Tag Archives: Wichita city government

Wichita City Library, 1965

What incentives can Wichita offer?

Wichita government leaders complain that Wichita can’t compete in economic development with other cities and states because the budget for incentives is too small. But when making this argument, these officials don’t include all incentives that are available.

In making the case for an economic development fund paid for by a sales tax, the argument goes like this: “Wichita and Sedgwick County compete conservatively with incentives. The City of Wichita and Sedgwick County have a total of $1.65 million in new uncommitted funds for cash incentives this year with any unused money going back to the general fund.” (Will Wichita Accelerate Competition for Primary Jobs?, presentation made to Wichita city council.)

This statement is true only if we use a very narrow definition of the word “incentive.” By any reasonable definition, Wichita has many incentives worth much more than what is claimed by Wichita economic development officials and politicians.

In fact, the report cited above contains contradictory information about the amounts that are available for economic development incentives in Wichita. Here is an example: “The $4.5 million PEAK program incentive from the Kansas Department of Commerce was an important factor in keeping NetApp in Wichita. Locally we were able to provide $836,000 in incentives.”

So with an incentives budget of $1.65 million, a Wichita company received $5.3 million in incentives. Some of that, like the PEAK incentive, is paid over a period of years. But that amount doesn’t begin to describe the benefits NetApp received.

Available incentive programs

Kansas Department of Commerce logoA letter to NetApp from the Kansas Department of Commerce laid out the potential benefits from the state. As detailed in the letter, the programs with potential dollar amounts are: Promoting Employment Across Kansas (PEAK), up to $7,705,535; Kansas Industrial Training with PEAK, up to $160,800; sales tax savings of $6,880,000; personal property tax exemption, $11,913,682; and High Performance Incentive Program (HPIP), $8,500,000. The total of these is $35,160,017. Some of these benefits are paid over a period of years. The PEAK benefits are payable over seven years, according to the letter, so that’s about $1.1 million per year. These are potential benefits; the company may not actually qualify for and receive this entire amount. But it’s what the state offered.

It’s true that some of these programs are not cash incentives of the type Wichita complains of lacking. But if a company is going to make purchases, and the state says you can skip paying sales tax on the purchases — well, that’s as good as cash. $6,880,000 in the case of NetApp, according to the Kansas Department of Commerce.

Local tax exemptions

Besides sales tax exemptions, the city has other types of tax exemptions it regularly offers. These exemptions can have substantial value. In 2008 as Drury contemplated Broadview Hotel 2013-07-09 020purchasing the Broadview Hotel, the city allowed the hotel to escape paying much of the taxes that the rest of us have to pay. According to city information, Drury planned to spend $22,797,750 on the hotel. If we use this as the appraised value for the property when it is complete, the annual property taxes due for this property would be $22,797,750 times .25 times 126.323 divided by 1000, or $719,970. This calculation may be rough, but it gives us an approximation of the annual operating subsidy being given to this hotel for the next ten years.

It's important for citizens to know incentivesWhen Boeing announced in 2012 that it was closing its Wichita operations, city leaders complained that Boeing was leaving Wichita even though it had received many incentives. From 1979 to 2007, Boeing received tax abatements through the industrial revenue bond process worth $658 million, according to a compilation provided by the City of Wichita. (This is not money the city lent or gave to Boeing. IRBs provide a vehicle for granting tax abatements or exemptions.) At the time, city officials said the average amount of bonds was $120 million per year. With Wichita commercial property tax rates at 3.008 percent ($30.08 per $1,000 of appraised value), according to GWEDC, that’s a tax savings of around $3.6 million per year. To Boeing, that’s as good as receiving cash year after year.

Tax increment financing

In 2013 Wichita approved a package benefiting Exchange Place in downtown. Here’s what the city council agenda packet gives as the sources of financing for this project.

HUD Loan Amount         $29,087,700
Private Equity            5,652,254
Tax Credit Equity        19,370,395
TIF Proceeds             12,500,000
Total Sources of Funds  $66,610,349

TIF, or tax increment financing, diverts future increased tax revenues away from their normal uses and diverts them back to the project. In this case, the city will borrow $12,500,000 by selling bonds. It will give this money to the developer. Then, TIF proceeds will be used to repay these bonds.

Some will argue that TIF isn’t really an incentive. The owners of the property will have to pay their property taxes, just like any other property owner. But for this project, the property taxes are used for the project’s own benefit instead of funding the costs of city government. This project gets to spend $12.5 million of its property tax payments on itself, rather than funding the costs of Wichita city government.

