate for another sales tax or other taxes to pay for more public investment. The sales pitch is that once the tax is collected and the assets paid for, we don’t need to consider the cost. They contend, as is the attitude of Unruh and arena boosters, that we can just sweep it under the rug and pretend it doesn’t exist. This is a false line of reasoning, and citizens ought not to be fooled.

Pay-to-play laws are needed in Wichita and Kansas

In the wake of scandals, some states and cities have passed “pay-to-play” laws. These laws often prohibit political campaign contributions by those who seek government contracts, or the laws may impose special disclosure requirements.

Many people make campaign contributions to candidates whose ideals and goals they share. This is an important part of our political process. But when reading campaign finance reports for members of the Wichita City Council, one sees the same names appearing over and over, often making the maximum allowed contribution to candidates. Their spouses also contribute.

And when one looks at the candidates these people contribute to, you notice that often there’s no commonality to the political goals and ideals of the candidates. Some people contribute equally to liberal and conservative council members. Then, when these people appear in the news after having received money from the Wichita City Council, it snaps into place: These campaign donors are not donating to those whose ideals they agree with. They’re donating so they can line their own pockets.

Some states and cities have taken steps to reduce this harmful practice. New Jersey is notable for its New Jersey Local Unit Pay-To-Play Law. In a nutshell, the law affects many local units of government and the awarding of contracts having a value of over $17,500. The law affects contracts awarded by other than a “fair and open process,” which basically means a contract process open to bidding. For other contracts, here is the summary of the law:

A municipal or county government agency cannot award a contract without using a fair and open process if the contractor …

  • is a contributor to a candidate committee or a political party committee where a member of the party is serving in an elective public office of that municipality or county, and, either …
  • made “reportable” contributions (those in excess of $300) during the year prior to the award, and/or …
  • makes contributions during the life of the contract.

The New Jersey law requires that businesses seeking government contracts certify they have not made contributions that would bar them from eligibility. It also contains provisions that contributions from a business owner’s spouse and children will be deemed to be from the business itself. For corporations, the contributions of principals, partners, officers, and directors, and their spouses, are considered to be from the corporation itself for purposes of the law.

Alabama, Connecticut, Colorado, Hawaii, Illinois, Ohio, and South Dakota are other states with some form of pay-to-play laws. Some of these are being challenged in the courts.

It’s not only states that have such laws. Cities, too, are passing them.

In 2009 Dallas passed a law, as described in a post on the Pay to Play Law Blog: “The ethics package contains numerous changes to existing lobbyist registration and disclosure requirements, City Council zoning powers and the disclosure of gifts to Council members. Most relevant to the pay-to-play space is that anyone bidding on a city contract is now prohibited from making donations during the bid period. Additionally, ‘major’ zoning applicants can no longer make contributions to Council members during the window which begins on the date of public notice of the zoning case, and which ends 60 days after the zoning case is resolved. Such changes are not too surprising in this instance, given that the scandal involving Hill revolved around favorable treatment for developers.”

Notably, the Dallas law was in response to special treatment for real estate developers — the very issue Wichita is facing now as it prepares to pour millions into the pockets of a small group of favored — and highly subsidized — downtown developers.

Smaller cities, too, have these laws. A charter provision of the city of Santa Ana, in Orange County, California, states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.” The population of Santa Ana is 324,528, which is just a little smaller than Wichita.

But Kansas has no such law. Certainly Wichita does not, where pay-to-play is seen by many citizens as a way of life. Those who want money from the council see it that way.

And citizens may remember the 2008 campaign for a bond issue for USD 259, the Wichita public school district. In my reporting of the campaign contributions made in support of the bond spending, I wrote: “One analysis finds that 72% of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms and others who directly stand to benefit from the new construction.”

The firm of Schaefer Johnson Cox Frey Architecture was a standout contributor to the bond effort, both in terms of cash contributions and in-kind contributions. Not surprisingly, that firm was awarded a contract for plan management services for the bond issue. The value of this contract is one percent of the value of the bond issue, or $3.7 million, and the firm will undoubtedly earn millions more for those projects on which it serves as architect.

In Kansas, campaign finance reports are filed by candidates and available to citizens, although some have problems with the timing of the filings. But many politicians don’t want these contributions discussed, at least in public. Recently Wichita Council Member Michael O’Donnell (district 4, south and southwest Wichita) expressed concern over the potential award of a $6 million construction contract, paid for with city funds, without an open bidding process. The contract is likely to go to Key Construction, a firm whose principals — and spouses — regularly appear on campaign finance reports, making the maximum allowed contribution to a wide variety of candidates.

For expressing his concern, O’Donnell was roundly criticized by many other council members, and especially by Mayor Carl Brewer. Video of the mayor’s remarks may be viewed at Wichita Mayor Carl Brewer addresses critics.

I can understand how council members don’t want to discuss their campaign contributions from those they’re about to give money to. It stinks. It causes citizens to be cynical of their government and withdraw from participation in civic affairs. It causes government to grow. It leads to more government planning of our lives, as is happening in Wichita. Pay-to-play laws can help.

For Wichita’s David Burk, subsidy machine is working again

For Wichita real estate developer David Burk of Marketplace Properties, being on the receiving end of sweetheart lease deals with the City of Wichita is becoming a habit.

According to a letter of intent approved by the city council — and sure to become law after a public hearing at a meeting of the Wichita City Council on September 13th — the city is planning to build about 8,500 square feet of retail space in a downtown parking garage. The garage is being built, partly, to serve a hotel Burk and partners are developing.

Here are the details of the deal Burk and his partners are getting from the taxpayers of Wichita: The city plans to lease this space to Burk and $1.00 per year. Not $1.00 per square foot, but $1.00 for the entire space — all 8,500 square feet.

That’s the plan for the first five years. For the next 10, the city would charge $21,000 rent per year, which is a rate of about $2.50 per square foot.

For years 15 through 20, the rent increases to $63,000, or $7.41 per square foot. At the end of this period, Burk will have the option of purchasing the space for $1,120,000, which is a cost of about $132 per square foot.

That cost of $132 per square foot is within the range of what sources in the real estate industry tell me top-quality retail space costs to build in Wichita, which is from $130 to $140 per square foot. Rents asked for that space would be from $15 to $18 per square foot per year.

Using the low figure, Burk could expect to collect about $127,500 in annual rent on space he rents for $1.00, leaving a gross profit of $127,499 for him. As the $15 rent is a net figure, Burk’s tenants will pay taxes, insurance, and maintenance.

As part of the Douglas Place Project, Burk and his partners will collect millions in the form of tax increment financing, forgiveness of property and sales taxes, capture of their hotel guest tax, community improvement district sales taxes, and historic preservation tax credits. This sweetheart lease is another layer in the cake — a very tall, many-layered cake of subsidies the city is baking for Burk.

While most citizens might be shocked at the many layers of subsidy offered to Burk, he’s accustomed to such treatment. In 2003, the city offered a similar deal to Burk and his partners for retail space that is part of the Old Town Cinema project. That deal was made with Cinema Old Town, LLC, whose resident agent is David Burk. According to the Wichita Eagle, other partners in this corporation include Wichita theater owner Bill Warren, real estate agent Steven Barrett, Key Construction and seven others.

David Wells, one of the owners of Key Construction, is a partner with Burk on the new hotel project, and Key is slated to build the garage under a process that doesn’t require competitive bidding, even though city money is used to pay for it.

The Old Town project let Burk and his partners lease 17,500 square feet of retail space from the City of Wichita for $1.00 per year for the first five years. Like the proposed project, that’s not $1.00 per square foot, but $1.00 per year for all 17,500 square feet.

Today this retail space probably rents for $15 to $18 per square foot, according to sources in the real estate industry. This means that Burk collected perhaps from $262,500 to $315,000 per year in rent. We don’t know the actual number, but it was likely in this ballpark. He had expenses, but not the main expense that most landlords face: the cost of the capital they have invested in their property. Burk had none of that expense, except for $1.00 per year.

Like the proposed deal, the rent Burk pays for the Old Town space increased over time. For the second five years the agreement calls for Burk to pay $5.00 per square foot to the city. For the third five years, the rate rises to $7.50.

Despite this sweetheart deal, Burk decided his property taxes were too high, and he appealed those taxes in a way the Wichita Eagle described as deceptive.

It’s no wonder Burk and his wife regularly make generous campaign contributions to almost all city council members, regardless of their political stances. He’s developed an efficient machine, and its machinery expose all the problems with crony capitalism and the problem of concentrated benefits and dispersed costs as revealed by public choice economics.

But I don’t think these problems bother the mayor, city council members (except for Michael O’Donnell), or city hall bureaucrats. For them — and most of all for Burk — it’s a process that worked once, and appears to be on the road to working again.

Wichita Mayor Carl Brewer to critics: stop grandstanding

Last week’s meeting of the Wichita City Council provided a window into the attitude of Wichita elected officials, particularly Mayor Carl Brewer. Through their actions, and by their words, we see a government that cares little for the rule of law and good government, and one that is disrespectful to citizens who call attention to this.

At issue was the circumvention of a statutorily required public hearing. In order to grant subsidies to a development team lead by David Burk of Marketplace Properties, the city is required to hold a public hearing, which it scheduled for September 13th. That schedule wasn’t fast enough for Burk, so at its August 9th meeting the council approved a letter of intent which formalizes the city’s desire to do the things that were to be the subject of the public hearing.

I, along with others, contend that this action — issuing the letter of intent — reduces the September 13th public hearing to a meaningless exercise. It’s true that several times city bureaucrats and elected officials assured citizens that the letter is non-binding and doesn’t mean the city will go through with the desires expressed in the letter. But I don’t think they believe that themselves, and the language of City Manager Bob Layton reveals so. In the end, the public hearing is reduced to — as the Wichita Eagle’s Rhonda Holman aptly noted — “a pointless afterthought.” See Wichita City Council bows to special interests.

This action is not good government, and it’s not open and transparent government, despite the claims of Mayor Brewer. It goes against our country’s principle of the rule of law, which holds that our laws and orderly procedures are more important than any single person.

Almost as troubling is the attitude of Mayor Brewer and others in city hall towards citizens who oppose their plans. Brewer — perhaps in an effort to maintain a sense of decorum or apparent integrity — does not mention the names of those he criticizes. This allows him to appear noble, but without being accountable to actual people, and the public, for the things he says.

John Todd, an activist and ally of mine who speaks at council meetings frequently — which means, in his case, about once or maybe twice a month — told me of his concerns: “It appears disingenuous to me for the mayor to unilaterally dress down citizens who address the council, with no opportunity for citizen rebuttal. The veiled message that comes through this process is this: ‘If you don’t agree with the mayor and council’s position on any issue, please shut up.’”

Todd is referring to the common practice of the mayor and some council members, notably Janet Miller (district 6, north central Wichita), to criticize opponents after they’ve completed their testimony and returned to the audience, when there is no opportunity for citizens to respond.

At the August 9th meeting, the mayor criticized his political opponents for making use of the opportunity to address the council, and by extension, the people who may be watching on television or the internet: “I hope that today, all of this grandstanding that I saw coming from some of the public and I saw from some of the council members, and questioning council members, elected officials’ integrity — unless you have proof, just because you have a camera here, that there is something you shouldn’t be doing. … This whole thing that I saw going on here today remind me so much of a previous administration where individuals were standing up and thank God we have the cameras here. The media’s here every single meeting.”

What’s particularly deplorable about the mayor’s remarks is that he’s criticizing people for speaking at a public hearing. Yes, city officials say the agenda item was only to consider a letter of intent that does not bind the city council. But that legalistic interpretation ignores the practical political reality that this meeting was, de facto, the public hearing for this project.

This is not the first time the mayor has complained about his critics. In the past, the mayor has said: “We need every person’s ideas, recommendations, and their opinion. … Being quiet and then complaining about it later isn’t going to be good for you or the community.”

But when citizens take the mayor’s advice — showing initiative, not being quiet, and stating opinions beforehand — now the mayor calls that grandstanding.

The mayor has also called his critics “naysayers” and complained that they have received too much media attention.

The mayor should take notice, however, that most people who care about public affairs and policy are severely disappointed with news media coverage of city hall events. The resources of news gathering agencies, especially newspapers, are severely depleted as compared to the past. In my coverage of a talk given by former Wichita Eagle editor Davis Merritt, I wrote this: “A question that I asked is whether the declining resources of the Wichita Eagle might create the danger that local government officials feel they can act under less scrutiny, or is this already happening? Merritt replied that this has been going on for some time. ‘The watchdog job of journalism is incredibly important and is terribly threatened.’ When all resources go to cover what must be covered — police, accidents, etc. — there isn’t anything left over to cover what should be covered. There are many important stories that aren’t being covered because the ‘boots aren’t on the street anymore,’ he said.” See Former Wichita Eagle editor addresses journalism, democracy, May 11, 2009.

In his remarks to me, John Todd wrote: “Diversity of opinion and the open discussion of divergent opinions are important parts of good government.” But citizens who observe the actions of the Wichita City Council — the issuance of this letter of intent being only the most recent example — and who sense the attitude of the mayor and some council members towards those who express opinions outside the orthodoxy — are likely to conclude, as many do, that it’s just not worth the effort to get involved.

Wichita City Council bows to special interests

Yesterday’s meeting of the Wichita City Council revealed a council — except for one member — totally captured by special interests, to the point where the council, aided by city staff, used a narrow legal interpretation in order to circumvent a statutorily required public hearing process.

The issue was a downtown hotel to be developed by a team lead by David Burk of Marketplace Properties. The subsidies Burk wants, specifically tax increment financing (TIF), require a public hearing to be held. The city scheduled the hearing for September 13th.

That schedule, however, didn’t suit Burk. In order to provide him a certain comfort level, the council agreed to issue a letter of intent stating that the council intends to do the things that the public hearing is supposed to provide an opportunity for deliberation.

I, along with others, contend that this action reduces the September 13th public hearing to a meaningless exercise. This action is not good government, and it’s not open and transparent government, despite the claims of Mayor Carl Brewer. It goes against our country’s principle of the rule of law, part of which holds that our laws are more important than any single person.

Several times council members — and once city attorney Gary Rebenstorf — explained that the letter of intent is non-binding on either party. But: No matter what information is presented at the September public hearing, no matter how strong public opinion might be against the incentives involved, is there any real likelihood that the council would not proceed with this plan and its incentives, having already passed a letter of intent to do so? I think there is very little possibility of that.

Persuasive arguments will be made that since the city issued a letter of intent, and since the developers may have already taken action based on that letter, it follows that the city is obligated to pass the plan. Otherwise, who would ever vest any meaning in a future letter of intent from this city?

During the discussion, no one was able to explain adequately why a letter of intent — if it is non-binding and therefore does not commit the city — was asked for by the developers. Despite the lawyerly explanation of Rebenstorf and council members — including the mayor — the letter does have meaning. Practically, it has such a powerful meaning that it makes the holding of the public hearing on September 13th a mere charade, a meaningless exercise in futility.

It’s not just me and a handful of others who contend this. The Wichita Eagle’s Rhonda Holman, who is usually in favor of all forms of public spending on downtown, wrote: “Even though the letter of intent will be nonbinding, it risks making the Sept. 13 public hearing on tax-increment financing seem like a pointless afterthought.”

In his remarks, City Manager Bob Layton explained that the meeting was the first time for council members to “formally vet this project and all of the incentives.”

He added: “If the council were to say, for instance, there were two or three pieces of that that you had discomfort with, that would then put everyone on notice that the deal may not go forward.” He said this is the purpose of today’s action, and he added that the action is non-binding.

I would suggest that since the council, with the exception of Council Member Michael O’Donnell (district 4, south and southwest Wichita), found no problems with issuing the letter of intent, it has no problems with the deal, and this is what makes the September public hearing, as Holman said, a “pointless afterthought.”

Astonishingly, the manger said while this is “not intended to be the normal process,” he said that he “kind of like it” as it gave an initial opportunity to gauge the sentiment of council members.

I’m glad the manager didn’t mention the sentiment of the public, as with little notice as to the content of the deal and its incentives, citizens had no meaningful opportunity to prepare.

An example of the contorted logic council members use to justify their action: Council Member Jeff Longwell (district 5, west and northwest Wichita) explained that issuing letters of intent is a common practice in real estate deals. He confused, however, agreements made between private parties and those where government is a party. Private parties can voluntarily enter into whatever agreements they want. But agreements with government are governed by laws. Yesterday, the city council announced its intent to do something for which it is required to hold a public hearing. That didn’t violate the letter of the law, but it certainly goes against its spirit and meaning. Longwell said he has no problem with that.

Their bureaucratic enablers helped out, too. Wichita Downtown Development Corporation President Jeff Fluhr, in his testimony, said we are working towards becoming a “city of distinction.” That we are, indeed — a city distinguished by lack of respect for the rule of law and its disregard for citizens in favor of special interests.

A few observations from the meeting follow.

Public investment

In response to a question from the mayor, Allen Bell, Wichita’s Director of Urban Development, said that the ratio of private dollars to public dollars for this project is about 2.2 to 1. Whether these numbers are correct is doubtful. It will take an analysis of the deal to determine the true numbers, and the details have been available for only a short time. But if correct, this ratio falls well short of the stated goals. Two years ago, when agitation for a new round of downtown planing started, boosters spoke of a ratio of 15 to 1. Eventually planners promised a ratio of 5 to 1 private to public investment for downtown. This project, while of course is just a single project and not the entirety of downtown development, doesn’t reach half that goal.

Order of events and media coverage

During the meeting, Council Member Pete Meitzner (district 2, east Wichita) conceded that “the order of events is confusing.”

Before that, Council Member Janet Miller (district 6, north central Wichita) claimed that there had been much media coverage of the proposed hotel, and that the public was actually getting two opportunities to talk about this project. She said that the media had published information about today’s meeting and the public hearing on September 13th.

Miller is gravely mistaken. Until a Wichita Eagle article on Saturday, I saw no mention of the letter of intent, and no detail of the form of subsidies to be considered for this project. The city’s list of legal notices contains no mention of the action that was taken at this meeting.

Questions not answered

During my remarks to the council, I related how last year the Wichita Eagle alleged that David Burk, the managing member of this project — and I quote here: “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.”

This Eagle article and a companion article went on to quote these people as having trouble with and being concerned, to varying degrees, with Burk’s acts: City Attorney Gary Rebenstorf; City Council member Jeff Longwell; City Council Member Lavonta Williams, now serving as vice mayor; then-Vice Mayor Jim Skelton, now on the Sedgwick County Commission; and City Manager Robert Layton.

In particular, the manager said, according to the Eagle, 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. Despite the fact that nearly all the property taxes Burk pays directly enriches himself and only him, he still doesn’t want to pay them. And according to the Wichita Eagle — not me — he engaged in deception in order to reduce them.

None of the four people in the council chambers — Rebenstorf, Longwell, Williams, and Layton — explained their apparent change of mind with regard to Burk’s acts.

Burk, who addressed the council immediately after I asked if he cared to explain his actions, decided to avoid the issue. In his shoes, I probably would have done the same, as there is no justification for the acts the Eagle accused him of doing. He, and his political and bureaucratic enablers in Wichita city hall, have to hope this issue fades.

Campaign contributions

Council member O’Donnell asked about a parking garage to be built at a cost of $6 million to the city: Will the city be putting this project out to competitive bid? Bell replied no, that is the developer’s request. City attorney Rebenstorf added that there is a charter ordinance that exempts these types of projects from bidding requirements.

O’Donnell said that awarding the construction contract to a company that has made campaign contributions to all council members (except him) “seems a little questionable.”

The company in question is Key Construction. Its principals regularly appear on campaign finance reports, making the maximum allowed contribution to a wide variety of candidates. Similarly, Burke and his wife also frequently make the maximum contribution to city hall candidates.

O’Donnell is correct to publicize these contributions. They emit a foul odor. In our political system, many people make contributions to candidates whose ideology they agree with, be it conservative, liberal, or something else.

