Voice For Liberty

Tag: Jim Skelton

Sedgwick County Commissioner and former Wichita City Council Member Jim Skelton

  • Education gap on Wichita City Council

    Education gap on Wichita City Council

    Currently there is discussion in Wichita on whether higher education is valued by residents. Following, from April 2011, a look at the educational achievement of the Wichita City Council. The members of the council cited below were Lavonta Williams, Sue Schlapp, Jim Skelton, Paul Gray, Jeff Longwell, and Janet Miller. Carl Brewer was mayor.

    Before Jim Skelton left the council in January, none of the four men serving on the Wichita City Council had completed a college degree. The three women serving on the council set a better example, with all three holding college degrees.

    Of the candidates running in next week’s election for four council seats and the office of mayor, less than half hold college degrees.

    Is it necessary to complete college in order to serve in an office like mayor or city council? Apparently, none of the four men who held these offices without a degree thought so. The two running to retain their present positions — Mayor Carl Brewer and council member Jeff Longwell (district 5, west and northwest Wichita) — evidently don’t think so, or they would not be running again.

    But we tell young people that college holds the key to success. We encourage schoolchildren to consider college and to take a rigorous high school curriculum in order to prepare for it. We encourage families to save for college. Our region’s economic development agency promotes the number of people with college or advanced degrees. We promote our colleges and universities as a factor that distinguishes Wichita. We hope that our elected officials will set an example we want young people to follow.

    Once in office, we ask our city elected officials to attempt to grasp and understand complex sets of financial data, working with a budget of about half a billion dollars for the City of Wichita. We hope that they will be able to consider large and weighty issues such as the role of government in a free society. Members of the professional management staff — bureaucrats — that manage the city, county, and state are generally required to hold college degrees.

    The irony is that elected officials often are highly reliant on the bureaucratic staff for information, data, and advice, and this professional bureaucracy is often highly educated. Does this imbalance create problems?

    Elected officials compared to regular people

    Amazingly, it turns out that elected officials, as a group, are less knowledgeable about civics than the general population. That’s the finding of Intercollegiate Studies Institute, which surveyed Americans and their knowledge of civics in 2008. After analyzing the data, ISI concluded: “Simply put, the more you know about American government, history, and economics the less likely you are to pursue and win elective office.”

  • Wichita being sued, alleging improper handling of bond repayment savings

    Wichita being sued, alleging improper handling of bond repayment savings

    A lawsuit claims that when the City of Wichita refinanced its special assessment bonds, it should have passed on the savings to the affected taxpayers, and it did not do that.

    A lawsuit filed in Sedgwick County District Court charges that the City of Wichita improperly handled the savings realized when it refinanced special assessment bonds at a lower interest rate. The case is 2018-CV-001567-CF, filed on July 13, 2018, and available here.

    The suit names David L. Snodgrass and Leslie J. Snodgrass as plaintiffs, and a long list of defendants, namely:

    • The City of Wichita, Kansas
    • Wichita City Manager Robert Layton
    • Wichita Finance Director Shawn Henning and Former Wichita Finance Director Kelly Carpenter
    • Wichita City Clerk Karen Sublett
    • Wichita Mayor Jeff Longwell and former Wichita Mayor Carl Brewer
    • Current Wichita City Councilmembers Brandon Johnson, Pete Meitzner, James Clendenin, Jeff Blubaugh, Bryan Frye, and Cindy Claycomb
    • Former Wichita City Councilmembers Lavonta Williams, Janet Miller, Sue Schlapp, Paul Gray, Jeff Longwell, Jim Skelton, and Michael O’Donnell
    • Springsted Incorporated
    • Gilmore And Bell, A Professional Corporation
    • Kutak Rock, LLP
    • Sedgwick County Treasurer Linda Kizzire

    The suit asks for a class to be created consisting of “all other affected land owners paying excess special assessments,” which would, undoubtedly, be many thousands of land owners. No specific amount of relief is requested.