Tax credits

Ambassador Hotel sign 2014-03-07Note that the sources of financing for the Exchange Place project includes “Tax Credit Equity.” Here’s an example of another downtown project, the Ambassador Hotel, and the incentive package the city prepared:

  • $3,325,000 in tax increment financing.
  • $4,245,000 in city funding under the capital improvement plan (CIP), to build parking for the hotel.
  • $3,800,000 in tax credits from the State of Kansas.
  • $3,500,000 in tax credits from the U.S. government.
  • $537,075 in sales tax exemptions on purchases during the construction and furnishing of the hotel.
  • $60,000 per year in community improvement district (CID) sales tax. The hotel charges an extra two cents per dollar sales tax, which the state returns to the hotel.
  • $127,499 per year (estimated) in rental revenue to the developers from a sweetheart lease deal.
  • Participation in Wichita’s facade improvement program, which provides special assessment financing that is repaid.

All told, this project was slated to receive $15,407,075 in taxpayer funds to get started, with additional funds provided annually.

The tax credits for this project are historic preservation tax credits. They have the same economic impact as a cash payment. The federal tax credits are available across the country, while the Kansas tax credits, of course, are a state program. In this case the hotel developers received an upfront payment of $3.8 million from the state in a form that’s as good as cash.

STAR bonds

Last year a STAR bonds district in northeast Wichita was approved to receive $31,570,785 from these bonds. The STAR bonds are paid off with sales tax revenue that would otherwise go to the state and overlapping jurisdictions. This is sales tax collected from the business’s customers, and doesn’t cost the business anything.

Adding it up

This list is not complete. There are other programs and other beneficiaries of economic development subsidies. With this in mind, it is disingenuous for city and other officials to use the $1.65 million figure as though it was all Wichita had to offer. It’s important for citizens to know that contrary to the claims of officials, Wichita has many economic development incentive programs available, and some have substantial value to the recipients, with corresponding cost to the city and other jurisdictions.

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Issues surrounding the Wichita sales tax and airport

In this episode of WichitaLiberty.TV: Who would be most harmed by the proposed Wichita sales tax? Also: A look at updated airport statistics, and what the city could do if it wants to pass the sales tax. View below, or click here to view at YouTube. Episode 55, broadcast August 17, 2014.

WichitaLiberty.TV set 2014-04-29 01 800

Economic development in Wichita, one tale

In this excerpt from WichitaLiberty.TV: A look at a recent episode of economic development in Wichita, and what can we learn from that. View below, or click here to view at YouTube. Originally broadcast June 15, 2014.

For more on this issue, see A lesson for Wichita in economic development.

Additional cost of proposed Wichita sales tax as percent of after-tax income, by income quintile

Wichita sales tax hike would hit low income families hardest

Analysis of household expenditure data shows that a proposed sales tax in Wichita affects low income families in greatest proportion, confirming the regressive nature of sales taxes.

One of the criticisms of a sales tax is that it is regressive. That is, it affects low-income families in greatest proportion. This is an important consideration to explore, because in November Wichita voters will decide whether to create a new city sales tax of one cent per dollar. If enacted, the sales tax in Wichita would rise from 7.15 percent to 8.15 percent.

It’s an important issue because to hear some people talk, it seems as though they are saying the proposed tax is “one penny.” Anyone can afford that, they say. But the tax is an extra penny on each dollar spent, meaning that the cost of, say, fifty dollars of food at the grocery store increases by fifty cents, not one penny.

Further, we hear the sales tax spoken of as being a one percent increase. That’s true, if we mean a one percent increase in the cost of most things we buy. And one percent, after all, is just one percent. Not a big deal, people say. But considering the sales tax we pay, a relevant calculation is this: (8.15 – 7.15) / 7.15 = 14 percent. Which is to say, the amount of sales tax we pay will rise by 14 percent.

Click the table for a larger version.
Click the table for a larger version.
To explore the effect of the proposed sales tax on families of different incomes, I gathered data from the U.S. Census Bureau, specifically table 1101, which is “Quintiles of income before taxes: Annual expenditure means, shares, standard errors, and coefficient of variation, Consumer Expenditure Survey, 2012, (Selected Values).” This table divides families into five quintiles. It gives annual expenditures for each quintile in various categories. For each category, I judged whether it is subject to sales tax. For example, for housing, I indicated it is not subject to sales tax. This is not totally accurate, as some of the spending in this category may be for taxable items like maintenance and repair supplies. Food is subject to sales tax in Kansas, although low-income families may apply for a rebate of the tax. Despite these shortcomings, I feel this data gives us an approximation of the effect of the sales tax. (Click on the table to view a larger version, or see below for how to obtain the data.)

