Posts tagged as:

TIF districts

For downtown Wichita, Mayor Brewer has a vision

by Bob Weeks on August 31, 2010

in Wichita city government

In Sunday’s Wichita Eagle, Wichita Mayor Carl Brewer penned a piece that states his belief in the importance of downtown and prepares the people of Wichita for the start of a prescriptive planning process, with accompanying subsidy to politically-favored developers willing to fulfill the plan.

The mayor used the word “vibrant” twice. Asking citizens question like “Would you like to have a vibrant downtown?” is meaningless. Who doesn’t? It’s only when the question is accompanied by context that citizens can start to understand how they should answer.

For example, in the mayor’s article, he mentions the use of special assessment financing that funded suburban infrastructure, and that this is not sufficient for downtown needs. This statement reveals a misunderstanding by the mayor about the various forms of financing that might be used to help development.

Special assessment financing means that the city spends money to build something, like the new street to serve a site where someone wants to build a house or a shopping center. The cost of this street, plus interest, is added to the property’s tax bill over a period of years. The property owner doesn’t get anything for free.

But in the forms of financing that the mayor and city hall planners favor for downtown, developers do get something for free. Under tax increment financing (TIF), developers get to use their property taxes to pay for the same infrastructure that everyone else has to pay for. That’s because in TIF, the increment in property taxes are used to pay off bonds that were issued for the exclusive benefit of a development. Or, as in the case with a new form of TIF called pay-as-you-go, the increment in property taxes are simply given back to the developer. (Which leads to the question: why even pay at all?)

Some deny that TIF does not directly enrich the developer. They’ll make arguments such as “it’s only used for infrastructure and eligible expenses” or “it’s not lending, it’s bonding” or “it wouldn’t happen but for TIF” or the biggest lie: TIF doesn’t have any cost. But despite these claims, TIF has a cost, and it does directly enrich the developer. That’s its entire purpose; its reason for being. If TIF didn’t enrich the developer, how does it change something that is claimed to be not economically feasible into something that is?

While city leaders say that public participation in the revitalization of downtown is to be limited, we should be cautious and skeptical. Goody Clancy planners have said that public participation will be limited to TIF. This is bad in its own right and should be opposed on its merits.

We need to be skeptical of the mayor and downtown planners because there isn’t enough TIF money available to do what they want to do. I fully expect a citywide sales tax, probably in the amount of one cent per dollar, to be proposed for the benefit of downtown subsidized developers. City leaders speak fondly of such a tax that Oklahoma City has used for many years.

City leaders have already shown themselves to be not averse to imposing additional sales taxes in Wichitans and our visitors, having granted several Community Improvement Districts the ability to charge up to an additional two cents per dollar sales tax. This means that when visitors check out of the Fairfield Inn in downtown Wichita, they’ll be faced with a sales tax rate of 9.3 percent. That’s in addition to the six percent guest tax, which in the case of this hotel is collected for the exclusive benefit of itself, rather than funding general government and tourism activities.

More community improvement districts are in the works. Wichita may soon be peppered with them.

No faith in free markets means no faith in people

The unwillingness of Wichita city leaders to let Wichitans freely decide where they live, and Wichita businesses freely decide where to locate, is a sign of lack of confidence in free markets and the people of Wichita. Because Wichitans do not choose to live and locate their business firms where politicians like Carl Brewer and Janet Miller — to name just two — and city hall bureaucrats like Wichita city manager Bob Layton and Wichita economic development director Allen Bell want them to, they deliver a slap in the face. It appears in the form of a vision backed up by planning, regulation, and the power to dish out favorable tax treatment, as outlined above.

Once formed, a vision is a powerful force. Randal O’Toole, author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future has written about visionaries and government planning:

The worst thing about having a vision is that it confers upon the visionary a moral absolutism: only highly prescriptive regulation can ensure that the vision overcomes an uncaring populace responding to a free market that planners do not really trust. But the more prescriptive the plan, the more likely it is that the plan will be wrong, and such errors will prove extremely costly for the city or region that tries to implement the plan.

An example of planning that many see as having gone wrong is the government planning that led to growth on the city’s fringes. An example that helped make this possible is the government’s decision to build the northeast expressway also known as K-96. Acts of government like this are claimed to have caused the demise of downtown, the very situation that planners now want to correct.

With government making “mistakes” (their claim, not mine) like this on a grand scale, why are we willing to trust that politicians and bureaucrats are making correct decisions now? Especially when you look at the campaign finance reports of most city council members and see the same names giving repeatedly to all council members, with these same names appearing repeatedly before the council asking for their subsidy. This is not a decision making process that gives citizens confidence.

It bears repeating: the existence of the downtown planning process tells Wichitans they’ve made a mistake in where they chose to buy a home or build a business. Not only will Wichitans have to pay for what they freely chose, they’re going to be asked to pay again so that those with purportedly superior vision can have their way.

Tagged as: Allen Bell, Carl Brewer, Community Improvement Districts, Downtown Wichita revitalization, Economic development, Free markets, Janet Miller, Regulation, Robert Layton, Subsidy, Tax increment financing, TIF districts

{ 19 comments }

More Wichita Community Improvement Districts proposed

by Bob Weeks on August 2, 2010

in Wichita city government

Tomorrow’s meeting of the Wichita City Council will consider starting the process for the approval of three Community Improvement Districts in Wichita.

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

CIDs may work in one of two ways: First, the city might sell special obligation bonds, give the money to the applicant, and pay off the bonds with the extra sales tax that is collected.

The other way is “pay-as-you-go,” in which the extra sales tax is sent to the applicant as it is collected.

Tomorrow’s city council meeting will accept petitions by property owners in the proposed CIDs and set dates for public hearings, usually around 30 days in the future.

The first of the proposed CIDs is the Bowllagio project at Kellogg and Maize Road. This is proposed to be a pay-as-you-go CID, meaning that the city will not issue bonds. The applicant proposes to collect the full two cents per dollar extra tax for up to 22 years.

The second is a development in the 2600 block of north Maize Road titled Central Park Place Development. The applicant proposes collecting an additional one cent per dollar for up to 22 years on a pay-as-you-go basis.

The third project is Planeview Grocery Store Project at George Washington Blvd. and Pawnee in southeast Wichita. This applicant proposed to collect two cents per dollar extra sales tax on a pay-as-you-go basis. This applicant also proposes creating a tax increment financing (TIF) district.

According to city documents, a goal of this project is to provide “affordable access to grocery shopping to the underserved Planeview area.” But if affordability is a goal of this project, we have to question the wisdom of adding two cents per dollar spent to the grocery bills of low income people.

Community Improvement Districts and public policy

There are several public policy issues surrounding Community Improvement Districts that deserve consideration.

First, the extra sales tax collected in these districts needs to be considered from a consumer protection perspective. How will shoppers in these districts learn that they are going to be paying extra sales tax? While some shoppers may not care, certainly low-income shoppers need to stretch their grocery dollars. Asking them to spend two cents extra per dollar doesn’t seem like the city is watching out for the best interests of its citizens.

