Tag Archives: James Clendenin

Wichita City Council Member James Clendenin

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What the Wichita city council could do

While the proposed Wichita city sales tax is a bad idea, the city could do a few things that would not only improve its chance of passage, but also improve local government.

This week the Wichita City Council passed an ordinance that starts the process of placing a sales tax measure on the November ballot. The one cent per dollar tax will be used for several initiatives, including an economic development jobs fund.

The city will need to gain the trust of citizens if the measure is to have any chance of passage. While I am personally opposed to the sales tax for some very good reasons, I nonetheless offer this advice to the city on what it could do to help pass the sales tax.

Oversight commissions

Presentations made by city hall state that the city council will appoint a private-sector led jobs commission. It would examine potential projects and make recommendations to the council. There will also be a citizens oversight committee and a jobs commission audit committee.

Wichita Investing in Jobs, How it WorksThe problem is that committees like these are usually stacked with city hall insiders, with people who want to personally gain from cronyism, and with people the city believes will be quietly compliant with what the city wants to do.

As an example, consider my appointment to the Wichita Airport Advisory Board last year. I had to be confirmed by the city council. I’ve been critical of the subsidy paid to airlines at the Wichita airport. I’ve researched airfares, air traffic, and the like. I’ve presented findings to the city council that were contrary to the city’s official position and that discovered a possible negative effect of the subsidy effort. Because of that, the council would not confirm my appointment. The city was not willing to have even one person on the airport board who might say wait, let’s take a look at this in a different way, and would have facts to support an alternative.

At Tuesday’s meeting the council assured citizens that it would not be the same group of city hall insiders serving on these boards. According to meeting minutes, council member James Clendenin (district 3, southeast and south Wichita) said “Over the next few months there is going to be a lot more detail given to the public so that they can make an informed decision at the time this comes up to a vote in November.”

If the council is serious about this it could take a simple step: Appoint the members of these boards well in advance of the November election. Also, define the structure of the boards, such as the number of members, how appointed, term of appointment, and other details.

Transparency

The city says that the operations of the committees and the jobs fund will be transparent. But the city’s record in transparency is poor. For many years the city’s quasi-independent agencies have refused to release spending records. Many, such as I, believe this is contrary to not only the spirit, but the actual language of the Kansas Open Records Act. There is nothing the city has said that would lead us to believe that the city plans to change its stance towards the citizens’ right to know.

If the city wants to convince citizens that it has changed its attitude towards government transparency and citizens’ right to know how tax money is spent, it could positively respond to the records requests made by myself and Kansas Policy Institute.

The city is also likely to engage in an educational and informational campaign on its cable television channel. If it does, a welcome gesture would be to offer time on the channel for citizen groups to present their side of the issues. The city’s cable channel is supposed to be a public access channel, but as of now, citizens have no ability to produce content for that channel.

In presentations to the council, reports released by the Texas Enterprise Fund have been used as examples of what Wichita might do to inform citizens on the economic development activities funded by the sales tax. But many in Texas are critical of the information provided about the fund’s operation.

Even when information is provided, it is subject to different interpretations by self-interested parties. On the Texas Emerging Technology Fund, the Houston Chronicle recently reported “Whether or not the fund has lost taxpayer money depends on which accounting method is applied. The Associated Press says a method common to government entities placed the fund’s value at $175 million, with a loss of $30 million. The governor’s office uses a private accounting standard that places the fund’s value at $230 million, a $25 million profit.”

In 2011 the Wall Street Journal reported on how job creation numbers can be stretched far beyond any sense of reason:

In Texas, Mr. Perry in a 2011 report to the legislature credited the Texas A&M Institute for Genomic Medicine with already producing more than 12,000 additional jobs. That’s ahead of the 5,000 promised by 2015.

According to the institute’s director, however, 10 people currently work in its new building. A Houston-area biotech firm that agreed to produce about 1,600 of the project’s jobs has instead cut its Texas staff by almost 400 people, and currently employs 220 people in the state.

What accounts for the discrepancy? To reach their estimate of 12,000-plus jobs created by the project, officials included every position added in Texas since 2005 in fields related sometimes only tangentially to biotechnology, according to state officials and documents provided by Texas A&M. They include jobs in things ike dental equipment, fertilizer manufacturing and medical imaging.

William Hoyt, an economics professor at the University of Kentucky who studies state economic-incentive programs across the U.S., said similar efforts elsewhere have been dogged by controversy over how many jobs they actually created. Even so, Mr. Hoyt said he hasn’t come across a definition as broad as that employed by Texas. “It’s hard to see jobs in dental supplies in El Paso being related to a genome clinic in College Station,” where Texas A&M’s main campus is located, he said.

A spokeswoman for Mr. Perry’s office in Austin, Texas, said the job totals for the A&M project were provided by the grant recipients, using figures compiled by the Texas Workforce Commission, the state’s labor agency, and hadn’t yet been “verified.” (Behind Perry’s Jobs Success, Numbers Draw New Scrutiny, October 11, 2011)

Locally, Wichita has had difficulty making information available. Last year the Wichita Eagle reported on the problems.

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

“It will take us some time to pull together all the agenda reports on the five-year reviews going back to 2003. That same research will also reveal any abatements that were ‘retooled’ as a result of the five-year reviews,” city urban development director Allen Bell said. “I can tell you that none of the abatements were terminated.” (Wichita doubles property tax exemptions for businesses, October 20, 2013)

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

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

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In fact, the city and its economic development agencies don’t even keep promotional websites current. GWEDC — that’s the Greater Wichita Economic Development Coalition credited with recruiting a company named InfoNXX to Wichita — doesn’t update its website to reflect current conditions. InfoNXX closed its facility in Wichita in 2012. When I looked at GWEDC’s website in October 2013, I found this on a page titled Office Operations:

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

Observe that the official Wichita-area economic development agency touted the existence of a company that no longer exists in Wichita, and claims a job count that the company never achieved. Also, at that time the USPS facility was in the process of closing and eliminating all Wichita jobs.

What is Wichita doing to convince citizens that it has moved beyond this level of negligence?

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WichitaLiberty.TV: The harm of cronyism, local and national

In this episode of WichitaLiberty.TV: Does Wichita have a problem with cronyism? The mayor, city council, and bureaucrats say no, but you can decide for yourself. Then, from LearnLiberty.org, the harm of cronyism at the national level. Episode 48, broadcast June 22, 2014. View below, or click here to view at YouTube.

Wichita city council agenda packet, as provided to the public.

Wichita, again, fails at government transparency

At a time when Wichita city hall needs to cultivate the trust of citizens, another incident illustrates the entrenched attitude of the city towards its citizens. Despite the proclamations of the mayor and manager, the city needs a change of attitude towards government transparency and citizens’ right to know.

At its May 20, 2014 meeting the Wichita City Council considered approval of a sublease by Shannon No. 2, LLC. The subject property had received subsidy from the city under an economic development program, which is why council approval of the sublease was required. I’ll cover the economics of the lease and its importance to public policy in another article. For now, the important issue is the attitude of the city towards government transparency and citizen participation.

Wichita city council agenda packet, as provided to the public.
Wichita city council agenda packet, as provided to the public.
In the agenda packet — that’s the detailed and often lengthy supplement to the council meeting agenda — some information regarding the Shannon lease was redacted, as you can see in the accompanying illustration. This piqued my interest, so I asked for the missing details.

Timing

The agenda packet is often made available Thursday afternoon, although sometimes it is delayed until Friday or even Monday. I sent an email message to the city’s chief information officer at 11:16 pm Thursday. After the message worked its way through several city departments, I received the information at 5:06 pm Monday. Since city council meetings are Tuesday morning, that left little time for research and contemplation.

This isn’t the first time citizens have been left with little information and even less time before council meetings. I was involved in an issue in 2008 where there was little time for citizens — council members, too — to absorb information before a council meeting. About this incident, former Wichita Eagle editorial board editor Randy Brown wrote this in a letter to the Eagle:

I’m fairly well acquainted with Bob Weeks, our extraconservative government watchdog. It’s fair to say that I agree with Weeks no more than one time in every 20 issues. But that one time is crucial to our democracy.

Weeks is dead-on target when he says that conducting the public’s business in secret causes citizens to lose respect for government officials and corrupts the process of democracy (“TIF public hearing was bait and switch,” Dec. 5 Opinion). And that’s what happened when significant 11th-hour changes to the already controversial and questionable tax-increment financing plan for the downtown arena neighborhood were sneaked onto the Wichita City Council’s Tuesday agenda, essentially under cover of Monday evening’s darkness.

This may not have been a technical violation of the Kansas Open Meetings Act, but it was an aggravated assault on its spirit. Among other transgressions, we had a mockery of the public hearing process rather than an open and transparent discussion of a contentious public issue. Randy Brown: Reopen Downtown Wichita Arena TIF Public Hearing

little-time-review-warren-loan-termsThe Wichita officials involved in this matter were council members Jeff Longwell (district 5, west and northwest Wichita) and Lavonta Williams (district 1, northeast Wichita). Longwell’s behavior and attitude is part of a pattern, because in another incident in the same year the Wichita Eagle reported “Wichita City Council members and the public got a first look at the contracts that could send a $6 million loan to the owners of the Old Town Warren Theatre just hours before today’s scheduled vote on the matter.” (Little time to review Warren terms, July 1, 2008)

That article quoted council member Longwell thusly: “It’s unlikely many residents would read the full contract even if it had been made public earlier.” This attitude is common among Wichita elected officials and bureaucrats, in my experience. The city formally lobbies the Kansas Legislature opposing any expansion of the Kansas Open Records Act, for example.

Consent agenda

The Shannon item was placed on the consent agenda. This is where items deemed to be non-controversial are voted on in bulk, perhaps two dozen or more at a time. Unless a council member asks to have an item “pulled” for discussion and a possible vote separate from the other consent items, there will be no discussion of any issues.

In 2012 there was an issue on the consent agenda that I felt deserved discussion. I researched and prepared an article at For Wichita’s Block 1 garage, public allocation is now zero parking spaces. At the council meeting, then-council member Michael O’Donnell (district 4, south and southwest Wichita) requested that I be able to present my findings to the council. But Mayor Carl Brewer and all five other city council members disagreed. They preferred to proceed as though the issue didn’t exist or was non-controversial. The message — the attitude — was that no time should be spent receiving information on the item. See For Wichita City Council, discussion is not wanted.

Wichita city officials, including Mayor Carl Brewer, say they are proud of the open and transparent city government they have created. But this episode, as well as others described in In Wichita, disdain for open records and government transparency, lets everyone know that transparency is dispensed, and accountability accepted, at the whim of the mayor, city council, and their bureaucratic enablers.

On his Facebook page, Clinton Coen wrote this about his city council representative James Clendenin (district 3, southeast and south Wichita) and this incident:

“I am once again ashamed of my City Councilman. Councilman Clendenin should have stood alongside his colleague, Councilman O’Donnel, and allowed a citizen to address his concerns on an agenda item. All Mr. Clendenin had to do was say “second” and Mr. Weeks could have addressed the council, provided that a majority of the council voted to allow it. Instead, Mr. Clendenin chose to censor someone that has a differing opinion. By bringing it to a vote, accountability would have been created, instead the remainder of the council chose to take the cowardly path.”

Why redacted in the first place?

As shown in the earlier illustration, the city redacted a large chunk of information from the agenda packet that it made available to the public. The city did — after some time — positively It's easy to say value transparencyrespond to my request for the complete document. Which begs these questions: Why did the city feel that some information needed to be kept secret? Did city council members have access to the redacted information? Did any members of the public besides myself ask for the information? How many citizens might have been discouraged from asking by fear of the the hassle of asking city hall for information like this?

There’s also the consideration that the citizens of Wichita are parties to this transaction. How well these incentive programs work and what effect they have on the Wichita economy is an important matter of public policy. Without relatively complete information, citizens are not in a position to make judgments.

Cost

Often council members and bureaucrats complain that providing information to citizens is a financial burden to the city. But in this case, I’m sure the city would have been dollars ahead if it had simply published the complete lease in the agenda packet. My request bounced around several city offices — three that I know of — and I imagine that each handling of my request added cost.

Attitude

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

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

The incidents describe above, combined with others, demonstrate that it’s easy for officials to say they value transparency and accountability. The actual delivery, however, is difficult for our current leaders.

Despite the proclamations of the mayor and manager, the city needs a change of attitude towards government transparency. The incident described in this article is one more example of a divergence between the proclamations of city officials and their acts. It’s an attitude problem. All city hall has to do is get a new attitude.

For more on this topic, see A transparency agenda for Wichita.

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

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

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Wichita City Council to consider entrenching power of special interest groups

city-council-chambers-sign-800On Tuesday the Wichita City Council will consider a resolution in support of the status quo for city elections. Which is to say, the council will likely express its support for special interest groups whose goals are in conflict with the wellbeing of the public.

The proposed resolution expresses support for retaining the present system in which city council and school board members are elected in non-partisan elections held in the spring. Candidates for all other offices (county commissioner, district court judge, district attorney, county clerk, county treasurer, register of deeds, sheriff, state representative, state senator, governor, attorney general, secretary of state, state treasurer, insurance commissioner, state board of education member, president, U.S. senator, U.S. representative, etc.) compete in partisan elections held in August and November.

Yes, the proposed resolution is full of language supporting lofty ideals. It mentions local control, concern over low voter turnout, the complexity of making changes, partisan politics, and even the Hatch Act, whatever that is.

(The Hatch Act restricts the ability of federal executive branch employees and certain state and local government employees to participate in some political activities, such as running for office in partisan elections. Non-partisan elections — that’s okay. The city is concerned that this could “disqualify many local candidates and office holders.” As if anyone already working for government also should also be an officeholder, non-partisan election or not.)

Why should we be concerned? Why would the city council support the current system of spring elections? Doesn’t the city council always act in the best interests of the body politic?

Here’s the answer, quite simply: In the spring elections, voter turnout is low. This makes it easier for special interest groups to influence the election outcomes. These special interest groups are not your friends (unless you are a member of one of the special groups).

Voter turnout is low in spring elections. Really low. I’ve gathered statistics for elections in Sedgwick County, and these numbers show that voter turnout in spring elections is much lower than in fall elections. (For these statistics I count the August primary as part of the fall election cycle.) Since 2000, turnout for fall elections, both primary and general, has been 44 percent. Over the same period, spring elections turnout has been 18 percent.

Remarkably, a special Wichita citywide election in February 2012 with just one question on the ballot had voter turnout of 13.7 percent. One year earlier, in April 2011, the spring general election had four of six city council districts contested and a citywide mayoral election. Turnout was 12.8 percent. That’s less than the turnout for a single-question election on year later.

The problem of low voter participation in off-cycle elections is not limited to Sedgwick County or Kansas. In her paper “Election Timing and the Electoral Influence of Interest Groups,” Sarah F. Anzia writes “A well developed literature has shown that the timing of elections matters a great deal for voter turnout. … When cities and school districts hold elections at times other than state and national elections, voter turnout is far lower than when those elections are held at the same time as presidential or gubernatorial elections.”

In the same paper, Anzia explains that when voter participation is low, it opens the door for special interest groups to dominate the election: “When an election is separated from other elections that attract higher turnout, many eligible voters abstain, but interest group members that have a large stake in the election outcome turn out at high rates regardless of the increase in the cost of voting. Moreover, interest groups’ efforts to strategically mobilize supportive voters have a greater impact on election outcomes when overall turnout is low. Consequently, the electoral influence of interest groups is greater in off-cycle elections than in on-cycle elections. As a result, the policy made by officials elected in off-cycle elections should be more favorable to dominant interest groups than policy made by officials elected in on-cycle elections.” (Election Timing and the Electoral Influence of Interest Groups, Sarah F. Anzia, Stanford University, Journal of Politics, April 2011, Vol. 73 Issue 2, p 412-427, version online here.)

Moving the spring elections so they are held in conjunction with the fall state and national elections will help reduce the electoral power and influence of special interest groups.