But Burk and others routinely make the maximum contribution to all — or nearly all — candidates, even those with widely varying political stances. How can someone explain Burk’s (and his wife’s) contributions to liberals like Miller and Williams, and also to conservatives like Longwell, Meitzner, and former council member Sue Schlapp?

The answer is that Schlapp and Longwell, despite their proclamations of fiscal conservatism, have shown themselves to be willing to vote for any form of developer welfare Burk and others have asked for. They create tangled webs of tortured logic to explain their votes. Meitzner, along with his fellow new council member James Clendenin (district 3, south and southeast Wichita), seems to be following the same path.

Several council members and the mayor took exception to O’Donnell’s raising of this matter. Clendenin, for his part, objected and said that the public has had over 30 days to consider and take exception with this project. This contention, like Miller’s, isn’t supported by any facts that I am aware of. It appears that the first mention of any of the details of the plan and the subsidies is contained in a MAPC agenda that appears to have been created on July 29. Besides not being 30 days in advance, the MAPC agenda is an obscure place to release what Clendenin believes is adequate public notice.

Regarding the issue of campaign contributions, the mayor — without mentioning his name — strongly criticized O’Donnell for bringing up this matter. Many people watching this meeting felt that the extreme reaction of Brewer and others to O’Donnell’s observation reveals a certain uneasiness regarding these contributions. I don’t believe the mayor and council members are taking illegal bribes, although when any city is enriching people with millions of dollars of developer welfare there is always that threat, and in some cities and states such practices are commonplace.

The fact remains, however, that there is a small group of campaign contributors who — over and over — ask for and receive largess from city hall.

The mayor’s criticisms

In his comments, Mayor Brewer accused opponents of providing only partial facts about matters, because the full facts did not support their case. He was referring to my remarks that a lawsuit brought against the city by a party who felt the city had reneged on a letter of intent was litigated all the way to the Kansas Supreme Court. In my remarks I didn’t mention who won that case — the city did — and the mayor believes this is an example of slanting the facts.

The mayor went on to make accusations of “grandstanding” from some of the public and “some council members” because there are cameras in the council chambers. He mentioned that news media are present at every meeting and that council meetings are broadcast on television.

The mayor should take notice, however, that most people who care about public affairs and policy are severely disappointed with news media coverage of city hall events. The resources of news gathering agencies, especially newspapers, are severely depleted as compared to the past. In my coverage of a talk given by former Wichita Eagle editor Davis Merritt, I wrote this: “A question that I asked is whether the declining resources of the Wichita Eagle might create the danger that local government officials feel they can act under less scrutiny, or is this already happening? Merritt replied that this has been going on for some time. ‘The watchdog job of journalism is incredibly important and is terribly threatened.’ When all resources go to cover what must be covered — police, accidents, etc. — there isn’t anything left over to cover what should be covered. There are many important stories that aren’t being covered because the ‘boots aren’t on the street anymore,’ he said.” See Former Wichita Eagle editor addresses journalism, democracy, May 11, 2009.

In addition, Bill Wilson, the reporter the Wichita Eagle sent to cover the meeting, has a documented bias against the concept of free markets, and against those who believe in them.

The mayor, when delivering his criticism, does not use the names of those he criticizes. It would be useful if he did, but it would mean he has to take greater accountability for his remarks.

Following are links to excerpts of testimony from the meeting — perhaps examples of the “grandstanding” the mayor complained about: John Todd, Shirley Koehn, and Bob Weeks.

Wichita should reject the fads Portland has followed

By Randal O’Toole. From February, 2010.

Randal O'Toole speaking in WichitaRandal O’Toole in Wichita.

Urban planners say they can make our cities more livable, our downtowns more vibrant, and our traffic calmer. The problem is that urban planners do not understand how cities work, so all of their plans often turn out disastrously wrong.

Many urban planners are quite capable of planning a sewer line, a road, a bus route, or a school. But it is huge leap from “I can locate a water main” to “I should have the power to decide how every piece of land in your urban area should be used.”

That is the power urban planners want. But cities are too complicated for anyone to plan, so giving anyone this power is asking for trouble.

Take my former hometown of Portland, Oregon, whose planners say they are making streets “vibrant” and the city “livable” by encouraging walking and transit ridership and discouraging driving.

To stop “sprawl,” planners told rural landowners around Portland that they cannot build a house on their own land unless they own at least 80 acres and earn $80,000 a year farming it. To promote “compact development,” planners rezoned many neighborhoods of single-family homes for multi-family housing with zoning so strict that, if someone’s house burns down, they can only replace it with an apartment.

Planners believe your only property rights are the rights planning commissions decide to give you — subject to change any time.

Portland has spent well over $2 billion building light-rail and streetcar lines. To encourage transit ridership, planners allowed rush-hour congestion on all major freeways and streets to increase to stop-and-go levels. Doing anything to relieve congestion, planners feared, “would eliminate transit ridership.”

To further encourage transit and walking, planners zoned all the land near light-rail stations for high-density, mixed-use development, so people could walk from their apartment buildings to a cafe or grocery store. When nothing got built — developers said Portland already had a surplus of multi-family housing — the city started subsidizing it, and has so far given around $2 billion in public funds to developers.

The results are attractive if you like the idea of dodging trolleys as you wander through canyons of four- and five-story apartment buildings. But the practical effects on Portland residents are mostly negative.

Planners successfully increased congestion by more than six times since 1982, about the time most of these plans began. But that hasn’t gotten people out of their cars: the share of commuters taking transit to work declined from 9.8 percent in 1980 to 6.5 percent in 2007.

Planners more than doubled housing prices, so a $150,000 home in Wichita would cost well over $300,000 in Portland. But that hasn’t made high-density housing particularly successful: many of these developments have high vacancy rates and several have gone bankrupt.

High housing prices forced many families with children to move to distant suburbs, and the remaining childless households eat out a lot, so Portland has lots of restaurants. But it also has high taxes and urban services have deteriorated as funds once dedicated to fire, police, public health, and other programs have been diverted to subsidies to developers.

Terrible traffic, unaffordable housing, high taxes, and reduced property rights: those are the legacies of Portland planning. That’s the future planners want to bring to Wichita. I recommend you just say no.

Randal O’Toole (rot@cato.org) is senior fellow with the Cato Institute and author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future. He recently visited Wichita for a series of speaking engagements and meetings.

Wichita city council to decide between rule of law, or rule by situation

Tuesday’s Wichita City Council meeting will provide an opportunity for the mayor, council members, and city hall staff to let Wichitans know if our city is governed by the rule of law and proper respect for it, or if these values will be discarded for the convenience of one person and his business partners.

Here’s the situation: a person wants to gain approval of a tax increment financing (TIF) district project plan. This requires a public hearing, which the city has scheduled for September 13th.

But this schedule doesn’t suit the applicant. He has a personal business need — an expiring purchase option — and wants the city to issue a letter of intent stating that the city intends to do all the things that are the subject of the September public hearing.

The letter of intent is not binding, city officials tell us. The council will still have to hold the September public hearing and vote on the incentives the developer wants. And the list of incentives is large, amounting to many millions of dollars. Whether to issue these incentives deserves discussion and a public hearing.

But the letter of intent, in effect, circumvents the public hearing. It reduces the hearing to a meaningless exercise. No matter what information is presented at the September public hearing, no matter how strong public opinion might be against this project, is there any real likelihood that the council would not proceed with this plan and its incentives, having already passed a letter of intent to do so? I imagine that persuasive arguments will be made that since the city issued a letter of intent, and since the developers may have already taken action based on that letter, it follows that the city is obligated to pass the plan. Otherwise, who would ever vest any meaning in a future letter of intent from this city?

And the developers are planning to take action based on this letter of intent. To them, the letter does have meaning. If it had no meaning, why would they ask for it?

That bears repeating: If the letter of intent is non-binding, why issue it at all?

The last time someone felt the city reneged on a letter of intent, it resulted in a court case that went all the way to the Kansas Supreme Court. I imagine the city is not anxious to repeat that experience.

Part of the purpose of public hearings and their advance notice, usually 30 days or so, is to give interested parties time to prepare for the hearing. But citizens are given just a few days notice of the proposed letter of intent. The parties who will receive the subsidies, of course, have known about this for some time. Their bureaucratic and political enablers have, too.

The issuance of the letter of intent on Tuesday, if the city council decides to do so, is an affront to the rule of law. It would be a powerful statement by the council that it intends to go ahead with the project and its subsides, public hearing — and citizens — be damned. It is a striking show of arrogance by the city and its political leadership, which is to say Mayor Carl Brewer.

After Tuesday’s meeting we will know one thing. We will know if the Wichita City Council and city staff value the rule of law more than the needs of one small group of people. We won’t really know about individual city staff, but the council members and mayor will have to vote on this item. We’ll know exactly where each of them stands. Expect waffling.

Tuesday provides citizens a chance to learn exactly how the mayor and each council members value the rule of law as compared to the needs of one person and his business partners. It is as simple as that.

The project

The project is the development of a new hotel in an existing building downtown. It sounds like a neat project and would be a great addition to Wichita. But — this project is a product of central government planning backed by massive government intervention in the form of millions of dollars of subsidy. Pretty much all the tools have been tapped in the proposed corporate welfare, even one form that will require the city to pass a special charter ordinance.

The lead developer, David Burk, is well known in Wichita and has produced a number of successful projects. (We must qualify this as “seemingly successful,” as it seems as all of Burk’s projects require some sort of taxpayer involvement and subsidy. So we don’t really know if these projects would be successful if they had to stand on their own.)

I’ve written extensively on the problems with government-directed planning and taxpayer-funded investment in downtown Wichita. See Downtown Wichita regulations on subsidy to be considered or Downtown Wichita revitalization for examples. This project suffers from all these problems.

Furthermore, we see the problems of the public choice theory of politics at play here. Perhaps most prominent is the problem of concentrated benefits and dispersed costs. In this case Burk and his partners stand to garner tremendous benefit, while everyone else pays. This is why Burk and his wife are generous campaign donors to both conservative and liberal city politicians.

Burk and past allegations

The involvement of Burk in the project, along with the city’s response, is problematic. City documents indicate that the city has investigated the backgrounds of the applicants for this project. The result is “no significant findings to report.” Evidently the city didn’t look very hard. In February 2010 the Wichita Eagle reported on the activities of David Burk with regard to property he owns in Old Town. Citizens reading these articles might have been alarmed at the actions of Burk. Certainly some city hall politicians and bureaucrats were.

The opening sentence of the Wichita Eagle article (Developer appealed taxes on city-owned property) raises the main allegation against Burk: “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.”

A 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, now serving as vice mayor, 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.

Some of Burk’s partners have a history of dealing with the city that is illustrative of their attitudes. In 2008 the Old Town Warren Theater was failing and its owners 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. The theater’s owners included David Wells, who is one of Burk’s partners in the project being considered by the council for the letter of intent.

Entrepreneurs are not always successful. Business failure, if handled honestly and honorably, is not shameful.

But when a business is already receiving taxpayer subsidy, and the response to failure is to demand even more from the taxpayer — that is shameful.

Burk and Wells, by the way, played a role in the WaterWalk project, which has a well-deserved reputation as a failed development. In 2011 the city’s budget includes a loss of slightly over one million dollars for the TIF district that has benefited its owners to the tune of over $41 million.

Burk has been personally enriched by city hall action before. An example from the same article: “A 2003 lease agreement gave Burk use of the retail strip at the front of the parking garage for $1 a year for the first five years.” Nearly-free property that you can then lease at market rates is a sweet deal.

These gentlemen have had their bite at the taxpayer-funded apple. Now they want another bite, on their own schedule, without regard to rule of law and the public.

Despite allegations, Wichita’s Dave Burk remains favored

As Wichita proceeds with the redevelopment of its downtown, one developer seems to be on the cutting edge of harvesting corporate welfare — despite his past behavior. Last year this person, Dave Burk of Marketplace Properties, acted in a way the Wichita Eagle described as deceptive in order to reduce his property taxes. Yet, Burk remains a favored developer at city hall, and he’s soon going to ask taxpayers to pay higher taxes for his benefit. These are the same taxes he himself doesn’t like to pay. The following article from February 2010 explains.

Today’s Wichita Eagle contains a story about a well-known Wichita real estate developer that, while shocking, shouldn’t really be all that unexpected.

The opening sentence of the article (Developer appealed taxes on city-owned property) tells us most of what we need to know: “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.”

Some might say it’s not surprising that Burk represented himself in the way the Eagle article reports. When a person’s been on the receiving end of so much city hall largess, it’s an occupational hazard.

And when you’ve been the beneficiary of so much Wichita taxpayer money, you might even begin to think that you shouldn’t have to pay so much tax anymore.

At the state level, you might seek over a million dollars of taxpayer money to help you renovate an apartment building.

Burk has certainly laid the groundwork, at least locally. A registered Republican voter, Burk regularly stocks the campaign coffers of Wichita city council members with contributions. These contributions — at least for city council candidates — are apparently made without regard to the political leanings of the candidates. How else can we explain recent contributions made to two city council members who are decidedly left of center: Lavonta Williams and Janet Miller? Burk and his wife made contributions to their campaigns in the maximum amount allowed by law.

This is especially puzzling in light of Burk’s contributions to campaigns at the federal level. There, a search at the Federal Election Commission shows a single contribution of $250 to Todd Tiahrt in 2005.

It’s quite incongruous that someone would contribute to Tiahrt, Williams, and Miller. Except Williams and Miller can — and have — cast votes that directly enrich Burk. Politicians at the federal level don’t have the same ability to do that as do Wichita city council members. Well, at least not considering Wichita city business.

So which is it: is Burk a believer in Republican principles, a believer in good government, or someone who knows where his next taxpayer handout will come from?

Burk’s enablers — these include Wichita’s lobbyist Dale Goter, Wichita Downtown Development Corporation president Jeff Fluhr and chairman Larry Weber, Wichita City Manager Robert Layton, Wichita economic development chief Allen Bell, and most importantly Wichita Mayor Carl Brewer and various city council members — now have to decide if they want to continue in their efforts to enrich Burk. Continuing to do so will harm their reputations. The elected officials, should they run for office again, will have to explain their actions to voters.

At the state level, the bill that will enrich Burk will likely be voted on in the Kansas Senate this week. Then, similar action may take place in the Kansas House of Representatives. Let’s hope they read the Wichita Eagle in Topeka.

Downtown Wichita regulations on subsidy to be considered

Tomorrow the Wichita City Council will consider policies relating to the award of subsidies for development in downtown Wichita. While the policies have the sheen of government authority, that the policies are government policies means that downtown development is certain to miss out on the benefits of free markets, capitalism, and the dispersed knowledge that only markets can generate and channel. In its place we’re left with a form of social engineering that seeks to remake Wichita in the vision of planners and their supporters.

Perhaps the most absurd idea surrounding the revitalization of downtown Wichita is that planning and subsidy is required. The idea that government officials know what the people of Wichita would really like and can then deliver that is nonsense. Yes, there have been many meetings with downtown planners. We paid $500,000 to a firm to plan for us, and based on recent news of additional consultants being hired, that wasn’t enough. The planners dutifully solicited the opinions of citizens, which is almost always that people want more of everything. That’s natural. But citizens sitting in focus groups are not markets. They make decisions in the abstract, without the constraints of the actual world.

One of the most absurd concepts of the plan is that the city is limited to investing only in money-losing projects. As a “minimum threshold criteria” for a project to receive city assistance, the document requires: “Economic analysis confirms that the project is infeasible ‘but for’ public investment.”

Is investing in otherwise money-losing projects a wise course for government to follow? The fact that something is economically infeasible tells us something: people don’t want it as much as they want something else. But, thanks to our city’s politicians and bureaucrats, Wichitans will be forced to pay for it anyway. It is thought by some that there is “market failure” here, that Wichitans aren’t smart enough to know what they really want or should want. But just because people make decisions that downtown visionaries don’t approve of, that’s not market failure.

The distinction that public dollars will go only towards things that have a “public purpose” — parking is most frequently mentioned — is really a distinction without a difference. An example might be a multi-story parking facility located between a residential building and an office building. The theory is that residents use the garage mostly at night and the office workers use it mostly during the day, so the two uses complement each other. But — aren’t we supposed to have a downtown where people live near where they work, and the whole place is walkable and transit-oriented?

Constructing parking spaces on a surface parking lot outside of downtown is expensive, too, although not as much as in multi-story parking garages. And we’re still left with the fact that downtown developers get their parking for free is an example of the entire city subsidizing something that benefits relatively few.

The proposed policy has a matrix that will be used to evaluate a project. Based on how well projects meet criteria, points will be awarded. A certain minimum number of points must be achieved for a project to be considered for public subsidy, and then the terms of such subsidy.

We can sort of understand the motivations of government officials when creating policies like this. They want to let citizens know that they are dishing out subsidy in a responsible manner. They want to avoid the appearance of giveaways to the politically-favored at the expense of everyone else. Now, it looks like we’re implementing policies to route taxpayer giveaways to the bureaucratically-favored. I’m not sure if one is better than the other.

The fact is that planning even a relatively small area such as downtown Wichita is an incredibly complex tax that is beyond the capability of government. Except — government will still try. And its regulations — that’s what this downtown plan is — will lead to something less than what downtown could be if government stepped aside. Israel Kirzner explains:

The perils associated with government regulation of the economy addressed here arise out of the impact that regulation can be expected to have on the discovery process, which the unregulated market tends to generate. Even if current market outcomes in some sense are judged unsatisfactory, intervention, and even intervention that can successfully achieve its immediate objectives, cannot be considered the obviously correct solution. After all, the very problems apparent in the market might generate processes of discovery and correction superior to those undertaken deliberately by government regulation. Deliberate intervention by the state not only might serve as an imperfect substitute for the spontaneous market process of discovery; but also might impede desirable processes of discovery the need for which has not been perceived by the government. Again, government regulation itself may generate new (unintended and undesired) processes of market adjustments that produce a final outcome even less preferred than what might have emerged in a free market.

Firms will still be free to develop in downtown Wichita if they forgo the subsidies that are available by conforming to the plan. I wouldn’t expect many to do so, however.

Kansas and Wichita quick takes: Monday May 16, 2011

Wichita City Council this week. This week the Wichita City Council handles several important issues. One is approval of the policies regarding incentives for downtown development. Then, the council will consider approval of the city’s portion of the Hawker Beechcraft deal. In order to persuade Hawker to stay in Kansas rather than move to Louisiana, the State of Kansas offered $40,000 in various form of incentive and subsidy, and it was proposed at the time that the City of Wichita and Sedgwick County each add $2.5 million. Of note is the fact that Hawker’s campus in east Wichita … oops, wait a moment — their campus is not within the boundaries of the city. Like Eastborough, Hawker is surrounded on all four sides by Wichita, but is not part of the city itself. I don’t know if this should have any consideration as to whether the city should give Hawker this grant. … Then, there’s approval of the Industrial Revenue Bonds for the Fairfield Inn in downtown at WaterWalk. The agenda material says that the hotel is now complete, so the construction loan is being refinanced with the IRBs, “which will be initially purchased by the construction loan lender and then later redeemed with the proceeds of a permanent commercial loan insured by the Small Business Administration.” The benefit of the bonds is that the hotel escapes paying $328,945 in sales tax on its furnishings, etc. The city has already issued a letter of intent to do this, so it’s likely this item will pass and someone else will have to pay the sales tax this hotel is escaping. … The complete agenda packet is at Wichita City Council May 17, 2011.

Wichita as art curator. The controversy over spending $350,000 on a large sculpture at WaterWalk promoted one reader to write and remind me of the city’s past experience as custodian of fine art. In 2004, the city mistakenly sold a sculpture by James Rosati as scrap metal. Realizing its mistake, the city refused to complete the transaction. The buyer sued, the city lost and appealed, losing again. Estimates of the sculpture’s worth ranged up to $30,000. Editorialized Randy Scholfield at the time in The Wichita Eagle: “That the sculpture ended up in an auction of surplus junk in the first place says something about how much the city valued it or exercised proper stewardship.”