Then there’s the “tax our visitors” strategy of council member and Vice Mayor Jeff Longwell and some other council members. Since the extra sales taxes in some CIDs like a hotel will largely be paid by visitors, it’s a wise economic development strategy, they say.

We need to consider, however, the effect of these high sales tax districts on visitors to Wichita. Will they be happy with their decision to visit Wichita once they learn of the high taxes on their hotel or restaurant bill? Will they mistakenly assume that these high taxes apply to the entire city? When corporate expense accounting sees the high taxes charged in Wichita, will they want to send business here again?

But perhaps the simplest public policy issue is this: If merchants feel they need to collect additional revenue from their customers, why don’t they simply raise their prices? Why the roundabout process of the state collecting extra sales tax, only to ship it back to the merchants in the CID?

No one at Wichita city hall has an answer for this question.

Tagged as: Community Improvement Districts, Economic development, Tax increment financing, Taxation, TIF districts, Wichita city council, Wichita city government

{ 7 comments }

The ‘tax expenditure’ solution for our national debt

by Bob Weeks on July 20, 2010

in Taxation

While most critics of government spending focus on entitlements, regular appropriations, and earmarks, there is a category of spending that not many pay much attention to. The spending is called “tax expenditures.”

It’s a big issue. As economist Martin Feldstein writes in the Wall Street Journal, tax expenditures will increase the federal budget deficit by $1 trillion this year.

Tax expenditures are implemented through the tax system. It’s usually the income tax system, especially at the federal level. Taxpayers may receive tax credits, which reduce the tax that must be paid dollar for dollar. Many credits are refundable, meaning that if the taxpayer has no tax liability, the government will send the recipient a check. Examples cited by Feldstein include “$500 million annual subsidy for the rehabilitation of historic structures and a $4 billion annual subsidy of employer-paid transportation benefits.”

While supporters of many of these programs portray them as not costing the government anything, Feldstein writes that they do: “These tax rules — because they result in the loss of revenue that would otherwise be collected by the government — are equivalent to direct government expenditures.”

I argued this in testimony I presented to a committee in the Kansas Legislature this year, when it was considering restoring and expanding the Kansas historic preservation tax credit program. I told committee members: “We must recognize that a tax credit is an appropriation of Kansans’ money made through the tax system. If the legislature is not comfortable with writing a developer a check for over $1,000,000 — as in the case with one Wichita developer — it should not make a roundabout contribution through the tax system that has the same economic impact on the state’s finances.”

In that committee, not one member voted against this program, even though the committee has some members who consider themselves very fiscally conservative and hawks on spending.

Here in Wichita, the city council regularly steers spending to certain companies through the tax system by granting property tax exemptions and tax increment financing.

Feldstein describes problems with spending implemented through the tax system:

  • Politicians use tax expenditures to grow the welfare state. While proposing a freeze on discretionary spending, President Obama at the same time proposed an expansion of a tax credit program for child or elderly care.
  • Once enshrined in the tax law, these appropriations don’t have to be reauthorized each year. They’re on auto-pilot, so to speak.
  • Eliminating tax expenditures is looked on by Republicans as a tax increase, so they are reluctant to support their elimination. Felstein counters: “But eliminating tax expenditures does not increase marginal tax rates or reduce the reward for saving, investment or risk-taking.”
  • Tax expenditures distort the economy in harmful ways: “[Eliminating tax expenditures] would also increase overall economic efficiency by removing incentives that distort private spending decisions.”

Feldstein concludes: “Cutting tax expenditures is really the best way to reduce government spending. And to be politically acceptable, the cuts in tax expenditures must be widespread, requiring most taxpayers to give up something so that the fiscal deficits can decline.”

The ‘Tax Expenditure’ Solution for Our National Debt

The credits and subsidies that make the tax code so complicated cost big bucks. Reduce them by third and the debt will be 72% of GDP in 2020 instead of 90%.

By Martin Feldstein

When it comes to spending cuts, Congress is looking in the wrong place. Most federal nondefense spending, other than Social Security and Medicare, is now done through special tax rules rather than by direct cash outlays. The rules are used to subsidize a wide range of spending including education, child care, health insurance, and a myriad of other congressional favorites.

These tax rules — because they result in the loss of revenue that would otherwise be collected by the government — are equivalent to direct government expenditures. That’s why tax and budget experts refer to them as “tax expenditures.” This year tax expenditures will raise the federal deficit by about $1 trillion, according to estimates by the congressional Joint Committee on Taxation. If Congress is serious about cutting government spending, it has to go after many of them.

Continue reading at the Wall Street Journal (subscription required)

Tagged as: Economic development, Economics, Government spending, Kansas state government, Tax abatements, Tax increment financing, TIF districts, Wichita city government

{ 5 comments }

North Dakota TIF video informative, reminiscent of Wichita

by Bob Weeks on May 25, 2010

in Wichita city government

The North Dakota Policy Council has a video on YouTube that explains the mechanics of tax increment financing (TIF) districts and the public policy problems associated with TIF.

The video is presented in three sections. The material in the first section is different from the way TIF districts work in Kansas, but the other two sections are very similar to the way the law works in Kansas.

At the start of part 3 (“Problems with TIFs”) the narrator states the problem succinctly: “Tax increment financing negatively affects everybody’s property tax bill by taking the tax revenue from increased taxable valuations on the properties in the TIF areas and putting that into TIF accounts.”

She then presents an illustration showing how the property taxes for non-TIF properties have to rise to make up for the fact that taxes from TIF properties do not go towards paying for city, county, or school district services. While Wichita doesn’t use the term “TIF accounts” as used in this video, the economic effect is the same.

The video also mentions politically-favored developers being the beneficiaries of TIF districts, specifically mentioning “a friend of the city who might own property that is struggling.” I wonder: is the North Dakota Policy Council aware of the situation in Wichita, where many feel that the city is bailing out Real Development (also known as the “Minnesota Guys”) by not only granting TIF financing to them, but increasing the amount of TIF financing against the recommendation of its independent consultant?

When you add the fact that our city manager’s girlfriend has the Minnesota Guys as a client and the city — specifically Mayor Carl Brewer — will not forthrightly explain this situation and the city’s response to citizens, we have a problem in Wichita.

Compounding the problem is the obvious lack of understanding of the economic effects of TIF districts by members of the Wichita City Council, and possibly by city hall bureaucrats, too. Wichita vice mayor Jeff Longwell has complained to the Wichita Eagle that the public doesn’t understand tax increment financing. We should be questioning Longwell’s own understanding, and that of council member Janet Miller, too.

Longwell and Miller — the rest of the council too, for that matter — are aided by newspaper reporters like the Wichita Eagle’s Bill Wilson, who is dismissive and hostile towards free markets and those who advocate for them, calling reliance on markets “intellectually shallow” and a “thin ideological argument.”