An example of special interests influencing elections

In January 2013 candidates for Wichita City Council filed campaign finance reports covering calendar year 2012. That year was the ramp-up period for elections that were held in February and March 2013. Two filings in particular illustrate the need for campaign finance and election reform in Wichita and Kansas.

Two incumbents, both who had indicated their intent to run in the spring 2013 elections, received campaign contributions in 2012 from only two sources: A group of principals and executives of Key Construction, and another group associated with theater owner Bill Warren.

The incumbent candidates receiving these contributions are Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) and Wichita City Council Member Lavonta Williams (district 1, northeast Wichita).

Except for $1.57 in unitemized contributions to Clendenin, these two groups accounted for all contributions received by these two incumbents during an entire year. Those associated with Key Construction gave a total of $7,000. Williams received $4,000, and $3,000 went to Clendenin. Those associated with Warren gave $5,000, all to Clendenin.

You may be wondering: Do these two groups have an extraordinarily keen interest in Wichita city government that’s not shared by anyone else?

Yes they do, and it’s not benevolent. Both have benefited from the cronyism of the Wichita City Council, in particular members Williams and Clendenin. Both groups are symptomatic of the problem of special interests influencing low-turnout elections. See Campaign contributions show need for reform in Wichita for details.

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Wichita campaign finance reform, and local elections in Kansas

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In this excerpt from WichitaLiberty.TV: An illustration of the need for campaign finance reform in Wichita and Kansas. A related issue is the need to change the timing of local elections in Kansas. View below, or click here to view at YouTube.

In January 2013 candidates for Wichita City Council filed campaign finance reports, and the filings illustrate the need for campaign finance reform in Wichita and Kansas.

Two incumbents, both who have indicated their intent to run in the spring elections, received campaign contributions in 2012 from two sources: A group of principals and executives of Key Construction, and another group associated with theater owner Bill Warren.

The incumbent candidates receiving these contributions are Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) and Wichita City Council Member Lavonta Williams (district 1, northeast Wichita).

Except for $1.57 in unitemized contributions to Clendenin, these two groups accounted for all contributions received by these two incumbents. As the election grew nearer, other parties contributed to these candidates. But for one year, only two groups made contributions.

So do these two groups have an extraordinarily keen interest in Wichita city government that’s not shared by anyone else? Yes they do, and it’s not benevolent. Both have benefited from the cronyism of the Wichita City Council, in particular members Williams and Clendenin. We’ve covered the benefits these parties have received, such as overpriced no-bid contracts and interest-free loans made to prop up an earlier failing loan from taxpayers. We need laws in Wichita and Kansas like some states and cities have. These are generally called pay to play laws, and they can be very simple, such as elected officials can’t vote on matters that enrich their significant campaign contributors. It could be that easy. See Kansas needs pay-to-play laws for more.

Here’s something that seems inconsequential, but is really important: The timing of our city council and school board elections. Currently these are held in the spring of odd-numbered years. These elections are also non-partisan, meaning that candidates don’t run as members of a political party.

I was asked to testify before a committee of the Kansas Senate. In preparation, I did some research. I found that for elections in Sedgwick County, voter turnout in spring elections is much lower than in fall elections. Since 2000, turnout for fall elections, both primary and general, has been 44 percent. Over the same period, spring elections turnout has been 18 percent. Other research I found confirmed that this pattern is common across the country.

You may be asking: Is this a problem?

Political scientist Sarah Anzia has done the research. She wrote this in a research paper: “When an election is separated from other elections that attract higher turnout, many eligible voters abstain, but interest group members that have a large stake in the election outcome turn out at high rates regardless of the increase in the cost of voting. Moreover, interest groups’ efforts to strategically mobilize supportive voters have a greater impact on election outcomes when overall turnout is low. Consequently, the electoral influence of interest groups is greater in off-cycle elections than in on-cycle elections. As a result, the policy made by officials elected in off-cycle elections should be more favorable to dominant interest groups than policy made by officials elected in on-cycle elections.” For more on this issue, see Kansas spring elections should be moved.

Special interest groups benefit from these low-turnout spring elections. Do you remember the first story I reported on today, where campaign contributions for two Wichita city council members came from only two sources? That’s an illustration of special interest groups in action. It’s harmful to our city and its economy.

What happened to the bill I testified on? There was much opposition by cities and school boards and the special interest groups that benefit from these low-turnout, off-cycle elections. The bill went nowhere. I hope that it is revived this year for another attempt.

Wichita can advocate for government transparency, or not

Wichita City Hall

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

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

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

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

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

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

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

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

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

Why open records are important

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

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

This item in the past

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

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

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

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

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

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

Misunderstanding the scope of KORA

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

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

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

Is the city overwhelmed with records requests?

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

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

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

Wichita’s attitude towards citizens

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

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

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

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

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

Wichita logic open records

Wichita city council advances economic development

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Can you fill in the blank?

Wichita City Council says: “By allowing Cessna to avoid paying property taxes, we are showing our support for the company.”

“By requiring other companies to pay their full share of property taxes, we are showing our ________ for these companies.”

Yesterday’s action taken by the Wichita City Council regarding economic development incentives granted to Cessna Aircraft Company through the Industrial Revenue Bond program may be confusing to some people. The Wichita Eagle is not helping citizens understand what is happening when the city issues IRBs. The headline and lede of the article illustrate: “Wichita approves $40.2 million in industrial revenue bonds for Cessna improvements.”

The bonds are a sideshow and not economically relevant. In fact, Wichita has a related program called EDX that implements the benefits of IRBs without the charade of a company buying its own bonds. The Eagle gets around to this, explaining: “Industrial revenue bonds are issued by governments without any taxpayer liability, a type of municipal bond repaid from the proceeds of bond sales. They do not affect the tax revenue or the credit of the issuing governmental entity. The company will buy its own bonds.”

This explanation isn’t accurate, however. IRBs do affect the tax revenue of the issuing governmental entity, because property purchased under the program is exempt from property taxation, and often sales tax. The article does finally explain why Cessna is applying for the IRBs: “The value of the abated taxes could be as much as $37,197 for the first year.”

That — or something like it — should have been the headline to this article. The fact that Kansas law grants tax abatements for bond-purchased property is the only reason that Cessna applied for the IRB program. As Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita) explained from the bench and as quoted by the Wichita Eagle: “I’d like to confirm to the public that what we’re doing is voting to allow Cessna to purchase $40 million of their own bonds for all these improvements.”

I’m glad he understands. We still have to endure the spectacle of a governing body voting to allow a company to issue bonds that the company will purchase from itself. Perhaps someday we will have laws that allow a company to issue debt and purchase that same debt without governmental approval.

In remarks from the bench, several council members thanked Cessna for its commitment to Wichita. Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) thanked Cessna for showing their commitment to Wichita, “as they have for decades.” I wonder: What do other business owners in Wichita who have to pay their full share of taxes think about Cessna’s commitment to Wichita?

Clendenin also expressed appreciation for their charitable nature and their “humongous” heart. I wonder: Why doesn’t Cessna pay the same taxes that everyone else has to pay so that we may keep more of our own money to be charitable as we see fit?

In their remarks, no member of the Wichita City Council made the argument that is often used to justify economic development incentives: economic necessity. No one proffered that absent these tax breaks, Cessna would be unwilling or unable to make this investment. No one wondered that given that Cessna is such a good corporate citizen, why does it ask to be excused from shouldering the same tax burden that almost everyone else has to bear?

No one spoke on behalf of the other business firms in Wichita that, when wanting to make an investment to expand and hire people, are not able to qualify for the type of favored treatment that companies like Cessna receive.

No one offered any evidence that these jobs are somehow different from other jobs in Wichita that area created every day without companies receiving special tax treatment.

No one argued that the tax burden should be applied fairly and evenly to everyone.

No one made the moral case for free enterprise — rather than cronyism and business welfare — as the way to grow and diversify the Wichita economy.

FITB - Cessna property tax abatements

Wichita contracts, their meaning (or not)

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

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

section-1106

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

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

Warren Theater Brewer's Best 2013-07-18

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

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

3. Bill Warren also owns movie theaters.

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

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

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

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

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

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

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

Wichita does it again

Government takes and gives

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

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

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

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

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

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

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

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

Key Construction and Mayor Carl Brewer

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

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

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

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

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

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

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

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

Lavonta Williams and James Clendenin

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

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

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

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

WichitaLiberty.TV July 14, 2013

WichitaLiberty.TV logo

In this episode of WichitaLiberty.TV, host Bob Weeks explains the attitude of the Wichita City Council regarding ethical behavior and reports on incidents that illustrate the need for campaign finance reform and pay-to-play laws in Wichita and Kansas. Also, Bob notices a document produced this year titled “Wichita Area Future Water Supply: A Model Program for Other Municipalities” and wonders why the city boasts of expensive water projects and long-term planning at the same time it’s forcing an austerity campaign on its citizens. Episode 4, aired July 14, 2013.

Starwood calls on Wichita

Office worker using telephone and computer

This Tuesday the Wichita City Council considers economic development incentives to Starwood Hotels & Resorts for a call center to open in Wichita.

Besides the usual problems with cronyism and corporate welfare (see Wichita-area economic development policy changes proposed for explanation of some problems), there are a few issues to consider regarding this item.

First, the site where the Starwood call center will be located is owned by Max Cole. He and his wife are significant campaign contributors to Wichita City Council Member James Clendenin (district 3, southeast and south Wichita). Under the concept of pay-to-play laws that Wichita needs, Clendenin should refrain from voting on this matter.

Second, a table of salaries supplied in the agenda packet makes an implied promise that probably won’t be kept. The table shows numbers of jobs (actually full-time equivalents), the hourly pay rate, and the annual wage. The annual wage, in all cases, is 2,080 times the hourly rate, meaning it is assumed that workers will work 40 hours per week, 52 weeks per year.

Information from the Kansas Department of Commerce offers more detail. Initially, 495 full-time and 55 part-time jobs will be created. In year five, the total will be 860 full-time and 95 part-time total. There is also this notation: “The company will pay at least 50% of employee health insurance benefits.”

As you may be aware, one of the provisions of Obamacare is that if employees work over 30 hours per week, the employer must provide health insurance or be fined. As a result, many companies across the county are scaling back weekly work hours to less than 30.

We ought to ask if Starwood intends to hire employees who will work 40 hours per week, if they want to. Will the liberals on the Wichita City Council — Mayor Carl Brewer, Council Member Lavonta Williams (district 1, northeast Wichita), and Council Member Janet Miller (district 6, north central Wichita) — ask that Starwood operate under the standards of Obamacare? The table presents data as “full-time equivalents,” which provides room for Starwood to go either way.

Starwood is asking for a forgivable loan of $200,000 from Wichita, and another of the same amount from Sedgwick County. I asked the Kansas Department of Commerce if it would reveal the programs and incentives that Starwood will receive from the State of Kansas. It would not supply that information at this time, but I obtained the information by another means. The state describes its offer to Starwood as worth “up to $1,583,272.” Of this, $750,000 would be in the form of direct cash grants.

Here is a link to the relevant pages from the Wichita city council agenda: Starwood Hotels & Resorts Economic Development Incentive Agreement with City of Wichita, Kansas. Also, from the Department of Commerce: Starwood Hotels & Resorts Economic Development Incentives offered by State of Kansas.

Ambassador Hotel Industrial Revenue Bonds

The City of Wichita should not approve a measure that is not needed, that does not conform to the city’s policy (based on relevant information not disclosed to citizens), and which is steeped in cronyism.

This week the Wichita City Council will consider authorizing industrial revenue bonds (IRB) for the Ambassador Hotel project in downtown Wichita.

In most cases, the major benefit of IRBs is exemption from paying property taxes. Since the Ambassador Hotel is located within a tax increment financing (TIF) district, it’s not eligible for property tax abatement. (Because of the TIF, the developers have already achieved the diversion of the majority of their property tax payments away from the public treasury for their own benefit.)

Instead, in this case the benefit of the IRBs, according to city documents, is an estimated $703,017 in sales tax that the hotel won’t have to pay.

The Ambassador Hotel has benefited from many millions of taxpayer subsidy, both direct and indirect. So it’s a good question as to whether the hotel deserves another $703,017 from taxpayers.

But if we follow the city’s economic development policy, the city should not authorize the IRBs. Here’s why.

The Sedgwick County/City of Wichita Economic Development Policy states: “The ratio of public benefits to public costs, each on a present value basis, should not be less than 1.3 to one for both the general and debt service funds for the City of Wichita; for Sedgwick County should not be less than 1.3 overall.”

The policy also states that if the 1.3 to one threshold is not met, the incentive could nonetheless be granted if two of three mitigating factors are found to apply. But there is a limit, according to the policy: “Regardless of mitigating factors, the ratio cannot be less than 1.0:1.”

In September 2011 the city council passed a multi-layer incentive package for Douglas Place, now better known as the Ambassador Hotel and Block One. Here’s what the material accompanying the letter of intent that the council passed on August 9, 2011 held: “As part of the evaluation team process, the WSU Center for Economic Development and Business Research studied the fiscal impact of the Douglas Place project on the City’s General Fund, taking into account the requested incentives and the direct, indirect and induced generation of new tax revenue. The study shows a ratio of benefits to costs for the City’s General Fund of 2.62 to one.

The same 2.62 to one ratio is cited as a positive factor in the material prepared by the city for Tuesday’s meeting.

So far, so good. 2.62 is greater than the 1.3 that city policy requires. But the policy applies to both the general fund and the debt service fund. So what is the impact to the debt service fund? Here’s the complete story from the WSU CEDBR report (the report may be viewed at Wichita State University Center for Economic Development and Business Research Study of Ambassador Hotel):

                                   Cost-benefit ratio
City Fiscal Impacts General Fund         2.63
City Fiscal Impacts Debt Service Fund    0.83
City Fiscal Impacts                      0.90

We can see that the impact on the debt service fund is negative, and the impact in total is negative. (A cost-benefit ratio of less than one is “negative.”)

Furthermore, the cost of the Ambassador Hotel subsidy program to the general fund is $290,895, while the cost to the debt service fund is $7,077,831 — a cost factor 23 times as large. That’s why even though the general fund impact is positive, the negative impact of the much larger debt service fund cost causes the overall impact to be unfavorable.

The city didn’t make this negative information available to the public in 2011, and it isn’t making it available now. It was made public only after I requested the report from WSU CEDBR. It is not known whether council members were aware of this information when they voted in 2011.

So the matter before the council this week doesn’t meet the city’s economic development policy standards. It’s not even close.

There are, however, other factors that may allow the city to grant an incentive: “In addition to the above provisions, the City Council and/or County Commission may consider the following information when deciding whether to approve an incentive.” A list of 12 factors follows, some so open-ended that the city can find a way to approve almost any incentive it wants.

A note: The policy cited above was passed in August 2012, after the Ambassador Hotel incentives package passed. But the 1.3 to one threshold was de facto policy before then, and whether a proposed incentive package met that standard was often a concern for council members, according to meeting minutes.

Timing and campaign contributions

Citizens might wonder why industrial revenue bonds are being issued for a hotel that’s complete and has been operating for over three months. The truly cynical might wonder why this matter is being handled just two weeks after the city’s general election on April 2, in which four city council positions were on the ballot. Would citizens disagree with giving a hotel $703,017 in sales tax forgiveness? Would that have an effect on the election?

Campaign contributions received by James Clendinin from parties associated with Key Construction. Clendenin will vote tomorrow whether to grant sales tax forgiveness worth $703,017 to some of these donors.Campaign contributions received by James Clendinin from parties associated with Key Construction. Clendenin will vote tomorrow whether to grant sales tax forgiveness worth $703,017 to some of these donors. (Click for larger view.)

Combine this timing with the practice of part of the hotel’s ownership team of engaging in cronyism at the highest level. Dave Burk and the principals and executives of Key Construction have a history of making campaign contributions to almost all city council candidates. Then the council rewards them with overpriced no-bid contracts, sweetheart lease deals, tax abatements, rebates of taxes their customers pay, and other benefits. The largesse dished out for the Ambassador Hotel is detailed here. This hotel, however, was not the first — or the last time — these parties have benefited from council action.