    The suit’s basis

    The city borrows money by issuing bonds to fund improvements to (generally) new neighborhoods. These bonds pay for things like residential streets, water pipes, and sewer lines. The debt service for these bonds, that is, the money needed to make the bond payments, is charged to benefitting property owners in the form of special assessment taxes, often called “specials.” These specials are separate from the general property taxes that are charged to all property.

    General property taxes are based on a property’s assessed value multiplied by a mill levy rate. Specials, however, are based on the cost of the infrastructure and the payments needed to retire the debt. This amount is determined at the time bonds are sold and the repayment schedule is established. (Bond payments depend on the amount borrowed, the length of the repayment period, and the interest rate. All this is known at the time the bonds are issued.)

    These specials usually last 15 years, and after paid, no longer appear on a property’s tax bill. Sometimes special assessments are prepaid.

    What the city did, and didn’t do, according to plaintiffs

    During the last decade, interest rates on long-term bonds generally fell. In response, the city issued refunding bonds. These bonds took advantage of low interest rates by paying off old bonds that had higher interest rates, replacing them with bonds with lower interest rates. The lawsuit alleges that since 2009, the city has issued $216 million in refunding bonds saving $60.2 million, according to city documents cited in the lawsuit. The suit does not specify how much of this savings is attributed to special assessment bonds.

    So the city refinanced special assessment debt at a lower rate, reducing the cost of the debt. That’s good. Homeowners often do this when mortgage rates are low, and it’s good that the city does this too.

    The problem, according to the lawsuit, is that some of the refinanced debt was special assessment debt. The lawsuit contends that, based on Kansas law, the city should have passed on the savings to the property owners that were paying off this special assessment debt. Instead, says the suit, “the City of Wichita transferred the excess special assessment money paid by affected Wichita taxpayers to support its general fund and/or other municipal funds.” In other words, the city spent the savings on other things, when it should have directed the savings to land owners who were paying the special taxes.

    Plaintiffs allege that the conduct of the city and its advisors constitutes fraud against those paying special assessment taxes:

    The fraudulent actions of Defendant City of Wichita, along with the other Wichita Defendants, and Defendants Springsted, Gilmore and Bell and Kutak Rock resulted in the misappropriation of millions of dollars of “saved” tax payments that should have been returned to Plaintiffs along with all other affected land owners paying special assessments levied under the General Improvement and Assessment Laws of the State of Kansas.

    Further, the suit alleges that the liability faced by many of the defendants is personal:

    Because the Wichita Defendants actively participated in the fraud practiced by Defendant City of Wichita, they cannot escape personal liability for the fraudulent actions of the City of Wichita upon Plaintiffs and all other affected land owners paying special assessments.

    While there is one named party as plaintiff, the suit alleges that all similarly situated persons have been harmed, and so a class action is appropriate. That would be all property owners who have paid special assessment taxes to Wichita since 2009, including myself.

  • A Wichita Shocker, redux

    A Wichita Shocker, redux

    Based on events in Wichita, the Wall Street Journal wrote “What Americans seem to want most from government these days is equal treatment. They increasingly realize that powerful government nearly always helps the powerful …” But Wichita’s elites don’t seem to understand this.

    A Wichita ShockerThree years ago from today the Wall Street Journal noted something it thought remarkable: a “voter revolt” in Wichita. Citizens overturned a decision by the Wichita City Council regarding an economic development incentive awarded to a downtown hotel. It was the ninth layer of subsidy for the hotel, and because of our laws, it was the only subsidy that citizens could contest through a referendum process.

    In its op-ed, the Journal wrote:

    The elites are stunned, but they shouldn’t be. The core issue is fairness — and not of the soak-the-rich kind that President Obama practices. One of the leaders of the opposition, Derrick Sontag, director of Americans for Prosperity in Kansas, says that what infuriated voters was the veneer of “political cronyism.”

    What Americans seem to want most from government these days is equal treatment. They increasingly realize that powerful government nearly always helps the powerful, whether the beneficiaries are a union that can carve a sweet deal as part of an auto bailout or corporations that can hire lobbyists to write a tax loophole.