As you might imagine, as income rises, so does total taxable expenditures. Of interest, the percent of expenditures that are taxable is relatively constant across income levels.

Additional cost of proposed Wichita sales tax as percent of after-tax income, by income quintileAn important finding is the bottom line of the table, which shows the increase in cost due to the proposed sales tax as percent of income after taxes. This calculates the relative impact of the proposed sales tax increase as a percent of income. It is here that we expect to see the regressive nature of a sales tax appear. For all consumers, the increase in cost is 0.35 percent. For the lowest class of income, the increase in cost is 0.97 percent of income. It falls to 0.26 percent for the highest income class.

This means that the lowest income class of families experience an increase nearly four times the magnitude as do the highest income families, as a percentage of after-tax income. This is the regressive nature of sales taxes illustrated in numbers, and is something that Wichita policy makers and voters should consider.

I’ve made the data available as a Google Docs spreadsheet. Click here for access.

Wichita Airport Passengers, Monthly, All Carriers vs. Airtran/Southwest, through May 2014

Wichita airport statistics updated

Why do Kansans pay taxes, including sales tax on food, to fund millions in subsidy to a company that is experiencing a sustained streak of record profits?

As the Wichita City Council prepares to authorize funding for Southwest Airlines, it’s worth taking a look at updated statistics regarding the airport. The agenda item the council will consider is available here.

Passengers

Wichita Airport Passengers, Monthly, All Carriers vs. Airtran/Southwest, through May 2014
Wichita Airport Passengers, Monthly, All Carriers vs. Airtran/Southwest, through May 2014
The city has pointed to the arrival of Southwest last June as a game-changer for the airport. It’s true that passenger counts have increased. In the nearby chart I present monthly passenger counts, enplanements only, at the Wichita airport for all carriers and for Southwest separately. I’ve treated Southwest as a continuation of AirTran, as Southwest started service at the same time AirTran stopped, and Southwest is receiving a similar subsidy. I show monthly traffic, and also a 12-month moving average to smooth out the extreme monthly variations in passenger traffic. (Click on charts for larger versions.)

Of note is that while the Southwest passenger count is rising, it started from a low position. Also, the count has not risen to the level that AirTran experienced in the middle of the last decade and as recently as 2011.

Flights

Wichita Airport Passengers, Monthly, Compared to National, through April 2014
Wichita Airport Passengers, Monthly, Compared to National, through April 2014
Wichita Airport Monthly Departures, through April 2014
Wichita Airport Monthly Departures, through April 2014
Wichita Airport Monthly Departures, Weekdays Only, through April 2014
Wichita Airport Monthly Departures, Weekdays Only, through April 2014
Considering the number of flights leaving the Wichita airport, the recent trend is up. This is a departure from recent trends. Although the number of available flights nationally has been slowly falling, it was falling faster for Wichita. That trend, for now, is reversed, although the number of flights in Wichita is far below the level of a decade ago.

The number of flights is an important statistic. Greater attention is given to fares, but for many travelers, especially business travelers, an available flight at any price is paramount. Last year at this time I wrote “A program designed to bring low air fares to Wichita appears to meet that goal, but the unintended and inevitable consequences of the program are not being recognized. In particular, the number of flights available at the Wichita airport continues to decline.” So it is good news that the number of flights has risen.

Wichita compared to the nation

Wichita Airport Statistics, through 2013
Wichita Airport Statistics, through 2013
Looking at passengers through the end of 2013, Wichita has now experienced an uptick. Passenger traffic in Wichita had been relatively level at a time that national traffic was rising. The number of available seats on flights has started to rise in Wichita, while nationally the trend has been level the past several years.

Load factor — the percent of available seats that were sold — is rising in Wichita, as it is nationally.

The last set of four charts is from an interactive visualization I prepared using data from the Bureau of Transportation Statistics. Click here to open the visualization in a new window. You may select any number of airports for display on the charts.

Southwest profits

Recently Southwest reported record high profits for the quarter ending in June. The company said that net income was $485 million, which it said represented the fifth consecutive quarter of record profits.

We might ask this question: Why do Kansans across the state pay taxes, including sales tax on food, to fund millions in subsidy to a company that is experiencing a sustained streak of record profits?

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Waste, economic development, and water issues.