Campaign contributions received by Lavonta Williams from parties associated with Key Construction. Williams will vote tomorrow whether to grant sales tax forgiveness worth $703,017 to some of these donors.Campaign contributions received by Lavonta Williams from parties associated with Key Construction. Williams will vote tomorrow whether to grant sales tax forgiveness worth $703,017 to some of these donors. (Click for larger view.)

Campaign finance reports filed by two incumbent candidates illustrate the lengths to which Key Construction seeks to influence council members. Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) and Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) received a total of $7,000 from Key Construction affiliates in 2012. Williams received $4,000, and $3,000 went to Clendenin. For Williams, these were the only contributions she received in 2012.

A table of campaign contributions received by city council members and the mayor from those associated with the Ambassador Hotel is available here.

Wichita mayor Carl Brewer with major campaign donor Dave Wells of Key Construction. Brewer will vote tomorrow whether to grant a company Wells is part owner of sales tax forgiveness worth $703,017.

This environment calls out for campaign finance reform, in particular laws that would prohibit what appears to be the practice of pay-to-play at Wichita City Hall.

There was a time when newspapers crusaded against this type of governance. Unfortunately for Wichitans, the Wichita Eagle doesn’t report very often on this issue, and the editorial board is almost totally silent. Television and radio news outlets don’t cover this type of issue. It’s left to someone else to speak out.

Wichitans have choices; perhaps not information

The Wichita Eagle publishes a voter guide before each election. While this is a useful civic service, readers of the newspaper might wonder what is the point of allowing candidates to make statements and claims without being held accountable.

Here are two examples of candidates responding to the question “Assess the city’s success in downtown revitalization so far. How do you see that role evolving in the future?”

Council Member Lavonta Williams (district 1, northeast Wichita) responded as follows:

The trend in downtown redevelopment is showing a definite payoff in private investment exceeding $250 million since 2009. People are moving downtown and more private developers are starting projects in the area all of the time. I think that the city will still need to play a role in assuring that infrastructure, especially public green spaces and strategically placed parking, is in place so that private development can be attracted.

Council Member Janet Miller (district 6, north central Wichita) answered this way:

Wichita adopted its Downtown Master Plan in 2010 following an 18-month process involving input from several thousand Wichitans. Since the plan’s adoption, there has been a growing confidence in downtown development, which has resulted in more than $150 million in private investment. The City’s role will be to continue to foster private investment supported by public infrastructure improvements where needed.

Both incumbent candidates claim a large investment in downtown Wichita. Although they didn’t make this claim in these answers, it’s usually claimed that the taxpayer investment in downtown pays off in the form of increased tax revenues. This is the cost-benefit analysis that the city relies on and uses to justify taxpayer investment in projects.

 Wichita Downtown Self-supporting Municipal Improvement District SSMID Assessed Valuation 2013-02 b

But evidence of a payoff for the taxpayer is hard to find. At the same time hundreds of millions in investment is claimed, the assessed value of property in downtown Wichita is declining.

We’re left to wonder whether readers of the Wichita Eagle are aware of the apparent contradiction between candidates’ claims and evidence from the real world.

On another issue, the influence of campaign contributions, readers of the Eagle will probably also be uninformed about candidates’ actions. In response to the question “How would you handle a vote on an issue involving a campaign contributor?” Council Member James Clendenin (district 3, southeast and south Wichita) supplied this answer:

No different than any other vote. I will vote for the best interest of the citizens Wichita and District III. I answer directly to the voters.

Williams answered the same question this way:

I would continue to handle it the way I always have. The city has good campaign finance laws that make sure no one individual or group can buy a council person’s vote. The law limits the contributions to a low enough amount that no one contribution can make or break a campaign. I treat each donation whether large or small the same and thank the community for their faith and support in what I do.

The candidates’ lofty claims of independence from campaign contributions are difficult to believe. There is simply too much money given, and the candidates’ actions are too suspect.

As an example, in 2012, these two candidates received campaign contributions from two sources: A group of principals and executives of Key Construction, and another group associated with theater owner Bill Warren. Except for $1.57 in unitemized contributions to Clendenin, these two groups accounted for all contributions received by these two incumbents.

Those associated with Key Construction gave a total of $7,000. Williams received $4,000, and $3,000 went to Clendenin.

Those associated with Warren gave $5,000, all to Clendenin.

The problem is that both of these groups have benefited from the cronyism of the Wichita City Council, in particular members Williams and Clendenin.

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

Both Williams and Clendenin voted for this no-bid contract that was contrary to the interests of taxpayers. They didn’t vote for this reluctantly. They embraced it.

Last summer Williams and Clendenin, along with the rest of the council, participated in a decision to award the large contract for the construction of the new Wichita airport to Key Construction, despite the fact that Key was not the low bidder. The council was tasked to act in a quasi-judicial manner, to make decisions whether discretion was abused or whether laws were improperly applied.

Judges shouldn’t preside over decisions that hugely enrich their significant campaign contributors. No matter what the merits of the case, this is bad government.

Williams was also the beneficiary of campaign contributions immediately before a Methodist minister asked the city to approve over two million dollars in tax increment financing. In 2008, the Reverend Dr. Kevass J. Harding wanted to spruce up the Ken-Mar shopping center at 13th and Oliver, now known as Providence Square. Near the end of June, Kevass Harding and his wife contributed a total of $1,000, the maximum allowed by law, to the campaign of Wichita City Council Member Lavonta Williams (district 1, northeast Wichita). This was right before Harding appeared before the city council in July and August as an applicant for tax increment district financing (TIF).

These campaign contributions, made in the maximum amount allowable, were out of character for the Hardings. They had made very few contributions to political candidates, and they appear not to have made many since then.

But just before the Ken-Mar TIF district was to be considered for approval, the Hardings made large contributions to Williams, who is the council member representing Ken-Mar’s district. Harding would not explain why he made the contributions. Williams offered a vague and general explanation that had no substantive meaning.

By the way, this project, under Harding’s management, foundered until the city council offered a bailout. By then Harding had found new partners. No surprise these partners included Key Construction, Williams’ sole source of campaign funds in 2012.

Wichitans who rely on the Wichita Eagle for advice on voting won’t likely be aware of these facts regarding these candidates.

Wichita economic development and the election

Ballot boxAs Wichitans decide their preference for city council members, voters should take a look at the numbers and decide whether they’re satisfied with our city’s performance in economic development.

As shown in the article Wichita economic statistics, Wichita is not doing well in key economic statistics. Debt has risen rapidly in recent years. Growth of private sector jobs lags far behind the nation and the state of Kansas, and government jobs have grown faster than private sector jobs. While inflation-adjusted spending per person is holding relatively steady, the city is cutting services and generally sending a message of budgetary distress.

Perhaps most astonishing: With all the public money poured into downtown redevelopment, with all the claims of new projects being competed, and with all the talk of building up the tax base, assessed valuation in downtown Wichita is declining.

In his recent State of the City Address, Wichita Mayor Carl Brewer called for increased effort and funding for economic development, specifically job creation. He, and most of Wichita’s political and bureaucratic leaders, believe that more targeted economic development incentives are needed to boost Wichita’s economy.

Whether these incentives are good economic development policy is open for debate. I don’t believe we need them. Kansas and Wichita should chart another course to increase economic freedom in Kansas. That, in turn, will make our area appealing to companies. But our local bureaucrats, most business leaders, and nearly all elected officials believe that targeted incentives are the way to attract and retain business.

Even if we believe that an active role for government in economic development is best, we have to conclude that our efforts aren’t working. In most years, the number of jobs that officials take credit for creating or saving is just a small part of the labor force, often less than one percent.

Rarely mentioned are the costs of creating these jobs. These costs have a negative economic impact on those who pay them. This means that economic activity and jobs are lost somewhere else in order to pay for the incentives.

Also, some of these jobs would have been created without the city’s efforts. All the city should take credit for is the marginal activity that it purportedly created. Government usually claims credit for everything, however.

Several long-serving politicians and bureaucrats that have presided over this failure: Mayor Carl Brewer has been on the city council or served as mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for many years.

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

The incumbents running for reelection to city council have been in office varying lengths of time. All, however, subscribe to the interventionist model of economic development championed by the mayor. That’s the model that hasn’t been working for Wichita.

If voters in Wichita are truly concerned about economic development for everyone, next week’s election provides an opportunity to make a positive change by bring new voices to the city council.

Dump truck carrying coins

Is graft a problem in Wichita?

Dump truck carrying coins

In his paper History and Constitutionality of Pay-to-Play Campaign Finance Restrictions in America Greg Schmid explains the problems that result from the “soft corruption” that pay-to-play laws combat.

Is this a problem in Wichita? Is it possible that “Graft takes the collective wealth of working taxpayers and transfers that wealth to the benefit of corrupt government officials and their private sector accomplices” in Wichita?

Yes. Absolutely. As explained in In Wichita, a quest for campaign finance reform, we have a problem.

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

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

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

As elections approach, Wichita voters ought to remember that the three incumbents running for reelection all accepted campaign contributions from the parties that they voted to reward with an overpriced no-bid construction contract.

Following, Greg Schmid explains the problem in this excerpt from History and Constitutionality of Pay-to-Play Campaign Finance Restrictions in America:

The Problem
Graft is nothing new in the world, especially soft “white collar” corruption involved in the award of government contracts based on “special relationships” between public officials and government contractors. Particular acts of corruption are often hard to detect, one at a time, but the aggregate effects of “Pay to Play” are reflected by the heavy financial toll that corrupted actors within our government system take on the taxpayer. Graft takes the collective wealth of working taxpayers and transfers that wealth to the benefitof corrupt government officials and their private sector accomplices. Graft increases the cost of government by motivating officials “on the take” to mismanage government project spending. An inside deal, that is good for the corrupt official personally, usually leads to a bad economic decision for the public because the extra cost of corruption must be passed on to the taxpayer; a bought politician tends to make distorted choices. This “mismanagement effect” is costly to the public trust. One dollar of corruption is estimated to impose a burden of $1.67 on the taxpayers. …

Efforts to make government transactions transparent are met with disdain and with incredulous personalized claims that people who don’t trust their public officials are just paranoid, and should not be allowed to interrupt the people’s business by prying into the inner workings of government procurements. Fear of being targeted for ridicule or worse by society’s powerful elite makes it easy to look the other way, live in denial, or just accept government corruption as the way of the world. This is the most dangerous attitude of all; the perception that our government system is just unethical and corrupt and that there is nothing anyone can do about it. By this attitude, the perception of pervasive corruption at all levels of government, citizens lose hope and lose faith in their governing institutions. When this fundamental disconnect occurs people disengage from government, and self-governance is at risk.

Downtown Wichita issues not appreciated

Once again, the Wichita Eagle editorial board misses the point regarding downtown Wichita development.

There may be some that are opposed to downtown simply because it’s downtown, or for other silly reasons. That seems to be the focus of Rhonda Holman’s editorial today.

But speaking from a perspective of economic freedom and individual liberty, it’s government interventionism in downtown that I object to. This is what harms Wichita, not the fact that people are living and working downtown or anywhere else, for that matter.

The political cronyism involved in many projects in downtown Wichita is what harms our city. When government takes from one and gives to another, everyone is worse off — other than the recipients. I understand that it’s easy to look at a subsidized project — be it downtown or elsewhere — and see people working at jobs. It’s much more difficult, however, to see the harm that the government intervention causes: Prosperity and jobs are lost due to inefficient government allocation of capital through political, not market, mechanisms. In the whole, we are worse off, not better.

If you don’t believe this — if you insist that the city government can create jobs and prosperity through its interventions, and that these have no net cost — then you have to ask why the city is not involved in more development.

It is the principled objection to government involvement that many do not understand, including, I think, the Wichita Eagle editorial board. An example: In September 2011, after I and others started a campaign to overturn a city council decision to award a tax subsidy to the Ambassador Hotel, the hotel’s lead developer asked to meet with me. In the meeting I explained that I would oppose the city’s action if applied to any hotel, located anywhere in Wichita, owned by anyone. He said that he sensed my opposition was based on principle, and I agreed.

The curious thing is that this seemed to puzzle him — that people would actually apply principles to politics.

The political allocation of investment capital in Wichita leads to problems of the appearance of impropriety, if not actual impropriety. There is a small group of people that repeatedly receive large amounts of taxpayer subsidy. These people and others associated with their companies regularly contribute to the campaign funds of city council members and candidates. These council members then vote to grant these people taxpayer-funded subsidy, year after year.

City council members also vote to award them with no-bid contracts. That’s terrible government policy. Especially when one recent contract was later put to competitive bid, and turned out to cost much less than the no-bid price. City council members, all except one, were willing to award their significant campaign contributors with an overpriced no-bid contract at taxpayer expense.

The company that won the no-bid contract was Key Construction. Its owners and executives were the sole contributors to the campaign fund of Lavonta Williams (district 1, northeast Wichita) in 2012 as she prepared to run for reelection this spring.

James Clendenin (district 3, southeast and south Wichita), also running for reelection this spring, and also having voted for the no-bid contract for Key, also received many contributions from Key and its executives in 2012. That company, along with person associated with one other company, were the sole source of Clendenin’s campaign funding that year.

Doesn’t the Wichita Eagle editorial board see a problem here? Doesn’t the newsroom?

There was a time when newspaper opinion editors crusaded against this type of behavior.

Newspaper editorial writers ought also to be concerned about how taxpayer funds are spent. The City of Wichita, however, has established non-profit organizations to spend taxpayer funds. The Wichita Downtown Development Corporation, for example, is funded almost exclusively through taxes. Yet, it claims that it is not a public agency as defined in the Kansas Open Records Act, and therefore need not fulfill records requests seeking to bring transparency as to how the agency spends its taxpayer funds. The city, inexplicably, backs WDDC in this interpretation of law that is contrary to the interests of citizens.

Secrecy of this type regarding taxpayer funds is not good public policy. There was a time when newspaper editors railed against government secrecy like this.

We need a newspaper editorial board that understands principle vs. political expediency. As a first step, let’s ask for an editorial board that recognizes these abuses of citizens and is willing to talk about them.

Carl Brewer: The state of Wichita, 2013

Wichita Mayor Carl Brewer, State of the City Address, January 29, 2013

Much like President Barack Obama in his recent inaugural address, Wichita Mayor Carl Brewer displayed his collectivist instincts in his “State of the City” address for 2013. His speech, as prepared, may be read here.

Opening, the mayor said “Wichita has overcome great challenges in the past and will overcome these as well, but we’ll need to work together.”

Near the close, the mayor said “THE TIME FOR ACTION IS NOW! We have reached a point where we MUST come together as a community, and create a plan that defines our priorities and the City we are to become.” And then: “For all of our differences, I have never doubted this community’s ability to come together and protect what matters most.” (The capitalization is in the mayor’s prepared text.)

But what’s really important to Wichita is economic development. Regarding that, Brewer said this:

As we struggle to compete for new businesses and new jobs, especially in light of job losses in aviation, we must face the reality that we are competing with other cities that offer economic incentives for business development and expansion. If we want to be IN the game, we need to PLAY the game, but we have no dedicated funding source for economic development. If we’re serious about finding new jobs for our people — and I am — we must change this scenario as soon as possible. Where will those incentive dollars come from? (Capitalization, again, is from the original.)

The idea of a dedicated funding source for economic development is something that many in Wichita would support. Many would oppose it, too. But instead of just lobbing rhetorical questions (Where will those incentive dollars come from?), the mayor should give us some answers. Or, at least make a specific proposal. Does the mayor recommend a sales tax increase? Or allocating specific levels of property tax to economic development? (The city is doing this on a temporary basis.) Or asking the state legislature to fund Wichita’s economic development, as we insist the legislature fund our airline subsidy program?

Whatever it is, Mayor Brewer, give us some specific ideas as to how you want to raise this money, and how you would spend it.