Tagged as: Carl Brewer, Janet Miller, Jeff Longwell, Robert Layton, Tax increment financing, TIF districts, Wichita city council, Wichita city government

{ 0 comments }

Wichita mayor speaks on economic development

by Bob Weeks on April 27, 2010

in Wichita city government

At last week’s Wichita City Council meeting, Mayor Carl Brewer spoke in favor of the city’s economic development policy, specifically as it related to a downtown Wichita development partly financed with tax increment financing, or TIF.

The mayor disagreed with those who have appeared at city council meetings to testify against the use of TIF. He told of how the city called mayors’ associations and the National League of Cities, and they said that most large cities use incentives. He learned that cities use some incentives that that Wichita has not yet heard of, which undoubtedly will give city staff some additional tools in the toolbox in the future.

He said “Incentives are available, and we’re on the right track.”

The mayor mentioned that Harvard and Yale experts said that Wichita had too much parking downtown. This is in agreement with the Goody Clancy proposal presented to the city last October. Wichita selected that firm to lead the planning process for the revitalization or redevelopment of downtown Wichita.

He said that in a recent meeting of mayors he attended, he learned that the mayors of other cities are trying to figure out how to use incentives and recruit business. They’re not turning their backs on incentives, he said, adding that “What we’re doing is nothing new.”

He told the audience that “We as a city are going to have to endure change, and we as a city are going to have to understand any time there’s change, there is going to be some pain.”

He added that he appreciated input from those who oppose the various subsidies and incentives the city gives to developers, and the city did check to see if the information they provided to the city was correct.

Commentary

The National League of Cities, one of the organizations the mayor consulted with regarding the use of incentives for the purpose of economic development, promotes an expansion of the powers of cities to engage in taxpayer-funded economic development subsidies. Its mission statement sounds noble: “Its mission is to strengthen and promote cities as centers of opportunity, leadership, and governance.” But citizens should not be deceived. It promotes interventionist practices rather than economic freedom. An example is its celebration of the U.S. Supreme Court decision in Kelo v. City of New London, which the Wall Street Journal described as “one of the worst in recent years, handing local governments carte blanche to seize private property in the name of economic development.”

The mayor’s refusal to embrace economic freedom — which he has described as a “philosophy” that is not viable in the real world — means that Wichita is likely to continue to engage in the same competitive practices as do almost all other cities. It means that deals like the subsidy granted to Real Development is a template for other taxpayers-funded giveaways. As Council Member Paul Gray has warned, the plans for the redevelopment of downtown Wichita are likely to require many millions — perhaps hundreds of millions of dollars — of public assistance or investment. Since there isn’t enough tax increment financing available to pay for this, we can expect to see proposals for tax increases, such as a new city sales tax of perhaps one cent on the dollar, to pay for downtown redevelopment.

A sales tax is the model for economic development in Oklahoma City. This has been promoted to Wichita and Sedgwick County leaders
 as a good idea for Wichita to pursue.

What Wichita is missing out on is a way to truly distinguish itself from all the other cities and counties that are all using the same economic development tools. Presently about all we can do is offer subsidies that are larger than what other cities offer. But if we decided to forgo the use of the usual economic development subsidies and incentives, that would be something very unusual. It could really put Wichita on the map as a place to locate to.

Since these economic development incentives and subsidies require other taxpayers, both individuals and businesses, to pay for their cost, Wichita could reduce the cost of doing business in Wichita for everyone. A company considering locating to Wichita could be confident that it would be operating in a low-tax environment. It wouldn’t have to hope that it fits into the city’s economic development policy guidelines. It wouldn’t have to hope that politicians and bureaucrats view its application favorably.

Further, once a company locates here, it wouldn’t have to worry that other companies will receive incentives and subsidies that it will have to pay for. It would not need to worry about the other costs that subsidies impose, such as subsidized companies having lower overhead and are therefore better able to compete for employees.

Eliminating interventionist policies from city hall could have other benefits. Is there a “good ‘ol boy” network of insiders that use Wichita city hall as their personal piggy bank? By eliminating the practice of granting incentives and subsidies, we could reduce or eliminate the cynical attitude of many citizens towards city government.

We wouldn’t have to worry whether the campaign contributions made by those seeking favor from city hall were made in the interest of good government, or made in the hopes of getting a TIF district or other subsidy passed through the council.

These ideas, however, are not seriously considered by the mayor or any city council members, at least to my knowledge. Instead, we in Wichita are doomed to finance an escalating economic development arms race. The economic freedom of Wichitans will decline.

This is noteworthy in light of the mayor’s curious assertion in his remarks that we will have to “endure pain” caused by change. We’ve changed nothing.

Tagged as: Carl Brewer, Downtown Wichita revitalization, Economic development, Free markets, Subsidy, Tax increment financing, Taxation, TIF districts, Wichita city council, Wichita city government

{ 3 comments }

Wichita Exchange Place project passes

by Bob Weeks on April 27, 2010

in Wichita city government

At today’s meeting of the Wichita City Council, final approval of the city’s involvement in a downtown Wichita development passed.

The item, which appeared on the consent agenda, was the second reading for the ordinances that authorize the Exchange Place Project, including the expansion of its tax increment financing district.

(A consent agenda is a group of items that will be voted on in bulk with a single vote. An item on a consent agenda will be discussed only if a council member requests the item to be “pulled.” If that is done, the item will be voted on separately. Generally, consent agenda items are considered by the city to be non-controversial, but that is not always the case.)

Council Member Lavonta Williams wanted to know more about the change to the parking plan. On Saturday reporting by the Wichita Eagle’s Brent Wistrom told of how the number of parking spaces that will be available to the public has declined as the project plan has evolved: “Now the proposed garage near Douglas and Market would have only 64 spaces saved for public parking. That’s down from 103 promised earlier this month, which was down from the 149 projected in March. Meanwhile, the number of spaces reserved for apartment tenants increased from 195 to 209.”

The availability of additional public parking spaces in downtown was one of the major reasons cited by city council members as a reason for approving the Exchange Place project.

Assistant City Manager Cathy Holderman asked Pat Ayers, a former Key Construction executive, to respond to the question. He said that the unique aspects of the proposed garage actually increased the number of parking spaces available during the work day, as residents of the apartments drive their cars to work.

(City manager Bob Layton, although present at the meeting, is not able to participate in this matter due to a conflict of interest.)

Is this a deviation from what was originally planned, asked Williams? Yes, was the reply from Ayers.

Vice Mayor Jeff Longwell asked Holdeman about a safeguard in place for this project, a ten percent “retainage.” Ayers replied that this provision is in effect for this project. But Council Member Paul Gray said a retainage is common to construction contracts, and that it simply ensures that the contractor completes the job, not the sustainability of the project.

There was mention of the fact that payments will be made directly to vendors, not to Real Development, the developers of the project. This is a reminder of the peculiar arrangement where the city is placing a huge bet of the success of downtown Wichita redevelopment in the hands of the principals behind Real Development, but evidently we don’t trust them enough to write them a check and be confident they will pay their bills.

The measure passed with Gray and Jim Skelton voting against the measure, as they did last week.

Other reporting is at Downtown condo project gets final approval.