    The “elites” referred to include the Wichita Metro Chamber of Commerce, the political class, and the city newspaper. Since then, the influence of these elites has declined. Last year all three campaigned for a sales tax increase in Wichita, but voters rejected it by a large margin. It seems that voters are increasingly aware of the cronyism of the elites and the harm it causes the Wichita-area economy.

    Last year as part of the campaign for the higher sales tax the Wichita Chamber admitted that Wichita lags in job creation. The other elites agreed. But none took responsibility for having managed the Wichita economy into the dumpster. Even today the local economic development agency — which is a subsidiary of the Wichita Chamber — seeks to shift blame instead of realizing the need for reform. The city council still layers on the levels of subsidy for its cronies.

    Following, from March 2012:

    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.

  • Wichita drops taxpayer protection clause

    Wichita drops taxpayer protection clause

    To protect itself against self-defeating appeals of property valuation in tax increment financing districts, the City of Wichita once included a protective clause in developer agreements. But this consideration is not present in two proposed agreements.

    When the Wichita Eagle reported that a downtown developer represented himself as an agent of the city in order to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, city officials were not pleased.

    The property in question is located in a tax increment financing district. Incremental tax revenue from the property is earmarked for paying off bonds that were issued for the property’s benefit. If tax revenue is reduced from original projections — perhaps because the tax valuation was appealed — the tax revenue might be insufficient to pay the bonds. City taxpayers are then on the hook.

    This is what happened, according to later Eagle reporting: “A special tax district formed by Wichita to assist in the development of the Old Town cinema project can’t cover its debt payments because the developers — including the city itself — petitioned a state court and got their property taxes reduced, records show.”

    This week the Wichita city council considers approving a project plan for part of a TIF district in Old Town, the Mosley Avenue Project. It’s contained within the Old Town Cinema Redevelopment District, a tax increment financing (TIF) district. The developer is Mosley Investments, LLC, a development group comprised of David Burk and Steve Barrett, according to city documents.

    The involvement of Burk and Barrett is problematic. The downtown developer who the Wichita Eagle said represented himself as an agent of the city without the city’s knowledge or consent was David Burk. Barrett was a partner on the project.

    To protect itself when Burk was involved in another TIF-financed project in 2011, the city added language to the developer agreement that prevented appeals of tax valuation, although there was a large loophole included.

    But for the Mosley project, there is no such language prohibiting appeals of tax valuation. For another TIF project plan the city will consider the same day, the Union Station project, there is also no such language.

    A question posed to city hall but not yet answered is this: Is lack of taxpayer protection an oversight, or is it by design?

    More importantly, who in city hall looking out for the interests of taxpayers? Could the generous campaign contributions of Burk and his wife be a factor in this missing taxpayer protection? Or the generous contributions of Key Construction and its executives? (Key Construction is frequently used by Burk.)

    Past action by Burk on property in TIF district

    In February 2010 the Wichita Eagle reported on the activities of Burk with regard to property he owns in Old Town. Citizens reading these articles might have been alarmed at his actions. Certainly some city hall politicians and bureaucrats were.

    The opening sentence of the Wichita Eagle article (Developer appealed taxes on city-owned property) raises the main allegation against Burk: “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

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

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

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

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

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

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

    In response to Burk’s action, the city included a special provision in the agreement for a project in which Burk was involved the next year. This project is the Ambassador Hotel, known at the time as the Douglas Place project. This project is also located within a TIF district and receives the benefit of TIF financing. City documents explained that protests of taxes would not be allowed, but there is a loophole: “In addition, the Developer agrees not to protest the taxes on the building unless the valuation reflects a capitalization rate that exceeds the average rate for boutique hotels as determined by a nationally-recognized hotel appraisal firm.” (Wichita City Council agenda packet, September 13, 2011, page 26.) The agreement and the loophole were expressed in more detail in the agreement on page 138 of the same document.