It’s that spending, I think, that people in Wichita have concern over. The cumulative record of Brewer, the city council, and city bureaucratic staff hasn’t inspired trust and confidence. Giving the city additional dollars to spend on economic development is not a wise investment.

For example, the mayor says that subsidizing downtown development is good economic development strategy. But we see the mayor and nearly all council members voting to give an overpriced no-bid contract to their significant campaign contributors. This happened despite the company’s large cost overruns on previous no-bid contracts awarded by the city. Is that good economic development practice?

We see the city council sitting in a quasi-judicial role, adjudicating the award of an airport construction contract when one of the parties is a significant campaign contributor. In fact, Key Construction — the company that prevailed in that decision — through its principals and executives, was the sole source of campaign funds raised by Lavonta Williams (district 1, northeast Wichita) in 2012 as she prepared to run for reelection this spring.

Key’s executives also contributed heavily to James Clendenin (district 3, southeast and south Wichita) last year. He’s running this spring, too.

At the time this airport contract was being handled, Council Member Jeff Longwell (district 5, west and northwest Wichita) was campaigning for the Sedgwick County Commission. Campaign finance reports revealed contributions from parties associated with Walbridge, a Michigan construction company. Why would those in Michigan have an interest in helping a Wichita City Council member fund his campaign for a county office? Would the fact that Walbridge is a partner with Key Construction on the new airport terminal, and that Longwell would be voting on that contract, provide a clue?

Or: A movie theater owner and business partners contribute to the mayor’s (and other) campaigns. Mayor and council vote to give a no-interest and low-interest loan and tax breaks to theater owner and his partners. Mayor goes into barbeque sauce business. Mayor’s barbeque sauce is now sold at movie theater.

Doesn’t Carl Brewer see anything wrong with this? Don’t his advisors tell him that this creates the appearance of impropriety? Does the mayor consider whether these actions make a positive impression on those who might want to invest in Wichita?

We see the city awarding economic development incentives that were not necessary for the project to proceed. It took a special election to teach the mayor and council that lesson. By the way, that unneeded and rejected incentive was awarded to the significant campaign contributors of Mayor Brewer and most council members.

We see the city taking credit for building up the tax base, yet giving away tax revenue in the form of property tax abatements, IRBs, tax increment financing, and STAR bonds.

The bureaucratic missteps: The Southfork TIF district is just the latest example.

The lack of respect for citizens’ right to know how taxpayer funds are spent is another troubling aspect of Brewer’s tenure as mayor. None of the words “accountability,” “transparency,” or “open government” were mentioned in the mayor’s address this year, as they have been in the past. No sense in calling attention to an area where the city has failed, I suppose.

All this is done in the name of economic development and jobs. But Wichita is underperforming Kansas and the nation in these areas. Under Brewer’s leadership, however, we are overachieving in the advancement of cronyism and its ills.

The record indicates that our officeholders, and those who advise them, are not worthy of our trust, and certainly not more taxes for economic development.

After last year’s State of the City speech, I noted “Wichita’s mayor is openly dismissive of economic freedom, free markets, and limited government, calling these principles of freedom and liberty ‘simplistic.’ Instead, his government prefers crony capitalism and corporate welfare.”

I also wrote: “Relying on economic freedom, free markets, and limited government for jobs and prosperity means trusting in free people, the energy of decentralized innovation, and spontaneous order. A government plan for economic development is the opposite of these principles.”

This year, the outlook for economic freedom and limited government in Wichita is gloomier than ever before. The door for those who wish to profit through cronyism is wide open. We’ll have to hope that, somehow, Wichita can learn to thrive under this regime.

Campaign contributions show need for reform in Wichita

Candidates for Wichita City Council have filed campaign finance reports, and the filings illustrate the need for campaign finance reform in Wichita and Kansas.

Two incumbents, both who have indicated their intent to run in the spring elections, received campaign contributions in 2012 from two sources: A group of principals and executives of Key Construction, and another group associated with theater owner Bill Warren.

The incumbent candidates receiving these contributions are Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) and Wichita City Council Member Lavonta Williams (district 1, northeast Wichita).

Except for $1.57 in unitemized contributions to Clendenin, these two groups accounted for all contributions received by these two incumbents.

Those associated with Key Construction gave a total of $7,000. Williams received $4,000, and $3,000 went to Clendenin.

Those associated with Warren gave $5,000, all to Clendenin.

So do these two groups have an extraordinarily keen interest in Wichita city government that’s not shared by anyone else?

Yes they do, and it’s not benevolent. Both have benefited from the cronyism of the Wichita City Council, in particular members Williams and Clendenin.

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

Both Williams and Clendenin voted for this no-bid contract that was contrary to the interests of taxpayers. They didn’t vote for this reluctantly. They embraced it.

Last summer Williams and Clendenin, along with the rest of the council, participated in a decision to award the large contract for the construction of the new Wichita airport to Key Construction, despite the fact that Key was not the low bidder. The council was tasked to act in a quasi-judicial manner, to make decisions whether discretion was abused or whether laws were improperly applied.

Judges shouldn’t preside over decisions that hugely enrich their significant campaign contributors. No matter what the merits of the case, this is bad government.

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

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

Wichita’s need for campaign finance reform

The campaign finance reports of Williams and Clendenin reinforce and spotlight the need for campaign finance reform in Wichita and Kansas.

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

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

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

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

Wichita could do better regarding open government, if it wants

Tomorrow the Wichita City Council will consider renewing its contract with Go Wichita Convention and Visitors Bureau. The renewal will provide another opportunity for the council to decide whether it is truly in favor of open government and citizen access to records.

Go Wichita, along with the Wichita Downtown Development Corporation and Greater Wichita Economic Development Coalition, contends that it is not a “public agency” as defined in Kansas law, and therefore does not have to fulfill records requests. Mayor Carl Brewer and all council members except Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) are comfortable with this tortured interpretation of the law. Inexplicably, the Sedgwick County District Attorney agreed with the city.

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

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

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

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

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

Why open records are important

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

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

This item, last year

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

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

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

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

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

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

John Rolfe, president of Go Wichita, told the council that he has offered to provide me “any information that is relevant” regarding Go Wichita. He mentioned the various financial reports his organization provides. He said he is unclear on the transparency question, and what isn’t transparent.

Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) asked Rolfe if he had ever denied a KORA request. Rolfe replied no, perhaps not remembering that Go Wichita denied my request.

Misunderstanding the scope of KORA

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

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

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

Is the city overwhelmed with records requests?

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

In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I have made no requests this year to the city citing the open records act. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.

As to his concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is troubling. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent.

As for a workshop for city council on the topic of open records: This would probably be presented by Rebenstorf, and his attitude towards the open records law is known, and is not on the side of citizens.

O’Donnell made a motion that the contract be approved, but amended that Go Wichita will comply with the Kansas Open Records Act. That motion didn’t receive a second.

Wichita’s attitude towards citizens

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

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

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

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

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

In Wichita, a quest for campaign finance reform

Actions of the Wichita City Council have shown that campaign finance reform is needed. Citizen groups are investigating how to accomplish this needed reform, since the council has not shown interest in reforming itself.

Consider recent actions by the council and its members:

The common thread running through these incidents? Council members voting to enrich their campaign contributors. Each of these — and there are others — are examples of a “pay-to-play” environment created at Wichita City Hall. It’s harmful to our city in a number of ways.

First, overpriced no-bid contracts and other giveaways to campaign contributors isn’t economic development. It’s cronyism. It’s wasteful and abusive of taxpayers and erodes their trust in government.

Second: Citizens become cynical when they feel there is a group of insiders who get whatever they want from city hall at the expense of taxpayers. At one time newspaper editorial pages crusaded against cronyism like this. But no longer in Wichita.

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

We need laws to prohibit Wichita city council members from voting on or advocating for decisions that enrich their significant campaign contributors. A model law for Wichita is a charter provision of the city of Santa Ana, in Orange County, California, which 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.”

We’d also need to add — as does New Jersey law — provisions that contributions from a business owner’s spouse and children will be deemed to be from the business itself. Additionally the contributions of principals, partners, officers, and directors, and their spouses, are considered to be from the business itself for purposes of the law. These provisions are important, as many city council members in Wichita receive campaign contributions from business owners’ family members and employees as a way to skirt our relatively small contribution limits.

Such campaign finance reform would not prohibit anyone from donating as much as they want (under the current restrictions) to any candidate. Nor would the law prevent candidates from accepting campaign contributions from anyone.

This reform, however, would remove the linkage between significant contributions and voting to give money to the contributor. This would be a big step forward for Wichita, its government, and its citizens.

Proponents see three paths towards campaign finance reform. One would be to press for a law in the upcoming session of the Kansas Legislature. Such a law would be statewide in scope, and could apply to city councils, county commissions, school boards, and other elective bodies.

A second path would be to use the municipal initiative process, which was used by community water fluoridation advocates in Wichita this year. Under this process, a group writes a proposed ordinance. Then, it must collect about 6,200 valid signatures on petitions. If a successful petition is verified, the city council must either (a) pass the ordinance as written, or (b) set an election. For the fluoridation initiative the council voted to call an election, which was held as part of the November general election. (The initiative failed to obtain a majority of votes, so the proposed ordinance did not take effect.)

There is also a third path, which is for the Wichita City Council to recognize the desirability of campaign finance reform and pass such an ordinance on its own initiative.

If we take the affected parties at their word, this third path should face little resistance. That’s because politicians who accept these campaign contributions say it doesn’t affect their voting, and those who give the contributions say they don’t do it to influence votes.

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

Incidents

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

When questioned about election donations:

“I would never do anything because of a campaign contribution,” said [former council member Sharon] Fearey, who received $500 from David Burk and $500 from David Wells.

“I don’t think $500 buys a vote,” said [former council member Sue] Schlapp.

“One has nothing to do with the other,” [Wichita Mayor Carl] Brewer said.

Also in 2008, the Reverend Dr. Kevass J. Harding wanted to spruce up the Ken-Mar shopping center at 13th and Oliver, now known as Providence Square. Near the end of June, Kevass Harding and his wife contributed a total of $1,000, the maximum allowed by law, to the campaign of Wichita City Council Member Lavonta Williams (district 1, northeast Wichita). This was right before Harding appeared before the city council in July and August as an applicant for tax increment district financing (TIF).

These campaign contributions, made in the maximum amount allowable, were out of character for the Hardings. They had made very few contributions to political candidates, and they appear not to have made many since then.

But just before the Ken-Mar TIF district was to be considered for approval, the Hardings made large contributions to Williams, who is the council member representing Ken-Mar’s district. Harding would not explain why he made the contributions. Williams offered a vague and general explanation that had no substantive meaning.

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

The no-bid contract for the garage was just one of many subsidies and grants given to Key Construction and Dave Burk as part of the Ambassador Hotel project. In Wichita city elections, individuals may contribute up to $500 to candidates, once during the primary election and again during the general election. As you can see in this table complied from Wichita City Council campaign finance reports, spouses often contribute as well. So it’s not uncommon to see the David and DJ Burk family contribute $2,000 to a candidate for their primary and general election campaigns. That’s a significant sum for a city council district election campaign cycle. Click here for a compilation of campaign contributions made by those associated with the Ambassador Hotel project.

Council Member Jeff Longwell (district 5, west and northwest Wichita), in his second term as council member, led the pack in accepting campaign contributions from parties associated with the Ambassador Hotel project. For his most recent election, he received $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife. Total from parties associated with the Ambassador Hotel project: $6,000. When Longwell ran for Sedgwick County Commission this summer, these parties donated generously to that campaign, too.

Council Member Lavonta Williams (district 1, northeast Wichita) received $5,000 from parties associated with the Ambassador Hotel: $3,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

Wichita Mayor Carl Brewer received $5,000 from parties associated with the Ambassador Hotel: $4,500 from parties associated with Key Construction, and $500 DJ Burk, David Burk’s wife.

Council Member and Vice Mayor Janet Miller (district 6, north central Wichita) received $3,500 during her 2009 election campaign from parties associated with the Ambassador Hotel: $1,500 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

For his 2011 election campaign, Council Member Pete Meitzner (district 2, east Wichita) received $3,500 from parties associated with the Ambassador Hotel: $2,500 from parties associated with Key Construction, and $1,000 from David Burk and his wife.

For his 2011 election campaign, Council Member James Clendenin (district 3, southeast and south Wichita) received $1,500 from parties associated with the Ambassador Hotel: $1,000 from parties associated with Key Construction, and $500 from David Burk and his wife.

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

Finally: This summer while Longwell was campaigning for the Sedgwick County Commission, campaign contributions from parties associated with Walbridge, a Michigan-based construction company appeared on Longwell’s campaign finance reports. Why would those in Michigan have an interest in helping a Wichita City Council member fund his campaign for a county office? Would the fact that Walbridge is a partner with Key Construction on the new Wichita Airport terminal provide a clue?

These contributions are of interest because on July 17, 2012, the Wichita City Council, sitting in a quasi-judicial capacity, made a decision in favor of Key and Walbridge that will cost some group of taxpayers or airport customers an extra $2.1 million. Five council members, including Longwell, voted in favor of this decision. Two members were opposed.

On July 16 — the day before the Wichita City Council heard the appeal that resulted in Key Construction apparently winning the airport contract — John Rakolta, Chairman and Chief Executive Officer of Walbridge and his wife contributed $1,000 to Longwell’s campaign for Sedgwick county commissioner.

Then on July 20, three days after the council’s decision in favor of Key/Walbridge, other Walbridge executives contributed $2,250 to Longwell’s campaign. Besides the Walbridge contributions, Key Construction and its executives contributed $6,500 to Longwell’s county commission campaign. Key and its executives have been heavy contributors to Longwell’s other campaigns, as well as to Wichita Mayor Carl Brewer and many other Wichita City Council members.

Open records again an issue in Kansas

Responses to records requests made by Kansas Policy Institute are bringing attention to shortcomings in the Kansas Open Records Act.

Those who have made records requests in Kansas are probably not surprised that KPI has had difficulty in having its records requests respected and filled. In 2007 Better Government Association and National Freedom of Information Coalition gave Kansas a letter grade of “F” for its open records law. Last year State Integrity Investigation looked at the states, and Kansas did not rank well there, either. See Kansas rates low in access to records.

This week KPI president Dave Trabert appeared before the Sedgwick County Commission to express his concerns regarding the failure of Greater Wichita Economic Development Coalition to fulfill a records request made under the provisions of the Kansas Open Records Act. Video is at Open government in Sedgwick County Kansas.

While commissioners Karl Peterjohn and Richard Ranzau spoke in favor of government transparency and compliance with records requests, not all their colleagues agreed.

Dave Unruh asked Trabert if GWEDC had responded to his records request. Trabert said yes, and the response from GWEDC is that the agency believes it has complied with the open records law. This, he explained, is a common response from agencies.

Commission Chair Tim Norton expressed concern that any non-profit the commission gives money to would have to hire legal help, which he termed an unintended consequence. He made a motion to receive and file Trabert’s remarks, which is routine. His motion also included taking this matter under advisement, which is what politicians do in order to bury something. Unruh seconded the motion.

Peterjohn made a substitute motion that a representative from GWEDC would appear before the commission and discuss the open records act. This motion passed four to one, with Unruh in the minority. Even though Norton voted in favor of Peterjohn’s motion, it’s evident that he isn’t in favor of more government transparency. Unruh’s vote against government transparency was explicit.

Wichita school district records request

USD 259, the Wichita public school district, also declined to fulfill a records request submitted by KPI. In a press release, KPI details the overly-legalistic interpretation of the KORA statute that the Wichita school district uses to claim that the records are exempt from disclosure.

In a news report on KSN Television, school board president Lynn Rogers explained the district’s reason for denying the records request: “But some school board members with USD 259 in Wichita say, the numbers brought up in court are preliminary numbers. That’s the reason they are not handing them over to KPI. ‘We have worked very hard over the years to be very forthright and we’ve tried to disclose the information when we have it,’ says Lynn Rogers.’”