Tagged as: downtown, Tax increment financing, TIF districts, Wichita city council, Wichita city government

{ 3 comments }

On Wichita’s Exchange Place TIF, Janet Miller speaks

by Bob Weeks on April 26, 2010

in Wichita city government

Last week’s meeting of the Wichita City Council featured a message from Council Member Janet Miller that illustrated her firm belief in centralized government planning for the purposes of economic development. It also contained a material mistake in the understanding of the facts of the project.

In her remarks from the bench, Miller disagreed with those who testify at council meetings against tax increment financing (TIF). She said there is much information that says this type of economic development incentive is effective.

She said “Sometimes I wonder what city folks are living in when they talk about the negative, or the lack of results from TIFs.” She then named several Wichita TIF districts that she said performed well.

If her remarks were aimed at me and some of the other people who have testified at city council meetings against the formation of TIF districts, council member Miller may not have been listening very carefully. We do not deny that TIF districts produce results — within the district itself. Things get built, buildings get renovated. It is the effect of TIF on the city as a whole that we are concerned with.

It’s the observed effects of TIF, as economists Dye and Merriman have found and I have mentioned to the city council, including Miller, several times: “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.”

It’s also the unobserved effects — the things that don’t happen because Wichita props up developers in politically-favored areas such as downtown. This form of centralized planning from Wichita city hall overrides the decisions that the citizens of Wichita make with their own pocketbooks, and concentrates power in the hands of bureaucrats and politicians.

As Randal O’Toole has written: “TIF today is often part of a social engineering agenda that Americans should reject.”

Miller praised the amount of office space Real Development has brought online in downtown Wichita. To the extent that this has been done without government assistance, this should be praised.

She agreed with Vice Mayor Longwell’s assessment of this project, saying “This is not a tax abatement project.” She is just as wrong as is Longwell and other council members who believe this.

In discussing the risk involved in this project, Miller told of how the disbursements from a HUD-guaranteed loan that will finance much of this project will made directly to contractors, not to Real Development. City of Wichita documents indicate that the City’s payments will be made in the same way. This is a quite peculiar arrangement: we are placing a huge bet of the success of downtown Wichita redevelopment in the hands of the principals behind Real Development, but evidently we don’t trust them enough to write them a check and be confident they will pay their bills.

Miller also spoke of the jobs that will be created by this project. Implicit in her argument is that this project, or something similar, would not occur without the city’s subsidy. Her argument also ignores what economists tell us — that TIF districts simply transfer development from one part of town to another.

What Wichitans should be most concerned about, however, is a misstatement by Miller that other council members may have relied on in making their decision on how to vote. Miller said: “The property tax increases, the increment that’s being calculated in this project, includes only the buildings in this project.”

This statement directly contradicts the facts. In the Longhofer study, other properties owned by Real Development — the Petroleum Building, Sutton Place, 105 S. Broadway, and others — are used to support the TIF loan for the Exchange Place project. In response to my question, Wichita’s urban development director Allen Bell confirmed the same.

In her message from the bench, Miller said that city staff and council members have had enough time to go over this proposal. Her mistaken remarks indicate, however, that the project is still not understood very well by the council, neither its mechanics or its economic effect.

Tagged as: Downtown Wichita revitalization, Economic development, Janet Miller, Jeff Longwell, Subsidy, Tax increment financing, Taxation, TIF districts, Wichita city council, Wichita city government

{ 5 comments }

Wichita’s Jeff Longwell on TIF districts, tax abatements

by Bob Weeks on April 23, 2010

in Wichita city government

Is a tax increment financing (TIF) district a tax abatement? Wichita city council member Jeff Longwell, now Wichita’s vice mayor, doesn’t think so. During this week’s city council meeting, Longwell said this in explaining his support of a TIF district created for the benefit of Real Development: “One of the things that people I think need to understand is that this is not a tax abatement.”

He said tax revenues will increase from $28,000 to half a million dollars, repeating that it is not a tax abatement.

So is it true that TIF is not a tax abatement?

A little background: The Wichita City council grants property tax abatements regularly as part of its Industrial Revenue Bond program. In the IRB program, the city is not the lender of funds, and it does not guarantee that the bonds will be repaid. Instead, the benefit of the IRB program is that the applicant won’t have to pay property tax on property purchased with the bond money. This abatement is generally granted for a period of ten years, although it is reviewed after five years to see if the company is fulfilling the promises it made to justify the tax abatement. In addition, a sales tax exemption may be granted on the property purchased with the bond money.

Confused? Many people are. A few weeks ago the city issued IRBs to a Wichita movie theater operator. Comments left at various online forums often argued that the city should not be lending money to the theater and its controversial ownership group. But as we’ve seen, the city is not making a loan. Instead, the IRB program is simply a vehicle that is used to grant relief from paying property taxes to the city, county, and school district.

So the IRB program, despite its name, is a tax abatement program. What about tax increment financing, then?

Under TIF, a district is formed. The property taxes being paid by a property in the district at the time of formation is noted and called the base. Usually this property is blighted or run-down, so this base is a very low value.

Then a development plan is created, perhaps to build apartments or a shopping center. Based on that plan and the property taxes that the completed project will likely pay, the city will borrow money and give it to the developers.

After the project is completed, the tax appraiser notices that there’s something new and valuable where there wasn’t before, and he levies a higher tax bill on the property. The difference between the original taxes — the base — and the new taxes is called the increment.

Under normal conditions when new property comes on the tax rolls, the tax revenue is used to provide public services such as police and fire protection. The school district is usually a recipient of a large portion of the new tax revenue, which might be used to pay for the schooling of residents of the new apartments, for example.

But in a TIF district, what happens to this new tax revenue — the increment?

Recall that the city borrowed money and gave it to the developers. The new property taxes — the increment — is used to pay off these bonds.

So council member Longwell is correct, in a way. Real Development will pay increased property taxes.

But when these increased taxes are used to pay off bonds that exclusively benefit Real Development, how is this any different from not paying property taxes?

Consider development not in a TIF district. Developers generally borrow money. Then they have to make loan payments and higher tax payments.

But TIF developers pay only higher taxes. There are no loan payments, as their increased property tax payments are used to pay off the loan.

So when considering the total economic reality, council member Longwell is wrong. Several other council members have the same mistaken belief.

Tax increment financing is a tax abatement in disguise. Actually, it’s worse than that. Tax abatements granted in the IRB program don’t require the city to be on the hook for a loan. But in a TIF district, the city is the lender, and city taxpayers are liable if the TIF district doesn’t perform up to projections. This has happened in Wichita, and taxpayers had to pay in one way or another.

Why is Longwell, now Wichita’s vice mayor, unable to grasp these facts? Perhaps he does but chooses to ignore them. He has a reason to do so. Downtown Wichita real estate developers — let’s be clear: developers who seek public subsidy instead of working to meet market demand — are generous with campaign contributions, funding both political liberals like Wichita city council member Janet Miller and self-styled fiscal conservatives such as Longwell.

Longwell’s term expires next spring, and he may choose to run for his same office or even the mayor’s office, as some political observers have speculated.