    At the time, city manager Layton told the Wichita Eagle that taxpayers would be protected in future deals: “We’ve taken several safeguards based on the city’s development experience over the last few years, as well as the advice from Goody Clancy and their business partners based on their experience.” He added “We think we’re set to encourage downtown development in a way that provides protection to the taxpayer.”

    Now this week Dave Burk comes again before the city council asking for TIF money. But there appears to be nothing in the current agreement to protect taxpayers, as there was in the Douglas Place agreement.

    Curiously, Burk is not mentioned by name in the documents prepared for the public hearing on January 6.

  • Sedgwick County elections: Commissioners

    Sedgwick County elections: Commissioners

    In Sedgwick County, two fiscally conservative commission candidates prevailed.

    This year three of the five positions on the Sedgwick County Board of Commissioners are up for election. Unlike the Wichita city Council, Sedgwick County commissioners run as members of a party, and compete in both primary and general elections. There can be independent and third-party candidates too. This year for one of the Sedgwick County commission districts the incumbent Republican ran unopposed. But in two other districts, there were spirited contests.

    Sedgwick County Commission, district 4In district four, which covers north-central and northwest Wichita, Maize, Valley Center, and Park City, incumbent Richard Ranzau was challenged by Carolyn McGinn. She had held this position in the past, and then served in the Kansas Senate, an office she still holds. Ranzau is well known — notorious, we might say — for his tough line on spending taxpayer dollars. The McGinn campaign had about twice as much money to spend. A lot of that came from the people we know as Wichita’s crony capitalists, that is, people and companies who actively seek handouts from government. The Wichita Metro Chamber of Commerce endorsed McGinn. Now, you may think of your local chamber of commerce as pro-business. And, the chamber is pro-business, no doubt about it. But pro-business is not the same as pro-capitalism. Being pro-business is not the same as being in favor of economic freedom. Being pro-business is not the same as supporting a limited, constitutional, government that protects our freedoms and property rights.

    I want to stress this point. Just this week Wichita’s own Charles Koch wrote an op-ed for USA Today. After expressing concern for the weak economy and its effect on workers, he offered a plan forward. He wrote “First, we need to encourage principled entrepreneurship. Companies should earn profits by creating value for customers and acting with integrity, the opposite of today’s rampant cronyism.”

    Concluding his article, Koch wrote: “Our government’s decades-long, top-down approach to job creation has failed. Its policies have made our problems worse, leaving tens of millions chronically un- or underemployed, millions of whom have given up ever finding meaningful work. In doing so, our government has not only thwarted real job creation, it also has reduced the supply and quality of goods and services that make people’s lives better and undermined the culture required to sustain a free society. When it comes to creating opportunities for all, we can do much better. It’s time to let people seek opportunities that best suit their talents, for businesses to forsake cronyism, and for government to get out of the way.”

    While Charles Koch was writing primarily about the United States government, the same principles apply to local government. And Wichita’s cronies — those who seek profits through politicians and bureaucrats rather than customers — they lined up behind Carolyn McGinn in a big way. By using their generous funding, she ran a negative campaign against Richard Ranzau. He forcefully and truthfully responded to her negative ads, and I’m pleased to say that I helped in that effort.

    What was the result of the election? Ranzau won with 54 percent of the vote. He now moves on to face Democrat Melody McRae-Miller in the November general election. She held this county commission seat before McGinn, and she also served in the Kansas legislature, in the House of Representatives.

    Sedgwick County Commission, district 5There was also a contest in district 5, which is Derby and parts of southeast Wichita. The one-term incumbent Jim Skelton declined to run for re-election. The two Republican candidates were Jim Howell and Dion Avello. Howell has represented parts of Derby in the Kansas House of Representatives for four years. Avello has been mayor of Derby for many years. The Wichita Chamber endorsed Howell in this race. Campaign funds were close in this race, with Howell having a small edge. The result of the election was Howell winning with 63 percent of the vote. He moves on to face the Democrat in the general election, former Rose Hill Mayor Richard Young.