This claim by Rogers — if sincere — is a break from the past. In 2008 Rogers told me that it is a burden when citizens make requests for records.

Until recently the Wichita school district had placed its monthly checkbook register on its website each month, and then removed it after a month had passed. Rogers explained that the district didn’t have space on its servers to hold these documents. That explanation is total nonsense, as the pdf check register documents are a very small fraction of the size of video files that the district hosted on its servers. Video files, by the way, not related to instruction, but holding coverage of groundbreaking ceremonies.

City of Wichita

KPI has made records requests to other local governmental agencies. Some have refused to comply on the basis that they are not public agencies as defined in Kansas statutes. This was the case when I made records requests to Wichita Downtown Development Corporation, Greater Wichita Economic Development Coalition, and Go Wichita Convention and Visitors Bureau.

In 2009 I addressed the Wichita City Council and asked that the city direct that WDDC follow the law and fulfill my records requests. (Video is at Video: City of Wichita and the Kansas Open Records Act.)

In my remarks, I told Mayor Carl Brewer and the council this:

The Kansas Open Records Act (KORA), in KSA 45-216 (a) states: “It is declared to be the public policy of the state that public records shall be open for inspection by any person unless otherwise provided by this act, and this act shall be liberally construed and applied to promote such policy.”

But in my recent experience, our city’s legal staff has decided to act contrary to this policy. It’s not only the spirit of this law that the city is violating, but also the letter of the law as well.

Recently I requested some records from the Wichita Downtown Development Corporation. Although the WDDC cooperated and gave me the records I requested, the city denies that the WDDC is a public agency as defined in the Kansas Open Records Act.

This is an important issue to resolve.

In the future, requests may be made for records for which the WDDC may not be willing to cooperate. In this case, citizens will have to rely on compliance with the law, not voluntary cooperation. Or, other people may make records requests and may not be as willing as I have been to pursue the matter. Additionally, citizens may want to attend WDDC’s meetings under the provisions of the Kansas Open Meetings Act.

Furthermore, there are other organizations similarly situated. These include the Greater Wichita Economic Development Coalition and the Go Wichita Convention and Visitors Bureau. These organizations should properly be ruled public agencies as defined in the Kansas Open Records Act so that citizens and journalists may freely request their records and attend their meetings.

Here’s why the WDDC is a public agency subject to the Open Records Act. KSA 45-217 (f)(1) states: “‘Public agency’ means the state or any political or taxing subdivision of the state or any office, officer, agency or instrumentality thereof, or any other entity receiving or expending and supported in whole or in part by the public funds appropriated by the state or by public funds of any political or taxing subdivision of the state.”

The Kansas Attorney General’s office offers additional guidance: “A public agency is the state or any political or taxing subdivision, or any office, officer, or agency thereof, or any other entity, receiving or expending and supported in whole or part by public funds. It is some office or agency that is connected with state or local government.

The WDDC is wholly supported by a special property tax district. Plain and simple. That is the entire source of their funding, except for some private fundraising done this year.

The city cites an exception under which organizations are not subject to the Kansas Open Records Act: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.”

The purpose of this exception is so that every vendor that sells goods and services to government agencies is not subject to the Kansas Open Records Act. For example, if a city buys an automobile, the dealer is not subject simply because it sold a car to the city.

But this statute contains an important qualifier: the word “solely.” In this case, the relationship between the City of Wichita and the WDDC is not that of solely customer and vendor. Instead, the city created a special tax district that is the source of substantially all WDDC’s revenue, and the existence of the district must be renewed by the city soon. The WDDC performs a governmental function that some cities decide to keep in-house. The WDDC has only one “customer,” to my knowledge, that being the City of Wichita.

Furthermore, the revenue that the WDDC receives each year is dependent on the property tax collected in the special taxing district.

The only reasonable conclusion to draw is that in terms of both funding and function, the WDDC is effectively a branch of Wichita city government.

The refusal of the city’s legal department to acknowledge these facts and concede that the WDDC is a public agency stands reason on its head. It’s also contrary to the expressly stated public policy of the state of Kansas. It’s an intolerable situation that cannot be allowed to exist.

Mr. Mayor and members of the council, it doesn’t take a liberal application of the Kansas Open Records Act to correct this situation. All that is required is to read the law and follow it. That’s what I’m asking this body to do: ask the city legal department to comply with the clear language and intent of the Kansas Open Records Act.

The following year when WDDC’s contract was before the council for renewal, I asked that the city, as part of the contract, agree that WDDC is a public agency as defined in Kansas law. (Video is at Kansas Open Records Act at Wichita City Council.) Then-council member Paul Gray, after noting that he had heard all council members speak in favor of government transparency, said that even if WDDC is not a public agency under the law, why can’t it still proceed and fulfill records requests? This is an important point. The Kansas Open Records Act contains many exclusions that agencies use to avoid releasing records. But agencies may release the records if they want.

Any council member could have made the motion that I asked for. But no one, including Gray, former council member Sue Schlapp, former member Jim Skelton (now on the Sedgwick County Commission), Mayor Carl Brewer, and council members Jeff Longwell (district 5, west and northwest Wichita), Janet Miller (district 6, north central Wichita), and Lavonta Williams (district 1, northeast Wichita) would make a motion to increase government transparency and citizens’ right to know. Wichita city manager Robert Layton offered no recommendation to the council.

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

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

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

Discussion on this matter revealed a serious lack of knowledge by some council members regarding the Kansas Open Records Act. In remarks from the bench James Clendenin (district 3, southeast and south Wichita) asked the city manager a series of questions aimed at determining whether the city was satisfied with the level of service that Go Wichita has provided. He then extended that argument, wondering if any company the city contracts with that is providing satisfactory products or service would be subject to “government intrusion” through records requests. Would this discourage companies from wanting to be contractors?

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

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

Pete Meitzner (district 2, east Wichita) asked that there might be a workshop to develop a policy on records requests. He expressed concern that departments might be overwhelmed with requests from me that they have to respond to in a timely fashion, accusing me of “attempt to bury any of our departments in freedom of information acts [sic].” Such a workshop would probably be presented by Wichita City Attorney Gary Rebenstorf. His attitude towards the open records law is that of hostility, and is not on the side of citizens.

In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I made no requests that year to the city citing the open records act. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.

As to Meitzner’s concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is troubling. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent.

Michael O’Donnell (district 4, south and southwest Wichita) made a motion that the contract be approved, but amended that Go Wichita will comply with the Kansas Open Records Act. That motion didn’t receive a second.

Brown and I appeared on the KAKE Television public affairs program This Week in Kansas to discuss this matter. Video is at In Wichita, disdain for open records and government transparency.

Enforcement of Kansas Open Records Act

In Kansas, when citizens believe that agencies are not complying with the Kansas Open Records Act, they have three options. One is to ask the Kansas Attorney General for help. But the policy of the Attorney General is to refer all cases to the local District Attorney, which is what I did. The other way to proceed is for a citizen to pursue legal action at their own expense.

After 14 months, Sedgwick County DA Nola Foulston’s office decided in favor of the governmental agencies. See Sedgwick County DA Response to KORA Request to Wichita Downtown Development Corporation.

When newspapers have their records requests refused, they usually give publicity to this. The Wichita Eagle is aware of my difficulties with records requests in Wichita, as their reporters have attended a number of meetings where my records requests were discussed, sometimes at length. But so far no coverage of an issue that, were the newspaper in my shoes, would undoubtedly covered on the front page. Something tells me that KPI won’t get any coverage, either.

Additional information on this topic is at:

Kansas counties decline sustainable communities planning

Two of the five Kansas counties that were asked to participate in a sustainable communities planning grant have decided not to join the effort. Of the five counties (Sedgwick, Butler, Reno, Harvey and Sumner), Butler and Sumner county commissioners voted against participation.

The REAP sustainable communities planning process is designed to, in the words of REAP, “create a long-term regional plan for ensuring the health and productivity of our local economy. The grant will support community engagement to identify common values and goals, followed by local and regional efforts to enhance economic development, connect people with jobs, reduce housing and transportation costs, ensure public safety, and use of limited public funds efficiently in the years ahead.”

Critics of government planing processes such as this are concerned that the planning process would subject us to additional control by the federal government. These are the so-called strings that are thought to accompany federal grants.

(For those who are interested in what strings look like, here’s an example of one that is relatively innocuous. A HUD document titled Program Policy Guidance OSHC-2012-01 explains “Applicants that reach a certain qualifying score under the Regional Planning Grant Program or the Community Challenge Grant Program will receive PSS designation. PSS designation provides your entity access to bonus points for selected other HUD grant programs, technical assistance, and other capacity building opportunities that will strengthen future efforts to apply to the program.” REAP has been awarded this status, as it complied with this “string.”)

When the Wichita City Council deliberated its endorsement of and participation in this program, Council Member James Clendenin (district 3, southeast and south Wichita), asked a series of questions of Joe Yager, chief executive officer of REAP, as to whether these concerns were true. Yager said no, there are no strings accompanying the grant. But what about after the planning process is over in three years? Will the plan be forced upon us, Clendenin asked?

Yager answered no, that local governing bodies would have to vote to implement any of the ideas or programs that resulted from the plan. Nothing will be forced upon us, nothing is mandated, he said. We wold simply have a “toolkit” of things to use.

This view or attitude — that local elected officials will protect us from the harmful elements that will emerge from the plan — is dangerously naive. First, in his short time in office, Clendenin has regularly voted for expansions of government planning, power, and spending. He doesn’t stand out from most other council members, not even the Republican members (except for one), as they also regularly vote for these things.

Second, we know that after the plan is complete there will be the argument that since we have the plan, that since we spent three years and $2.2 million on the process, we might as well go ahead and implement it.

Then, there will be the future grants and undoubtedly increased local spending required to implement the plan. There is now research that looks at the effect of federal grants on future local spending. In their research paper titled Do Intergovernmental Grants Create Ratchets in State and Local Taxes? Testing the Friedman-Sanford Hypothesis economists Russell S. Sobel and George R. Crowley concluded this: “Federal grants often result in states creating new programs and hiring new employees, and when the federal funding for that specific purpose is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes.”

The authors cautioned: “Far from always being an unintended consequence, some federal grants are made with the intention that states will pick up funding the program in the future.” See Federal grants increase future local spending.

Sedgwick County Commissioner Richard Ranzau has researched the sustainable development movement, and has written a paper explaining what he found.

Randal O’Toole, Senior Fellow at the Cato Institute, has written extensively on government planning, especially regarding land use and transportation. His op-ed on this topic follows:

The vast majority of Americans, surveys say, aspire to live in a single-family home with a yard. The vast majority of American travel — around 85 percent — is by automobile. Yet the Obama administration thinks more Americans should live in apartments and travel on foot, bicycle, or mass transit.

To promote this idea, the administration wants to give the south central Regional Economic Area Partnership (REAP) the opportunity to apply for a $1.5 million grant to participate in “sustainable communities.” Also sometimes called “smart growth,” the ideas promoted by these programs are anything but sustainable or smart. (As members of REAP, the governing bodies for both Wichita and Sedgwick County endorsed this grant.)

The urban plans that come out of these kinds of programs typically call for:

  • Redesigning streets to increase traffic congestion in order to discourage people from driving;
  • Increasing subsidies to transit, bike paths, and other “alternative” forms of travel even though these alternatives are used by few people;
  • Denying owners of land on the urban fringes the right to develop their property in order to make single-family housing more expensive;
  • Subsidizing high-density, developments that combine housing with retail shops in the hope that people will walk to shopping rather than drive;
  • Rezoning neighborhoods of single-family homes for apartments with zoning so strict that, if someone’s house burns down, they will have to replace it with an apartment.

My former hometown of Portland, Oregon has followed these policies for two decades, and the results have been a disaster. In their zeal to subsidize transit and high-density developments, the region’s officials have taken money from schools, libraries, fire, and police, leaving those programs starved and in disarray.

Since 1980, Portland has spent more than $3 billion building light-rail lines. Far from improving transit, the share of commuters taking transit to work has fallen from 9.8 percent in 1980 to 7.5 percent today, mainly because the region cut bus service to pay for the trains. Traffic congestion quadrupled between 1984 and 2004, which planners say was necessary to get people to ride transit.

The region’s housing policies made single-family homes so expensive that most families with children moved to distant suburbs where they can afford a house with a yard. Residents of subsidized high-density housing projects drive just about as much as anyone else in the Portland area, and developers have learned to their sorrow that if they follow planners’ guidelines in providing less parking for these projects, they will end up with high vacancy rates.

Despite these problems, Portland has received lots of positive publicity. The reason for this is simple: by forcing out families with children, inner Portland is left mainly with young singles and childless couples who eat out a lot, making Portland a Mecca for tourists who like exciting new restaurants. This makes Portland a great place to visit, but you wouldn’t want to live there unless you like noisy, congested streets.

The idea of “sustainable communities” is that planners can socially engineer people into changing their travel behavior by redesigning cities to favor pedestrians and transit over automobiles. Beyond the fact that this is an outrageous intrusion of government into people’s lives, it simply doesn’t work. Such experts as University of California economist David Brownstone and University of Southern California planning professor Genevieve Giuliano have shown that the link between urban design and driving is too weak to make a difference.

To protect livability and avoid unsustainable subsidies to transit and high-density development, Wichita, Sedgwick County, and other REAP members of south central Kansas should reject the $1.5 million grant offered by the federal government.

Wichita voters reject cronyism — again

Tuesday’s primary election in Kansas was notable for the large number of victories by conservative challengers over Republican senate incumbents. Also important is that voters in Wichita and the surrounding area rejected, for the second time this year, the culture of political cronyism that passes for economic development in Wichita.

On Tuesday incumbent Sedgwick County Commissioner Karl Peterjohn defeated a challenge by Wichita City Council Member Jeff Longwell. The contrast was clear: Peterjohn with his long-time, outspoken advocacy for limited government and free market principles, although perhaps tempered a bit based on some votes he’s made. Longwell, however, advocates for “more tools in the toolbox.” In other words, a larger role for government in economic development and centralized planning.

The result: Peterjohn won, 57 percent to 43 percent.

Longwell had the endorsements of many Wichita-area politicians, including Wichita Mayor Carl Brewer and all other Wichita City Council members except Michael O’Donnell (district 4, south and southwest Wichita): Vice Mayor Janet Miller (district 6, north central Wichita) and council members Lavonta Williams (district 1, northeast Wichita), James Clendenin (district 3, southeast and south Wichita), and Pete Meitzner (district 2, east Wichita).

Sedgwick County Commission members Tim Norton, Jim Skelton, and Dave Unruh also endorsed Longwell.

In addition to these endorsements, Longwell had a large money advantage over Peterjohn. According to campaign finance reports filed July 30, Longwell had raised nearly $62,000.

Peterjohn’s July 30 report showed about $20,000 raised, so as of that date Longwell had over three times as much campaign money at his disposal than Peterjohn.

The money advantage and the endorsements are linked. On Longwell’s July 30 campaign finance report we learned that executives of a Michigan construction company made campaign contributions immediately before and after Longwell participated in a city council voted that benefited them. Key Construction, a heavy contributor to Longwell’s campaign, also benefited from Longwell’s vote that day. This was just another episode in Longwell’s history of voting for overpriced no-bid contracts and no-interest city loans for his large campaign contributors.

The day after Peterjohn held a news conference questioning Longwell’s Michigan contributions, Longwell held the news conference that announced the above-mentioned endorsements. Many of those endorsers also receive campaign money from those they award with no-bid contracts and other taxpayer-funded largesse.

Despite the advantage in campaign funds and the endorsements, voters in west Wichita and west Sedgwick County rejected the political cronyism that is Jeff Longwell’s legacy in government service.

It’s the second time this year voters have rejected cronyism. In February Wichita voters voted down a tax giveaway to the Ambassador Hotel by a margin of 62 percent to 38 percent.