Longwell has already drawn one challenger for his city council position, tea party activist Lynda Tyler. While lacking experience holding elective office, Tyler has well-established conservative credentials and can be expected to run a vigorous and well-funded campaign.

Longwell, who along with Wichita Mayor Carl Brewer complains that Wichita doesn’t have enough “tools in the toolbox” for dishing out economic development incentives to politically-connected city hall insiders, will have to explain his actions to voters in his largely conservative west-side district.

Someone should ask him if he really understands the economic reality of tax increment financing districts.

Tagged as: Carl Brewer, Janet Miller, Jeff Longwell, Tax abatements, Tax increment financing, TIF districts, Wichita city council, Wichita city government

{ 14 comments }

Tax increment financing is not free money

by Bob Weeks on April 19, 2010

in Wichita city government

Cato Institute Senior Fellow Randal O’Toole has written extensively on the subject of urban planning, development, and tax increment financing (TIF) districts. The following article contains many points that the Wichita City Council may wish to consider as it considers expansion of a downtown Wichita TIF district at tomorrow’s council meeting.

O’Toole was in Wichita earlier this year. Coverage of a lecture he delivered at that time is Randal O’Toole discusses urban planning in Wichita.

The author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future, O’Toole’s latest book is Gridlock: Why We’re Stuck in Traffic and What to Do About It.

TIF is Not “Free Money”

By Randal O’Toole

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

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

Read the rest of the article at the North Dakota Policy Council.

Tagged as: Downtown Wichita revitalization, Economic development, Subsidy, Tax increment financing, Taxation, TIF districts, Wichita city council, Wichita city government

{ 0 comments }

Wichita proposed tax increment financing district subject of news

by Bob Weeks on April 18, 2010

in Wichita city government

Today’s Wichita Eagle carries two news stories regarding the proposed expansion of a downtown Wichita tax increment financing (TIF) district. The front-page story Condo vote key to downtown Wichita growth and the additional story Owners report mixed views of developers provided background on the vote the Wichita City Council may make at Tuesday’s 9:00 am meeting.

The second article provides insight into Real Development’s track record in Wichita. While success in any real estate venture is not guaranteed, certain types of arrangements seem to have a high likelihood of problems, and these are reported on in the article.

Not mentioned is the problems at the Lofts at St. Francis, a Real Development residential condominium project. Last summer I reported on how this building’s facade needed repair, and the city needed to intervene in order to finance the repairs. I wrote, and testified in front of the city council, that the inability of the homeowners association to deal on its own with such a simple matter indicated a defect somewhere: “While the homeowners association and the condominium owners might not have anticipated that repairs would be needed so soon after the building’s opening, they must have contemplated that repairs and maintenance — to either exterior or interior common areas — would be needed at some time.”

The city waived two guidelines in its facade improvement program so that special assessment financing could be granted to the owners of condominiums in this building.

Some private parties have an interest in seeing Real Development — the “Minnesota Guys” — continue to receive subsidy from the City of Wichita. At Tuesday’s city council meeting, several businessmen testified on behalf of Real Development on the basis that this company is good for the future of downtown Wichita. Some of these, such as a current Key Construction executive, have an obvious financial motive for wanting the project to proceed with city subsidy.

Others, such as a former Key Construction company executive, may also have financial motives that are not immediately obvious. In particular, two tenants of Real Development buildings testified. Joe Tigert, the manager of the New York Life office in Wichita, spoke on behalf of Real Development. He didn’t reveal that he’s a tenant of Real Development at 125 N. Market. Joe Lloyd of Liebherr-Aerospace also spoke in favor of Real Development. His office is at 105 S. Broadway, another Real Development property.

Those who speak at Wichita City Council meetings are not required to disclose their motivations for speaking. And unlike the requirement at the federal and state level, those who are being paid to lobby the council are not required to disclose the fact that they are being paid, or who is paying them, or how much they spend lobbying.

An underlying current of thought that is emerging is that because of its extensive holdings in downtown Wichita, Real Development is too big to fail. If the city doesn’t grant their request for expansion of the amount of the TIF district, the future of downtown Wichita is in doubt.

Citizens ought to reject this argument. If we want to have a robust downtown Wichita, we need development that is grounded in solid free-market fundamentals. Development propped up with subsidy will not have the solid foundation that downtown needs if it is to be successful over the long term.

Tagged as: Capitalism, Subsidy, Tax increment financing, TIF districts, Wichita city council, Wichita city government

{ 1 comment }

Taxpayer-funded development in Wichita opposed

by Bob Weeks on April 18, 2010

in Wichita city government

Following is the tesimony of John Todd before the Wichita City Council on April 13, 2010.

Good morning Mayor and members of the Wichita City Council. My name is John Todd. I oppose the expansion of the Exchange Place TIF and incentive package you are considering today that benefits Real Development, a group of downtown developers commonly known by many people as the “Minnesota Guys.”

Shortly after the Minnesota Guys arrived in Wichita a few short years ago, they were invited to address the Wichita Independent Business Association to share their development plans for downtown Wichita. A Real Development partner indicated to me that the first building they purchased in downtown Wichita was in the $0.81 per square foot range and that after renovation the housing units they were creating were selling in the $200 per square foot range. Their plan for downtown Wichita was exciting and I complemented them for their insight in recognizing the opportunity they had discovered and seized upon in our downtown area.

After the formal presentation I personally complemented the Minnesota Guys and thanked them for what they were doing downtown. They assured me that their redevelopment work in our downtown would be completed without government incentives, and I assured them that they would have my support as long as they stayed out of the public treasury.

Well, so much for that dialogue. Now they are asking for a bigger bite from the public apple.

The 2007 TIF financing plan provided for a $6 million dollar tax funded parking garage, and now they need a $9.3 million dollar facility? The 2007 agreement provided for a $3 million dollar “City Improvement Expenditure” as city reimbursement to the developers for land acquisition, demolition, site preparation and such other “redevelopment project costs” as permitted by Kansas law. That number has grown to $3.325 million dollars under today’s proposal. Where does this money come from under this proposal? Please ask Allen Bell to explain.

Please refer to page 37 of today’s proposal, “Projected Debt Service Schedule” for the Tax Increment Financing Bonds needed to finance this project. Using data that was available to the public last Friday, the principal amount for this project is shown as $10.6 million dollars plus $5.2 million dollars in interest for a total principal and interest projected total cost of $15.8 million dollars.

Based on the 2009 Mill levy of 120.360, Wichita Public Schools would forgo an estimated $7.5 million dollars in tax revenues for this project over the course of the project bonds, with Sedgwick County taxpayers participating at an estimated $3.9 million and the City of Wichita taxpayers at $4.2 million. Since this TIF expansion involves taxes from other government entitles, this TIF expansion should require the approvals of the Wichita Public Schools and the Sedgwick County Board of County Commissioners.