    22-CommissionWhat do the results of these elections mean? First, there may be a shift of power on the Sedgwick County commission. Currently, commissioners Ranzau and Karl Peterjohn are often in a minority of two against the other three commissioners. It’s thought that it Howell is elected, he would often join Ranzau and Peterjohn to form a working majority of three. That could cause a change in policy at the County commission, and that’s something that the Wichita chamber and Wichita’s cronies don’t want. It will be interesting to see who the chamber and the cronies support in the general election, Ranzau or the Democrat. In 2008, when Peterjohn ran for his first term, the Wichita chamber campaigned against him, making it their most important priority in that election.

    For this shift to materialize, both Ranzau and Howell must win their November elections.

    Wichita Chamber of Commerce 2013-07-09 004Ranzau’s victory is a defeat for the Wichita Chamber of Commerce. Besides endorsing McGinn, it made independent expenditures in her favor. This has broader implications than just one county commission district. This week the Wichita City Council voted in favor of placing a sales tax issue on the November ballot. The Wichita Chamber is strongly behind the sales tax in Wichita, and I would expect to see the chamber devote a lot of resources campaigning for its passage. Richard Ranzau is opposed to the sales tax increase. While his county commission district encompasses a lot of territory that is outside the City of Wichita, and it is only Wichita voters who will decide the sales tax issue, I think we can safely conclude that his victory paints a gloomy forecast for approval of a sales tax.

    Looking even farther to the future. Ranzau’s county commission district overlaps part of Wichita city council district 5. That is currently represented by Jeff Longwell. He can’t run again because of term limits. Longwell is firmly in the grasp of Wichita’s cronies. Could Ranzau’s victory pave the way for a fiscally conservative city council candidate in district 5? That election will be next spring.

    Also next spring Wichita will elect a new mayor. There are many names mentioned as candidates, including Longwell. What do the victories of Ranzau and Howell mean? What impact will the sales tax campaign and election result have on the spring elections?

    24-Carolyn McGinn Key Construction 2014-07-02 01bThe Wichita Chamber and the Wichita cronies campaigned hard for Carolyn McGinn against Richard Ranzau. Well, I should clarify: They spent a lot of money on the campaign. Richard himself, his family, and his volunteers worked hard. The desire for economic freedom by Richard Ranzau and his volunteers was a more powerful force than the greed of the Wichita Chamber of Commerce, Key Construction, David Burk, and Bill Warren.

    Keep this in mind. The Sedgwick County Commission has very little power to initiate the type of economic development incentives that the Wichita Chamber and the cronies want. That power rests almost totally at the Wichita City Council and the Kansas Department of Commerce. Also, the county commission has limited power to stop or object to incentives. Their main voice is the ability to cancel the formation of a tax increment financing district.

    So if the Wichita Chamber and the cronies are willing to intervene to such extent in the campaign for county commissioner, think what they will be willing to do in city council or mayoral contests, if they see that their grip on the really big cookie jar might be in doubt. Since the departure of Michael O’Donnell for the Kansas Senate there has been no one on the Wichita city council who questions anything the Chamber and the cronies want. Not in any serious manner, that is. We see council members making false displays of pretense now and then, but that’s all they do.

  • Wichita’s evaluation of development team should be reconsidered

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

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

    wichita-evaluation-matrix-2013-08

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

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

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

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

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

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

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

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

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

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

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

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

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

    warren-bailout-poses-dilemma

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

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

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

  • Sedgwick County Commission: Let’s not vote today

    At the October 31 meeting of the Sedgwick County Commission, Karl Peterjohn introduced a measure that would let the Kansas Legislature know that the commission supports improving the tax climate in Kansas, and specifically would limit property tax growth. But electoral politics forced a delay in a vote.

    In response to Peterjohn’s proposal, the coalition of one Democrat and two liberal Republicans that form the working majority on the commission maneuvered to delay voting on the measure until after the November 6 election. With the item appearing on tomorrow’s agenda, it’s very likely that the majority coalition — Commission Chair Tim Norton, Dave Unruh, and Jim Skelton — will vote against the proposal.