Longwell played a role in that election, too. When citizens exercised their constitutional right to challenge the taxpayer-funded giveaway to the hotel, Jeff Longwell said it was “disappointing,” and a “stunt.” He said that using this fundamental aspect of democracy causes citizens to “lose credibility.”

When it came time for the council to set the date for the special election on the hotel tax, Longwell attempted to have the election commissioner set the date as early as possible, obviously thinking that a short campaign would benefit the hotel developers.

Those hotel developers, by the way, included many of Longwell’s long-time campaign contributors.

After Wichita voters rejected this special tax deal, the Wall Street Journal in a column titled “A Wichita Shocker: You can beat city hall” wrote: “Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.”

It’s no wonder Longwell was disappointed when citizens petitioned their government. Voters soundly rejected the political cronyism and sweetheart deals that are Longwell’s legacy.

In Wichita, a problem with government ethics

Wichita and Kansas lag behind states like Illinois and New Jersey in laws regarding ethical behavior by elected officials. Last week Wichita saw a lesson in how Wichita Mayor Carl Brewer and a majority of the Wichita City Council failed a test in government ethics. Besides Brewer, long-serving council members Jeff Longwell (district 5, west and northwest Wichita) and Lavonta Williams (district 1, northeast Wichita), as well as Vice Mayor Janet Miller (district 6, north central Wichita) have also displayed a callous disregard for ethical behavior by government officials.

Today I appeared on the KAKE Television public affairs program This Week in Kansas and explained the recent incidents that ought to cause Wichitans and Kansans to insist on reform regarding government ethics. Pay-to-play laws would be a good start. See Wichita and Kansas need pay-to-play laws.

For earlier reporting on this matter, see Wichita City Council can’t judge airport contract, For Wichita government, an ethics tipping point, and Wichita fails ethics test.

Wichita fails ethics test

Yesterday Wichita Mayor Carl Brewer and a majority of the Wichita City Council failed a test, showing that Wichita elected officials, except for one, aren’t interested in ethical behavior.

The problem is worse than portrayed in a Wichita Eagle editorial, which commented on the appearance of the mayor’s and council’s action. In Wichita, we don’t have the mere appearance of a problem, we have an actual and real problem.

The problem, in a nutshell, is that the mayor and all members of the city council except for Michael O’Donnell (district 4, south and southwest Wichita) don’t see that’s a problem for them to award no-bid contracts to campaign contributors. They also don’t see that it’s wrong to preside over a hearing in a quasi-judicial manner and award contracts to a campaign contributor. See For Wichita government, an ethics tipping point and Wichita City Council can’t judge airport contract.

In some states and cities, the routine action of the mayor and council members would be illegal. It ought to be illegal in Kansas. There was no discussion from the council bench about this, and none in the executive session council members took.

Coincidentally, a group spoke during the public agenda portion of Tuesday’s council meeting about their concern for what they say is the corrupting influence of campaign money in politics.

None of the group stayed to observe the city council provide a lesson in how most of Wichita’s elected officials willfully ignore the issues the group is concerned with. From the bench Vice Mayor Janet Miller (district 6, north central Wichita) spoke approvingly of the group’s cause. But last year Miller voted for a no-bid contract to be awarded to her campaign contributors, and she voted in Tuesday’s airport contract hearing.

The behavior of Mayor Brewer and most members of the council gives new urgency for the Kansas Legislature to pass pay-to-play laws, which generally prohibit officeholders from voting on matters that financially benefit their campaign contributors. We can call it “Carl’s Law.” See Wichita and Kansas need pay-to-play laws.

An example of a pay-to-play law is a charter provision of the city of Santa Ana, in Orange County, California, which 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.”

Kansas has no such law. Certainly Wichita does not, where pay-to-play is seen by many citizens as a way of life — the Wichita way.

For Wichita government, an ethics tipping point

Tomorrow Wichita Mayor Carl Brewer and the Wichita City Council will make a decision that will let the city learn the ethics and character of its elected officials.

The issue is whether the mayor and five of six council members will decide to preside in a quasi-judicial matter over a case involving a major campaign contributor and personal friend. Now we know that the mayor has also intervened on behalf of Key Construction, recommending exclusively that the firm be hired for a construction project.

My reporting in Wichita City Council can’t judge airport contract details the campaign contributions made by executives of Key Construction and their spouses.

On Sunday Bill Wilson of the Wichita Eagle reported on the letter Brewer sent to a retail store planning to build in Wichita. Key was the only construction company the mayor recommended. (Letter from mayor at center of construction bid controversy.)

Wichita has shown it is willing to disregard the taxpayer in order to award out-sized profits to Key Construction. The most recent scheme — which didn’t pan out for Key — had the council willing to overspend by $1.3 million through a no-bid contract planned for Key. Only the action of council members Pete Meitzner (district 2, east Wichita) and Michael O’Donnell (district 4, south and southwest Wichita) prevented the award of the no-bid contract and saved Wichita taxpayers $1.3 million.

Despite this, Mayor Brewer wrote in his Key Construction recommendation letter: “Key is known for their consistent quality construction, budget control and on schedule delivery.”

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

With a record like this, we have to wonder why Mayor Brewer would recommend Key Construction. Besides the campaign contributions and fishing trips, that is.

The Wichita mayor’s behavior gives new urgency for the Kansas Legislature to pass pay-to-play laws, which generally prohibit officeholders from voting on matters that financially benefit their campaign contributors. We can call it “Carl’s Law.” See Wichita and Kansas need pay-to-play laws.

Until such laws are in place, it is up to the personal judgment and character of the mayor and each city council member who has accepted campaign funds from Key Construction to decide whether they should act as judge in a case where Key is a party and stands to benefit financially. The decisions they make will let us know the future course for government ethics in Wichita. They either take a stand for good government, or fall farther into the morass of political cronyism.

Wichita City Council can’t judge airport contract

On Tuesday the Wichita City Council will conduct a hearing for review of the award of a contract for the construction of the new Wichita Airport terminal. But because of relationships between nearly all council members — especially Wichita Mayor Carl Brewer — and one of the parties to the dispute, the city council should not participate in this decision.

The contract, worth about $100 million, was awarded to Dondlinger and Sons and its partner. Dondlinger has built many large projects, including INTRUST Bank Arena. But the city then ruled that Dondliger’s bid is “unresponsive.” The reason is that Dondlinger may not have met bid requirements regarding disadvantaged and minority business enterprises.

The firm next in line to receive the contract is Key Construction of Wichita. If the city council finds against Dondllinger, Key gets the contract, presumably. That’s the source of the problem the city council faces, as Key is heavily involved in politics, with its executives and their spouses often making the maximum allowed campaign contributions to nearly all members of the council. Personal relationships may play a role, too.

For the mayor and current council members, here is my tabulation of how much Key-associated persons made to each member’s most recent campaign:

Carl Brewer: $4,500
Jeff Longwell (district 5, west and northwest Wichita): $4,000
Lavonta Williams (district 1, northeast Wichita): $3,000
Pete Meitzner (district 2, east Wichita): $2,500
Janet Miller (district 6, north central Wichita): $1,500
James Clendenin (district 3, southeast and south Wichita): $1,000
Michael O’Donnell (district 4, south and southwest Wichita): $0

Is there a pattern to these contributions? That is, does Key make contributions to candidates with a specific political philosophy, such as conservatism or liberalism? Of the top three contributors, two have distinctly liberal ideas about taxation and spending, while the other is touting conservative credentials as he campaigns for another office. Patterns like this suggest that the contributions are made to gain access to officeholders, or for favorable consideration when the donor asks the council to vote to give it money or contracts. Key Construction does that a lot.

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

The political influence of Key Construction extends beyond campaign contributions, too. Mayor Brewer’s personal Facebook profile has a photo album holding pictures of him on a fishing trip with Dave Wells of Key Construction.

These political investments have paid off for Key Construction, as it has received a number of no-bid contracts over the years. Last August the council decided to award Key a no-bid contract to build the parking garage that is part of the Ambassador Hotel project. The no-bid cost of the garage was to be $6 million, according to a letter of intent. All council members except Michael O’Donnell (district 4, south and southwest Wichita) voted for the no-bid contract to Key Construction, although Mayor Carl Brewer was absent. It is likely that he would have voted with the majority, however.

Later the city decided to place the contract for bid. Key Construction won the bidding, but for a price some $1.3 million less.

What citizens need to know is that the city council, except O’Donnell, was willing to spend an extra $1.3 million on a project awarded to a politically-connected construction firm.

So should the Wichita City Council make the decision on the airport contract? City documents don’t indicate whether Tuesday’s hearing is of a quasi-judicial nature, as it is sometimes when the council rules on certain matters involving appeal of decisions made by city authorities. But the council is being asked to make decisions involving whether discretion was abused or whether laws were improperly applied.

That sounds a lot like the role of judges. In 2009 the U.S. Supreme Court ruled that, in the words of legal watchdog group Judicial Watch, “… significant campaign contributions or other electoral assistance pose a risk of actual bias. Writing for the majority, Justice Anthony Kennedy said: ‘Just as no man is allowed to be a judge in his own cause so too can fears of bias arise when a man chooses the judge in his own cause.’”

Judicial Watch also noted “The ruling will likely affect judges in 39 states that elect them — including Washington, Texas and California — from presiding over cases in which their campaign contributions could create a conflict of interest. The nation’s judicial code has long said that judges should disqualify themselves from proceedings in which impartiality might reasonably be questioned, but the Supreme Court ruling is the first to address hefty election spending.”

The mayor and council members are not judges. But they’re being asked to make a judge-like decision. If held to the same standards as the U.S. Supreme Court says judges must follow, Mayor Brewer and the five council members who accepted campaign contributions from Key Construction need to recuse themselves from Tuesday’s decision on the Wichita Airport construction contract. A similar argument can be made for city manager Robert Layton and all city employees. Directly or indirectly they serve at the pleasure of the council.

Finally, this episode is another example of why Wichita and Kansas need pay-to-play laws.

Wichita decides to join sustainable communities planning

At yesterday’s Wichita City Council meeting, the council took up the issue as to whether the city would participate in the REAP sustainable communities planning process. All council members except Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) voted in favor of participation.

Critics of government planing processes such as this are worried that the planning process would subject us to additional control by the federal government. These are the so-called strings that are thought to accompany federal grants.

(For those who are interested in what strings look like, here’s an example of one that is relatively innocuous. A HUD document titled Program Policy Guidance OSHC-2012-01 explains “Applicants that reach a certain qualifying score under the Regional Planning Grant Program or the Community Challenge Grant Program will receive PSS designation. PSS designation provides your entity access to bonus points for selected other HUD grant programs, technical assistance, and other capacity building opportunities that will strengthen future efforts to apply to the program.” REAP has been awarded this status, as it complied with this “string.”)

James Clendenin (district 3, southeast and south Wichita), asked a series of questions of Joe Yager, chief executive officer of REAP, as to whether these concerns were true. Yager said no, there are no strings accompanying the grant. But what about after the planning process is over in three years? Will the plan be forced upon us, Clendenin asked?

Yager answered no, that local governing bodies would have to vote to implement any of the ideas or programs that resulted from the plan. Nothing will be forced upon us, nothing is mandated, he said. We wold simply have a “toolkit” of things to use.

This view or attitude — that local elected officials will protect us from the harmful elements that will emerge from the plan — is dangerously naive. First, in his short time in office, Clendenin has regularly voted for expansions of government planning, power, and spending. He doesn’t stand out from most other council members, not even the Republican members (except for one), as they also regularly vote for these things.

Second, we know that after the plan is complete there will be the argument that since we have the plan, that since we spent three years and $2.2 million on the process, we might as well go ahead and implement it.

Then, there will be the future grants and undoubtedly increased local spending required to implement the plan.

It’s also naive of Clendenin to ask a professional planner like Yager questions about the desirability of planning. What answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

One of the things Wichita has agreed to do is to provide in-kind services to the planning consortium in the form of staff time. Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) asked a series of questions determining whether some work might go unperformed as staff members devote time to the planning process.

John Schlegel, Wichita director of planning, assured him no, that no work would go undone as a result of staff members taking on new responsibilities as part of the city’s in-kind contribution.

Two years ago a similar issue arose in Sedgwick County, where staff time was devoted to the oversight of the Intrust Bank Arena. At the time I reported this: “Sedgwick County Commissioner Dave Unruh told the Wichita Eagle that the county did not hire any new staff to perform work that has an estimated value of $2.6 million. My question is this: Is this evidence that there was $2.6 million of slack time in county employee’s schedules? How were they able to get this vast amount of work accomplished? Perhaps after the arena work that has occupied $2.6 million of staff time is complete, we could hire out this staff to earn revenue for the county, as it seems they will have time on their hands.”

A Wichita shocker

“Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.” So starts today’s Wall Street Journal Review & Outlook editorial (subscription required), taking notice of the special election last week in Wichita.

The editorial page of the Wall Street Journal is one of the most prominent voices for free markets and limited government in America. Over and over Journal editors expose crony capitalism and corporate welfare schemes, and they waste few words in condemning these harmful practices.

The three Republican members of the Wichita City Council who consider themselves fiscal conservatives but nonetheless voted for the corporate welfare that voters rejected — Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, southeast and south Wichita), and Jeff Longwell (district 5, west and northwest Wichita) — need to consider this a wake up call. These members, it should be noted, routinely vote in concert with the Democrats and liberals on the council.

For good measure, we should note that Sedgwick County Commission Republicans Dave Unruh and Jim Skelton routinely — but not always — vote for these crony capitalist measures.

The Wichita business community, headed by the Wichita Metro Chamber of Commerce endorsed this measure, too.

Hopefully this election will convince Wichita’s political and bureaucratic leaders that our economic development policies are not working. Combined with the startling findings by a Tax Foundation and KMPG study that finds Kansas lags near the bottom of the states in tax costs to business, the need for reform of our spending and taxing practices couldn’t be more evident. It is now up to our leaders to find within themselves the capability to change — or we all shall suffer.

Carl Brewer: State of the City for Wichita, 2012

Last night Wichita Mayor Carl Brewer delivered his annual State of the City Address. The text of the address may be read at State of the City Address.

In his speech, Brewer several times criticized those who act on “partisan agendas.” This is quite a remarkable statement for the mayor to make. Partisan usually refers to following a party line or platform. The mayor didn’t mention who he was criticizing, but it’s likely he was referring to myself and others like John Todd, Susan Estes, and Clinton Coen, as we appear regularly before the city council, usually in disagreement with the mayor and his policies.

What’s remarkable is that the council, even though it has four Republican members, almost always votes uniformly with Democrat Brewer and the other two politically liberal members of the council. The only exception is Michael O’Donnell (district 4, south and southwest Wichita), who is often in a minority of one voting in opposition to the other six. The other Republican members — Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, southeast and south Wichita), and Jeff Longwell (district 5, west and northwest Wichita) — routinely vote in concert with the Democrats and liberals on the council.

Remarkable also are the many members of the business community who appeal to the council for subsidies, increased government intervention, and more central planning from city hall: many of these are Republicans. Conservative Republicans, many have personally told me.

This describes a lack of partisanship. Most of the mayor’s critics, such as myself, are more accurately characterized not as acting along party lines, but as acting on their belief in economic freedom, free markets, and limited government.

Economic development

The mayor said that the city’s efforts in economic development had created “almost 1000 jobs.” While that sounds like a lot of jobs, that number deserves context.

According to estimates from the Kansas Department of Labor, the civilian labor force in the City of Wichita for December 2011 was 192,876, with 178,156 people at work. This means that the 1,000 jobs created accounted for from 0.52 percent to 0.56 percent of our city’s workforce, depending on the denominator used. This miniscule number is dwarfed by the normal ebb and flow of other economic activity.

The mayor did not mention the costs of creating these jobs. These costs have a negative economic impact on those who pay these costs. This means that economic activity — and jobs — are lost somewhere else in order to pay for the incentives.

The mayor’s plan going forward, in his words, is “We will incentivize new jobs.” But under the mayor’s leadership, this “active investor” policy has produced a very small number of jobs, year after year. Doubling down on the present course is not likely to do much better.