Legislature fails to confront KPERS. This year the Kansas Legislature failed to confront the looming problem of the Kansas Public Employees Retirement System, or KPERS. A small revision was made to the program, and a study commission was created. Neither action comes anywhere near to solving this very serious problem, as described in Economist: KPERS must undergo serious reform.

Over 30 major news organizations linked to George Soros. Business and Media Institute: “When liberal investor George Soros gave $1.8 million to National Public Radio, it became part of the firestorm of controversy that jeopardized NPR’s federal funding. But that gift only hints at the widespread influence the controversial billionaire has on the mainstream media. Soros, who spent $27 million trying to defeat President Bush in 2004, has ties to more than 30 mainstream news outlets — including The New York Times, Washington Post, the Associated Press, NBC and ABC.” … This is from the first of a four part series.

Romney seen as candidate of business, not capitalism. Timothy P. Carney in To Mitt Romney, big government is good for business: “Mitt Romney has the strongest business backing of any Republican presidential hopeful, and he carries himself as a technocratic problem solver. … Examine Romney’s dalliances with big government that have caused him such grief, and you’ll see a trend: They all are described as ‘pro-business,’ they all amount to corporate welfare, and they all reflect the technocratic mind-set you’d expect of a business consultant. Romney’s record and rhetoric show how managerialism veers away from the free market and into corporatism.” … Carney discusses Romney’s disastrous health care program in Massachusetts — which is seen as a prototype for Obamacare, his efforts to lure business to the state with subsidies, his support of ethanol subsidies, a national catastrophic insurance fund, and the Troubled Asset Relief Program.

Programs for elderly must be cut. Robert Samuelson in The Washington Post: “When House Speaker John Boehner calls for trillions of dollars of spending cuts, the message is clear. Any deal to raise the federal debt ceiling must include significant savings in Social Security and Medicare benefits. Subsidizing the elderly is the biggest piece of federal spending (more than two-fifths of the total), but trimming benefits for well-off seniors isn’t just budget arithmetic. It’s also the right thing to do. I have been urging higher eligibility ages and more means-testing for Social Security and Medicare for so long that I forget that many Americans still accept the outdated and propagandistic notion that old age automatically impoverishes people.” … Samuelson goes on to show that many are doing quite well in old age and gets to the heart of the problem: “The blanket defense of existing Social Security and Medicare isn’t ‘liberal’ or ‘progressive.’ It’s simply a political expedient with ruinous consequences. It enlarges budget deficits and forces an unfair share of adjustment — higher taxes, lower spending — on workers and other government programs. This is the morality of the ballot box.” In other words, the elderly, which are a powerful voting bloc, have found they can vote themselves money. Concluding, he writes “Social Security was intended to prevent poverty, not finance recipients’ extra cable channels.”

Social Security seen as unwise, financially. A video from LearnLiberty.org, a project of Institute for Humane Studies, explains that apart from the political issues, Social Security is a bad system from a purely financial view. Explained in the video is that 22 year-olds can expect to earn a 1.6 percent rate of return on their “investment” in Social Security contributions. Further, the “investment” is subject to a “100 percent estate tax.”

Market development in Wichita. From Wichita downtown planning, not trash, is real threat: “While the downtown Wichita planners promote their plan as market-based development, the fact is that we already have market-based development happening all over Wichita. But because this development may not be taking place where some people want it to — downtown is where the visionaries say development should be — they declare a ‘market failure.’ But just because people make decisions that visionaries don’t approve of, that’s not market failure. And this is one of the most important reasons why Wichitans should oppose the downtown plan. It proposes to direct public investment away from where free people trading in free markets want public investment to be. The public investment component of the downtown plan says that people who decided not to live or work downtown are wrong, and they must now pay for others to be downtown. … We have market-based development in Wichita. We don’t need a government plan to have market-based development.”

Kansas and Wichita quick takes: Friday May 6, 2011

Wichita downtown sites draw little interest. Wichita Business Journal: “Interest from developers in eight city-owned “catalyst” sites in downtown Wichita was minimal — unexpectedly so. ‘I was a little bit surprised how light the response was,’ says Scott Knebel, downtown revitalization manager for the city of Wichita.” With the city soliciting informal proposals for eight sites, only two proposals were received.

KPERS. It appears that the Kansas Legislature will pass a pension “reform” bill that does not include a shift to a defined-contribution plan for new employees. Instead, the tough decisions that need to be made about the Kansas Public Employees Retirement System have been placed in the hands of a study committee. More information about the seriousness of the KPERS problem is at Economist: KPERS must undergo serious reform and KPERS problems must be confronted. Video is here, with two parts following.

More flexibility for school funds. Kansas Watchdog reports that Kansas schools will now have more flexibility to spend funds that are presently stashed away in various funds. Of interest in the article is a chart showing the growth in these fund balances. School spending advocates protest that these funds are needed to because revenue doesn’t arrvie at the same time bills do, which is true. But these fund balances have been growing, because schools have not been spending all the money they’ve been given. While this bill is a good idea, schools have always been able to tap into these funds by simply contributing less to them, thereby spending down the balances. But schools have not wanted to to do this.

Growth in Kansas spendingGrowth in Kansas spending. Click for a larger view.

Despite “cuts,” spending grows. For all the talk in Kansas of budget cuts, state spending still manages to grow year after year. Kansas Watchdog is again on top of this topic, noting “Each year various adjustments push state spending above the approved budget, but in 2010 that extra spending took a big jump that will require even more spending in the future.” Of particular interest is the chart showing spending rising every year.

Sandy Springs a model. Common Sense with Paul Jacob: “Local governments suffer from a big problem: bigness. Too often they expand their scope of services, and, in so doing, progressively fail to cover even the old, core set of services. You know, like fire and police and roads and such. The solution is obvious. Mimic Sandy Springs. This suburban community north of Atlanta, Georgia, had been ill-served by Fulton County. So a few years ago the area incorporated. And, to fend off all the problems associated with the ‘do-it-all-ourselves’ mentality, the city didn’t hire on a huge staff of civil servants. Instead, it contracted out the bulk of those services in chunks. Now, the roads get paved and the streets are cleaned and the waste is removed better as well as cheaper than ever. Reason Foundation, a think tank known for its privatization emphasis, has been on the story from the beginning. A 2005 appraisal predicted that the town would become a ‘model city.’ That prophecy seems to have been on the money, and a Reason TV video emphasizes this with the shocking fact that the town ‘has no long-term liabilities.’ As the rest of the nation’s cities, counties and states lurch into insolvency, Sandy Springs shows a way out.” … The City of Wichita has had success in outsourcing the mowing of parks. Currently, the city has several dozen pieces of commercial mowing equipment at auction.

States’ war for jobs. Bloomberg Businesweek: “State and local governments eager to recover some of the more than 8 million jobs lost during the recession are giving away $70 billion in annual subsidies to companies, according to calculations by Kenneth Thomas, a political scientist at the University of Missouri-St. Louis. States have long relied on fiscal incentives to lure businesses, or keep existing employers from decamping to other locales. Such largesse is coming under renewed scrutiny during this time of strapped budgets. State deficits could reach a combined $112 billion in the fiscal year starting July 1. ‘The tragic irony of it is that in order to pay for these things, they’re cutting other areas that really are the building blocks of jobs and economic growth,’ says Jon Shure, director of state fiscal strategies for the Washington-based Center on Budget and Policy Priorities. … With the national unemployment rate at 8.8 percent, the threat of a company pulling up stakes is enough to open states’ wallets. ‘States and communities are afraid to play chicken,’ says Jeff Finkle, who heads the International Economic Development Council. … Kansas has offered movie theater chain AMC Entertainment a generous incentives package to move away from Kansas City, Mo., The New York Times reported in April. Officials in Missouri are considering making a counteroffer. Neither the company nor state officials would comment. The bidding war helped prompt an Apr. 5 letter signed by 17 corporate executives asking the governors of the two states to quit offering inducements to lure businesses across state lines. ‘At a time of severe fiscal constraint the effect to the states is that one state loses tax revenue, while the other forgives it,’ the letter said. ‘The only real winner is the business who is ‘incentive shopping’ to reduce costs.’” … Governor Brownback’s economic development plan speaks of “A more uniform business tax policy that treats all businesses equally rather than the current set of rules and laws that give great benefit to a few (through heavily bureaucratic programs) and zero benefit to many.” It will be a while before we know if the state is able to stick to this plan.

Shale gas to be topic in Wichita. This Friday (may 6) the Wichita Pachyderm Club features Malcolm C. Harris, Sr., Ph.D., Professor of Finance, Division of Business and Information Technology, Friends University, speaking on the topic: “Shale gas: Our energy future?” Harris also blogs at Mammon Among Friends. … “Shale gas” refers to a relatively new method of extracting natural gas, as reported in the Wall Street Journal: “We’ve always known the potential of shale; we just didn’t have the technology to get to it at a low enough cost. Now new techniques have driven down the price tag — and set the stage for shale gas to become what will be the game-changing resource of the decade. I have been studying the energy markets for 30 years, and I am convinced that shale gas will revolutionize the industry — and change the world — in the coming decades. It will prevent the rise of any new cartels. It will alter geopolitics. And it will slow the transition to renewable energy.” … Critics like the Center for American Progress warn of the dangers: “The process, which involves injecting huge volumes of water mixed with sand and chemicals deep underground to fracture rock formations and release trapped gas, is becoming increasingly controversial, with concerns about possible contamination of underground drinking water supplies alongside revelations of surface water contamination by the wastewater that is a byproduct of drilling.”

Economics in one lesson this Monday. On Monday (May 9), four videos based on Henry Hazlitt’s classic work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Curse of Machinery, Disbanding Troops & Bureaucrats, Who’s “Protected” by Tariffs?, and “Parity” Prices. The event is Monday (May 9) at 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

Voters favor cuts, not tax increases to balance budget. “A survey of Kansas voters conducted on behalf of the Kansas Chamber of Commerce found widespread support for cutting spending rather than raising taxes as the way to balance the Kansas budget. Support was also found for cutting state worker salaries, or reducing the number of state employees.” More at Kansas Chamber finds voters favor cuts, not tax increases to balance budget.

Here’s the Kansas data. “KansasOpenGov.org provides a repository of data about Kansas state and local governments, giving citizens the data they need to hold officials accountable.” More at Kansas OpenGov: Here’s the Kansas data.

Government can’t be like business

As Wichita begins its implementation of the plan for the revitalization of downtown Wichita, stakeholders like to delude themselves that the plan is “market-driven,” that the city will make prudent use of public “investment,” and that the plan’s supporters really do believe in free markets after all. It’s a business-like approach, they say.

But government is not business. The two institutions are entirely different. Government cannot act as a business does — the incentives and motivations are wrong. Furthermore, as Ludwig von Mises taught us, government can’t calculate profit and loss, the essential measure that lets us know if a business is making efficient use of resources.

But some refuse to accept the distinction between the two, insisting that just because an organization — say the Wichita Downtown Development Corporation — is entirely supported (except for a little private fundraising one year) by taxpayer funds, it’s not the same as a government institution.

The City of Wichita suffers from all the problems cited in this excerpt from Central Planning Comes to Main Street by Steven Greenhut, which appeared in the August 2006 issue of The Freeman: Ideas on Liberty. As our city moves away from development based on markets to development based on government planning, and away from a dynamic free market approach to economic development towards political and bureaucratic management of our destiny, we can expect these problems to become more ingrained.

Problems with Incentives

By Steven Greenhut

Most city managers and economic-development officials that I’ve talked to fancy themselves as CEOs of companies, and they argue that what they are doing is no different from what private companies do: maximizing revenues. “Why wouldn’t a libertarian support what we’re doing given that you value private business and understand the importance of profit?” I’ve often been asked.

The answer is simple. Cities are not businesses. They take the tax dollars of residents and make decisions about land use that are backed by police powers. They do not operate in a market; they do not have voluntary stockholders. Despite the delusions of city managers, the city staff usually is not as sophisticated or as skilled as corporate staff, which means cities often get a poor deal when negotiating with rent-seeking corporations.

When cities insert themselves into the economic development game, either with carrots or sticks, they:

  • Shift decision-making from individuals to governments;

  • Take money from taxpayers and redistribute it to individuals and companies;
  • Undermine property rights and other freedoms;
  • Encourage a class of rent-seekers, who learn to lobby city officials for favors and special financial benefits;
  • Put unfavored businesses at a competitive disadvantage with those who are favored; and
  • Stifle political dissent, as companies that are dependent on the city for lucrative work become reluctant to speak their minds about any number of city issues.

Despite what city managers will tell you, the choice is not between economic development and letting a city rot. The choice is between central planning, empowering officials to decide which businesses are worthy of their help, and the good old free market, which lets free people decide which business should succeed or fail.

City officials like to be “proactive,” as they say, and help with economic development. There is something they can do. They can get out of the way, by lowering tax rates, deregulating, ending zoning restrictions, and eliminating exclusive contracts with utilities and developers. It’s not out of the question. The city of Anaheim is doing just that, with remarkable results.

Mackinac’s LaFaive puts it well in a 2003 article: “The best business climate is one in which government ‘sticks to its knitting’ and does its particular assignments well, at the lowest possible cost while creating a ‘fair field with no favors’ environment for private enterprise.”

Not a bad template. Sure beats a world of central planning, where city officials can choose who gets handouts and even who gets driven out of town.

TIF, a Wichita ‘tool,’ might be on the way out in California

In the Wall Street Journal, Steven Greenhut writes about California’s redevelopment agencies, which are very similar to tax increment financing districts (TIF) in Kansas. California governor Jerry Brown has proposed ending these agencies. Local government officials, who are beneficiaries of the agencies, are pushing back. A controller’s report in California finds that the agencies are a “source of waste and governmental abuse — not a generator of jobs and economic growth.” This is consistent with other economic research on TIF districts.

Greenhut correctly diagnosis the problem with these agencies or districts: “Redevelopment has attracted the Brown administration’s attention for an obvious reason: The more aggressive cities have become in using this ‘tool,’ the more they divert tax dollars from traditional public services like schools, fire-fighting and police services.” The use of the term “tool” evokes the rhetoric of Wichita city council members, who are wishing for more “tools in the toolbox.”

As part of its approval of the Goody Clancy plan for the revitalization of downtown Wichita, Susan Estes asked the city council to formally disavow the use of eminent domain for the purposes of transferring property from one person to another. While the city says it does not intend to use the power of eminent domain for this purpose, the reluctance of the council to add this provision to the plan means that it is held in reserve. Mayor Carl Brewer believes it is “one of the tools that is available to the city.” And when perceived to be needed, the power of eminent domain is usually too powerful to resist.

TIF district money is expected to be a key component of the public financing contribution to downtown Wichita redevelopment.

Greenhut concludes: “While economic development and local control are crucial issues, it’s hard to understand why any Republican would believe that a regime of government planning and subsidy is the best way to achieve those goals. They should be standing up against the abuses of property rights and the fiscal irresponsibility inherent in the redevelopment process and championing market-based alternatives to urban improvement — even if it means defending a proposal from a Democratic governor they often disagree with.” Or here in Wichita, a liberal Democratic mayor who champions the centralized government planning of the Wichita Downtown Development Corporation.

Greenhut’s most recent book is Plunder: How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.

Jerry Brown’s Good Deed Gets Punished

California’s governor wants to close his state’s redevelopment agencies, which abuse property rights and breed dependency among city governments.

By Steven Greenhut

Forced to choose between funding public schools and subsidizing ritzy golf courses, many California officials prefer the latter. That’s become painfully clear in the past few weeks as Golden State politicians have fiercely opposed Gov. Jerry Brown’s plan to shave $1.7 billion from the state’s budget deficit by shuttering California’s 400 redevelopment agencies.

The roots of this story go back to 1945, when the California legislature allowed cities and counties to form these redevelopment agencies. Their purpose, at least in theory, was to fight urban blight. Once public officials deem an area blighted, redevelopment agencies can use eminent domain to clear old properties and sell bonds to pay for improvements.

To pay off the bonds, the agencies gobble up any subsequent increase in tax revenue — what the state calls the “tax increment.” In addition, a portion of the sales taxes generated by the new retail and commercial centers go into city, not state, coffers. That’s the main reason redevelopment agencies are popular among local politicians, Republican and Democratic alike. (Plus, they allow pols to reward favored corporations and developers.)

Continue reading at the Wall Street Journal (subscription required) or Pacific Research Institute (no subscription required).

Kansas and Wichita quick takes: Wednesday March 2, 2011

Duplication in federal programs found. Washington Examiner Editorial: “Nobody with even minimal knowledge of how public bureaucracies work should be surprised by the Government Accountability Office’s conclusion that there is a ‘staggering level of duplication’ in the federal government. Duplication is inevitable when professional politicians in both major parties go for decades using tax dollars to buy votes among favored constituencies, and reward friends, former staffers, family members and campaign contributors with heaping helpings from the pork barrel. With the inevitable program duplication also comes an endless supply of official duplicity as presidents, senators and representatives rationalize spending billions of tax dollars on programs they know either don’t work as promised, or that perform the same or similar functions as existing efforts and are therefore redundant.” … And they say it’s tough to cut spending.

Public school town hall meetings. Walt Chappell, Kansas State Board of Education member, is holding two public meetings in Wichita this week. Chappell writes: “You are cordially invited to share your top 4 priorities for what Kansas K-12 students should learn at a Town Hall meeting this week. Your Kansas State Board of Education is deciding how to improve our schools at a Board retreat on March 7th. As your elected representative on the KSBOE, I look forward to hearing your suggestions before we vote.” The first meeting is Thursday March 3rd from 6:30 pm to 8:30 pm at Lionel D. Alford Library located at 3447 S. Meridian (just north of I-235). A second meeting will be on Saturday March 5th from 2:30 pm to 4:30 pm at Westlink Public Library, 8515 W. Bekemeyer, just North of Central and Tyler.

Wichita school board candidates. This Friday (March 4th) the Wichita Pachyderm Club features candidates for the board of USD 259, the Wichita public school district. For the at-large seat, the candidates are Sheril Logan, Carly Miller, and Phil Neff. For district 4, the candidates are Michael Ackerman, Jr., Jeff Davis, and Clayton Houston. The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

Bureaucrats can’t change the way we drive … but they keep trying. More from the Washington Examiner, this time by Fred Barnes. “For most Americans — make that most of mankind — the car is an instrument of mobility, flexibility and speed. Yet officials in Washington, transportation experts, state and local functionaries, planners and transit officials are puzzled why their efforts to lure people from their cars continue to fail.” While Barnes writes mostly about automobiles vs. transit from a nationwide perspective, the issue is important here in Wichita. The revitalization of downtown Wichita contains a large dose of public transit as a way for people to get around downtown. It’s also likely that various streets will be restructured to make them less friendly to automobiles. .. More broadly, a major reason for some to support public funding of downtown is their hatred of “sprawl” and its reliance on the automobile, despite that being the lifestyle that large numbers of Wichitans prefer. They see this as something that government needs to correct.

Wednesdays in Wiedemann tonight. Today (March 2) Wichita State University’s Lynne Davis presents an organ recital as part of the “Wednesdays in Wiedemann” series. These recitals, which have no admission charge, start at 5:30 pm and last about 30 minutes. … Today is an all-Bach program, and Davis writes: “This is music for the soul, music for when the weather isn’t quite what it needs to be, music to heal our coughs and colds, music to meditate by — however this grand yet simple composer speaks to you.” … The location is Wiedemann Recital Hall (map) on the campus of Wichita State University. For more about Davis and WSU’s Great Marcussen Organ, see my story from earlier this year.