    Why the rush for delay? Norton was facing a vigorous challenge in the election. He couldn’t afford to cast a vote against property tax reform. With Skelton publicly supporting Norton, and Unruh doing so behind the scenes, the two Republicans supported their liberal Democratic fellow traveler in delaying the vote until after the election.

    But after the election, Norton is free to vote against property tax reform. Skelton and Unruh don’t face the voters for another two years, and they’ll be relying on the short memory span of most voters.

  • Sedgwick County tower sale was not in citizens’ best interest

    The sale of a radio tower owned by Sedgwick County reveals another case of local government not looking out for the interests of citizens and taxpayers, with the realization that the stain of cronyism is alive and well.

    As a result of system upgrades, the county no longer needs a radio tower located near 77th Street North and Interstate 135. Pixius Communications, LLC made an offer to purchase the tower and the five acre tower site for $280,000. The county proceeded making arrangements for the sale, preparing a sales agreement contract between Sedgwick County and Pixius with a sales price of $280,000, along with several other legal documents necessary to support the sale. These documents are available at the agenda file for this item.

    According to sources, County Manager William Buchanan supported the Pixius offer. So did commissioners Dave Unruh and Jim Skelton.

    But commissioners Richard Ranzau and Karl Peterjohn felt that the best way to sell the tower was through an auction.

    Commission Chair Tim Norton, because of his receipt of campaign contributions from Pixius, Jay Maxwell (owner of Pixius), and Penny Maxwell (spouse of owner), was going to abstain from voting. (Skelton has accepted contributions from the Maxwells, but he was going to vote nonetheless.)

    So there was not a majority of three votes to accept the Pixius offer. Buchanan suggested the auction. All commissioners agreed.

    Now we know the results of the auction: A Florida company offered $610,000. After a sales commission ($55,000) and half of closing costs ($1,128), the county will net $553,872. That’s almost twice the price the county manager and two commissioners were willing to sell the tower for.

    There’s something else: What will be the appraised value of the tower and site for tax purposes? The selling price of a property is strong evidence of its value. As a result of the auction, therefore, this property is likely to be appraised at $610,000 instead of $280,000. That’s good for those who think it’s good for government to bring in more tax revenue.

    This episode is another instance where no-bid contracts and cronyism cost taxpayers. Maxwell, the almost-beneficiary of this sweetheart no-bid contract, has been the recipient of many benefits at taxpayer expense, such as tax increment financing and community improvement district taxes. He’s tried for more, but even the Wichita City Council has a limit to its cronyism, now and then. Although cronyism and no-bid contracts have been a problem at Wichita City Hall.

    Interestingly, a recent KSN Television news story characterized Ranzau and Peterjohn as “hardline fiscal conservatives.” The story went on to report “Incumbent Democrat Tim Norton often sides with the two more moderate members of the commission with many votes being decided by a 3-2 margin.” Those moderate members are, of course, Unruh and Skelton.

    Norton didn’t have to take sides — at least publicly — on this issue, but I’m confident that if this was not an election year for Norton, he would have voted for the original Pixius deal that we now see was a disaster for taxpayers.

    In the KSN story Norton was quoted as saying “I’m a business man of many years in Wichita. I understand the business climate and job retention.”

    Unruh and Skelton are also businessmen. I hope these commissioners look after their personal business with more care and concern than they have shown for the business of taxpayers.

  • Special interests will capture south-central Kansas planning

    Special interest groups are likely to co-opt the government planning process started in south-central Kansas as these groups see ways to benefit from the plan. The public choice school of economics and political science has taught us how special interest groups seek favors from government at enormous costs to society, and we will see this at play over the next few years.

    Sedgwick County has voted to participate in a HUD Sustainable Communities Regional Planning Grant. While some justified their votes in favor of the plan because “it’s only a plan,” once the planning process begins, special interests plot to benefit themselves at the expense of the general public. Once the plan is formed, it’s nearly impossible to revise it, no matter how evident the need.