But there are those who disagree, despite all evidence to the contrary. Sedgwick County Commissioner Dave Unruh — a conservative Republican, for those keeping track of partisanship — recently called for a “deal-closing” fund of $100 million. A funding source of this magnitude would undoubtedly require a new tax. There are many who feel there should be a new sales tax devoted to economic development and downtown Wichita development. We should not be surprised to see such a proposal emerge, and not be surprised that civic and business institutions will support it.

The mayor repeatedly said that the city has been “courageous.” In reality, Wichita does about the same as everyone else. But there is a way Wichita could distinguish itself among cities.

Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business has made a convincing case that Kansas needs to move away from the “active investor” approach to economic development. This is where government decides which companies will receive special treatment, be it in the form of tax abatements, tax credits, grants, tax increment financing, community improvement district special taxes, and other forms of subsidy. Being an “active investor” has been the approach of the City of Wichita, and according to the mayor’s vision, this plan is to be stepped up in the future.

In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

Later, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Wichita and Kansas rely on for economic development: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

We need business and political leaders in Wichita and Kansas who can see beyond the simplistic imagery of a groundbreaking ceremony and can assess the effect of our failing economic development policies on the entire community. Unfortunately, we don’t have many of these — and Mayor Brewer leads in the opposite direction.

Critical of misinformation campaigns

In his speech, Brewer was critical of those who “spread misinformation.” He was not specific as to who he’s criticizing, and I wouldn’t expect him to name specific people in a speech like this.

But when the mayor criticizes people for being uninformed or misinformed, he needs to look first at himself. He and city staff also need to engage their critics and be responsive to requests for information.

As an example of misinformation, the mayor cited this evidence that city policies are working: “The proposed Ambassador Hotel with a 3-to-1 private to public investment ratio.”

The city arrived at this ratio by employing a very narrow definition of public investment. When tax credits from the State of Kansas and federal government as well as other sources of public subsidy are accounted for, the ratio drops to less than two to one.

It’s true that considering only the city’s artificially narrow definition of public funding, the ratio does reach three to one. But Wichitans also have to pay part of the costs of the tax credits and other subsidies.

The city has also been less than honest in its promotion of the cost-benefit ratio for the Ambassador Hotel project. The city officially cites a cost-benefit study produced by Wichita State University Center for Economic Development and Business Research. Part of that study produced a cost-benefit ratio of 2.63 to one, and that’s what the city uses as justification for its participation in the project.

But the full story of the costs and benefits of this project are contained in these numbers from the WSU analysis:

                                    ROI   Cost-benefit ratio
City Fiscal Impacts General Fund  163.2%        2.63
City Fiscal Impacts Debt Service  -17.2%        0.83
City Fiscal Impacts                -9.8%        0.90

WSU evaluated the impact of the Ambassador Hotel on the City of Wichita’s finances in two areas: The impact on the city’s General Fund, and separately on the city’s Debt Service Fund. The two were combined to produce the total fiscal impact, which is the bottom line in this table.

The City of Wichita cites only the positive impact to the General Fund figure. But the impact on the Debt Service fund is negative, and the impact in total is negative.

It’s true that the ROI and cost-benefit ratio for the General Fund indicate a positive investment return. But the cost of the Ambassador Hotel subsidy program to the General Fund is $290,895, while the cost to the Debt Service Fund is $7,077,831 — a cost factor 23 times as large.

Citizens ought to ask: Who is spreading misinformation?

It is difficult to get a response from city hall regarding questions like these. So far city economic development director Allen Bell has not agreed to meet with representatives of Tax Fairness for All Wichitans, a group opposed to the subsidies for the Ambassador Hotel. (I am part of that group.) The city and its allied economic development groups will not send representatives to participate in a public forum on this matter.

Simplistic answers

The mayor criticized those who “provide simplistic answers to very complicated challenges.” He may be — we don’t really know — referring to those like myself who advocate for free market solutions to problems rather than reliance on government. Certainly the mayor believes that government must act — “courageously” he said — to confront our problems.

A problem with the mayor’s plan for increased economic interventionism by government is the very nature of knowledge. In a recent issue of Cato Policy Report, Arnold King wrote:

As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.

When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.

Relying on free market solutions for economic growth and prosperity means trusting in the concept of spontaneous order. That takes courage. It requires faith in the values of human freedom and ingenuity rather than government control. It requires that government officials let go rather than grabbing tighter the reins of power.

Mayor Brewer, five of six city council members, and the city hall bureaucracy do not believe in these values. Wichita’s mayor is openly dismissive of economic freedom, free markets, and limited government, calling these principles of freedom and liberty “simplistic.” Instead, his government prefers crony capitalism and corporate welfare. This is the troubling message that emerges from Brewer’s State of the City address.

Open records, rights of Kansans disrespected at Wichita City Council

Yesterday the Wichita City Council decided to issue another contract to Go Wichita Convention and Visitors Bureau. I appeared to recommend that the council not issue this contract until an issue regarding the Kansas Open Records Act is resolved. Explanation of why Go Wichita should be considered a “public agency” and comply with records requests is found in Wichita open records issue buried.

A few notes from the meeting (video may be viewed here or at the end of this article):

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

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

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

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

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

John Rolfe, president of Go Wichita, told the council that he has offered to provide me “any information that is relevant” regarding Go Wichita. He mentioned the various financial reports his organization provides. He said he is unclear on the transparency question, and what isn’t transparent.

Michael O’Donnell (district 4, south and southwest Wichita) asked Rolfe if he had ever denied a KORA request. Rolfe replied no, perhaps not remembering that Go Wichita denied my request.

Misunderstanding the scope of KORA

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

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

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

Is the city overwhelmed with records requests?

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

In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I have made no requests this year to the city citing the open records act. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.

As to his concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is troubling. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent.

As for a workshop for city council on the topic of open records: This would probably be presented by Rebenstorf, and his attitude towards the open records law is known, and is not on the side of citizens.

O’Donnell made a motion that the contract be approved, but amended that Go Wichita will comply with the Kansas Open Records Act. That motion didn’t receive a second.

Wichita’s attitude towards citizens

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

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

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

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

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

Suing your government is costly. Citizens will realize their own taxpayer dollars are used against them.

Wichita’s political class

From June.

The discussion at yesterday’s Wichita City Council meeting provided an opportunity for citizens to discover the difference in the thinking of the political class and those who value limited government and capitalism.

At issue was Mid-Continent Instruments, Inc., which asked the city for a forgivable loan of $10,000. It received the same last week from Sedgwick County. According to city documents, the State of Kansas through its Department of Commerce is also contributing $503,055 in forgivable loans, sales tax exemptions, training grants, and tax credits.

At the city council meeting Clinton Coen, a young man who ran for city council earlier this year, spoke against this measure, which he called corporate welfare.

In response to Coen, Council Member James Clendenin (district 3, south and southeast Wichita) asked if we should ignore companies that want to do business here, or should we allow them to leave? Implicit in the question is that the threat dangled by Mid-Continent is real: that unless the city gives them $10,000, they will expand somewhere else. How citizens and council members feel about this issue largely depends on their perceived genuineness of this threat.

When Coen recommended that the city cut spending, Clendenin said “I can guarantee you, from what I have seen, this city government has cut a tremendous amount of spending.” When pressed by Coen for examples of cuts, he demurred. Clendenin also said that the $10,000 is needed to show the city’s commitment to the company.

Perhaps coming to the rescue of her younger and less experienced colleague, Council Member Janet Miller asked City Manager Bob Layton how much has been cut from the budget, and he replied “we’ve cut over $20 million in the general fund over three years.”

In saying that, Layton is using the language and mind-set of bureaucrats and politicians. In this world, it’s a cut if spending does not rise as fast as planned or hoped for. As you can see from the accompanying chart, Wichita general fund spending has not been cut in recent years. It has risen in each of the last three years, and plans are for it to keep rising.

Wichita general fund spending

This illustrates a divide between the thinking of the political class and regular people. Blurring the distinction between plans and reality lets politicians and bureaucrats present a fiscally responsible image — they cut the budget, after all — and increase spending at the same time. It’s a message that misinforms citizens about the important facts.

Miller also praised the return on investment the city receives for its spending on economic development, citing Wichita State University Center for Economic Development and Business Research and the cost-benefit calculations it performs. These calculations take the cost of providing the incentives and compare it to the returns the city and other governmental entities receive.

What is rarely mentioned, and what I think most people would be surprised to learn, is that the “returns” used in these calculations is manifested in the form of increased tax revenue. It’s not like in the private sector, where business firms attempt to increase their sales and profits by providing a product or service that people willingly buy. No, the city increases its revenue (we can’t call it profit) by collecting more taxes.

It’s another difference between the political class and everyone else: The political class craves tax revenue.

Aside from this, the cost-benefit calculations for the city don’t include the entire cost. The cost doesn’t include the county’s contribution, the majority of which comes from residents of its largest city, which is Wichita. Then, there’s the half-million in subsidy from the state, with a large portion of that paid for by the people of Wichita.

But even if you believe these calculations, there’s the problem of right-sizing the investment. If an investment of $10,000 has such glowing returns — last week Sedgwick County Commissioner Jim Skelton called the decision a “no-brainer” — why can’t we invest more? If we really believe this investment is good, we should wonder why the city council and county commission are so timid.

Since the applicant company is located in his district, Council Member Pete Meitzner (district 2, east Wichita), praised the company and the state’s incentives, and made a motion to approve the forgivable loan. All council members except Michael O’Donnell (district 4, south and southwest Wichita) voted yes.

Going forward

While the political class praises these subsidies and the companies that apply for them, not many are willing to confront the reality of the system we’re creating. Some, like O’Donnell and Sedgwick County Commissioner Richard Ranzau, have recognized that when government is seen as eager to grant these subsidies, it prompts other companies to apply. The lure of a subsidy may cause them to arrange their business affairs so as to conform — or appear to conform — to the guidelines government has for its various subsidy programs. Companies may do this without regard to underlying economic wisdom.

We also need to recognize that besides simple greed for public money, businesses have another reason to apply for these subsidies: If a publicly-traded company doesn’t seek them, its shareholders would wonder why the company didn’t exercise its fiduciary duty to do so. But this just perpetuates the system, and so increasing amounts of economic development fall under the direction of government programs.

While most people see this rise in corporate welfare as harmful — I call it a moral hazard — the political class is pleased with this arrangement. As Meitzner said in making his motion, he was proud that Wichita “won out” over the other city Mid-Continent Instruments considered moving to.

Another harmful effect of these actions is to create a reputation for having an uncompetitive business environment. Not only must businesses of all types pay for the cost of these subsidies, some face direct competition by a government-subsidized competitor. This is the situation Wichita-area hotels face as a result of the city granting millions in subsidy to a hotel developer to build a Fairfield Inn downtown.

Even those not in direct competition face increased costs as they attempt to hire labor, buy supplies, and seek access to capital in competition with government-subsidized firms. Could this uneven competitive landscape be a factor that business firms consider in deciding where to locate and invest?

We can expect to see more government intervention in economic development and more corporate welfare. Former council member Sue Schlapp in April took a job with the Kansas Department of Commerce. Her job title is “senior constituent liaison,” which I think can be better described as “customer service agent for the corporate welfare state.” Her office is in Wichita city hall.

Increasingly we see politicians and bureaucrats making decisions based on incorrect and misleading information, such as claiming that the city’s general fund budget has been cut when spending has increased. Sometimes they are fed incorrect information, as in the case of a presentation at Sedgwick County Commission that bordered on fraudulent.

Sometimes, I think, officeholders just don’t care. It’s easiest to go along with the flow and not raise ripples. They participate in groundbreakings and get their photograph in the newspaper and on television that way. Which brings up an important question: why do none of our city’s mainstream media outlets report on these matters?

Wichita City Council campaign contributions and Douglas Place/Ambassador Hotel

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.

Looking at the candidates these people contribute to, we find that often there’s no commonality to the political goals and ideals of the candidates. Some contribute equally to liberal and conservative council members. At first glance, it’s puzzling.

But 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.

All told, parties associated with the proposed Douglas Place/Ambassador Hotel project contributed at least $24,500 to current city council members during their most recent campaigns. This is split between two groups of people: executives associated with Key Construction and their spouses, and David Burk and his wife.

Those associated with Key Construction contributed $16,500, and the Burks contributed $8,000.

At a recent city council meeting, Mayor Brewer, along with council members Janet Miller and Lavonta Williams expressed varying degrees of outrage that people would link their acceptance of campaign contributions with their votes and conduct as officeholders.

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

Burk and the others must be expecting something from these campaign contributions. There’s no other reasonable explanation. Candidates and officeholders who accept these contributions know that Burk and his business partners are likely to appear before the council asking for money. If they find this distasteful or repugnant, they could simply refuse to accept Burk’s contributions, as well as those from people associated with Key Construction. But they don’t.

This is what writers like Randal O’Toole mean when he wrote “TIF puts city officials on the verge of corruption, favoring some developers and property owners over others.”

Some states and cities have “pay-to-play” laws which govern conduct of officeholders who have accepted campaign contributions from those seeking government contracts. An example is a charter provision of the city of Santa Ana, in Orange County, California, which 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.”

If Wichita had such a law, the city council couldn’t muster a quorum of its members to vote on the Douglas Place project, so pervasive are the campaign contributions.

Contributions by Douglas Place participants

In Wichita city elections, individuals may contribute up to $500 to candidates, once during the primary election and again during the general election. As you can see in this table complied from Wichita City Council campaign finance reports, spouses often contribute as well. So it’s not uncommon to see the David and DJ Burk family contribute $2,000 to a candidate for their primary and general election campaigns. That’s a significant sum for a city council district election campaign cycle. Click here for a compilation of campaign contributions made by those associated with the Douglas Place/Ambassador Hotel project.

Council Member Jeff Longwell (district 5, west and northwest Wichita), in his second term as council member and with his heart set on becoming the next mayor, leads the pack in accepting campaign contributions from parties associated with the Douglas Place project. For his most recent election, he received $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife. Total from parties associated with the Douglas Place project: $6,000.

Council Member Lavonta Williams (district 1, northeast Wichita), who is also vice mayor, received $5,000 from parties associated with Douglas Place/Ambassador Hotel: $3,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

Wichita Mayor Carl Brewer received $5,000 from parties associated with Douglas Place/Ambassador Hotel: $4,500 from parties associated with Key Construction, and $500 DJ Burk, David Burk’s wife.

Council Member Janet Miller (district 6, north central Wichita) received $3,500 during her 2009 election campaign from parties associated with Douglas Place/Ambassador Hotel: $1,500 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

For his 2011 election campaign, newly-elected Council Member Pete Meitzner (district 2, east Wichita) received $3,500 from parties associated with Douglas Place/Ambassador Hotel: $2,500 from parties associated with Key Construction, and $1,000 from David Burk and his wife.

For his 2011 election campaign, newly-elected Council Member James Clendenin (district 3, southeast and south Wichita) received $1,500 from parties associated with Douglas Place/Ambassador Hotel: $1,000 from parties associated with Key Construction, and $500 from David Burk and his wife.

This article has been updated to include information from campaign finance reports filed in January 2012.

At Wichita City Council, facts are in dispute

Some Wichita City Council members, including Mayor Carl Brewer criticize people who speak at council meetings for using inaccurate information. Although most citizens who speak are willing to take questions at the time they present their testimony, most council members will not engage in dialog with them, instead choosing to level their criticism at a time when the speakers are not able to defend themselves.

So let’s take a look at some of the statements made by city council members at the September 13th meeting, where the council approved by a six to one vote a package of incentives for the Douglas Place project, a downtown hotel.