Americans for Prosperity website attacked. The website of Americans for Prosperity has been attacked by a group that disagrees with AFP’s position on issues. AFP President Tim Phillips issued a statement: “Americans for Prosperity has established itself as a leading voice in one of the great political debates underway in this country over government spending and how best to restore the fiscal solvency of governments at both the state and federal level. Yesterday, a group claimed credit for an attempt to silence our voice and to stifle that debate through an illegal attack on our website. While the political debate over government spending can be heated, we hope that even our opponents will join us in condemning this illegal attack on our free speech rights as unacceptable and irredeemable. Our country cannot meet the great challenges before us if we cannot have a free and open discussion about the threats that we face. Americans for Prosperity will not be intimidated and will not be deterred from our effort to support responsible economic policies, including the efforts of Governor Walker and other democratically elected leaders in that state to balance the budget through common-sense reforms.” … While I agree with Phillips that free and open discussion is necessary to resolve the issues we face, the disruption of AFP’s website is really more a property rights issue than a speech issue.

Kansas presidential primary pitched as economic development. Washburn University political science professor Bob Beatty: “Why the dash by states to be early on the [presidential primary] calendar? The first is political power and ego. Early primary and caucus states merit attention from the presidential candidates to party big-wigs and power brokers within these early states. But a second reason has rapidly risen in prominence: The economic impact that candidate visits and media coverage of same brings a state. One economist has argued that the economic impact of the Iowa caucuses on the Iowa economy in 2004 was in the neighborhood of $50-$60 million. Other states want a piece of that action.” The complete editorial is Insight Kansas Editorial: Creative Thinking About 2012 GOP Presidential Caucus Can Benefit State.

Huelskamp joins Tea Party Caucus. Tim Huelskamp, a new member of the United States Congress from the Kansas first district, has joined the Congressional Tea Party Caucus headed by Michele Bachmann. The two other new members of the House of Representatives from Kansas have not joined.

How government works. The myth of George W. Bush as a small-government conservative, hiding information from the press and public, and the revolving door between government and lobbying. From Rollback: Repealing Big Government Before the Coming Fiscal Collapse by Thomas E. Woods, Jr. “Of the $96.5 trillion in unfunded Medicare liabilities, $19.4 trillion was added by the ‘small government’ George W. Bush administration’s prescription drug benefit, known as Medicare Part D. The story of that bill’s passage is the story of America in the twenty-first century. The White House did not want to risk the bill’s passage by letting accurate estimates of its cost leak out. Richard Foster, Medicare’s chief actuary, reported that its administrator, Bush appointee Thomas Scully, threatened him with his job if he revealed cost estimates to Congress — a claim that email correspondence from a Scully subordinate appeared to corroborate. The pharmaceutical industry was thrilled with the bill, which would yield perhaps an additional $100 billion in industry profits over the next eight years. Ten days after the bill’s passage, Scully left to join a lobbying firm and represented several large pharmaceutical companies. The bill’s principal author, Billy Tauzin, went on to head the drug companies’ main lobbying organization, a position that paid $2.5 million per year.”

Wichita downtown plan to be considered by county commission

Next week the Sedgwick County Commission will consider its approval of the Goody Clancy plan for the revitalization of downtown Wichita. In December, the plan was passed enthusiastically by the Wichita City Council. There, not even self-styled conservative members like Sue Schlapp, Paul Gray, Jeff Longwell, and Jim Skelton could muster even one tiny bit of doubt as to the wisdom of this plan, with its centralized planning and calls for massive spending of public money.

At the county commission, things may be different. Here are a few articles commissioners may want to consider as they prepare to endorse — or not — this plan.

Wichita should reject Goody Clancy plan for downtown. Mr. Mayor, members of this council, there are many reasons why we should reject Project Downtown: The Master Plan for Wichita. I’d like to present just a few. … First, consider the attitudes of Goody Clancy, the Boston planning firm the city hired to lead us through the process. At a presentation in January, some speakers from Goody Clancy revealed condescending attitudes 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.” … David Dixon, who leads Goody Clancy’s Planning and Urban Design division and was the principal for this project, revealed his elitist world view when he told how that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is only found at the core. This idea that only downtown people are socially and culturally rich is an elitist attitude that we ought to reject. Click here to read the article.

In Wichita, who is to plan? In presenting the plan for the revitalization of downtown Wichita, Wichita’s planners routinely make no distinction between government planning and private planning. In their presentations, they will draw analogies between the wisdom of individuals or businesses creating and following a plan and government doing the same. … An example is Wichita Downtown Development Corporation President Jeff Fluhr, who told the Wichita Pachyderm Club that the development of downtown is like the planning of an automobile trip, so that we don’t make major investments that we later regret. … But government and the private sector are very different, facing greatly different constraints, motivations, and access to information. As a result, the two planning processes are entirely different and not compatible. Click here to read the article.

Tax increment financing: TIF has a cost. Tax increment financing, or TIF districts, is slated to be used as one of the primary means to raise money for the “public investment” portion of the costs of the revitalization of downtown Wichita. Touted by its supporters as being without cost, or good for the entire city, or the only way to get a project started, these arguments make sense only to those who see only the immediate effects of something and are unwilling — or unable — to see the secondary effects of this harmful form of government intervention. Click here to read the article.

Wichita’s vision, by the urbanist elites. Why are some in Wichita so insistent on pushing their vision of what our city should look like, and why are they willing and eager to use the coercive force of government to achieve their vision? In the article below, Randal O’Toole, using a work by Thomas Sowell, provides much insight into understanding why. Click here to read the article.

Wichita downtown planning, not trash, is real threat. A recent plan for the City of Wichita to take over the management of residential trash pickup has many citizens advocating for the present free market system. While I agree that a free market in trash pickup is superior to government management of a cooperative, it is, after all, only trash. There are far greater threats to the economic freedom of Wichitans, in particular the planning for the future of downtown Wichita. … While the downtown Wichita planners promote their plan as market-based development, the fact is that we already have market-based development happening all over Wichita. But because this development may not be taking place where some people want it to — downtown is where the visionaries say development should be — they declare a “market failure.” Click here to read the article.

Government is not business, and can’t be. As Wichita begins its implementation of the plan for the revitalization of downtown Wichita, stakeholders like to delude themselves that the plan is “market-driven,” that the city will make prudent use of public “investment,” and that the plan’s supporters really do believe in free markets after all. It’s a business-like approach, they say. But government is not business. The two institutions are entirely different. Click here to read the article.

Eminent domain reserved for use in Wichita. As part of the plan for the future of downtown Wichita, the city council was asked to formally disavow the use of eminent domain to take private property for the purpose of economic development. The council would not agree to this restriction. Click here to read the article.

At Wichita planning commission, downtown plan approved. At last week’s meeting of the Wichita Metropolitan Area Planning Commission, members were asked to approve the Goody Clancy plan for the revitalization of downtown Wichita. I appeared to make sure that commissioners were aware of some of the highly dubious data on which the plan is based. In particular, I presented to the commission the Walk Score data for downtown Wichita, and how Goody Clancy relied on this obviously meaningless data in developing plans for downtown Wichita. Click here to read the article.

Wichita downtown plan focused on elite values, incorrect assumptions. One of the themes of those planning the future of downtown Wichita is that the suburban areas of Wichita are bad. The people living there are not cultured and sophisticated, the planners say. Suburbanites live wasteful lifestyles. Planners say they use too much energy, emit too much carbon, and gobble up too much land, all for things they’ve been duped into believing they want. It’s an elitist diagnosis, and Wichita’s buying it. Well, we’ve already paid for it, but we can stop the harmful planning process before it’s too late. Click here to read the article.

Some Goody Clancy Wichita findings not credible. Last week Boston planning firm Goody Clancy presented its master plan for the revitalization of downtown Wichita. As this plan is now part of the political landscape in Wichita, we ought to take a critical look at some of its components. Click here to read the article.

Good intentions, and planners, can sap a city’s soul. The following article by Kansas City writer Jack Cashill, courtesy of Ingram’s Magazine, explains some of the problems with city planning of the type Wichita is undertaking at this time. Click here to read the article.

Tax increment financing: TIF has a cost

Tax increment financing, or TIF districts, is slated to be used as one of the primary means to raise money for the “public investment” portion of the costs of the revitalization of downtown Wichita. Touted by its supporters as being without cost, or good for the entire city, or the only way to get a project started, these arguments make sense only to those who see only the immediate effects of something and are unwilling — or unable — to see the secondary effects of this harmful form of government intervention.

Cato Institute Senior Fellow Randal O’Toole has written extensively on the subject of urban planning, development, and tax increment financing (TIF) districts. The following article contains many points that the Wichita City Council may wish to consider as it decides whether to rely on this form of financing for downtown projects, or for projects anywhere in the city.

O’Toole was in Wichita last year. Coverage of a lecture he delivered at that time is Randal O’Toole discusses urban planning in Wichita. The author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future, O’Toole’s latest book is Gridlock: Why We’re Stuck in Traffic and What to Do About It.

TIF is Not “Free Money”

By Randal O’Toole

Originally created with good intentions, tax-increment financing (TIF) has become a way for city officials to enhance their power by taking money from schools and other essential urban services and giving it to politically connected developers. It is also often used to promote the social engineering goals of urban planners.

TIF is based on the idea that public improvements to a neighborhood or district will lead developers to invest in that district. To finance such public improvements, cities are allowed to keep the “increment” or increased property taxes collected from the area. Typically, planners estimate in advance how much new property tax the city can collect and then sell bonds that will be repaid out of those taxes. The revenues from the bonds are used to pay for the improvements.

TIF was invented in California in 1952 in response to a problem found in many cities after World War II. At the beginning of and during the war, most urban residents lived in apartments. After the war, huge numbers of people moved to single-family homes in the suburbs. This left inner-city neighborhoods with high vacancy rates. Since few wanted to rent the cramped housing in such neighborhoods, the landowners did not keep the housing in good condition, and the neighborhoods became “blighted.”

So the California legislature allowed cities to create “redevelopment districts.” Typically, the cities evicted the residents of the districts and tore down the housing, thus leaving bare land that developers could use to build whatever met market demand. It sometimes worked, but often did not, and to this day some neighborhoods of New York City, New Jersey, and other urban areas remain little more than gravel pits.

Eventually, every state but Arizona legalized TIFs — North Dakota doing so in 1973. (Arizona and some other states use a similar scheme involving sales taxes.) Thousands of cities have established TIF districts. But experience has proven that they don’t work as well as hoped.

TIF is not “free money.” Studies have found that, at best, TIF is a zero-sum game, meaning for every winner in the TIF game others lose an equal amount. In other words, TIF does not increase the total amount of development that takes place in a city or region; it merely transfers development from one part of the region to another.

The new developments in the TIF districts consume fire, police, and other services, but since they don’t pay for those services, people in the rest of the city either have to pay higher taxes or accept a lower level of services. This means people outside the district lose twice: first when developments that might have enhanced their property values are enticed into the TIF district and second when they pay more taxes or receive less services because of the TIF district.

Not only does TIF not stimulate urban growth, it may even slow it down. One study found that TIF is actually a negative-sum game because businesses that might have located or expanded in the cities decide to move to another place that has lower taxes or higher levels of urban services.

TIF puts city officials on the verge of corruption, favoring some developers and property owners over others. TIF creates what economists call a moral hazard for developers. If you are a developer and your competitors are getting subsidies, you may simply fold your hands and wait until someone offers you a subsidy before you make any investments in new development. In many cities, TIF is a major source of government corruption, as city leaders hand tax dollars over to developers who then make campaign contributions to re-elect those leaders.

TIF isn’t even necessary to promote redevelopment of declining neighborhoods. Eventually, property values fall low enough that people start to buy and restore or replace buildings in those districts. Rather than use TIF and eminent domain to redevelop a warehouse district, Anaheim recently decided to merely get out of the way of developers of what became known as the Platinum Triangle. Since then, developers have invested billions of dollars in the district.

TIF is no longer about blight. Today, the inner-city slums that TIF was created to replace are long gone, yet TIF continues to grow. Bismarck wants to create a quiet rail zone. Fargo wants to revitalize its downtown. Whenever any kind of development “need” arises, city officials are happy to steal money from fire, police, schools and other services that rely on property taxes and use it to fund that need.

Some states require cities to find that a neighborhood is blighted before they can use TIF. San Jose planners once found that a third of their city was blighted, including one posh neighborhood that was supposedly a slum because the residents had failed to rake the leaves from the private tennis courts in their backyards. Some cities go so far as to declare prime farmland to be “blighted” so they can maximize their share of the revenues when that land is developed.

TIF today is often part of a social engineering agenda that Americans should reject. With no more slums to clear, urban planners see themselves as having a new mission: not to restore blighted neighborhoods but to re-engineer society to fit their fantasies of how people should live. Automobiles are evil, the planners think, and getting people to live in high-density housing will lead them to drive less because they won’t have as far to go to get anywhere. So cities like Denver, Minneapolis, and Portland are using TIF to subsidize high-density developments.

Ironically, we seem to have come full circle. Once used to subsidize the removal of high-density developments that few wanted to live in, TIF is now used to subsidize the construction of high-density developments that few want to live in. After all, if there was truly a demand for such high-density housing, no subsidies would be needed.

While we like to think that government officials have our best interests at heart, TIF is just too much of a temptation for many cities to resist. Two Democratic legislators in Colorado want to reform TIF in that state so that cities can’t declare farms to be blighted. A bill doing just that was proposed in, but not passed by, North Dakota’s 2003 legislature.

But that doesn’t go far enough. Legislators should recognize that TIF no longer has a reason to exist, and it didn’t even work when it did. They should repeal the laws allowing cities to use TIF and encourage cities to instead rely on developers who build things that people want, not things that planners think they should have.

Kansas and Wichita quick takes: Monday January 31, 2011

Some downtown Wichita properties plummet in value. A strategy of Real Development — the “Minnesota Guys” — in Wichita has been to develop and sell floors of downtown office buildings as condominiums. Some of these floors have been foreclosed upon and have come back on the market. Some once carried mortgages of $400,000 or more, meaning that at one point a bank thought they were worth at least that much. But now four floors in the Broadway Plaza Building, three floors of the Petroleum Building, two floors of Sutton Place, and one floor of the Orpheum Office Center are available for sale at prices not much over $100,000, ranging from $14 to $25 per square foot. Other downtown office buildings — very plain properties — are listed at much higher prices. For example, one downtown property is listed at $82 per square foot. … Some of these floors have had declining appraisals. According to the Sedgwick County Treasurer, the fifth floor of Sutton Place, which is listed for sale at $135,000, was appraised in 2008 for $530,900. In 2009 the appraised value dropped to $215,000.

Kansas Days. The primary news made at this year’s Kansas Days gathering was the election of Todd Tiahrt to replace Mike Pompeo as national committeeman. Otherwise, there was a large turnout in Topeka with many receptions and meals that provided opportunities to meet officeholders and new friends, and to reacquaint with old friends from across the state. Plus, I got to sample the “Brownback” beer. It’s pretty good.

Williams named to national economic development committee. From Wichita Business Journal: “Wichita City Council member Lavonta Williams has been named to a National League of Cities steering committee on Community and Economic Development Policy and Advocacy.” Undoubtedly for her unfailing support of any form of corporate welfare that comes before the Wichita City Council.

Mises University this summer. If you’re a college student and would like to receive instruction in Austrian Economics — “a rigorous and logical approach to economics that gives free markets their due and takes full account of the reality of human choice” — I suggest applying to the Ludwig von Mises Institute to attend Mises University this summer. I attended as a member observer in 2007, and it was a wonderful and very intense week. For more information, click on Mises University 2011. Scholarships are available.

A Rosa Parks moment for education. Kevin Huffman in the Washington Post: “Last week, 40-year-old Ohio mother Kelley Williams-Bolar was released after serving nine days in jail on a felony conviction for tampering with records. Williams-Bolar’s offense? Lying about her address so her two daughters, zoned to the lousy Akron city schools, could attend better schools in the neighboring Copley-Fairlawn district. … In this country, if you are middle or upper class, you have school choice. You can, and probably do, choose your home based on the quality of local schools. Or you can opt out of the system by scraping together the funds for a parochial school. But if you are poor, you’re out of luck, subject to the generally anti-choice bureaucracy.” Kansas has no school choice programs to speak of, and so far Kansas Governor Sam Brownback has not expressed advocacy for school choice.

The state against blacks. The Wall Street Journal’s Jason L. Riley interviews economist Walter E. Williams on the occasion of the publication of his most recent book Up from the Projects: An Autobiography. The reason for the article’s title: “‘The welfare state has done to black Americans what slavery couldn’t do, what Jim Crow couldn’t do, what the harshest racism couldn’t do,’ Mr. Williams says. ‘And that is to destroy the black family.’” … On economics and why it is important, Riley writes: “Over the decades, Mr. Williams’s writings have sought to highlight ‘the moral superiority of individual liberty and free markets,’ as he puts it. ‘I try to write so that economics is understandable to the ordinary person without an economics background.’ His motivation? ‘I think it’s important for people to understand the ideas of scarcity and decision-making in everyday life so that they won’t be ripped off by politicians,’ he says. ‘Politicians exploit economic illiteracy.’” … On the current state of politics: “Mr. Williams says he hopes that the tea party has staying power, but ‘liberty and limited government is the unusual state of human affairs. The normal state throughout mankind’s history is for him to be subject to arbitrary abuse and control by government..”

Professor Cornpone. From The Wall Street Journal Review & Outlook: “The last time these columns were lambasted by a presidential candidate in Iowa, he was Democrat Richard Gephardt and the year was 1988. The Missouri populist won the state caucuses in part on the rallying cry that ‘we’ve got to stop listening to the editorial writers and the establishment,’ especially about ethanol and trade. Imagine our amusement to find Republican Newt Gingrich joining such company. The former Speaker blew through Des Moines last Tuesday for the Renewable Fuels Association summit, and his keynote speech to the ethanol lobby was as pious a tribute to the fuel made from corn and tax dollars as we’ve ever heard. Mr. Gingrich explained that ‘the big-city attacks’ on ethanol subsidies are really attempts to deny prosperity to rural America … Yet today this now-mature industry enjoys far more than cash handouts, including tariffs on foreign competitors and a mandate to buy its product. Supporters are always inventing new reasons for these dispensations, like carbon benefits (nonexistent, according to the greens and most scientific evidence) and replacing foreign oil (imports are up). … Given that Mr. Gingrich aspires to be President, his ethanol lobbying raises larger questions about his convictions and judgment.” Another advocate for the ethanol boondoggle, and perhaps again a presidential candidate, is Kansas Governor Sam Brownback.

Politics and city managers to be topic. This Friday (February 4) the Wichita Pachyderm Club features as its speaker H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs, Wichita State University. His topic will be “The Political Roots of City Managers in Kansas.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

Wednesdays in Wiedemann this week. Wednesday (February 2) Wichita State University’s Lynne Davis presents an organ recital as part of the “Wednesdays in Wiedemann” series. These recitals, which have no admission charge, start at 5:30 pm and last about 30 minutes. The location is Wiedemann Recital Hall (map) on the campus of Wichita State University. For more about Davis and WSU’s Great Marcussen Organ, see my story from earlier this year.

Government bird chirping. American Majority’s Beka Romm wonders about the wisdom of a mayor’s plan to broadcast bird songs on the city’s streets, and how we can decide whether government should be doing things like this.

Wichita city manager Robert Layton on the air

Yesterday Wichita city manager Robert Layton appeared as a guest on the Gene Countryman Show on KNSS Radio in Wichita and spoke on a number of topics brought up by the host and callers.

Several times host Gene Countryman referred to Wichita theater owner Bill Warren and his assessment of Layton as “best city manager the city’s ever had,” calling Warren’s assessment “high praise.” Warren has good reason to heap praise on Layton. He and his partners have benefited handsomely from actions the Wichita City Council has taken at Layton’s recommendation. Most recently Warren escaped paying property taxes on a new movie theater, and negotiated a deal in where the property tax on an existing property will increase at an agreed-upon rate that is likely lower than what would happen otherwise. Before Layton’s arrival in Wichita, the council heaped subsidy on Warren too, once bailing out the failing Warren Old Town Theater with an interest-free loan.

Layton also said criticism causes him to “bristle a little bit,” but dismissed his critics as a small minority, although he said he doesn’t discount it.