Cato Institute Senior Fellow Randal O’Toole has written about tax increment financing. “TIF does not increase the total amount of development that takes place in a city or region, it merely transfers development from one part of the region (or the city) to another. … The new developments in the TIF districts consume fire, police, and other (city) services, but since they don’t pay for those services, people in the rest of the city either have to pay higher taxes or accept a lower level of services. This means people outside the district lose twice: first when developments that might have enhanced their property values are enticed into the TIF district and second when they pay more taxes or receive less services because of the TIF district.”

A TIF study by economists Richard Dye and David Merriman concludes that while TIF’s are good for the favored development, they may actually reduce the rate of economic growth in the rest of the city.

Today, this council along with our mayor has the opportunity to say no to the expansion of this tax-funded project.

Tagged as: Subsidy, Tax increment financing, TIF districts, Wichita city council, Wichita city government

{ 2 comments }

Topeka tax increment financing project struggles

by Bob Weeks on April 15, 2010

in Taxation

In Topeka, a residential and retail project funded with $5 million of tax increment financing (TIF) is in trouble, as the following story from the Topeka Capital-Journal describes.

The project is titled the “College Hill Redevelopment District.” Wichita has its own College Hill neighborhood, and a residential project funded by tax increment financing there has not done well, either.

Both of these projects are residential, and recent times have not been kind to residential real estate. Taxpayers are at risk when TIF districts do not meet their projections. Developers have the opportunity to earn profits to offset the losses they may incur from time to time. Taxpayers, like government, have no ability to profit from successful projects to make up for losses.

College Hill project pushes on
All 25 townhomes, 24,000 square feet of retail space remain unoccupied

All 25 relatively new townhomes in Topeka’s College Hill Redevelopment District stand unoccupied.

So does its 24,000 square feet of retail space.

But developers behind the $30 million project to revitalize central Topeka’s College Hill business district say they remain committed. This month, they entered into a contract with a large retail brokerage firm that will work to bring in retail businesses.

Read the rest of the story at the Topeka Capital-Journal.

Tagged as: Tax increment financing, TIF districts

{ 2 comments }

Tax increment financing questions topic at Wichita city council meeting

by Bob Weeks on April 15, 2010

in Wichita city government

On Tuesday the Wichita city council heard a request by Real Development for a $2.5 million increase in tax increment financing on a downtown project. Discussion during the meeting revealed how little is known about the numbers that the city uses in deciding whether to participate in the project. Numbers that don’t make sense, plus the fact that the applicant has not responded to the city’s request for new numbers, indicate that this proposal should be rejected.

A question that I asked referred to some numbers presented by in the materials supplied to council members in the public, specifically the total investment and market value for the project. When the project was revised for the first time in 2008, the plan called for total investment of $27,800,000, producing a project with market value of $33,803,000. In this plan the market value is greater than investment, which seems like a good thing.

In the second revision presented to the council this week, here are the values: Total investment is $46,491,728, while the market value is $41,695,000. Now the market value is less than investment. In fact, it is ten percent less than the amount invested.

I asked how are these market values determined, and is it wise to have investment that is so much greater than market value? In the video below, I think we can agree that a satisfactory answer was not provided.

In particular, the city’s economic development chief Allen Bell said that he had asked the applicants for updated information on these figures, but had not received it. This was revealed at the time the council was being asked to make an investment of some ten million dollars of taxpayer funds.

The fact that there was confusion, and data not made available to the city, at the time the council is being asked to make a decision casts quite a bit of doubt on the entire decision-making process.

A second question I asked had to do with the fact that the TIF district is quite a bit larger than the specific buildings that are the subject of the TIF financing request, and not all the property in the district is owned by the applicants. I asked that as property values — and therefore tax payments — in the other property in the district rises, does its increased valuation go towards paying off the TIF bonds? The answer from Bell was no.

A second question was what if these other property owners in the TIF district wanted to obtain TIF financing of their own. Does the fact that their property is already in a TIF district prevent them from receiving TIF financing? The answer from Bell was no.

Tagged as: Economic development, Subsidy, Tax increment financing, TIF districts, Wichita city council, Wichita city government

{ 5 comments }

Wichita Exchange Place TIF should be rejected

by Bob Weeks on April 12, 2010

in Wichita city government

Tomorrow’s meeting of the Wichita city council will feature a public hearing as to whether a tax increment financing district that benefits Real Development should be modified. The TIF district is already approved in the amount of $9.3 million. The applicants are asking that the city’s contribution be increased to $11.8 million, plus approval of changes to the project plan.

The first issue we should address is the purpose of these public hearings. Presumably notice of their existence is given not only so citizens and interested parties can plan to attend, but also so that there can be discussion of the details of the issue. This second reason is not fulfilled to any meaningful extent. There just isn’t time for anything to happen. The agenda report for this matter did not appear on the city’s website until around noon Friday, just two business days before the hearing.

Furthermore, the plan may be revised as late as today — the day before the public hearing — according to reporting in today’s Wichita Eagle.

There needs to be more time if these public hearings are to be anything but a sham. The city approved April 13 as the date for the public hearing on March 23. So the public hearing is announced, but details of the project are not known. How will the public — much less city council members — become aware of the final plan?

The plan to be heard tomorrow is the second revision of the original plan, which was first approved in 2007. Some may criticize Real Development for the shifting plan. But this is the nature of business. Change, however, is something that government bureaucracy is particularly ill-equipped to deal with.

There are reasons to be concerned with these particular applicants. Several floors in buildings they own in Wichita have been subject of foreclosure actions. While it is not Real Development that failed to pay the loans that were foreclosed on, this happened in buildings Real Development owns and developed with a condominium-style of ownership.

There is also issue of allegations made by tenants of Real Development that it is not performing on its obligations. These tenants will not come forward in public, as they are afraid that if the city stops subsidizing Real Development, the tenants will suffer.

But the largest and overriding issue is that the city should not be directing taxpayer investment outside the market process. It is an undeniable fact that the city is considering forcing Wichita taxpayers to risk an investment of around $10 million in this project. And if the investment doesn’t work out, the city is likely to force Wichitans to spend even more money on this project, as the city did when it made a no-interest and low-interest loan to a downtown theater that was underperforming in its TIF district.

It would be one thing if TIF districts were good for the city, but there is no such evidence. There is evidence that TIF districts are great for the developers — after all, wouldn’t like to have their increase in property taxes spent for their exclusive benefit, which is the purpose of a TIF district — but not so good for the rest of the city. The article Tax Increment Financing: A Tool for Local Economic Development by economists Richard F. Dye and David F. Merriman states, in its conclusion:

TIF districts grow much faster than other areas in their host municipalities. TIF boosters or naive analysts might point to this as evidence of the success of tax increment financing, but they would be wrong. Observing high growth in an area targeted for development is unremarkable.

So TIFs are good for the favored development — not a surprising finding. What about the rest of the city? Continuing from the same study:

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.

So TIF districts may actually reduce the rate of economic growth in the rest of the city.

Cato Institute Senior Fellow Randal O’Toole has written this about tax increment financing:

TIF does not increase the total amount of development that takes place in a city or region; it merely transfers development from one part of the region to another. … The new developments in the TIF districts consume fire, police, and other services, but since they don’t pay for those services, people in the rest of the city either have to pay higher taxes or accept a lower level of services. This means people outside the district lose twice: first when developments that might have enhanced their property values are enticed into the TIF district and second when they pay more taxes or receive less services because of the TIF district.