In this episode of WichitaLiberty.TV: Wichitans ought to ask city hall to stop blatant waste before it asks for more taxes. Then, a few questions about economic development incentives. Finally, how should we pay for a new water source, and is city hall open to outside ideas? View below, or click here to view at YouTube. Episode 53, broadcast July 27, 2014.

Wichita’s vampires and monsters

In this excerpt from WichitaLiberty.TV: The City of Wichita urges citizens to take steps to stop “vampire” power waste. But before hectoring people to introduce inconvenience to their lives in order to save small amounts of electricity, the city should tackle the real monsters of its own creation. Originally broadcast June 29, 2014. View below, or click here to view at YouTube.

For more on this issue, see “Forget the vampires. Let’s tackle the real monsters.”

Wichita City Budget Cover, 1993

For Wichita’s new water supply, debt is suddenly bad

Wichita city leaders are telling us we need to spend a lot of money for a new water source. For some reason, debt has now become a dirty word.

Details are not firm (that’s a problem right there), but the amount needed is $250 million, city officials say. It could be less, they now speculate, maybe only $200 million.

To raise these funds, here’s the choice we’re given: Either (a) endure a sales tax for five years, or (b) borrow money, raise water bills for 20 years, and pay a lot of interest.

Wichita Area Future Water Supply: A Model Program for Other Municipalities
Wichita Area Future Water Supply: A Model Program for Other Municipalities
It’s a similar argument made in favor of a sales tax to pay for the Intrust Bank Arena in downtown Wichita. By paying higher sales tax for a short while, we avoid long-term debt.

There’s also the argument made that by using a sales tax, visitors to Wichita help pay for the water project. Of course, the sales tax is largely paid by local residents. My estimates indicate that raising the sales tax by one cent per dollar costs the average household $223 per year. That’s based on U.S. Census data of household spending in various categories, some subject to sales tax, and some not.

But even if we can get visitors to Wichita to pay part of the project’s cost through a sales tax, that’s not necessarily a wise course of action. By making it more expensive to visit Wichita, we make it a less desirable destination.

The motivation of those who argue for raising funds by getting outsiders to pay for our water project through a sales tax may be missing a subtle point. That is, much of what is “sold” in Wichita is not subject to sales tax, as the output of many manufacturers in Wichita isn’t taxed. The fuselages of Boeing 737 jetliners is an example. But these manufacturers use a lot of water and pay water bills. The cost of that they’ll probably pass on to their customers.

Wichita City Budget Cover, 1993Of course, by making products manufactured in Wichita more expensive, we make them less desirable. There really is no free lunch, as the economists say.

All these arguments link the project with its funding too closely. They ought to be independent decisions.

What’s really curious is the city’s sudden aversion to debt. Almost all the money used to pay for the ASR to this point was borrowed. So far, the total cost of ASR is $247 million. It’s common to pay for long-lived capital assets with borrowed funds. So it’s strange for city council members to suddenly decide that debt is not good, and that we have to pay for this project with cash, which is what the sales tax does.

Here’s another alternative: If the project costs $250 million, let’s raise water bills by that amount over five years. In this way, water users pay for the new water supply, and we avoid the debt that city council members seem determined to avoid.

This might be a bitter pill to swallow. In 2013, the Wichita water utility collected about $65 million in revenue. That doesn’t represent the total that people pay on their water bills, as the sewer utility collected $50 million. Adding $50 million per year to water bills might seem like a large increase, and it would be.

But it’s important to have water users pay for water. Also, we need to be aware of the costs of a new water supply. That’s easier to accomplish when people pay this cost through their water bills. When paying through a general sales tax, this linkage is less obvious. There is less transparency, and ultimately, less accountability.

A street light in downtown Wichita, July 22, 2014.

If the transit lights are off, the street lights are probably on

When the city of Wichita is not concerned about waste that is easily observed, how careful is it about avoiding waste not easily seen by citizens?

Last Friday afternoon the parking lot lights Wichita Transit Center where switched on, as they often are during the day.

Street lights in downtown Wichita, July 22, 2014.
Street lights in downtown Wichita, July 22, 2014.
So at lunchtime today as I drove by the Transit Center and saw that the lights were off, I was relieved that the city wasn’t wasting electricity lighting the noonday sky.

But I didn’t have to travel much farther before I saw street lights turned on for several blocks on Douglas, Broadway, and Topeka. This is not unusual.

Waste like this is unacceptable. The city council is likely to recommend that Wichitans vote for higher sales taxes as the city can’t afford to run the buses or adequately maintain streets. Before asking for higher taxes, the city should stop wasteful spending on burning street lights in the middle of the day.