On the possible arrival of Southwest Airlines to Wichita, Layton said he feels “pretty good” about Wichita’s chances in receiving service from the popular discount airline. He said that we need to keep the Affordable Airfares Program to keep Southwest interested in Wichita. But later he said “The Southwest business model doesn’t require subsidies over a long period of time.”

But as I wrote in 2006, we’ve been told before that the airfare subsidies were meant to be temporary: “From the beginning, we in the Wichita area have been told each year that the AirTran subsidy was intended as a temporary measure, that soon AirTran would be able to stand on its own, and there will be no need to continue the subsidy.” History has shown, however, that the subsidy has grown to the point where the entire state funds the subsidy for Wichita. It appears to be a permanent part of the state’s economic program, with Governor Brownback expressing support for continued funding for the program.

On downtown, Layton said that the city doesn’t want to place businesses in downtown who will be on tax breaks or tax exempt for ten years. If the city is to achieve this goal, it will take a 180 degree change in the mindset in city hall where the mayor and vice-mayor Jeff Longwell complain that we don’t have enough “tools in the toolbox” to incentive businesses. In his State of the City address last week, one of the achievements Mayor Carl Brewer was proud of was the decision by Cargill to locate a facility in downtown Wichita. According to city documents, “The City has also offered a 100% five-plus-five year tax abatement on the new facility.” This is precisely the type of tax break Layton spoke against. Cargill, by the way, received many other forms of subsidy — let’s be clear — corporate welfare — for its decision.

On the plan for how to handle Wichita’s trash, Layton said his intent was to start a community dialog on the subject, and that has happened. Layton praised Iowa’s bottle bill, which adds five cents to the price of items sold in bottles. He said it makes it easier for people to recycle.

In Wichita, who is to plan?

In presenting the plan for the revitalization of downtown Wichita, Wichita’s planners routinely make no distinction between government planning and private planning. In their presentations, they will draw analogies between the wisdom of individuals or businesses creating and following a plan and government doing the same.

An example is Wichita Downtown Development Corporation President Jeff Fluhr, who told the Wichita Pachyderm Club that the development of downtown is like the planning of an automobile trip, so that we don’t make major investments that we later regret.

But government and the private sector are very different, facing greatly different constraints, motivations, and access to information. As a result, the two planning processes are entirely different and not compatible.

In the following excerpt from Planning for Freedom: Let the Market System Work. A Collection of Essays and Addresses, Ludwig von Mises addresses this issue. As Mises writes, the choice is not between planning or no planning. The choice is who is to plan.

“Conscious Planning” versus “Automatic Forces”

As the self-styled “progressives” see things, the alternative is: “automatic forces” or “conscious planning.” It is obvious, they go on saying, that to rely upon automatic processes is sheer stupidity. No reasonable man can seriously recommend doing nothing and letting things go without any interference through purposive action. A plan, by the very fact that it is a display of conscious action, is incomparably superior to the absence of any planning. Laissez faire means: let evils last and do not try to improve the lot of mankind by reasonable action.

This is utterly fallacious and deceptive talk. The argument advanced for planning is derived entirely from an inadmissable interpretation of a metaphor. It has no foundation other than the connotations implied in the term “automatic,” which is customarily applied in a metaphorical sense to describe the market process. Automatic, says the Concise Oxford Dictionary, means “unconscious, unintelligent, merely mechanical.” Automatic, says Webster’s Collegiate Dictionary, means “not subject to the control of the will . . . performed without active thought and without conscious intention or direction.” What a triumph for the champion of planning to play this trump-card!

The truth is that the choice is not between a dead mechanism and a rigid automatism on the one hand and conscious planning on the other hand. The alternative is not plan or no plan. The question is: whose planning? Should each member of society plan for himself or should the paternal government alone plan for all? The issue is not automatism versus conscious action; it is spontaneous action of each individual versus the exclusive action of the government. It is freedom versus government omnipotence.

Laissez faire does not mean: let soulless mechanical forces operate. It means: let individuals choose how they want to cooperate in the social division of labor and let them determine what the entrepreneurs should produce. Planning means: let the government alone choose and enforce its rulings by the apparatus of coercion and compulsion.

Under laissez faire, says the planner, the goods produced are not those which people “really” need, but those goods from the sale of which the highest returns are expected. It is the objective of planning to direct production toward the satisfaction of “true” needs. But who should decide what “true” needs are?

The various planners agree only with regard to their rejection of laissez faire, i.e., the individual’s discretion to choose and to act. They disagree entirely on the choice of the unique plan to be adopted. To every exposure of the manifest and incontestable defects of interventionist policies the champions of interventionism always react in the same way. These faults, they say, were the sins of spurious interventionism; what we are advocating is good interventionism. And, of course, good interventionism is the professor’s own brand only.

Wichita’s vision, by the urbanist elites

Why are some in Wichita so insistent on pushing their vision of what our city should look like, and why are they willing and eager to use the coercive force of government to achieve their vision? In the article below, Randal O’Toole, using a work by Thomas Sowell, provides much insight into understanding why.

Reading this post, I couldn’t help think of Wichita: the “manufactured crisis” of too much driving and too little walking; the desire by many, including several Wichita City Council members — even self-styled conservative members — to expand the power and reach of government; and the denial of responsibility for obvious failures like Waterwalk.

We should remember that the plan for downtown Wichita developed by Boston planning firm Goody Clancy is a plan developed by and for self-styled elites. We only need to remember when David Dixon, Goody Clancy’s principal, told Wichitans that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is only found at the core. That’s an insult to the vast majority of Wichitans, but the elites in Wichita evidently believe it, or are willing to tolerate this insult in order to achieve their vision.

O’Toole visited Wichita last year and presented a fascinating lecture.

The Vision of the Urbanites

By Randal O’Toole

As the Antiplanner has traveled and visited people all over the country, I’ve noticed an interesting phenomenon. Though I’ve met thousands of suburban and rural residents who are very happy with their homes and lifestyles, I’ve never met one who thinks the power of government should be used to force others to live in the same lifestyle. Yet I’ve met lots of urban residents who openly admit that they believe their lifestyle is so perfect that government should force more if not most people to live in dense, “walkable” cities.

Do cities turn people into liberal fascists? Or do liberal fascists naturally congregate into cities, and if so, why?

A general description of the phenomenon I’ve observed can be found in Thomas Sowell’s 1995 book, The Vision of the Anointed. Sowell says that America’s liberal elites view themselves as smarter or more insightful than everyone else, and thus qualified to impose their ideas on everyone else. The process of doing so, says Sowell, follows four steps (p. 8):

First, the anointed identify or, more usually, manufacture a crisis. Sowell’s book reviews three such crises: poverty, crime, and teen pregnancy, all of which were declining in the 1960s when the liberals turned them into crises. The crises relevant to this blog include such things as urban sprawl (totally manufactured as in fact it is not a problem at all) and auto driving (while some of the effects of driving are negative, these are easily corrected while the overall benefits of driving are positive).

Second, the anointed propose a solution that inevitably involves government action. Sowell makes it clear that the the leadership of the elites go out of their way to define or manufacture the crises in ways that make it appear the government action are the only solutions. In other words, their real goal is to make government bigger, not to solve problems. I don’t know if that is true or not, but it doesn’t really matter; what matters is they propose the wrong solutions to problems that often don’t really exist.

Third, once the solution is implemented, the results turn out to be very different, and often far worse, than predicted by the anointed. Crime, poverty, and teen pregnancy went up, not down, when government stepped in to “fix” these problems in the 1960s. In the case of urban planning, anti-sprawl policies made housing unaffordable and led to the recent mortgage crisis. Anti-automobile policies make congestion worse and therefore waste even more energy and produce more pollution.

The final stage is one of denial, in which the elites claim that their policies had nothing to do with the worsening results. Other factors were at work, they claim; in fact, the results might have been even worse if their enlightened policies had not been put into effect.

Sowell notes that the anointed use several tactics to promote their ideas. For example, “empirical evidence itself may be viewed as suspect, insofar as it is inconsistent with that vision” (p. 2). Whenever the Antiplanner uses data to show that there is no urban sprawl crisis or rail transit doesn’t work in a debate with an urban anointed, the inevitable response is some version of “figures don’t lie but liars figure.” “Statistics can be used to show anything you want,” is another version. These comforting words leave the anointed free to dismiss any data and all that conflict with their vision.

A second fundamental tactic is to presume that they have the moral high ground. “Those who accept this vision are deemed to be not merely factually correct but morally on a higher plane,” says Sowell. “Put differently, those who disagree with the prevailing vision are seen as being not merely in error, but in sin” (pp. 2-3). The term “smart growth” is a classic example of this tactic, used solely to bludgeon any dissenters with the claim that they must favor “dumb growth.”

Relying on tactics like these, the anointed avoid confronting the fraudulent nature of their crises and the failures of their solutions. “What is remarkable is how few arguments are really engaged in, and how many substitutes for arguments there are,” says Sowell (p. 6).

While The Vision of the Anointed describes the situation, it doesn’t answer the fundamental question of why people think that way. A partial answer is provided by Sowell’s 1987 book, A Conflict of Visions, in which Sowell traces two different world views back to the late eighteenth century. One view, expressed by Adam Smith, is that humans are imperfect and so we should design institutions that work even if the face of these imperfections. The other view, proposed by William Godwin, is that humans are perfectable, which suggests that the benign hand of government authority should be used to guide people to that perfection.

Today, the Tea Party represents the descendants of Adam Smith, while urban planners are descendants of Godwin. As University of California planners Mel Webber and Fred Collignon wrote more than a decade ago, urban planners were “heir to the postulates of the Enlightenment with its faith in perfectibility.”

The question still remains: why are urbanites more susceptible to the vision of the anointed? Perhaps part of the answer is that the constant friction between strangers that cities impose on their residents leads to a desire for government authority to protect people from those frictions. But a larger part of the answer may be that the role of government is far more visible in cities than elsewhere, and far larger in cities today than in the past, so residents of those cities cannot imagine living without it — and those who want more government are attracted to those cities. In any case, everyone in general and urbanites in particular should be wary of any ideas that make government bigger, as they are probably just part of some elitist scheme to coercively impose their vision on everyone else.

The link to this article at O’Toole’s site is The Vision of the Urbanites.

Government is not business, and can’t be

As Wichita begins its implementation of the plan for the revitalization of downtown Wichita, stakeholders like to delude themselves that the plan is “market-driven,” that the city will make prudent use of public “investment,” and that the plan’s supporters really do believe in free markets after all. It’s a business-like approach, they say.

But government is not business. The two institutions are entirely different. Government cannot act as a business does — the incentives and motivations are wrong. But some refuse to accept the distinction between the two, insisting that just because an organization — say the Wichita Downtown Development Corporation — is entirely supported (except for a little private fundraising one year) by taxpayer funds, it’s not the same as a government institution.

The City of Wichita suffers from all the problems cited in this excerpt from Central Planning Comes to Main Street by Steven Greenhut, which appeared in the August 2006 issue of The Freeman: Ideas on Liberty. As our city moves away from development based on markets to development based on government planning, and away from a dynamic free market approach to economic development towards political and bureaucratic management of our destiny, we can expect these problems to become more ingrained.

Problems with Incentives

By Steven Greenhut

Most city managers and economic-development officials that I’ve talked to fancy themselves as CEOs of companies, and they argue that what they are doing is no different from what private companies do: maximizing revenues. “Why wouldn’t a libertarian support what we’re doing given that you value private business and understand the importance of profit?” I’ve often been asked.

The answer is simple. Cities are not businesses. They take the tax dollars of residents and make decisions about land use that are backed by police powers. They do not operate in a market; they do not have voluntary stockholders. Despite the delusions of city managers, the city staff usually is not as sophisticated or as skilled as corporate staff, which means cities often get a poor deal when negotiating with rent-seeking corporations.

When cities insert themselves into the economic development game, either with carrots or sticks, they:

  • Shift decision-making from individuals to governments;

  • Take money from taxpayers and redistribute it to individuals and companies;
  • Undermine property rights and other freedoms;
  • Encourage a class of rent-seekers, who learn to lobby city officials for favors and special financial benefits;
  • Put unfavored businesses at a competitive disadvantage with those who are favored; and
  • Stifle political dissent, as companies that are dependent on the city for lucrative work become reluctant to speak their minds about any number of city issues.

Despite what city managers will tell you, the choice is not between economic development and letting a city rot. The choice is between central planning, empowering officials to decide which businesses are worthy of their help, and the good old free market, which lets free people decide which business should succeed or fail.

City officials like to be “proactive,” as they say, and help with economic development. There is something they can do. They can get out of the way, by lowering tax rates, deregulating, ending zoning restrictions, and eliminating exclusive contracts with utilities and developers. It’s not out of the question. The city of Anaheim is doing just that, with remarkable results.

Mackinac’s LaFaive puts it well in a 2003 article: “The best business climate is one in which government ‘sticks to its knitting’ and does its particular assignments well, at the lowest possible cost while creating a ‘fair field with no favors’ environment for private enterprise.”

Not a bad template. Sure beats a world of central planning, where city officials can choose who gets handouts and even who gets driven out of town.

Economic freedom at decline, across the U.S. and in Wichita

Earlier this year Robert Lawson appeared in Wichita to speak about economic freedom throughout the world. While the United States presently ranks well, that is changing. Writing this month in The Freeman, Lawson and his colleagues warn of dangerous trends — particularly the Obama Administration’s response to the recession — that pose a threat to the economic freedom that powers growth and prosperity.

While the article is focused primarily at the national economy, there are lessons to be learned locally, too. In particular, increasing intervention into the state and local economy leads to compounding the loss of economic freedom.

As an example, the Wichita City Council has just approved a plan for the revitalization of downtown Wichita that calls for public investment to be made downtown. While the plan is promoted as a market-based plan, it is, instead, a government plan to redirect investment from where people have decided it should be to where politicians, bureaucrats, and their patrons think it should be. These patrons are sometimes called “crony capitalists,” as explained in this passage from the article (James D. Gwartney, Joshua C. Hall and Robert A. Lawson:
The Decline in Economic Freedom
):

It is important to distinguish between market entrepreneurs and crony capitalists. Market entrepreneurs succeed by providing customers with better products, more reliable service, and lower prices than are available elsewhere. They succeed by creating wealth — by producing goods and services that are worth more than the value of the resources required for their production. Crony capitalists are different: They get ahead through subsidies, special tax breaks, regulatory favors, and other forms of political favoritism. Rather than providing consumers with better products at attractive prices, crony capitalists form an alliance with politicians. The crony capitalists provide the politicians with contributions, other political resources, and, in some cases, bribes in exchange for subsidies and regulations that give them an advantage relative to other firms. Rather than create wealth, crony capitalists form a coalition with political officials to plunder wealth from taxpayers and other citizens.

We are now in the midst of a great debate between the proponents of limited government and open markets on the one hand and those favoring more collectivism and political direction of the economy on the other. The outcome of this debate will determine the future of both economic freedom and the prosperity of Americans and others throughout the world.

In Wichita, “those favoring more collectivism and political direction of the economy” are winning. Not only are they winning the actual political votes, they are also winning the battles within their own minds. Astonishingly, many of the crony capitalists in Wichita have deluded themselves into believing that they are supporters of free markets and capitalism. But taxpayer-supported institutions like Wichita Downtown Development Corporation and Visioneering Wichita exist for the very purpose of directing taxpayer funds toward the crony capitalists. Even the Wichita Metro Chamber of Commerce plays a role in the plunder of the taxpayer, with its president nodding in approval as nominally conservative members of the Wichita City Council expressed their support for the collectivist, anti-market vision for downtown Wichita.

The heads of each of these organizations, along with city council members Sue Schlapp, Paul Gray, Jim Skelton, and Vice Mayor Jeff Longwell consider themselves to be conservatives. Many of these have personally assured me they are in favor of free markets.

The actions of the council members, not only their enthusiastic embrace of the downtown plan, but their interventions — at nearly every meeting, week after week — that interfere with the market economy and destroy economic freedom, show that none have even a basic understanding of the difference between the economic means and the political means. Writing in his recent book The Science of Success, Koch Industries Chairman and CEO Charles Koch explains the difference:

The economic means of profiting involves voluntarily exchanging your goods or services for the goods or services of others. Parties will not voluntarily enter into an exchange unless they both believe they will be better off. Therefore, you can only profit over time in a system of voluntary exchange (a market) by making others better off.

The political means of profiting transfers goods or services from one party to another by force or fraud. A coerced or fraudulent exchange leaves at least one of the parties worse off. Examples are stealing, committing fraud, polluting, using unsafe practices, filing baseless lawsuits, lobbying government to hamper competitors or obtain subsidies and promoting self-serving redistribution programs.

The economic means creates wealth by making each participant, and, therefore, society as a whole, better off. The political means, at best, merely distributes wealth. As a general system, it causes the overcoming majority of people to be worse off. (emphasis added)

Eminent domain reserved for use in Wichita

As part of the plan for the future of downtown Wichita, the city council was asked to formally disavow the use of eminent domain to take private property for the purpose of economic development. The council would not agree to this restriction.

Susan Estes noted that the legislative agenda that the city council passed earlier in the meeting supported “home rule and local control as the most valid solution for recurring legislative issues.” High on the list of these issues is eminent domain.

Estes asked that the city adopt a statement that the city will not use eminent domain to take property for someone else’s use.

Answering her, Mayor Carl Brewer said it is the council’s record not to use eminent domain. “But,” he said, the city needs that opportunity and flexibility. He said that the city has been asked by developers to use eminent domain, but they’ve resisted. Nonetheless, he described it as one of the tools that is available to the city.

Council member Janet Miller said that the Kansas legislature has placed restrictions on eminent domain, which she characterized as a prohibition.

While Miller is correct — the Kansas legislature would have to pass a statute authorizing specific use of eminent domain, and the law is now more in favor of property owners than in the past — that protection, in my opinion, is weak.

We can easily imagine a scenario where a developer — promising a grand development — wants a large tract of land, perhaps a city block or more. The mayor and others will travel to Topeka and testify that the city desperately needs the jobs and tax revenue the development will create. (Forgetting the fact that the development will probably be in a tax increment financing district and therefore not contributing increased tax revenue to the city’s general government.) The city’s lobbyist will work the halls, a case of a taxpayer-paid lobbyist working against the interest of taxpayers. The case will be made to other lawmakers that if they ever want to use eminent domain in their home towns, they’d better vote for Wichita’s request. Other forms of legislative logrolling will be in full behind-the-scenes use.

So now property owners, instead of having to contest the city’s lawyers before a judge, have to lobby the entire legislature. The case — instead of being heard in a forum where the rule of law is respected — will be contested in a political body which in many cases has shown us that it cares little for private property rights.

This was a moment in time where the city council could have taken leadership in protecting property owners from eminent domain abuse. The city — particularly Mayor Brewer and Council Member Miller — failed to grasp the importance of protecting this form of liberty and economic freedom.

Wichita should reject Goody Clancy plan for downtown

Remarks to the Wichita City Council regarding the adoption of a plan for the future of downtown Wichita.

Mr. Mayor, members of this council, there are many reasons why we should reject Project Downtown: The Master Plan for Wichita. I’d like to present just a few.

First, consider the attitudes of Goody Clancy, the Boston planning firm the city hired to lead us through the process. At a presentation in January, some speakers from Goody Clancy revealed condescending attitudes 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.”

David Dixon, who leads Goody Clancy’s Planning and Urban Design division and was the principal for this project, revealed his elitist world view when he told how that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is only found at the core.

This idea that only downtown people are socially and culturally rich is an elitist attitude that we ought to reject.

By the way, as I look at the members of this council and the city bureaucratic staff behind me, I see many people who do not live in the core area.

In fact, looking at the Wichita Downtown Development Corporation, its president, chair, and past chair live in the type of fringe, suburban developments that Dixon claims are not socially and culturally rich. Do all of you accept Dixon’s criticism?

These attitudes reflect those of most of the planning profession — that people can’t be relied on to choose what’s best for them. Instead they believe that only they — like the planners at Goody Clancy — are equipped to make choices for people. It’s an elitism that Wichita ought to reject.