Similar findings apply to the issuance of industrial revenue bonds, as the city issued last week and issues frequently.

Finally, I have a simple question for the mayor, city council, and city staff: Will any downtown development occur without public subsidy?

Resources on tax increment financing:

Exchange Place Redevelopment Plan April 13, 2010

Tagged as: Downtown Wichita arena, Subsidy, Tax abatements, Tax increment financing, Taxation, TIF districts, Wichita city council, Wichita city government

{ 9 comments }

Wichita Warren Theater IRB a TIF district in disguise

by Bob Weeks on April 4, 2010

in Wichita city government

On Tuesday the Wichita City Council will consider an economic development incentive for a local business. The process the city is using to grant this incentive bypasses the scrutiny that accompanies the formation of TIF districts while providing essentially the same benefit.

The proposal provides Industrial Revenue Bond financing to American Luxury Cinemas, Inc., d.b.a. 21st Street Warren Theatre, a company owned in part by Wichita theater operator Bill Warren. Under the city’s IRB program, no city money is lent to Warren, and the city does not provide any guarantee that the bonds will be repaid.

Instead, the benefit of the IRB to Warren is that he will escape paying property taxes on the new theater. Also, he will likely avoid paying sales taxes on purchases made with the bond money. (The city-supplied material doesn’t mention the sales tax exemption, but this incentive is commonly granted, and mention of it was likely omitted by mistake from the agenda report.)

This project is a TIF district in effect. It has the same economic benefit to the applicant. But the way this deal is structured means it doesn’t have to go through the normal approval process of a TIF district. Specifically, the Sedgwick County Commission will not have a chance to consider approval of these incentives. That approval would probably not be granted.

The process being used also allows the city to bypass the 30 day notice of a public hearing required for formation of a TIF district.

In a TIF district, the city borrows money and spends it immediately for the benefit of the TIF district. What the city spends money on isn’t important, as long as it’s spent on things that the owners of the property in the TIF district would have to pay for themselves, if not for the city. This is important to remember, as defenders of TIF districts say that the city money is spent “only on infrastructure,” as if most developers don’t have to pay for their own infrastructure.

As improvements to property in the TIF district are made — buildings being built or renovated, etc. — the property taxes on the property go up. This increase in the tax payments — that’s the increment in TIF — goes to pay off the borrowed money that was spent on the TIF district.

Since the TIF district spending was for the exclusive benefit of of the TIF district applicant, and the increased property taxes are paying off the bonds that provided that spending, TIF districts, in effect, let the applicants keep the increase in their own property taxes for their exclusive benefit.

Whenever anyone else improves their property and has to pay higher taxes, those taxes go to fund the general operations of government.

(If this sounds confusing and complicated, it is. It is confusing by design. A while back I told the council: “I’ve come to realize that this confusion serves a useful purpose to this council, because if the people of Wichita knew what was really happening, they’d be outraged.”)

In the Warren deal that the council will consider on Tuesday, no TIF district is being created. But because the property is in the IRB program, property taxes will be forgiven. Warren is agreeing to make payments equal to the present tax bill on the property (plus a small annual increase).

The net effect is that the Warren group will not pay property taxes on the value of the new project. It’s the same economic effect as a TIF district, without the scrutiny that accompanies formation of a TIF district.

Some city politicians and bureaucrats — particularly Mayor Carl Brewer, council member Jeff Longwell, and the city’s economic development chief Allen Bell — have complained that the city doesn’t have enough “tools in the toolbox” when it comes to dishing out economic development incentives.

This applicant has been the recipient of economic development incentives, including a TIF district formed for its benefit. When that business was failing, the city created a special tool for Warren’s benefit: a no-interest and low-interest loan.

Here we see another new tool being created — the formation of what is, in effect, a TIF district without accompanying scrutiny.

Warren IMAX Theater Project

Tagged as: Allen Bell, Carl Brewer, Economic development, Jeff Longwell, Subsidy, Tax abatements, Tax increment financing, Taxation, TIF districts, Wichita city council, Wichita city government

{ 7 comments }

Will the real robber barons please stand up?

March 30, 2010

At the April 13th meeting of the Wichita City Council a request from downtown developer Real Development will be made for an additional $2.2 million taxpayer subsidy for its condo project Exchange Place, located at Douglas and Market. With two weeks to go before this public hearing there is still time for council members to read The Myth of the Robber Barons by Burton Folsom. Folsom’s easy-to-read 134-page narrative lays out the case for entrepreneurship in America and can be read in one evening. It’s a history lesson worth reading by all.

Read the full article →

Randal O’Toole on Wichita’s WaterWalk and government planning

February 10, 2010

As part of Randal O’Toole’s visit to Wichita, he recorded some remarks in front of a few of Wichita’s monuments to government planning. Paul Soutar of Kansas Watchdog recorded video and assembled the remarks. His reporting is Randal O’Toole on Wichita’s WaterWalk and Government Planning.

Read the full article →

Businesses in Old Town Cinema district fought property taxes

February 9, 2010

As reported in the Wichita Eagle by Brent Wistrom: “Business owners in a special taxing district surrounding the Old Town Warren Theatre have fought to have their property taxes reduced, forcing the city to cover debts incurred when the city bought land, installed utilities and built a park to spur the development.”

I guess no one wants to pay taxes, even when those taxes go to pay off bonds that benefited your property. That’s true even though the city has made a no-interest and low-interest loan to the primary business in this TIF district. As the Eagle story reports: “The move was seen as a way to ensure the theater’s success and give the TIF district a boost.”

Read the full article →

Public forum on WaterWalk hotel proposal

January 20, 2010

On Monday January 25, a group of citizens will hold a public forum concerning the proposal for a hotel in the WaterWalk development in downtown Wichita.

Read the full article →

Estes Park repeals TIF district

January 20, 2010

A city in Colorado has voted to repeal a TIF district. Wichitans ought to take notice. Randal O’Toole, the author of the post, notes the complexity of the TIF mechanism. This is in line with testimony I’ve delivered to the Wichita City Council, in which I characterized TIF districts as “a confusing arrangement that hides the reality and size of the subsidy given to TIF developers.” The benefit, I said, is that “this confusion serves a useful purpose to this council, because if the people of Wichita knew what was really happening, they’d be outraged.”

O’Toole will be visiting Wichita on Thursday and Friday February 4 and 5 for a series of events, including a public lecture on Thursday evening. Details will follow.

Read the full article →

Wichita planning puts freedom, prosperity at risk

October 13, 2009

Mr. Mayor, members of the council,

I’m here today to ask this council to put aside consideration of this proposal. My reasons are not particular to this proposal or planning firm, but rather I am concerned that we believe we have the ability to successfully plan at all.

Read the full article →

Welshimer files for re-election to Sedgwick County Commission

October 9, 2009

Today, Sedgwick County Commissioner Gwen Welshimer filed for re-election to her position as a member of the commission. Her statement is below.