You have to wonder: If the city is, apparently, not concerned about blatant waste like this — waste that anyone can easily observe — what is it doing about waste that can’t easily be seen?

A street light in downtown Wichita, July 22, 2014.
A street light in downtown Wichita, July 22, 2014.
This is indicative of the attitude of the city as explained in Forget the vampires. Let’s tackle the real monsters. The city has an advertising campaign to persuade residents to do things like unplugging phone chargers and televisions when not in use. You see, these devices may use small amounts of electricity even when not in use. That’s the “vampire” power waste. The city says we need to avoid this waste in order to keep our air clean.

But street lights burning in the middle the day: This wastes a lot of power.

Before considering any extra funding for the city, let’s ask that it stop wasteful spending like these lights. Even better, before sending any funding, let’s stop this waste.

I realize that the lights illustrated in these photographs are, undoubtedly, a small portion of the city’s spending. But you don’t have to look very hard to find waste like this, and we know that small examples of waste are multiplied many times. So when city leaders tell us that there is nowhere left to cut in the budget, that everything that can be done to trim the fat has already been done, and that the only thing we can do is raise taxes — well, think of this photograph and others illustrated in Waste in Wichita, the seen and probably unseen, Wichita’s monsters on display, again, Forget the vampires. Let’s tackle the real monsters, Wichita advances in the field of cost savings, Another Friday lunch, and even more lights are on, To compensate, Wichita switched on the street lights, In Wichita, the streetside seating is illuminated very well, In Wichita, the rooftops are well-lit and On a sunny day in downtown Wichita you can see the street lights.

This is not to say that waste like this does not occur in the private sector. Of course it does. But businesses and individuals have a powerful incentive to avoid waste that isn’t present in government: Businesses and people are spending their own money. And even if they waste money, it’s their money, not ours.

Wichita City Budget Cover, 1962

Economic development incentives in Wichita: A few questions

Wichita justifies its use of targeted economic development incentives by citing benefit-cost ratios that are computed for the city, county, school district, and state. If the ratio exceeds a threshold, the project is deemed worthy of investment.

Wichita City Budget Cover, 1962The process assumes that these benefit-cost ratios are valid. This is far from certain, as follows:

1. The benefits in the calculation are not really benefits. Instead, they’re in the form of projected higher tax revenues collected by governments. This is very different from the profits that private sector companies earn from their customers in voluntary market transactions.

2. Even if government collects more tax by offering incentives, it should not be the goal of government to grow just for the sake of growing.

3. Government claims that in order to get these “benefits,” incentives are necessary. But often the new economic activity (relocation, expansion, etc.) would have happened without the incentives.

4. Why is it that most companies are able to grow without incentives, but only a few companies require incentives? What is special about these companies? Why do some companies receive incentives year after year?

5. If the relatively small investment the city makes in incentives is responsible for such wonderful outcomes in terms of jobs, why doesn’t the city do this more often? If the city has such power to create economic growth, why is anyone unemployed?

Wichita City Council Chambers

For Wichita leaders, novel alternatives on water not welcome

A forum on water issues featured a presentation by Wichita city officials and was attended by other city officials, but the city missed a learning opportunity.

This week Kansas Policy Institute held an educational form on the issues of water in the Wichita area. The event featured four presentations with questions and answers, with most being about one hour in length.

This was a welcome and important event, as the city is proposing to spend several hundred million dollars on an increased water supply. It is likely that citizens will be asked to approve a sales tax to pay this cost. It’s important that we get this right, and citizen skepticism is justified. The city has recently spent $247 million on a water project that hasn’t yet proved its value over a reasonably long trial. A former mayor has told audiences that he was assured Wichita had adequate water for the next 50 years. It was eleven years ago he was told that. Wichita’s current mayor has admitted that the city has not spent what was needed to maintain our current infrastructure, instead pushing those costs to the future.

Most of the information that Wichitans have access to is provided by city government. So when an independent group produces an educational event on an important topic, citizens might hope that Wichita city officials take part.

And, Wichita city officials did take part. The second of the four presentations was delivered by Wichita public works director Alan King and council member Pete Meitzner (district 2, east Wichita). City governmental affairs director Dale Goter and council member Lavonta Williams were in the audience.

But after this presentation ended, the four city officials left.

What did they miss? They missed two additional presentations, or half the program. The city officials did not hear a presentation by Dr. Art Hall of Kansas University which presented novel ideas of using markets for water resources. Particularly, how Wichita could secure increased water supply by purchasing water rights and using the infrastructure it already has in place.