The irony is that when we start to look at what exactly Goody Clancy is selling us, we find that we ought to reject it.

In January, Dixon 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 ClancyWalk Score data for downtown Wichita, as presented by planning firm Goody Clancy. Click for a larger view.

The score for 525 E. Douglas, the block the Eaton Hotel is 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 told me 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 this website.

He’s correct. Walk Score has been updated. Now for the same location the walk score is 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.

If someone would ever happen to stroll by that location, he’d find that address, 155 N. Market number 220, is the management office for an office building whose name is Market Place.

Still no grocery store. Not even close.

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.

And since this January reliance on Walk Score was made after Goody Clancy had spent considerable time in Wichita, the fact 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 similar shoddy data and analysis.

I also question whether we have the bureaucratic and political will to actually do what this plan says. For example, the public financing portion is to be limited to things that have a genuine public purpose, such as parking. Financing, if I understand correctly, will be limited largely to tax increment financing districts and historic preservation tax credits.

But look at what this city has done.

In January, Goody Clancy, in its market findings report, told us there is a thriving market for downtown hotel rooms. But right after that the city awarded several millions in subsidy to the Fairfield Inn Hotel, in addition to the benefit it already received from being in a TIF district.

Goody Clancy’s report also states: “Strong occupancy and revenue rates at hotels and a relative undersupply of rooms compared to office space suggest a market opportunity for more hotel rooms.”

But just recently, this city awarded yet another form of subsidy to the many millions already awarded to the Broadview Hotel.

So I wonder if we have the bureaucratic and political will to limit ourselves to the types of public subsidy that the plan calls for.

Finally, Mayor and members of the council, we already have market-driven development in Wichita. Just because some people don’t agree with the results the markets have produced, that does not constitute a market failure that requires government correction.

We already have community engagement in Wichita by people who are actually accountable for the decisions they make and the actions they take.

Now we are considering replacing the dynamic and truly market-driven approach to building our city with what is — despite the claims of its backers — a political and bureaucratic system.

This is a mistake we should not make.

Kansas and Wichita quick takes: Sunday December 12, 2010

This week at Wichita City Council. This Tuesday, six speakers have signed up to appear on the public agenda. This is a portion of the meeting where citizens may speak on nearly any topic. Five are speaking on the city’s proposed trash plan, while one is speaking on a city-wide recycling project. … Approval of the city’s legislative agenda will be considered. Probably the greatest threat to economic freedom is this plank: “City of Wichita supports continued use of effective private-public partnerships and the appropriate intervention of state and local governments to spur economic development.” Also the city expresses support for highly subsidized, expensive, and little-used passenger rail service. … Also the council will consider amending the Wichita-Sedgwick County Comprehensive Plan to include Project Downtown: The Master Plan for Wichita. This is the plan that consulting firm Goody Clancy developed for the revitalization of downtown Wichita. The complete agenda report is at Wichita City Council, December 14, 2010.

Sedgwick County Commission this week. On Wednesday the Sedgwick County Commission will vote on its legislative agenda. The agenda, or platform, is not law, but expresses the sentiment or desire of the commission. Last year Commissioner Karl Peterjohn shepherded through the requirement that voters approve all tax rate increases. This year the same language is proposed, but it may not pass. (The proposed language is this: “All local sales tax increases must be approved by voters under Kansas law. All property tax increases that raise the mill levy should also be required to receive voter approval.”) Some commissioners believe that voters elect them to use their judgment to make decisions on taxes, while other commissioners believe voters should have the final say on something as important as this. The agenda and backup material for Wednesday’s meeting is at Sedgwick County Commission, December 15, 2010.

Wichita Eagle: Adopt downtown plan. Today’s Wichita Eagle editorial calls for passage of the downtown master plan recently developed by planning firm Goody Clancy. Rhonda Holman argues that a “busier, richer core” will benefit the town economically, adding that “downtown matters too much to be left to chance.” The idea that the core is essential to progress is taken as a given, but when downtown supporters are questioned, no evidence to support this nostrum is given. Also, this concept of “chance” that Holman doesn’t trust could also be described as a dynamic marketplace of ideas and capital, with many diverse players with dispersed knowledge acting to advance their own self-interest by creating things people will freely buy, all coordinated through the magic of the price system. What Wichita — with Holman’s support — plans to do is to replace this with the bureaucratic and political system.

City planning by “Those Who Know Best.” “While the fixations of trendy planners might not register on the list of things that average Americans think about, these new utopian land-use ideals are filtering down into government agencies and city councils, and might eventually impact the way we all live.” Writing in the Orange County Register, Steven Greenhut quotes the definition of New Urbanism: “New Urbanism is the most important planning movement this century, and is about creating a better future for us all. It is an international movement to reform the design of the built environment, and is about raising our quality of life and standard of living by creating better places to live. New Urbanism is the revival of our lost art of place-making, and is essentially a reordering of the built environment into the form of complete cities, towns, villages and neighborhoods …” He warns: “Whenever some ideologue claims to offer the most important thing since sliced bread and then promises to reorder my life around it, we should all get nervous.” (The downtown Wichita planners do not use the term “New Urbanism,” but they share the same characteristics and goals.) And even more strongly: “The New Urbanists claim to want to give our lives meaning by creating superior urban forms of living, yet they miss the most meaningful things in life because they emphasize architecture over people. Like all totalitarians, they assume that what they prefer is so good and noble that they have the moral right to impose it on everybody else. The rest of us need to take notice now, so there is still time to oppose it.”

Anderson appointment criticized. KU political science professor Burdett Loomis criticizes the appointment of Steven J. Anderson to be the new Kansas budget director, branding him an “ideologue” that has made “broadside attacks on public education.” Anderson believes in limited government, and his “attacks” on public — let’s be clear here — government schools are advocating school choice through vouchers. In states where vouchers are used, evidence is that public schools improve in response to the competition from private schools that parents can now actually afford. Plus, the state saves money, too. Loomis also criticizes Anderson for uncovering the large unspent fund balances in many Kansas agencies, balances that Loomis seems to doubt exist. Overall, Loomis presents an argument for the status quo in Kansas government, and the potential for change in the direction of restraining its growth has Loomis — in his own words — “concerned — worried, even.”

Wichita downtown planning, not trash, is real threat

A recent plan for the City of Wichita to take over the management of residential trash pickup has many citizens advocating for the present free market system. Some go as far as calling city-managed trash pickup “socialism.”

While I appreciate the sentiment, and I agree that a free market in trash pickup is superior to government management of a cooperative, it is, after all, only trash. There are far greater threats to the economic freedom of Wichitans, in particular the planning for the future of downtown Wichita.

While the downtown Wichita planners promote their plan as market-based development, the fact is that we already have market-based development happening all over Wichita. But because this development may not be taking place where some people want it to — downtown is where the visionaries say development should be — they declare a “market failure.”

But just because people make decisions that visionaries don’t approve of, that’s not market failure. And this is one of the most important reasons why Wichitans should oppose the downtown plan. It proposes to direct public investment away from where free people trading in free markets want public investment to be. The public investment component of the downtown plan says that people who decided not to live or work downtown are wrong, and they must now pay for others to be downtown.

The public investment in suburban development, by the way, is not as large as critics of “sprawl” claim. Here is an example of the public infrastructure that a suburban development paid. It’s a big number, and pays for many of the things that people assume the city pays for. Downtown developers, however, aren’t asked to pay for infrastructure in the same way. Or, they may receive preferential treatment like tax increment financing (TIF) that allows their property taxes to be redirected back to them for their own exclusive benefit.

We have market-based development in Wichita. We don’t need a government plan to have market-based development.

The downtown planning visionaries are also proud of their community engagement. This consists largely of asking people what they’d like to see downtown. The problem with this community engagement is that there’s no accountability. Anyone can say they’d like to see almost anything downtown, and it goes into the plan. But without accountability, this is meaningless. After all, who doesn’t want more of everything?

The fact is that just like we already have market-based development in Wichita, we already have community engagement in Wichita. It’s done by people who are held accountable by markets in the most severe way. These people are the private-sector developers who risk their own capital in order to build what their research or tenants tell them they want. It is through this process that we build what people really want when they spend their own money. Those planning how to spend other people’s money — these are the downtown planners and visionaries — do not have this accountability.

It is the conceding to a centralized government of the power to plan that is a great threat to economic freedom in Wichita. To top it off, it just isn’t going to work. Here is a passage from the opening chapter of The Voluntary City: Choice, Community and Civil Society that explains the problems with the type of planning Wichita is considering to adopt:

The use of land is not a “special case” exempt from the power of markets to fashion orderly and efficient outcomes. In fact, quite the opposite is true. Just as Nobel prize-winner Friedrich Hayek (1988) and fellow Austrian economist Ludwig von Mises demonstrated the folly of top-down economic planning, Jane Jacobs (1963) exposed the problems of top-down city planning. Top-down planners of all stripes are fatally hobbled by their inability to tap local knowledge, the sheer magnitude of which would in any event overwhelm them. In a competitive market, local knowledge reappears, lessening the dependence on politics and increasing flexibility; “public” goods (and spaces) in CIDs and in shopping centers are provided more optimally; the capitalization of benefits in land rents more efficiently finances public goods provision; and market-tested rules of governance are developed. Private developers now routinely supply what had been thought to be “public” goods — without the widely presumed market failure. Just as many people presume the inevitability of top-down planning because of external effects and information problems, events show the opposite: the inevitability of bottom-up approaches to these problems exactly as the Hayekian critique makes clear. It takes decentralized markets to generate the required information through trial-and-error learning. In the process, market participants are far more productive than central planners can ever be.

In Wichita, we are considering replacing the dynamic and truly market-driven approach to development with the political and bureaucratic system. This loss of economic freedom is far more important than having a city manager who doesn’t think Wichitans can handle arranging for their own trash service.

Kansas and Wichita quick takes: Tuesday December 7, 2010

Political pretense vs. market performance. What is the difference between markets and politics or government? “There is a large gap between the performance of markets and the public’s approval of markets. Despite the clear superiority of free markets over other economic arrangements at protecting liberty, promoting social cooperation and creating general prosperity, they have always been subject to pervasive doubts and, often, outright hostility. Of course, many people are also skeptical about government. Yet when problems arise that can even remotely be blamed on markets, the strong tendency is to ‘correct’ the ‘market failures’ by substituting more government control for market incentives.” The article is The Political Economy of Morality: Political Pretense vs. Market Performance by Dwight R. Lee. Lee explains the difference between “magnanimous morality” (helping people) and “mundane morality” (obeying the generally accepted rules or norms of conduct). Markets operate under mundane morality, which is not as emotionally appealing as as magnanimous morality. But it’s important, as it is markets — not government — that have provided economic progress. There’s much more to appreciate in this article, which ends this way: “The rhetoric dominating the public statements of politicians and their special-interest supplicants is successful at convincing people that magnanimous morality requires substituting political action for market incentives, even though the former generates outcomes that are less efficient and moral than does the latter. The reality is that political behavior is as motivated by self-interest as market behavior is. … As long as there are people who cannot resist the appeal of morality on the cheap, the political process will continue to serve up cheap morality. And the result will continue to be neither moral nor cheap.”

Begging for Billionaires. The documentary film Begging for Billionaires will be shown in Wichita next week. The film’s synopsis is this: “In 2005, a divided U.S. Supreme Court gave city governments the authority to take private homes and businesses by eminent domain and transfer ownership to private developers for the purpose of building things like shopping centers, corporate office towers and professional sports arenas. According to the court, the community economic development benefits of such private projects qualified them as being for ‘public use’ under the 5th Amendment’s ‘takings clause.’ The Court’s ruling immediately sparked public outrage and was broadly criticized as a gross misinterpretation of the constitution. Through a mix of guerrilla journalism, expert interviews, and the stories of victims; Begging For Billionaires reveals the fallout of the Kelo case, exposing how city governments brazenly seize property after property from the powerless and give it to the powerful for the pettiest of non-essential ‘economic development’ projects, many of which are subsidized with taxpayer money. Meanwhile, poor and disadvantaged families are forced from their homes. Everyday citizens watch helplessly as their family histories are bulldozed to smithereens. In some cases, homeowners scramble to save their life’s possessions as demolition crews pulverize the walls around them, and Centuries-old neighborhoods are wiped from existence despite rich histories and beautifully maintained homes. Begging for Billionaires begs the question: are we losing sight of the balance between individual property rights and those of the community?” The movie, sponsored by Americans for Prosperity, will be shown on Monday, December 13 from 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

O’Toole on urban planning. As Wichita considers approving a plan for the revitalization of downtown Wichita, we should consider the wisdom of Randal O’Toole: “Urban planners want to shape our cities. And they want our cities to shape you. That’s the conclusion of Cato Institute Senior Fellow Randal O’Toole. He argues that the rationales for most urban planning collapses upon examination.” O’Toole visited Wichita earlier this year. Click here to view a short video of him speaking on urban planning.

Kansas House of Representatives leaders elected. “House Speaker Mike O’Neal, R-Hutchinson and Rep. Arlen Siegfreid, R-Olathe, will hold pivotal leadership positions in the Kansas House after voting Monday among GOP members who re-elected O’Neal to the chamber’s top job and selected Siegfreid as the new House majority leader.” More from Tim Carpenter in the Topeka Capital-Journal.

School lessons learned. Joel Klein, Chancellor of New York City public schools, writing in the Wall Street Journal: “Over the past eight years, I’ve been privileged to serve as chancellor of the New York City Department of Education, the nation’s largest school district. Working with a mayor who courageously took responsibility for our schools, our department has made significant changes and progress. Along the way, I’ve learned some important lessons about what works in public education, what doesn’t, and what (and who) are the biggest obstacles to the transformative changes we still need. … Traditional proposals for improving education — more money, better curriculum, smaller classes, etc. — aren’t going to get the job done. … Bureaucrats, unions and politicians had their way, and they blamed poor results on students and their families. … The people with the loudest and best-funded voices are committed to maintaining a status quo that protects their needs even if it doesn’t work for children. … As I leave the best job I’ve ever had, I know that more progress is possible despite the inevitable resistance to change. To prevail, the public and, most importantly, parents must insist on a single standard: Every school has to be one to which we’d send our own kids. We are not remotely close to that today. We know how to fix public education. The question is whether we have the political will to do it.” This is more evidence of how far behind the rest of the states is Kansas.

Kansas and Wichita quick takes: Monday November 29, 2010

Louisville success factor may be gone. The secret sauce behind redevelopment of downtown Louisville, Kentucky may no longer be available to cities attempting to replicate Louisville’s success, such as it is. The Washington Post reports in the article Sen. Mitch McConnell’s earmark power credited for revitalizing Louisville: “The once grand downtown of this city on the Ohio River is shabby, as the nation’s old downtowns tend to be. Magnificent tall cast-iron-fronted buildings sit empty. So do historic brick tobacco warehouses, surrounded in razor wire, tagged with graffiti. But the downtown of Kentucky’s largest city also has a spectacular redeveloped waterfront featuring bike paths and open vistas, the spanking-new KFC Yum Center sports arena, and a medical complex of several hospitals that employ nearly 20,000 people, treat tens of thousands and conduct cutting-edge research. This resurgence is a result of civic vision, pride, tenacity — and the impressive earmark performance of Louisville’s Slugger: Mitch McConnell (R), Kentucky’s longest-serving senator and the powerful Senate minority leader.” … Louisville is cited as a success story by Wichita’s planners. But the earmark money that helped Louisville is probably not available to Wichita in the near term, and may not ever be available again, at least as it has been in the past. Plus, Kansas doesn’t have a senator with the clout of McConnell, and not one that calls Wichita home. McConnell lives in Louisville.

Loss of earmarks lamented. In the Wichita Eagle article Earmark ban could kill some Kansas projects, well, the title pretty much describes the problem according to some. In particular, the town of Augusta would have had a difficult time affording a levee if not for earmarks. It is mentioned that earmarks are about one percent of the total federal budget. One comment writer, defending the process, wrote “Earmarks return our money to us.” To which we must counter: Why send the money away to Washington in the first place, only to have to fight to get it back?

“No” to citizen-powered democracy. The Newton Kansas argues that a “practical” state like Kansas shouldn’t let its citizens place propositions on the ballot through the petitions process. The editorial says that the California budget process has led to “serious economic turmoil in that state.” It doesn’t explain why, but the writer is probably referring to the fact that the California budget must be passed by a two-thirds majority of both houses of the legislature, rather than by a simple majority as in Kansas. The editorial also says that ballot measures induce spending by proponents and opponents, and some money may come from out of state. Special interests may get involved, too. And administrative costs of adding “pages” to the ballot must be paid for, too. … I must inform the Newton Kansas that the Kansas statehouse is already overrun by special interests, out-of-state interests already spend a lot on our elections and lobbying, and anyone who has observed our legislative process up close would not use the word “practical” to describe it. … The primary reason the ruling class don’t like the citizen initiative process is that one of the first things citizens may do is impose term limits on their elected officials.

Wichita IMAX may not be exclusive. In another installment of his series of love letters to Wichita theater operator Bill Warren, Wichita Eagle reporter Bill Wilson reports on the construction of Warren’s new theater in west Wichita. On Warren’s plans for his theaters in Moore, Oklahoma (part of the Oklahoma City metropolitan area), Wilson’s article reports: “IMAX? ‘Possibly, and a few other surprises down there,’ Warren said.” … Earlier this year when Warren applied to the Wichita City Council for favored tax treatment for this theater, he implied that without the city’s largesse, he’d take his IMAX theater elsewhere. In his remarks at the council meeting where the tax favoritism was approved, Wichita Mayor Carl Brewer bought into the myth that there can be only one Warren IMAX theater when he said: “A lot of other cities want this IMAX … they’re on the internet watching this city council meeting to see what we’re going to do because they’re going to make a bid for this IMAX.” … City officials said the theater would be a tourist draw from as far away as Texas. … With another Warren IMAX possibly being built nearby, Wichitans and the mayor ought to agree that we were mislead, and Wilson ought to report this in the pages of the Wichita Eagle. This entire episode is more evidence that the Wichita City Council will believe almost anything told to them, as long as it involves the possibility of economic development and jobs.

Sheriff to address Pachyderms, guide tour. This Friday (December 3) the Wichita Pachyderm Club features Sedgwick County Sheriff Robert Hinshaw as the presenter. His topic will be “An overview of the duties of the office of sheriff.” Then, from 2:00 pm to 3:00 pm Sheriff Hinshaw will guide Pachyderm Club members on a tour of the Sedgwick County jail. I’ve had the sheriff’s tour before, and it is very interesting. The public is welcome at Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

Wichita City Council this week. As this Tuesday is the fifth Tuesday of a month, the Wichita City Council will not meet. Also, the Sedgwick County Commission will not meet this week.

No free market for health care. A letter in today’s Wichita Eagle claims love for the free-market economy, but not for the provision of health care. The writer claims that free markets for medical services cannot work, because the transactions are one-sided, in that the patient does not have freedom of choice. The writer also cites government success in providing military and education that “improve our society’s overall well-being,” so government should provide health care, too. … I might suggest to the letter writer that we first attempt a free market in health care before we decide it doesn’t work. Most health care is paid for by someone else, and many people who have health insurance through their employers don’t have a choice in the matter. It is this regulation that causes many of the problems in the market, such as it is, and it is nothing resembling “free.” … Citing success of government education and military may not be persuasive to those who see performance of American schools on a long downward slide compared to other countries.

Wichita downtown plan focused on elite values, incorrect assumptions

One of the themes of those planning the future of downtown Wichita is that the suburban areas of Wichita are bad. The people living there are not cultured and sophisticated, the planners say. Suburbanites live wasteful lifestyles. Planners say they use too much energy, emit too much carbon, and gobble up too much land, all for things they’ve been duped into believing they want.

It’s an elitist diagnosis, and Wichita’s buying it. Well, we’ve already paid for it, but we can stop the harmful planning process before it’s too late.