    An example of how much reverence is given to government plans comes right from the U.S. Supreme Court in the decision Kelo v. New London, in which the Court decided that government could use the power of eminent domain to take one person’s property and transfer it to someone else for the purposes of economic development. In his opinion for the Court, Justice Stevens cited the plan: “The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” Here we see the importance of the plan and due reverence given to it.

    Stevens followed up, giving even more weight to the plan: “To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.”

    To Stevens, the fact that the plan was comprehensive was a factor in favor of its upholding. The sustainable communities plan, likewise, is nothing but comprehensive, as described by county manager Bill Buchanan in a letter to commissioners: “[the plan will] consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”

    That pretty much covers it all. When you’re charged with promoting economic prosperity, defending earth against climate change, and promoting public health, there is no limit to the types of laws you might consider.

    Who will plan?

    The American Planning Association praised the Court’s notice of the importance of a plan, writing “This decision underscores the importance for a community to have a comprehensive development plan formulated through a democratic planning process with meaningful public participation by everyone.”

    But these plans are rarely by and for the public. Almost always the government planning process is taken over and captured by special interests. We see this in public schools, where the planning and campaigning for new facilities is taken over by architectural and construction firms that see school building as a way to profit. It does not matter to them whether the schools are needed.

    Our highway planning is hijacked by construction firms that stand to benefit, whether or not new roads are actually needed.

    Our planning process for downtown Wichita is run by special interest groups that believe that downtown has a special moral imperative, and another group that sees downtown as just another way to profit at taxpayer expense. Both believe that taxpayers across Wichita, Kansas, and even the entire country must pay to implement their vision. As shown in Kansas and Wichita need pay-to-play laws the special interests that benefit from public spending on downtown make heavy political campaign contributions to nearly all members of the Wichita City Council. They don’t have a political ideology. They contribute only because they know council members will be voting to give them money.

    In Wichita’s last school bond election, 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms and others who directly stand to benefit from new school construction, no matter whether schools are actually needed. The firm of Schaefer Johnson Cox Frey Architecture led the way in making these contributions. It’s not surprising that this firm was awarded a no-bid contract for plan management services for the bond issue valued at $3.7 million. This firm will undoubtedly earn millions more for those projects on which it serves as architect.

    The special interest groups that benefit from highway construction: They formed a group called Economic Lifelines. It says it was formed to “provide the grassroots support for Comprehensive Transportation Programs in Kansas.” Its motto is “Stimulating economic vitality through leadership in infrastructure development.”

    A look at the membership role, however, lets us know whose economic roots are being stimulated. Membership is stocked with names like AFL-CIO, Foley Equipment Company, Heavy Constructors Association of Greater Kansas City, Kansas Aggregate & Concrete Associations, Kansas Asphalt Pavement Association, Kansas Contractors Association, Kansas Society of Professional Engineers, and PCA South Central Cement Promotion Association. Groups and companies like these have an economic interest in building more roads and highways, whether or not the state actually needs them.

    The planners themselves are a special interest group, too. They need jobs. Like most government bureaucrats, they “profit” from increasing their power and sphere of influence, and by expansion of their budgets and staffs. So when Sedgwick County Commissioner Jim Skelton asks a professional planner 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.

    And we have evidence that planners watch out for themselves. It is not disputed that this planning grant benefits Regional Economic Area Partnership (REAP). Sedgwick County Commissioner Richard Ranzau says that John Schlegel, Wichita’s Director of Planning, told him that “acceptance of this grant will take REAP to another level, because right now they are struggling, and this will help plot the course for REAP.” He said that REAP, which is housed at the Hugo Wall School of Public Affairs at Wichita State University, needs to expand its role and authority in order to give it “something to do.”

    We see that REAP is another special interest group seeking to benefit itself. In this case, our best hope is that REAP engages in merely make-work, that the plan it produces is put on a shelf and ignored, and that the only harm to us is the $1.5 million cost of the plan.

    By the way, did you know that Sedgwick County Commissioner Dave Unruh, who voted in favor of the plan that benefits REAP, is now chairman of REAP? Special interest groups know how to play the political game.