In the final presentation, the audience asked questions that the presenter was not able to answer. City officials like public works director King would have been able to provide the answers.

I understand that city council members are part-time employees paid a part-time salary. Some have outside jobs or businesses to run. But that’s not the case with the city’s public works director or its governmental affairs director.

Come to think of it, where was the city manager? Assistant city manager? Other council members? The city’s economic development staff?

Where was Mayor Carl Brewer?

If you’ve attended a city council meeting, you may have to sit through up to an hour of the mayor issuing proclamations and service awards before actual business starts. Fleets of city bureaucrats are in the audience during this time.

But none of these would spend just one hour listening to a presentation by a university professor that might hold a solution to our water supply issue.

I understand that city officials might not be the biggest fans of Kansas Policy Institute. It supports free markets and limited government.

But city officials tell us that they want to hear from citizens. The city has gone to great lengths to collect input from citizens, implementing a website and holding numerous meetings.

About 70 people attended the KPI forum. Citizens were interested in what the speakers had to say. They sat politely through the presentation by the two city officials, even though I’m sure many in the audience were already familiar with the recycled slides they’d seen before.

But it appears that Wichita city officials were not interested in alternatives that weren’t developed by city hall. They can’t even pretend to be interested.

Wichita commercial property taxes are high … really high

Wichita commercial property tax rates compared to national average
Wichita commercial property tax rates compared to national average
In this excerpt from WichitaLiberty.TV. Wichita commercial property taxes are very high, according to an ongoing study. View below, or click here to view on YouTube. For more on this topic, including a summary of Wichita data compared to other cities, see Wichita property taxes compared.

currency-briefcase-money-163502_1280

Economic development incentives, at the margin

visualization-exampleThe evaluation of economic development incentives requires thinking at the margin, not the entirety.

When considering the effect of economic development incentives, cities like Wichita use a cost-benefit analysis to determine whether the incentive is in the best interests of the city. The analysis usually also considers the county, state, and school districts, although these jurisdictions have no say over whether the incentive is granted, with a few exceptions. The basic idea is that by paying money now or forgiving future taxes, the city gains even more in increased tax collections. This is then pitched as a good deal for taxpayers: The city gets more jobs (usually) and a profit, too.

Economic activity generates tax revenue flowing to governmental agencies. When people work, they pay income taxes. When they buy stuff, they pay sales taxes. When they create new property or upgrade existing property, it is taxed.

In the calculation of cost-benefit ratios, when a company receives economic development incentives, government takes credit for the increase in tax revenue. Government often says that without the incentive, the company would not have located in Wichita. Or, it might not have expanded in Wichita. Or these days, it is claimed that incentives are necessary to persuade companies to consider remaining in Wichita rather than moving somewhere else.

But there are a few problems with the arguments that cities and their economic development agencies promote. One is that the increase in tax revenue happens regardless of whether the company has received incentives. What about all the companies that locate to or expand in Wichita without receiving incentives?

Related is that jurisdictions may grant relatively small incentives and then take credit for the entire deal. I’ve been told that when economic development agencies learn of a company moving to an area or expanding, they swoop in with small incentives and take credit for the entire deal. The agency is then able to point to a small incentive that enabled a huge deal. As you can imagine, it’s difficult to get the involved parties to speak on the record about this.

The importance of marginal thinking

Here’s an example of the importance of looking at marginal gains rather than the whole enchilada. In 2012, the City of Wichita developed a program called New HOME (New Home Ownership Made Easy). The crux of the program is to rebate Wichita city property taxes for five years to those who buy newly-built homes in certain neighborhoods under certain conditions.

Wichita City HallThe important question is how much new activity this program will induce. Often government takes credit for all economic activity that takes place. This ignores the economic activity that was going to take place naturally — in this case, new homes that are going to be built even without this subsidy program. According to data compiled by Wichita Area Builders Association and the WSU Center for Economic Development and Business Research — this is the data that was current at the time the Wichita city council made its decision to authorize the program — in 2011 462 new homes were started in the City of Wichita. The HOME program contemplated subsidizing 1,000 homes in a period of 22 months. That’s a rate of 545 homes per year — not much more than the present rate of 462 per year. But, the city has to give up collecting property tax on all these homes — even the ones that would be built anyway.

What we’re talking about is possibly inducing a small amount of additional activity over what would happen naturally and organically. But we have to subsidize a very large number of houses in order to achieve that. The lesson is that we need to evaluate the costs of this program based on the marginal activity it may induce, not all activity. For more, see Wichita new home tax rebate program: The analysis.