Consider the attitudes of Goody Clancy, the Boston planning firm the city hired to lead us through the process. At a presentation in January, some speakers from Goody Clancy revealed condescending attitudes 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.”

David Dixon, the Goody Clancy principal for this project, revealed his elitist world view when he told how that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is only found 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.”

These attitudes reflect those of most of the planning profession — that people can’t be relied on to choose what’s best for them. Instead they believe that only they — like the planners at Goody Clancy — are equipped to make choices for people. It’s an elitism that Wichita ought to reject.

Besides this, many of the assumptions that planners rely on are wrong, like the purported demographic shifts planners rely on. Consider the recent article Urban Legends: Why Suburbs, Not Dense Cities, are the Future by journalist and geographer Joel Kotkin. While Kotkin’s article focuses a lot on mega-cities like Mumbai and Mexico City, there’s a lot to be learned by smaller cities like Wichita.

One of the issues Kotkin addresses is the effort of cities to appeal to the “creative class.” This is a hot issue in Wichita, where it is thought that we can’t attract young urbanites and their energy and upward economic mobility. Therefore, we must invest in arts, culture, and “hipness.” Kotkin responds:

The hipper the city, the mantra goes, the richer and more successful it will be — and a number of declining American industrial hubs have tried to rebrand themselves as “creative class” hot spots accordingly. But this argument, or at least many applications of it, gets things backward. Arts and culture generally do not fuel economic growth by themselves; rather, economic growth tends to create the preconditions for their development. … Sadly, cities desperate to reverse their slides have been quick to buy into the simplistic idea that by merely branding themselves “creative” they can renew their dying economies; think of Cleveland’s Rock and Roll Hall of Fame, Michigan’s bid to market Detroit as a “cool city.” … Culture, media, and other “creative” industries, important as they are for a city’s continued prosperity, simply do not spark an economy on their own. It turns out to be the comparatively boring, old-fashioned industries, such as trade in goods, manufacturing, energy, and agriculture, that drive the world’s fastest-rising cities.”

The things the Wichita plan is designed to foster: increased density, increased real estate values, decreased use of the automobile, and prescription by cultural elites of what may be built in which locations — these things drive away many people, Kotkin says: “Nor is the much-vaunted ‘urban core’ the only game in town. Innovators of all kinds seek to avoid the high property prices, overcrowding, and often harsh anti-business climates of the city center.”

The sprawl and the alleged unsustainable lifestyle of the suburbs that elites like the Goody Clancy planners clearly disdain — here’s what Kotkin says: “Consider the environment. We tend to associate suburbia with carbon dioxide-producing sprawl and urban areas with sustainability and green living. But though it’s true that urban residents use less gas to get to work than their suburban or rural counterparts, when it comes to overall energy use the picture gets more complicated.” He cites examples in the article.

But the planning process might not be all bad, Kotkin concedes, noting that “To their credit, talented new urbanists have had moderate success in turning smaller cities like Chattanooga and Hamburg into marginally more pleasant places to live.” Chattanooga is one place that Wichita planners and their acolytes have visited recently.

Downtown Wichita demographics not favorable

“Uber-geographer” Joel Kotkin wrote in the Wall Street Journal recently: “Pundits, planners and urban visionaries — citing everything from changing demographics, soaring energy prices, the rise of the so-called ‘creative class,’ and the need to battle global warming — have been predicting for years that America’s love affair with the suburbs will soon be over.”

As Wichita considers adoption of the plan for the revitalization of its downtown, urban planners — both local and out-of-town — tell us that there’s a big demand for downtown living. People are tired of suburban living, they say. Presentations by the city’s planning firm Goody Clancy have contained bullet points like “who favor living and working in vibrant downtowns” and “and they are part of broad demographic trends that are much more ‘downtown friendly’ …e.g., almost two-thirds of Wichita’s households include just one or two people.”

This purported shift from suburban to urban lifestyles is one of the primary underlying memes for the downtown Wichita planners. Is this shift in preference real?

Not according to Kotkin: “But the great migration back to the city hasn’t occurred.”

Kotkin cites some figures showing the decline in the market for downtown condos in a few cities, and concludes “Behind the condo bust is a simple error: people’s stated preferences.” He shows some figures that support his contention that “Demographic trends, including an oft-predicted tsunami of Baby Boom ‘empty nesters’ to urban cores, have been misread.”

These demographic trends are behind the analysis that Goody Clancy uses to promote its vision for downtown Wichita. Kotkin’s research ought to give us concern that downtown visionaries are leading Wichita down a path that really isn’t there.

Kotkin issues a note of caution for urban planners: “The condo bust should provide a cautionary tale for developers, planners and the urban political class, particularly those political ‘progressives’ who favor using regulatory and fiscal tools to promote urban densification. It is simply delusional to try forcing a market beyond proven demand.”

What does this mean for Wichita? Wichita’s planners and leaders are promoting a light-handed approach to downtown development, saying, for example, that public financing will be only for public purposes. But Wichita has a history of heavy-handed interventionism using economic development tools of all types. They wish for more. And as the mayor said at a council meeting earlier this year, he’s recently learned of new types of incentive programs that other cities are using. Other council members and some city staff believe that Wichita doesn’t have enough “tools in the toolbox” for shoveling incentives on companies for economic development purposes.

So I think Wichita’s leaders definitely will use the “regulatory and fiscal tools” that Kotkin warns of. It’s only without government intervention that we’ll know whether Wichitans really prefer suburban, downtown, or other forms of living. Urban planners and city hall bureaucrats can’t tell us that.

The Myth of the Back-to-the-City Migration

The condo bust should lay to rest the notion that the American love affair with suburbia is over.

Pundits, planners and urban visionaries—citing everything from changing demographics, soaring energy prices, the rise of the so-called “creative class,” and the need to battle global warming—have been predicting for years that America’s love affair with the suburbs will soon be over. Their voices have grown louder since the onset of the housing crisis. Suburban neighborhoods, as the Atlantic magazine put it in March 2008, would morph into “the new slums” as people trek back to dense urban spaces.

But the great migration back to the city hasn’t occurred. Over the past decade the percentage of Americans living in suburbs and single-family homes has increased. Meanwhile, demographer Wendell Cox’s analysis of census figures show that a much-celebrated rise in the percentage of multifamily housing peaked at 40% of all new housing permits in 2008, and it has since fallen to below 20% of the total, slightly lower than in 2000.

Continue reading at the Wall Street Journal (subscription required) or at Kotkin’s website.

At Wichita planning commission, downtown plan approved

At last week’s meeting of the Wichita Metropolitan Area Planning Commission, members were asked to approve the Goody Clancy plan for the revitalization of downtown Wichita. I appeared to make sure that commissioners were aware of some of the highly dubious data on which the plan is based.

Listen to my remarks to the planning commission.

In particular, I presented to the commission the Walk Score data for downtown Wichita, and how Goody Clancy relied on this obviously meaningless data in developing plans for downtown 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 mster plan Goody Clancy has developed for downtown Wichita. In January, David Dixon, who leads Goody Clancy’s Planning and Urban Design division, used Walk Score in a presentation delivered in Wichita.

Walk Score is not a project of Goody Clancy, as far as I know, and David 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 ClancyWalk Score data for downtown Wichita, as presented by planning firm Goody Clancy. Click for a larger view.

The score for 525 E. Douglas, the block the Eaton Hotel is 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 as Larry Weber, chairman of the Wichita Downtown Development Corporation told me a while back, 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 this website.

He’s correct. Walk Score has been updated, but we should still be concerned about the quality of the data. Now for the same location the walk score is 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.

If Mr. Weber would ever happen to stroll by that location, he’d find that address, 155 N. Market number 220, is the management office for an office building whose name is Market Place.

It’s not a grocery store. It’s nothing resembling a grocery store. Now I’m even more concerned about the credibility of this data and the fact that Goody Clancy relied on it. I’m further concerned that Weber thinks this is an improvement, and that he feels I should not be concerned.

As I reminded the commission members, David Dixon and other Goody Clancy staff 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.

And since this January reliance on Walk Score was made after Goody Clancy had spent considerable time in Wichita, the fact 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 similar shoddy data and analysis.

A member of the planning commission asked that Scott Knebel, a member of the city’s planning staff who is the city’s point man on downtown planning, address the concerns raised by me.

Knebel said “In terms of the Walk Score, I suspect Mr. Weeks is absolutely right, it probably is a relatively flawed measurement of Walk Score.” He added that the measurement is probably flawed everywhere, downtown and elsewhere. He said that Goody Clancy used it “as an illustration of the importance of walkability in an urban area.” He added, correctly, that Goody Clancy tied it to premiums in real estate values in areas that are mixed use and walkable.

In the end, all commission members voted in favor of accepting the plan. The Wichita City Council is scheduled to hear this matter on December 14th.

Kansas and Wichita quick takes: Monday November 15, 2010

This week at Wichita city council. An Old Town bar faces the possibility of losing its drinking establishment license and two apartment complexes seek city support in the application for housing tax credits. … The old Coleman Company Plant at 250 N. St. Francis faces an obstacle on its path to demolition: The Wichita Historic Preservation Board found that “the demolition of the structure and construction of a surface parking lot does encroach upon, damage, or destroy the environs of the state and national register listed properties by removing distinctive buildings, and altering spatial relationships that characterize the environs.” There were other reasons the board found to oppose the demolition. The building was deemed to be a “character-defining structure.” Furthermore, it is located within 500 feet of historical districts and historical properties. This is the so-called “halo” law, where if your property is located with the environs of another historic property, there are restrictions on what you can do with your property. … In a matter added to the agenda at the last moment, the city will decide whether to pay a Wichita man $925,000 to settle charges that he was injured by actions of the Wichita police department.

Planning commission to look at downtown plan. This week the Metropolitan Area Planning Commission will have a public hearing on the Goody Clancy plan for the revitalization of downtown Wichita. The meeting is Thursday at 1:30 pm in the tenth floor meeting room at Wichita city hall. The agenda for the meeting is here: Metropolitan Area Planning Commission Agenda, November 18, 2010.

Kansas tax policy. Various proposals for modifying Kansas’ tax system are floating about. One aspect in particular that is gaining attention is the multitude of sales tax exemptions, where various classes of economic activity or specific named organizations do not have to pay sales tax on their purchases. In Sunday’s Wichita Eagle Rhonda Holman wrote “selected taxpayers are saving $4.2 billion a year, worsening the tax burden for everybody else.” This number is highly misleading. As I explained earlier this year in Kansas sales tax exemptions don’t hold all the advertised allure: “Analysis of the nature of the exemptions and the amounts of money involved, however, leads us to realize that the additional tax revenue that could be raised is much less than spending advocates claim, unless Kansas was to adopt a severely uncompetitive, and in some cases, unproductive tax policy.” … An example is the exemption whereby manufacturers don’t pay sales tax on component parts used in producing final products, with an estimated $2,248.1 million in lost sales tax revenue. If Kansas were to eliminate this exemption, we could very quickly say goodbye to all our manufacturers. … Another example is government not paying sales tax on its purchases, worth an estimated $449.9 million in lost revenue. Reporting from Kansas Reporter on a special committee formed to look at Kansas tax policy is at Kansas tax reform waits on Brownback plans, lawmakers say.

“Big Ditch” builder to address Pachyderms. At this Friday’s (November 19) meeting of the Wichita Pachyderm Club, M. S. “Mitch” Mitchell will speak on the topic “The Big Ditch, 60 Years Later.” Otherwise known as the Wichita-Valley Center Flood Control Project, the project is responsible for flood control in Wichita, and Mitchell was there at its building. The public is welcome at Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

Why I will not teach to the test. A California public school teacher explains why he will not “teach to the test” despite that state’s emphasis on “value added” teacher assessments: “The state tests being used to evaluate student progress — and, in turn, the effectiveness of teachers — virtually ensure mediocrity. … As teachers, we want to know if we are doing a good job. We want to know our strengths and our weaknesses. We welcome accountability. Frankly, I am embarrassed by how hard teachers’ unions have fought to protect weak teachers. It is shameful. But scoring all teachers based on a system that pushes educators to produce memorizers instead of thinkers is not the answer. Worse, it actually rewards mediocre teaching.” No doubt about it, evaluating teachers in public schools is a problem. Being insulated from competition, school administrators may evaluate teachers on all sorts of things except what really matters: how well they do their job. See In public schools, incentives matter.

Tracking federal tax dollars. According to the Wall Street Journal: “A recent Kaiser Family Foundation survey found that 40% thought foreign aid was one of the two largest federal-budget expenses. In reality, Uncle Sam spends $14 on Medicare — itself the second-largest expense — for every dollar spent on foreign aid.” To help citizens understand how federal money is spent, the Journal highlighted an analysis by Third Way, which describes itself as “the leading moderate think-tank of the progressive movement. Top categories for spending? Social Security, Medicare, Medicaid, and interest on the national debt. Then some several categories of military spending, which if consolidated, would move higher. The Journal article is Tracking Your Federal Tax Dollars ; the ThirdWay study is at Tax Receipt: Knowing What You Paid For.

Rasmussen key polls. “Lame duck” session of Congress: “Most voters think Congress should wait until the new members take office in January before tackling any major new legislation, but even more expect Democrats to try to pass major legislation anyway in the upcoming lame-duck session.” More here. … Support for investigation of Obama Administration is not high; breaks down on party lines: Voters Have Mixed Feelings About GOP Plans to Investigate Obama. But voters support investigating the new health care law passed earlier this year: Most Voters Favor Investigation of Health Care Law’s Potential Impact.

One more vote. The Center for Individual Freedom has launched an initiative called “The 60% Solution,” a proposal for a Constitutional Amendment requiring: a federal balanced budget annually, a 60% vote in both the U.S. House and U.S. Senate to raise the debt ceiling, and a 60% vote in both the U.S. House and U.S. Senate to increase taxes or impose new taxes. More information may be found at One More Vote, the name referring to the fact that Congress in 1995 fell just one vote short of endorsing a balanced budget amendment and sending it to the states for ratification. But CFIF warns against a simple balanced budget amendment: “A balanced budget amendment, in the wrong hands or crafted in the wrong form, can unfortunately provide a vehicle for big-government advocates to rationalize higher taxes.”

Wichita Eagle opinion line.“We have term limits, via voting. We need better-informed voters. Voters need to educate themselves as to the issues and the people who are running for certain offices.” This sentiment is repeated after each election. The fact that voters, at least according to this opinion, don’t inform themselves year after year is a strong argument for term limits.

Kansas and Wichita quick takes: Friday November 12, 2010

Dilts drops campaign for city council. Jason Dilts has announced that he is ending his campaign for a position on the Wichita City Council. He had been running for the district 4 position currently held by Paul Gray, who is precluded from running again by the city’s term limit law. While Dilts’ politics are liberal and might have been expected to depart from those of the incumbent, Gray voted for nearly every spending measure that came before the council. … Dilts’ departure leaves this district without any publicly declared candidates. The filing deadline for city and school board elections is January 24, 2011. The primary election is March 1, and the general election is on April 5. These elections are non-partisan, meaning that candidates run without party identification, although everyone who cares knows who belongs to which party. In the primary, the top two vote-getters advance to the general election.

OTB: One-term Barack. Larry Sabato of the University of Virginia Center for Politics predicts a dim future for President Barack Obama and his chances for reelection. Sabato’s most recent “Crystal Ball” column starts off with “The wreckage of the Democratic Party is strewn just about everywhere. President Obama’s carefully constructed 2008 Electoral College breakthrough is now just broken, a long-ago memory of what might have been a lasting shift in partisan alignment.” After presenting the evidence, Sabato concludes: “There’s only one logical conclusion to be drawn: President Barack Obama is down for the count, will have an early lame duck presidency, and will be out of the White House in two years.”

Project Downtown: The Master Plan for Wichita. The “final draft” version of the plan for the revitalization of downtown Wichita is now available. Click on Project Downtown: The Master Plan for Wichita. Perhaps after the “final draft” comes the “first permanent version?” Next week the Metropolitan Area Planning Commission will hold a public hearing to consider adoption of the plan. The meeting is at 1:30 pm Thursday Nov. 18, in the tenth floor conference room at Wichita City Hall, 455 N. Main. This is an opportunity for the public to comment on this project. I’m thinking I’ll be there.

Wichita city hall garage closing. Letter to Wichita Eagle, in part: “The bureaucrats reserve for themselves convenient services, while those they are supposed to serve do without and are exposed to parking-meter violations and parking fines. Wichita government has a history of poor service to its citizens. Recent examples include the mismanagement of the Wichita water utility and resulting increases in our water bills, and the increased fees assessed to homeowners for home protection alarms. Yet we see good-old-boy deals on below-market rate loans and tax incentives to every project that comes before city officials, worthy or not.”

Some Kansas counties voted against judges. Last week’s elections in Kansas offered voters the opportunity to vote whether several Kansas Supreme Court and Kansas Court of Appeals justices should be retained in office. Voters decided to retain all by roughly a two-to-one margin. But some Kansas counties voted against retaining the judges. In particular, some western Kansas counties, Cherokee county in extreme southeastern Kansas, and Coffey county in east-central Kansas voted against the judges. A Kansas Watchdog story asked Fort Hays State University political science professor Chapman Rackaway for his analysis. He said “I think you’re seeing more an expression of a philosophy than a particular agenda against these particular justices.” He noted “A more libertarian streak runs strong in western Kansas, and along with that comes a philosophy of ‘throw the bums out.’” He also says that “I think if you ran a correlation of votes you’d find that the strongest Libertarian and Republican results would come from some of the counties you’ve pointed out. In the end, then, this is more about general change than it is a specific policy or judge.”

Health insurance profits. Watching liberal media so you don’t have to: Cenk Uygur, who appears on the liberal television network MSNBC, reported on the profits of health insurance companies. He said that health insurance companies earned $9.3 billion in profits for the first three months of the year, up 41 percent in the last year, adding “Do we really want to leave decisions about our health and our lives to a corporation whose sole purpose is to make money off of us? They get billions in profits by taking in more money from us than they pay out for our care. I’m not sure that makes a lot of sense.” First: citing a number like these profit figures without providing context means very little. Health insurance company profits — in terms of the industry’s size — have been low in recent years. Second: Have the insurance companies figured out how to the “game” the Obamacare plan? It wouldn’t be the first time large companies have co-opted government regulation for their own profit. Third: Do you — as does Uygur — trust the government to make decisions regarding your health care? The idea of a benevolent government paternally caring for our best interests is dangerous. Profit is a more reliable motive. The problem is that health insurance companies compete in a highly regulated market, where the profit motive is not fully able to express itself. Contrast the market for automobile insurance, where companies compete vigorously for business. In that industry, complaints of companies refusing to pay legitimate claims are rare. That’s because with auto insurance, consumers have a wide variety of companies to select from. That’s not the case with health insurance, where the choice for many people is made by their employer. Dissatisfied consumers have little ability to switch to another company.

KansasOpenGov.org revamped. The Kansas Policy Institute announces a major revision of its government transparency website KansasOpenGov.org. I’ll have a longer article about this website next week.

Kansas and Wichita quick takes: Wednesday October 20, 2010

Poll: Republicans to win big. Wall Street Journal: “A vigorous post-Labor Day Democratic offensive has failed to diminish the resurgent Republicans’ lead among likely voters, leaving the GOP poised for major gains in congressional elections two weeks away, according to a new Wall Street Journal/NBC News poll. Among likely voters, Republicans hold a 50% to 43% edge, up from a three-percentage-point lead a month ago. … ‘It’s hard to say Democrats are facing anything less than a category four hurricane,’ said Peter Hart, the Democratic pollster who conducts the Journal poll with Republican pollster Bill McInturff. ‘And it’s unlikely the Democratic House will be left standing.’”

Faust-Goudeau, Ranzau featured. The two major party candidates for Sedgwick County Commission District 4 — Democrat Oletha Faust-Goudeau and Republican Richard Ranzau — are featured in today’s Wichita Eagle. This is an important election, as the balance of power on the commission is at stake.