Welshimer, a Democrat, is so far the only candidate in that party. There are three Republicans who have either filed or are considering filing.

Read the full article →

Goody Clancy proposal for Downtown Wichita revitalization master plan

September 29, 2009

Last Friday a selection committee selected one company from four finalists to lead the planning effort for the revitalization of downtown Wichita. If some city leaders had their way, citizens of Wichita wouldn’t be able to see this document until after the city council makes a decision to follow — or not — the recommendation of the selection committee. But thanks to city manager Robert Layton’s decision, this document is now available for all to read. (Thanks also go to council member Jim Skelton, for his unsuccessful effort to release the documents.)

Read the full article →

Wichita planning firm hopefuls make pitch

September 24, 2009

This past Tuesday and Wednesday, the four planning firms that were selected as finalists for the master plan for the revitalization of downtown Wichita made their public presentations.

Read the full article →

Wichita’s redevelopment role model needs scrutiny

September 17, 2009

On the City of Wichita’s cable channel 7, Kansas City’s Power & Light District is presented as a model for the revitalization of downtown Wichita. Wichita Mayor Carl Brewer sees this district as Wichita’s competition.

So yesterday I went to take a look for myself. And I agree with the mayor. It’s a neat place. It’s huge. It would be great if Wichita had something like it.

Read the full article →

Wichita downtown revitalization discussed on Kansas Week

August 16, 2009

Bob Weeks discusses planning for downtown Wichita revitalization and what he learned on his trip to the Platinum Triangle in Anaheim, California. Host Tim Brown and guest Randy Brown also appear. From the KPTS Television show Kansas Week, August 14, 2009.

Read the full article →

Wichita’s getting ready to plan

August 14, 2009

The danger we face is that Wichita’s plan will end up like almost all other urban plans — a top-down effort micromanaged by politicians and bureaucrats, people whose incentives are all wrong. We already have the structure in place, with our mayor promoting the plan for downtown as his signature achievement, and a tax-supported downtown development organization headed by a young and energetic planning professional.

There is a different way to go about redevelopment, a way that respects freedom and property rights, while at the same time promising a better chance of success.

Read the full article →

Someone in California understands TIF

August 4, 2009

In California, they’re called redevelopment districts. In Kansas, we call them tax increment financing or TIF districts. By either name, they provide a way to channel money to politically favored developers.

Read the full article →

Wichita covered with tax-advantaged districts

April 29, 2009

Here’s a map of improvement and development districts in Wichita and Sedgwick County.

Sometimes critics of tax increment financing districts (TIF districts) say things like “If TIF districts are good for development, why not make the entire city a TIF district?” Maybe we’re headed that way.

Read the full article →

Williams — King — Minnesota Guys connection raises concern

March 27, 2009

There’s a triangle of influence and connections that should raise flags of caution as voters decide the makeup of the Wichita city council.

At the center is Beth King, a Wichita public relations executive. She’s well known in city hall, having managed the mayoral campaign of Carl Brewer in 2007. She’s said to be a close advisor to him. Her name is so familiar that when her emails are forwarded among department heads in city hall, she’s referred to as simply “Beth.” No last name is necessary.

Read the full article →

KenMar Shopping Center, Funded by Righteousness

March 4, 2009

Can the Lord’s work be funded by taxation? If you’re Reverend Kevass Harding, the answer is sure, why not? He might even think it’s his calling.

Never mind that at its fundamental level, taxation takes money from one person against their will and gives it to another.

Read the full article →

Proposition K and TIF Districts Collide

February 18, 2009

A recent story in the Wichita Eagle by Dion Lefler (Tax plan could leave city with TIF debt) illustrates the some of the problems that can happen with complex economic development efforts.

The problem in this case lies in the interaction of Proposition K, an effort to reform property tax appraisals in Kansas, and tax increment financing, or TIF districts.

Read the full article →

In Wichita, let’s have economic development for all

February 18, 2009

There’s probably little doubt that offering incentives to companies to move to Wichita results in some that do. And, as we’ve seen, some Wichita companies are adept at inciting rumors they might move or locate new facilities somewhere else in order to gain some advantage or incentive from local or state (or sometimes both) government.

Read the full article →

Wichita Center City TIF Missed Linkage Between “Unrelated” Developers

February 11, 2009

A missed linkage between developers involved in a Wichita tax increment financing (TIF) project means progress should be stopped until all facts are known. In July, 2007, the City of Wichita considered a development plan (the Center City South Redevelopment District) for a tax increment financing (TIF) district in downtown Wichita. The beneficiary of the [...]

Read the full article →

Wichita Center City South TIF Changes Slip Through

February 4, 2009

At the December 16, 2008 meeting of the Wichita City Council, a major revision to the development plan of a downtown Wichita TIF district was made. This TIF district is a project of Real Development, whose principals Michael Elzufon and David Lundberg are commonly known as the “Minnesota Guys.” The changes to this plan were [...]

Read the full article →

Prudence Requires Postponement of Wichita TIF District: The Video

January 6, 2009

Bob Weeks recommends postponing approval of a Wichita TIF district until new procedures are put in place. Plus, a question about future mill levies, with a response from council member Sharon Fearey. The remarks in printed form are at this link: Prudence Requires Postponement of Wichita TIF District.

Read the full article →

Prudence Requires Postponement of Wichita TIF District

January 6, 2009

Remarks to be delivered to the Wichita City Council on January 6, 2009. Mr. Mayor, members of the council: Last month it was discovered that procedures used to investigate the background of potential city business partners were lacking in some respects. It is now recognized that the process that were in place failed to give [...]

Read the full article →

Wichita city hall: more evidence of lax procedures

December 29, 2008

Wichita Eagle reporting from yesterday (Past client: Developer admitted embezzling) provides more evidence of the need for improved procedures and greater accountability at Wichita city hall. In this story, investigative journalist Dion Lefler reports that Grant Gaudreau admitted stealing money from a business partner. This comes to light just after the City of Wichita nearly became a business partner with Gaudreau.

Read the full article →

Tax increment financing (TIF Districts) in Wichita, explained

December 24, 2008

Last week I spoke to the Wichita Pachyderm Club about tax increment financing, or TIF districts, in Wichita. John Todd spoke about the same topic, too.

Surprisingly, my remarks contained some different material from the talk given to the same group by Allen Bell, Wichita’s director of urban development.

Read the full article →

Kansas law requires Wichita to hold another public hearing

December 23, 2008

Recently, the Wichita city council passed a resolution announcing a public hearing on a TIF district and its project plan. The city then, on the day before the hearing, substantially changed the plan. This change means that the city must hold another public hearing.

Read the full article →

Some Wichita communications breakdowns are more important than others

December 19, 2008

At the December 16, 2008 meeting of the Wichita City Council, Mayor Carl Brewer scolded interim city manager Scott Moore for failure to communicate effectively with council members. The process, according to the mayor, “made a complete mockery of the entire process and everything we actually do.”

Read the full article →

← Previous Entries