Lights of various types turned on in the afternoon, Wichita Transit Center, July 11, 2104.

Waste in Wichita, the seen and probably unseen

When the city of Wichita is not concerned about waste that is easily observed, what about waste that not easily seen by citizens?

Lights on at midday in downtown Wichita. July 11, 2014.
Lights on at midday in downtown Wichita. July 11, 2014.
Yesterday most downtown Wichita street lights were switched off during the day. But not all, as can be seen by the many lights switched on at the Wichita Transit Center. They were on Friday afternoon, just as they are on many days.

Wichita Transit Center, July 11, 2104. Some of the bulbs are apparently burnt out.
Wichita Transit Center, July 11, 2104. Some of the bulbs are apparently burnt out.
While waste like this is unacceptable, it is all the more intolerable considering that Wichita’s transit system is out of money. The city council has recommended that Wichitans vote for higher sales taxes, part of which would fund the transit system. That would include, I suppose, funding the wasteful spending on burning street lights in the middle of the day. This is indicative of the attitude of the city as explained in Forget the vampires. Let’s tackle the real monsters.

You have to wonder: If the city’s transit department is, apparently, not concerned about blatant waste like this — waste that anyone can easily observe — what is it doing about waste that can’t easily be seen?

So before considering any extra funding for Wichita transit, let’s ask that it stop wasteful spending like these lights. Even better, before sending any funding, let’s stop this waste.

Lights of various types turned on in the afternoon, Wichita Transit Center, July 11, 2104.
Lights of various types turned on in the afternoon, Wichita Transit Center, July 11, 2104.
The lights illustrated in these photographs are, undoubtedly, a small portion of the city’s spending. But you don’t have to look very hard to find waste like this, and we know that small examples of waste are multiplied many times. So when city leaders tell us that there is nowhere left to cut in the budget, that everything that can be done to trim the fat has already been done, and that the only thing we can do is raise taxes — well, think of this photograph and others illustrated in Wichita’s monsters on display, again, Forget the vampires. Let’s tackle the real monsters, Wichita advances in the field of cost savings, Another Friday lunch, and even more lights are on, To compensate, Wichita switched on the street lights, In Wichita, the streetside seating is illuminated very well, In Wichita, the rooftops are well-lit and On a sunny day in downtown Wichita you can see the street lights.

This is not to say that waste like this does not occur in the private sector. Of course it does. But businesses and individuals have a powerful incentive to avoid waste that isn’t present in government: Businesses and people are spending their own money. And even if they waste money, it’s their money, not ours.

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Citizen activists and the proposed Wichita sales tax

In this episode of WichitaLiberty.TV: Two activists join host Bob Weeks to discuss activism at the local level. Then, what about the proposed sales tax increase in Wichita? View below, or click here to view at YouTube. Episode 51, broadcast July 13, 2014.

Tactics that hurt the economy

Wichita could innovate and gain attention by opting out of the harmful practice described in the following article.

How an oft-used economic development tactic may actually be hurting the economy

By J.D. Harrison, Washington Post

If you can’t build your own, steal someone else’s.

That, one economist notes, has become the default strategy for state and city governments in their pursuit of rapidly growing businesses, with many offering increasingly lucrative incentive packages to encourage employers to move to and create jobs in their districts.

However, that’s hardly the most sustainable method to promote the country’s economic growth — and there’s new evidence that it’s not particularly effective at a local level, either.

Continue reading at Washington Post.

Change in Wichita mill levy rates, year-to-year and cumulative.

Wichita property taxes rise again

The City of Wichita is fond of saying that it hasn’t raised its mill levy in many years. But the mill levy has risen in recent years.

Wichita mill levy rates. This table holds only the taxes levied by the City of Wichita and not any overlapping jurisdictions.
Wichita mill levy rates. This table holds only the taxes levied by the City of Wichita and not any overlapping jurisdictions.
In 2002 the City of Wichita mill levy rate was 31.845. In 2013 it was 32.509, based on the city’s Comprehensive Annual Financial Report. That’s an increase of 0.664 mills, or 2.09 percent, since 2002. In one year the mill levy rate increased .038 mills, or 0.12 percent. (These are for taxes levied by the City of Wichita only, and do not include any overlapping jurisdictions.)

Recent Wichita mill levy rates.
Recent Wichita mill levy rates.
The Wichita City Council did not take explicit action to raise this rate. Instead, the rate is set by the county based on the city’s budgeted spending and the assessed value of taxable property subject to Wichita taxation.