Rasmussen: Health care, bailouts, stimulus not popular with voters. “A new Rasmussen Reports national telephone survey finds that most Likely Voters think their representative in Congress does not deserve reelection if he or she voted for the national health care law, the auto bailouts or the $787-billion economic stimulus plan.” The complete story is here.

Downtown Wichita planning. The people of Wichita need to be wary about the planning for the revitalization of downtown Wichita developed by planning firm Goody Clancy. As Randal O’Toole explains in a passage from his book The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future, planning provides an opportunity for special interests to run over the will of the people: “When confronted with criticism about their plans, planners often point to their public involvement processes. ‘Hundreds of people came to our meetings and commented on our plans,’ they say. ‘So we must be doing something right.’ Wrong. Planning is inherently undemocratic. Efforts to involve the public mainly attract people who have a special interest in the outcome of the plans. … Planning processes are even less likely to attract the public than elections. Getting involved in planning requires a much greater commitment of time than simply voting, and the process is so nebulous that there is no assurance that planners will even listen to the public. … At the same time, some groups have a strong interest in getting involved in planning either for ideological reasons or because planning can enrich their businesses. The usual result when a few special interest get involved in a process ignored by everyone else is to develop a plan that accommodates the special interests at everyone else’s expense.” When we look at who is involved in the Wichita planning, we see these special interests hard at work.

More corporate welfare in Sedgwick County. Today, without meaningful discussion, the Sedgwick County Commission committed to a $25,000 forgivable loan to TECT Power. The loan agreement specifies targets of employment and wages that TECT must meet. This is not the only corporate welfare the company is seeking. The Wichita Business Journal reports: “The Wichita City Council will be asked to match the Sedgwick County loan, and the company is seeking incentives from the Kansas Department of Commerce.” Does this approach to economic development work? See Kansas spending should be cut, not frozen and In Wichita and Kansas, economic development is not working.

Heartland policy blog launched. The Heartland Institute has launched Somewhat Reasonable, described as an “in-house” policy blog. In an announcement, HI says: “It is the place friends and fans of The Heartland Institute can keep up with the conversation about free markets, public policy and current events that takes place every day among our fellows and scholars. Heartland staffers don’t always agree, which is part of the fun of working at a libertarian think tank.” Heartland is continually at the forefront of research and advocacy for free markets and economic freedom.

Tea Parties and the Political Establishment. The Sam Adams Alliance has released a new report that examines the relationship between tea party activists and the political establishment. Its research shows “shows the two entities are united on issue priorities, but differ when it comes to their level of enthusiasm and the Tea Party movement’s ability to accomplish its political goals.” One finding is that the political establishment doesn’t have much confidence in tea party activists’ ability to achieve their goals: “… only about 7 percent of Establishment respondents said the Tea Party knows how to accomplish its goals, while about 41 percent of Tea Party activists surveyed say this is true.” But the establishment needs tea party activists: “42 percent of Establishment respondents said it was ‘very important’ that Tea Partiers work with them.” In conclusion, the study states: “The Tea Parties have knowingly or unknowingly begun to promote a distinctly separate understanding of the political landscape compared to the Establishment’s. The tensions between them illustrate the underlying differences in their conception of the current political environment, their willingness to embrace populist elements, selection of means and tactics, and their acceptance of new entrants into the political world. However they share many of the same issue priorities, indicating that there is opportunity for a closer and more amicable relationship between the two factions.” The full document is at Surface Tension: Tea Parties and the Political Establishment.

Chevrolet Volt. The Chevrolet Volt plug-in car is suffering a bit of dings in its green-glamour now that GM has revealed that it will use its gasoline motor more often than previously thought. But there are substantive reasons why this car should be scrutinized. Writes Holman W. Jenkins, Jr.: “Cars account for 9% of America’s CO2 output, making power plants a much more sensible target if your worry is global warming. Ironically, the Volt rolls out amid news that an investor is abandoning a big U.S. nuclear project, leaving America more dependent than ever on ‘dirty’ coal for its electricity. Storing electricity — which is what the Volt’s batteries do — is probably the least efficient thing you can do with the output of such plants. Then again, perhaps this explains the rapturous greeting the Volt is receiving from the utility industry. … The Volt’s defenders will shout that the Volt is a blow against terrorism and in favor of energy independence. Two answers: The Volt doesn’t need defenders if it’s a car that consumers want, and that GM can make and sell at a profit. But GM can’t. … The second answer is that even if every American drove a Volt, and every car in America was a Volt, it would not appreciably change the global challenges we face.” More at Volte-Face: GM’s new electric car depends on coal-belching power plants to charge its batteries. What’s the point?

Kansas and Wichita quick takes: Sunday October 17, 2010

Roots of tea party. Richard A. Vigeurie writing in Politico: “Asked about what stirred the tea party movement, [Former VU.S. Senator from Virginia George] Allen blamed President Barack Obama and the Democrats. ‘It’s what has happened in the last year,’ he said. Allen is flat-out wrong. Americans didn’t elect Obama, Senate majority leader Harry Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.) as much as they threw out Republicans in 2006 and 2008. Americans were angry about the GOP officials’ lack of discipline and courage, and their profligate spending and abandonment of small-government, Republican principles.” Washington Examiner’s Mark Tapscott reacts: “Viguerie is right, of course, and his oped ought to be a reminder to all professional politicians in both major political parties that the Tea Party movement is at its most fundamental a reaction to the horrendous mess they have made of things in the nation’s capital.”

Wichita Mayor Carl Brewer announces run for reelection. Here’s a list of Brewer’s prominent supporters, as reported by the Wichita Eagle’s Brent Wistrom: “Jack DeBoer, chairman of Consolidated Holdings and owner of WaterWalk; downtown developer David Burk; theater mogul Bill Warren; council member Sue Schlapp; Dave Wells, president of Key Construction; and Jeff Turner, CEO of Spirit AeroSystems, where Brewer worked before being elected in 2007.” As noted in comments to the article, the business people listed have benefited mightily from the city’s corporate welfare programs, which Brewer wholeheartedly supports as he readily accepts campaign contributions from those who benefit. Curious is the inclusion of city council member Sue Schlapp, who is quick to remind us of her conservative credentials, but nearly always votes for developer giveaways that end up costing city taxpayers. One name that is surprising to see on this list is Dave Burk. Earlier this year the Wichita Eagle reported this: “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.” It’s telling that Brewer would have him stand nearby as he announces his reelection plans.

Overheard on This Week in Kansas. Referring to Louisiana possibly using federal relief funds to pay for incentives to entice Wichita’s Hawker Beechcraft to relocate near the Baton Rouge airport, I said: “If we’re talking about Hurricane Katrina money being used to get these jobs, to my knowledge Baton Rouge wasn’t destroyed by Hurricane Katrina. It’s not like these jobs are going to the ninth ward in New Orleans, which was hurt.”

Many Americans see government as a threat. Gallup Poll via ARRA News Service: “The percentage of Americans who think the federal government poses ‘an immediate threat’ to the rights and freedoms of ordinary citizens has increased significantly over the last seven years, rising from 30 percent to 46 percent, according to a Gallup poll. Only 51 percent of Americans now say they do not think the federal government poses ‘an immediate threat’ to the rights and freedoms of ordinary citizens. Similarly, the percentage of Americans who think the federal government has too much power has also significantly increased, from 39 percent in 2002 to 59 percent today.” I would be interested in seeing similar polls for state, county, and city government, as well as school districts.

Markets tell us the worth of things. William Anderson writing in the Freeman: “A public-works project such as the proposed tunnel makes sense if over time the marginal benefits outweigh the marginal costs. If they do not, then it provides a benefit to some at the expense of others, something the ancients might have called ‘unjust.’ Since the output of public works is not priced in the market, how would we know if costs exceed benefits? … Today, we see economic analysis turned on its head. Projected cost overruns suddenly are justified because ‘they provide jobs,’ as though higher costs mean more wealth created.” As Wichita begins to plan for spending on downtown Wichita revitalization, we need to rely on market signals for the relative worth of things. Despite the claims of planning firm Goody Clancy that downtown Wichita will be market-driven, it is in fact driven by politics, which is the opposite of markets. Nonetheless, the Wichita Eagle covers downtown revitalization as a business story, when it is really a political story.

Kansas and Wichita quick takes: Wednesday October 13, 2010

FactFinder 12: Goyle campaign ad. From KWCH Television: “FactFinder 12 found no evidence Sentry International directly outsourced manufacturing work, only that it partners with companies in China and many other countries to purchase foreign made products.” What’s not talked about in regard to this issue is that U.S. companies don’t manufacture products overseas just for the heck of it. Competitive pressures force them to.

The energy future will look familiar. George Will takes a look at the future of energy in America. But a reminder of the past, in case you forgot: “In 1977, Jimmy Carter said mankind could ‘use up’ all the world’s proven [oil] reserves ‘by the end of the next decade.’ Since then, the world has consumed three times more oil than was in the proven reserves.”

The truth about our jobs crisis. BankruptingAmerica.org has a short video illustrating the depth and magnitude of the crisis. “The jobs report released on Friday shows that unemployment persists at 9.6 percent. As high as this number is, it doesn’t tell the whole unemployment story.” Additional resources are available at the site.

Sowell on government greed. “Those who are always accusing people in the private sector of “greed” almost never accuse government of greed, no matter what it does. Indeed, the question of whether the government is greedy almost never comes up, so most of us probably never think about it. … Perhaps one of the most unconscionable acts of greed by government is confiscating people’s homes, in order to turn this property over to other people, who are expected to build things that will pay more taxes.”

Tweets from Communications Week. At Wichita State University I served on a panel on social media and political campaigns. Some tweets from the audience: “Denae Herrman: Bob Week’s advice for candidates on Twitter: Be more candid & informal. Loosen up! I agree. What makes SM fun is the interactivity.” … “Shae Blevins: @bob_weeks says Goyle, Brownback and Pompeo have failed at using social media for their campaigns in some way. UPDATE your stuff!” … “Lou Heldman: Brownback, Goyle, Pompeo campaigns criticized by @bobweeks on Elliott School panel for sometimes inept use of social media.” I’m sorry, campaigns … but it’s true.

DCCC cuts back on Moore support. From The Atlantic: “The Democratic Congressional Campaign Committee has pulled some funding from 10 districts, canceling their ad buys in six and reducing their buys in another four. … The committee has also continued cutting time in KS 03, where Stephene Moore (D) is running for her husband’s seat.”

Liberal Billionaires Take On The Koch Brothers In California Energy Fight. Clare O’Connor in Forbes: “Much has been written about the oil and gas billionaire Koch brothers and their multimillion-dollar donations to right-wing causes. … However, in recent days a handful of liberal billionaires have decided to take on the Kochs in one of the most hotly contested battles this election season: Proposition 23, the California ballot that may well prove a bellwether for the future of energy legislation in the U.S.”

Election dates to note: October 13 — advance ballots start to be mailed. October 18 — last day to register to vote or change party affiliation. October 29 — last day election office will mail advance voting ballots, so make sure your application arrives at your county election office before this date. November 2 — election day.

Obama and the Politics of Outsourcing. William S. Cohen, writing in the Wall Street Journal: “For every job outsourced to Bangalore, nearly two jobs are created in Buffalo or other American cities.” … American popular opinion: “A Wall Street Journal/NBC News poll released Sept. 28 found that outsourcing was the top reason cited by Americans as the cause of the country’s economic problems — and that for the first time in years a majority (53%) of Americans say free-trade agreements have hurt the U.S.” This sentiment is unfounded. Continuing: “Most people treat outsourcing as a zero-sum game — one foreign worker replaces one American worker. But this is not how the dynamic global economy works. … [An analysis] found that when U.S. firms hired lower-cost labor at foreign subsidiaries overseas, their parent companies hired even more people in the U.S. to support expanded operations. … Those new U.S. jobs were higher-skilled and better-paying.” The politics of it: “During difficult economic periods, people are tempted to seek refuge in the false promise of protectionism. … Politicians are not above exploiting an issue by appealing to popular sentiment even when that sentiment is belied by economic reality.” Outsourcing of Kansas jobs is the major campaign theme — and attack ad hammer — of Kansas fourth district Congressional Democrat candidate Raj Goyle.

Will Wichita have a government “bank” to fund downtown? The Wichita Eagle reports that the Wichita contingent visiting Louisville is being pitched the benefits of a government-run fund to spur downtown development. Two takeaways: “The fund, says JPMorgan banker Louis Straub II, doesn’t provide ‘free money’ to developers. ‘It’s a loan with much more favorable terms’ than developers would get through a traditional bank loan.” I would say that sounds like free money to me — as long as you consider paying interest on a loan a cost. Then, a real whopper: “Gary Schmitt, executive vice president at Intrust Bank, said the creation of such a fund in Wichita is possible. … there is precedent for Wichita-area banks getting together to help finance downtown projects. He said it was done in the case of the Hyatt Regency Wichita, for which local banks came together and created a participation loan to finance the hotel. ‘History has shown that the banks will come together for the betterment of the community,’ Schmitt said.” So wow did that work out? The Hyatt failed and is now owned by the city of Wichita, and can operate without concerns about profit. In 2001 the Eagle editorialized: “Having a marquee downtown hotel wholly owned by a city can’t be good for stimulating more private hotel development … Who’s going to be willing to finance, build and open a hotel in direct competition with one supported by public dollars?” As we’ve seen by recent action regarding the Broadview Hotel and Fairfield Inn, no one will — unless the government contributes millions in subsidy.

Wichita Eagle opinion line. “The reason some people can’t find voter fraud in Kansas is the same reason a thief can’t find a policeman.”

Drury request for more Broadview Hotel subsidy should be rejected

Tomorrow’s meeting of the Wichita City Council features a public hearing on the creation of a Community Improvement District to benefit Drury Southwest, developer of the Broadview Hotel in downtown Wichita.

CIDs are a creation of the Kansas Legislature from the 2009 session. They allow merchants in a district to collect additional sales tax of up to two cents per dollar. The extra sales tax is used for the exclusive benefit of the CID.

In this case, Drury is asking hotel guests — these are visitors to Wichita, usually — to pay an extra two cents per dollar sales tax. This CID is being constructed as “pay-as-you-go,” in which the extra sales tax is sent back to the applicant as it is collected.

The agenda material for this item tells us that Drury suffered increased costs due to “delays to the project caused by legislative changes to the value of historic tax credits.” Last week I told the council how economic development management by government adds political uncertainty to the entrepreneurial process. The Broadview developers chose to operate in the political arena rather than the marketplace. They were hurt — they claim — and now they want politicians to make up for that.

Drury has already received, or will receive, a huge amount of assistance from government for its work on the Broadview Hotel. Its participation in Kansas’ historic preservation tax credit program means a grant to the developers of perhaps $4 million. It is just as though the state wrote a check to Drury for that amount, and this is money that Kansas taxpayers have to make up.

Further, Drury will escape paying much of the taxes that the rest of us have to pay. According to city information provided last week, Drury plans to spend $22,797,750 on the hotel. If we use this as the appraised value for the property when it is complete, the annual property taxes due for this property would be $22,797,750 times .25 times 126.323 divided by 1000, or $719,970. This calculation may be rough, but it gives us an idea of the annual operating subsidy being given to this hotel for the next ten years.

Then, as part of the industrial revenue bond program this hotel is participating in, the hotel will avoid paying sales tax on purchases related to its renovation and furnishing. It’s a little ironic, then, that the hotel asks its guests to pay a special additional sales tax that benefits only the hotel.

Finally, the city accelerated riverbank improvements that benefit the Broadview, and there’s a sweetheart sale by the city of a parking garage across the street.

So this hotel is receiving plenty of subsidy from Wichita and Kansas taxpayers.

Does Wichita trust its planners?

This request by Drury for more Broadview Hotel subsidy poses a challenge to Wichita city council members. Goody Clancy, the firm that has been planning the revitalization of downtown Wichita, has proposed what seems to be a tougher stance towards government handouts to downtown developers. David Dixon, principal planner for Wichita’s planning effort, was reported in the Wichita Eagle thusly: “Dixon was clear: There will be enough private development downtown to repay taxpayers for the public investments through increases in the tax base.”

In January’s preliminary findings, Goody Clancy told Wichita that there is a strong market for hotels in downtown Wichita. The final report states: “Downtown Wichita offers a strong potential for new lodging developments.” That implies that hotels ought to be profitable without requiring massive subsidy. But right after the preliminary finding, the city broke new ground in granting millions in subsidy to a hotel developer to build a Fairfield Inn downtown.

The Goody Clancy plan has not yet been before the Wichita city council for formal acceptance. But most members, especially Mayor Carl Brewer, are enthusiastic about the plan.

Tomorrow’s meeting and the action by the council will let us know if the city has the political will to take Goody Clancy’s findings and advice to heart.

Some Goody Clancy Wichita findings not credible

Last week Boston planning firm Goody Clancy presented its master plan for the revitalization of downtown Wichita. As this plan is now part of the political landscape in Wichita, we ought to take a critical look at some of its components.

A theme repeated over and over is that downtown development in Wichita will succeed as downtown becomes more walkable. Walkability is a component of the “new urbanist” school of city planning, which calls for compact, walkable cities and neighborhoods. Underlying new urbanism is a hostility towards suburban lifestyles and the automobile. We see the bias against automobiles in the plans for increased use of transit downtown. And at one time Goody Clancy said we have too much parking in downtown Wichita, although they seem to have deemphasized that finding.

But people love their cars. They provide unparalleled mobility and freedom. Business owners, if they have experience in new urbanist neighborhoods, know this too.

Recently I toured Baldwin Park, a development in Orlando, Florida that uses new urbanist design. Regarding the automobile, new urbanism means that cars are kept out of sight and mind as much as possible. Homes do not have their garages in the front. Instead, garages are at the rear of homes, and access is through alleyways. Similarly, businesses will have parking located behind the store, with the main entrance on the street, where it is thought there will be much pedestrian traffic.

In Baldwin Park, there’s a Publix grocery store, which is a very nice chain of supermarkets in the South. But our tour guide — the developer of Baldwin Park — told us that Publix insisted on having the main entrance to the store at the rear, where the parking lot is. No dummies, the Publix store owners. They know that people want to drive to the grocery store.

I also toured Celebration, Florida, another new urbanist community with emphasis on walkability. But on a pleasant Florida afternoon, there was a long line of parents in cars waiting to pick up children as school let out.

Returning to Wichita: in January Goody Clancy presented preliminary findings in Wichita. As part of the presentation, principal David Dixon said that this planning effort is grounded in data and hard analysis. As an example, Dixon promoted Walk Score as a measure of the value we place in downtown. Walk score, according to its website, “calculates the walkability of an address based on the distance from your house to nearby amenities. Walk Score measures how easy it is to live a car-lite lifestyle — not how pretty the area is for walking.”

I’ve found that the walk scores are not credible measures. The score for 525 E. Douglas, the block the Eaton Hotel is in and mentioned by Dixon as a walkable area, scored 91, which means it is a “walker’s paradise.” Examination of the results, however, leads us to have little confidence in this measure.

For example, an important “amenity” — that’s a favorite word of planners — that should be nearby is a grocery store. The details for the walk score 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. Those familiar with the area will also know that the nearest grocery is several miles away.

For a nearby library, it lists Robert F. Walters Digital Library, which is a specialized geological library costing $1,500 per year to use — over the internet.

For a drug store, it lists Rx Doctor’s Choice, which is a specialty retailer selling oral chelation treatments — by mail order. It’s nothing at all like a general-purpose drug store. One of those is nowhere nearby.

These results are pure junk. Wichitans should draw one of several conclusions. First, if Dixon believes the Walk Score website results are credible, it casts a huge and dark shadow of doubt over the entirety of the information Goody Clancy is giving Wichita. What else in the plan is based on such obviously trashy data and analysis?

Second, if Dixon sells this junk to Wichitans without investigating its credibility, it means that he has no credibility. And if he believes it’s credible, that’s a problem, too.

Finally, if Wichitans — and I’m speaking particularly of Wichita’s political and bureaucratic leadership — believe this nonsense, it means we’ll believe anything. Heaven help us in this case.