James Clendenin

At the September 13th meeting, James Clendenin (district 3, south and southeast Wichita) said “I heard a lot of misinformation, and I heard a lot of good information.” He seemed to be most interested in the jobs that the hotel will create. Referring to the contention that the hotel will create 100 jobs, he said: “That’s all people ask me about — how many jobs. Just tell me jobs. I want to know jobs — jobs, jobs, jobs — people want to know jobs. I know that when Old Town was started 20 years ago, no jobs where in that part of the city. 20 years later we have jobs. … But I see people employed 20 years later that would never would have been employed unless a developer stepped up.”

I can understand the concern for jobs and how council members want to be seen doing things that they believe will create jobs. But it’s difficult to see how this hotel will create new jobs, except perhaps on the several times each year that the hotel might be used to support the larger conventions the city hopes to draw.

Instead, it’s much more likely that the hotel will simply draw most of its customers from the pool of people already planning to come to Wichita. And this hotel will have a big advantage in competing for these existing customers, especially those looking for a high-end hotel. As reported in the Wichita Eagle, the hotel developers said that without the city subsidy, the rooms would cost $250 per night. Their plans, however, are to offer the rooms for $150.

So with the help of taxpayers, the developers get to offer a $250 product for $150. That’s quite a competitive boost. My research shows that currently there are four downtown Wichita hotels offering rooms at that rate or higher. I wonder how they will feel when undercut by a taxpayer-subsidized competitor? (First, the owners of these hotels will have to realize that they, too, have received substantial subsidy.)

As to the impact of subsidies like Tax increment financing, or TIF: The important paper Tax Increment Financing: A Tool for Local Economic Development by Richard F. Dye and David F. Merriman comes to these conclusions:

If the use of tax increment financing stimulates economic development, there should be a positive relationship between TIF adoption and overall growth in municipalities. This did not occur. If, on the other hand, TIF merely moves capital around within a municipality, there should be no relationship between TIF adoption and growth. What we find, however, is a negative relationship. Municipalities that use TIF do worse.

We find evidence that the non-TIF areas of municipalities that use TIF grow no more rapidly, and perhaps more slowly, than similar municipalities that do not use TIF. (emphasis added)

Later, the paper concluded: “TIF subsidies might be helping growth within the TIF district, but they are hurting growth outside the district by a larger amount.”

This paper addresses economic growth, which is not, strictly speaking, equivalent to jobs, although the two are closely related. A paper that does address the impact of TIF on jobs is from Paul F. Byrne of Washburn University. The title of the report is Does Tax Increment Financing Deliver on Its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth, and in the abstract we find this conclusion regarding the impact of TIF on jobs:

Increasingly, municipal leaders justify their use of tax increment financing (TIF) by touting its role in improving municipal employment. However, empirical studies on TIF have primarily examined TIF’s impact on property values, ignoring the claim that serves as the primary justification for its use. This article addresses the claim by examining the impact of TIF adoption on municipal employment growth in Illinois, looking for both general impact and impact specific to the type of development supported. Results find no general impact of TIF use on employment. However, findings suggest that TIF districts supporting industrial development may have a positive effect on municipal employment, whereas TIF districts supporting retail development have a negative effect on municipal employment. These results are consistent with industrial TIF districts capturing employment that would have otherwise occurred outside of the adopting municipality and retail TIF districts shifting employment within the municipality to more labor-efficient retailers within the TIF district. (emphasis added)

I would ask that council member Clendenin and the others read research like this before they come to their conclusions.

Furthermore, we might ask the hotel developers if they are going to run their hotel as a jobs program, or are they going to seek to minimize the use of labor, employing only as much as is required to run the hotel the way they want? In a competitive marketplace, this is what businesses are forced to do, if they want to stay in business.

Finally, the contention of Clendenin that there are people who are employed only because of Old Town is laughable.

Pete Meitzner

Newly-elected council member Pete Meitzner (district 2, east Wichita) seemed impressed and secure in that the hotel developers have agreed to personally guarantee any shortfall in property tax revenue below what is necessary to cover the payments on the bonds the city is issuing under tax increment financing.

This guarantee is quite unlikely to ever be tapped, and is an example of offering something at little risk and no cost to the developers. Then, gullible city council members lap it up.

Here’s how the arithmetic works: According to city documents, the projected debt service required to pay the TIF bonds in 2016 is $340,000. For the same year, the projected revenue from the hotel’s property tax that is applicable to the TIF bond repayments is $262,000. (Remember these property taxes are taxes the hotel must pay, no matter what they’re used for.)

For the hotel owners to become in a position where they would have to pay to cover a shortfall, the value of the hotel would have to drop by 23 percent. That’s not likely to happen, and if something like that did, it would be a signal of severe problems across the entire city, or country, for that matter.

Jeff Longwell

Speaking from the bench when he could not be rebutted by citizens, Council Member Jeff Longwell criticized citizens who testified, saying they are using “wrong numbers.” Longwell’s criticisms deserve scrutiny.

During the council meeting, there were several ratios presented as a way to evaluate the hotel, and Longwell confused them. He said: “You can argue if it’s 6 to 1, or 5 to 1, but I’ll tell you, even if it’s as low as 2.6 to 1 return, folks, that’s a great investment.”

The 6 to 1 ratio is the ratio of private investment to public investment, as calculated by the city.

The 2.6 to 1 return is a payback to the city, based on expected increased tax revenues compared to the city’s cost. This is calculated by the Wichita State University Center for Economic Development and Business Research.

The 6 to 1 ratio is based on balance sheet concepts. It refers to assets.

The 2.6 to 1 ratio is a calculation from an income statement. It refers to income relative to expenses.

The only conclusion to draw is that Longwell is sorely confused. Perhaps worse, Allen Bell, Wichita’s Director of Urban Development had just explained these numbers in response to a question by Meitzner. But Bell didn’t correct Longwell. Neither did the city manager, who undoubtedly knows the difference between the two sets of numbers.

Besides this, the 6 to 1 ratio is calculated using an extremely narrow view of the city’s investment in the project, and an overly expansive assessment of the developer’s investment. It ignores many subsidies being provided to the developers, some at city expense, and also at the expense of state and federal taxpayers.

Further, for that ratio to make any sense, you have to assume city ownership of the hotel. “We” — meaning the city of Wichita — don’t own the “6″ part of the ratio. The hotel developers do. It’s not a public asset.

Janet Miller

Like Clendenin and Longwell, Council Member Janet Miller (district 6, north central Wichita) criticized the inaccurate information presented by citizens: “A lot of the information that was shared this morning was not accurate. … I’m not going to be able to address everything.”

Here’s an example of the reasoning of Miller. Referring to the issue of tax money being diverted to the Douglas Place project, she said: “Other taxes, such as the historic and federal tax credits are not property taxes, they’re not sales taxes, those are credits toward income taxes. So unless you’re paying the income taxes those are not your taxes.”

Here Miller is ignoring the effect of tax credits on the budgets of states and the federal government. Tax credits reduce the revenue of the issuing body by the amount of the credit. So when the state of Kansas issues $3,800,000 in tax credits to the Douglas Place project, it reduces revenue to the state by that same amount.

Now if the state were to reduce its spending by that same amount, specifically based on the issuance of this tax credit, we’d be left with no impact on the state’s budget.

But the state isn’t going to to that — it never has. So taxpayers across the state must make up the difference — directly contradicting Miller’s contention that “those are not your taxes.”

The same reasoning applies to the federal tax credits of $3,500,000 that this project is seeking.

Miller also contended that the guest taxes paid by this hotel are “not your taxes.” According to the city’s budget, the purpose of the Tourism and Convention Fund, which is funded by the guest tax, is to “support tourism and convention, infrastructure, and promotion of the City.” Its outlined priorities are to be “debt service for tourism and convention facilities, operational deficit subsidies, and care and maintenance of Century II.”

So, yes, I would say that the guest tax is “our” tax. There are those who are asking for millions to renovate Century II. Since this hotel’s guest tax — most of it — will not be going to that goal, someone else has to pay.

Further, to the extent that the new hotel draws guests from other hotels, that guest tax is being diverted away from the Tourism and Convention Fund. (Of course, we have to remember that many other hotels have a similar deal to benefit from their guest taxes. Last year the city gifted the Fairfield Inn & Suites Wichita Downtown, part of the heavily subsidized WaterWalk project, $2,500,000, to be paid back by the hotel’s guest tax receipts.)

Miller also took issue with those who contend that the original plan called for Key Construction to build the parking garage: “While there was a general contractor, and that part of the project would not have been bid out, the rest of it would have been bid thorough the city’s process. So the vast majority, except for about 6 percent of the project, would have been bid out through the city’s bid project.”

Miller is specifically contradicted by the letter of intent that she voted for at the August 9th meeting of the council. The letter states: “Douglas Place LLC, will acquire and rehabilitate the Douglas Building and will construct the parking garage and urban park.”

Does she think that the principals of Key Construction — who are part of the development team of the Douglas Place project, and who have made heavy campaign contributions to Miller and others — would let someone else build the garage?

Furthermore, at the same meeting City Attorney Gary Rebenstorf said it was the developer’s preference that the garage be built without competitive bidding — again contradicting Miller’s contention that the garage would be bid on.

And if we take Miller’s statement at face value — “the vast majority, except for about 6 percent of the project, would have been bid out” — does this imply that 94 percent of the project will be bid out? This would imply that the hotel itself would be placed for public bid, and I don’t think there’s been any consideration of that.

Miller also addressed the issue of special assessment financing. That is part of the Douglas Place project, with $1,500,000 to be used for facade improvement and lead paint and asbestos removal. Miller said: “Just as a reminder: The facade improvement and asbestos removal expenses, all of that — those dollars are being repaid through special assessments. For those of you who are critical of special assessment financing, I would encourage you to look at your annual tax bill and see if it says special assessment on there. If it does, we have loaned your developer money to put in public improvements around your property. There’s a very large share of Wichita’s outstanding debt that is developers’ specials. So if we want to be critical of developers specials, that’s gonna be a really big conversation that will include all the housing developers in this city and how those dollars are lent and repaid over years.”

There’s a big distinction between the way special assessment financing is used for new development as compared to this project. On new developments, special assessment financing is used to pay for public improvements like streets, sewers, water mains, and storm water drainage. After they are built, these assets are then owned by the city. They become city assets, but were paid for by the developer.

That’s not going to happen with this hotel. Its owners will not deed over the building’s facade to the city. It will remain a private asset.

Furthermore, in new development, the assets that special assessment financing is used to pay for support development that generally ends up on the tax roles, providing the tax revenue stream that city council members promote as good. But not so with this hotel. Being in a TIF district, its property taxes — except for 30 percent — do not benefit the city, as they are used to benefit the developers.

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 and its political class

The discussion at yesterday’s Wichita City Council meeting provided an opportunity for citizens to discover the difference in the thinking of the political class and those who value limited government and capitalism.

At issue was Mid-Continent Instruments, Inc., which asked the city for a forgivable loan of $10,000. It received the same last week from Sedgwick County. According to city documents, the State of Kansas through its Department of Commerce is also contributing $503,055 in forgivable loans, sales tax exemptions, training grants, and tax credits.

At the city council meeting Clinton Coen, a young man who ran for city council earlier this year, spoke against this measure, which he called corporate welfare.

In response to Coen, Council Member James Clendenin (district 3, south and southeast Wichita) asked if we should ignore companies that want to do business here, or should we allow them to leave? Implicit in the question is that the threat dangled by Mid-Continent is real: that unless the city gives them $10,000, they will expand somewhere else. How citizens and council members feel about this issue largely depends on their perceived genuineness of this threat.

When Coen recommended that the city cut spending, Clendenin said “I can guarantee you, from what I have seen, this city government has cut a tremendous amount of spending.” When pressed by Coen for examples of cuts, he demurred. Clendenin also said that the $10,000 is needed to show the city’s commitment to the company.

Perhaps coming to the rescue of her younger and less experienced colleague, Council Member Janet Miller asked City Manager Bob Layton how much has been cut from the budget, and he replied “we’ve cut over $20 million in the general fund over three years.”

In saying that, Layton is using the language and mind-set of bureaucrats and politicians. In this world, it’s a cut if spending does not rise as fast as planned or hoped for. As you can see from the accompanying chart, Wichita general fund spending has not been cut in recent years. It has risen in each of the last three years, and plans are for it to keep rising.

Wichita general fund spending

This illustrates a divide between the thinking of the political class and regular people. Blurring the distinction between plans and reality lets politicians and bureaucrats present a fiscally responsible image — they cut the budget, after all — and increase spending at the same time. It’s a message that misinforms citizens about the important facts.

Miller also praised the return on investment the city receives for its spending on economic development, citing Wichita State University Center for Economic Development and Business Research and the cost-benefit calculations it performs. These calculations take the cost of providing the incentives and compare it to the returns the city and other governmental entities receive.

What is rarely mentioned, and what I think most people would be surprised to learn, is that the “returns” used in these calculations is manifested in the form of increased tax revenue. It’s not like in the private sector, where business firms attempt to increase their sales and profits by providing a product or service that people willingly buy. No, the city increases its revenue (we can’t call it profit) by collecting more taxes.

It’s another difference between the political class and everyone else: The political class craves tax revenue.

Aside from this, the cost-benefit calculations for the city don’t include the entire cost. The cost doesn’t include the county’s contribution, the majority of which comes from residents of its largest city, which is Wichita. Then, there’s the half-million in subsidy from the state, with a large portion of that paid for by the people of Wichita.

But even if you believe these calculations, there’s the problem of right-sizing the investment. If an investment of $10,000 has such glowing returns — last week Sedgwick County Commissioner Jim Skelton called the decision a “no-brainer” — why can’t we invest more? If we really believe this investment is good, we should wonder why the city council and county commission are so timid.

Since the applicant company is located in his district, Council Member Pete Meitzner (district 2, east Wichita), praised the company and the state’s incentives, and made a motion to approve the forgivable loan. All council members except Michael O’Donnell (district 4, south and southwest Wichita) voted yes.

Going forward

While the political class praises these subsidies and the companies that apply for them, not many are willing to confront the reality of the system we’re creating. Some, like O’Donnell and Sedgwick County Commissioner Richard Ranzau, have recognized that when government is seen as eager to grant these subsidies, it prompts other companies to apply. The lure of a subsidy may cause them to arrange their business affairs so as to conform — or appear to conform — to the guidelines government has for its various subsidy programs. Companies may do this without regard to underlying economic wisdom.

We also need to recognize that besides simple greed for public money, businesses have another reason to apply for these subsidies: If a publicly-traded company doesn’t seek them, its shareholders would wonder why the company didn’t exercise its fiduciary duty to do so. But this just perpetuates the system, and so increasing amounts of economic development fall under the direction of government programs.

While most people see this rise in corporate welfare as harmful — I call it a moral hazard — the political class is pleased with this arrangement. As Meitzner said in making his motion, he was proud that Wichita “won out” over the other city Mid-Continent Instruments considered moving to.

Another harmful effect of these actions is to create a reputation for having an uncompetitive business environment. Not only must businesses of all types pay for the cost of these subsidies, some face direct competition by a government-subsidized competitor. This is the situation Wichita-area hotels face as a result of the city granting millions in subsidy to a hotel developer to build a Fairfield Inn downtown.

Even those not in direct competition face increased costs as they attempt to hire labor, buy supplies, and seek access to capital in competition with government-subsidized firms. Could this uneven competitive landscape be a factor that business firms consider in deciding where to locate and invest?

We can expect to see more government intervention in economic development and more corporate welfare. Former council member Sue Schlapp in April took a job with the Kansas Department of Commerce. Her job title is “senior constituent liaison,” which I think can be better described as “customer service agent for the corporate welfare state.” Her office is in Wichita city hall.

Increasingly we see politicians and bureaucrats making decisions based on incorrect and misleading information, such as claiming that the city’s general fund budget has been cut when spending has increased. Sometimes they are fed incorrect information, as in the case of a presentation at Sedgwick County Commission that bordered on fraudulent.

Sometimes, I think, officeholders just don’t care. It’s easiest to go along with the flow and not raise ripples. They participate in groundbreakings and get their photograph in the newspaper and on television that way. Which brings up an important question: why do none of our city’s mainstream media outlets report on these matters?