Change in Wichita mill levy rates, year-to-year and cumulative.
Change in Wichita mill levy rates, year-to-year and cumulative.
While the city doesn’t have control over the assessed value of property, it does have control over the amount it decides to spend.

Despite the data that is readily available in the city’s comprehensive annual financial reports, some choose to remain misinformed and/or uninformed. The video below provides insight into the level of knowledge of some elected officials and city staff.

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Water, waste, signs, gaps, economic development, jobs, cronyism, and water again.

In this episode of WichitaLiberty.TV: A look at a variety of topics, including an upcoming educational event concerning water in Wichita, more wasteful spending by the city, yard signs during election season, problems with economic development and cronyism in Wichita, and water again. View below, or click here to view at YouTube. Episode 50, broadcast July 6, 2014.

water fountain gargoyles fountain-197334_640

Examining Wichita’s water future

From Kansas Policy Institute.

water fountain gargoyles fountain-197334_640A proposal before the Wichita City Council would raise the sales tax in the city by 1% to fund several projects. The biggest piece of the proposal would be to fund additional water capacity for users of the city water system.

On Thursday 17 July, come hear from the City of Wichita and others on the scope of the problems, possible solutions, and the perspectives of several experts in the debate.

Click here to register for this event.

Date: Thursday 17 July
When: 7:30 a.m. registration and 8:00 a.m. start to presentations
Where: Wichita State University MetroPlex Room 132 ( 29th and Oliver)
Cost: Free with Advance Registration

A light breakfast will be served. The session will conclude by 12:15 p.m.

Speaker Line-up and Agenda:
7:30 a.m. — Registration and Breakfast
8:00 a.m. — Kansas Water Office on scope of water usage/needs in SCKS
9:00 a.m. — City of Wichita Proposal: Alan King, Dir. of Public Works, accompanied by Councilman Pete Meitzner
10:00 a.m. — Are Water Markets Applicable in Kansas?: Dr. Art Hall, executive director of the Center for Applied Economics at the University of Kansas
11:00 a.m. — Wichita Chamber of Commerce Water Task Force Findings: Karma Mason, president of iSi Environmental

KPI is not taking a position of the water proposal before the City Council. This event is to provide a forum for relevant parties to present their perspective on the issue with the public. Each presenter will have 30 minutes for a presentation followed by an Q&A.

This is the first in a series of KPI-sponsored forums of this nature on the different aspects of the sales tax proposal. Future forums will be held on the economic development and street and transit proposals.

For more information about this event contact Kansas Policy Institute at 316.634.0218. To register, click here.

In Wichita, gap analysis illustrates our problems

Wichita City Hall.
Wichita City Hall.
Following is testimony provided to the Wichita City Council on July 1, 2014. Background on this issue may be found at In Wichita, a public hearing with missing information and Wichita city council schools citizens on civic involvement.

Thank you for providing the gap analysis that I requested.

If the gap analysis is credible, if it really is true that projects like this are not financially feasible without taxpayer assistance, what does that tell us about Wichita? Shouldn’t we work on fixing these problems for everyone, rather than parceling out business welfare on a piecemeal basis?

The agenda packet material for this item says there is a need for incentives “based on the current market.” But not long ago this council was told that downtown Wichita is booming. So why won’t the market support a project like this without a handout from city taxpayers? And if downtown is truly booming but we’re still giving out incentives, will we ever be able to wean ourselves off?

Based on my reading of the gap analysis document, I see another problem with the facade improvement program. It shifts costs from landlords to commercial tenants. Instead of paying for the facade improvement costs as part of a mortgage or other financing, these costs become additional property taxes that commercial tenants pay in addition to rent.

This is really a problem, as Kansas and Wichita commercial property taxes are high. Each year The Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence survey property taxes. Considering the largest city in each of the states, Wichita property taxes are ninth highest in the nation for commercial property.

Wichita taxes are not just a little higher, but a lot higher. For example, for a commercial property valued at $100,000, Wichita property taxes are 38.5 percent higher than the national average.

Some of the reason why commercial property taxes are so high is due to the difference in assessment rates for various property classes. That’s not set by the City of Wichita. But the overall level of spending, and therefore the level of taxation, is set by this council. Further, the cost of incentives like this raise the cost of government for everyone else. One thing the city could do is to reduce spending somewhere else to offset the cost of this incentive. This would mean that other taxpayers do not have to bear the cost of this incentive.

If we wonder why the Wichita economy is not growing, commercial property tax rates and this council’s policy of targeted reductions are a large part of the problem.

WichitaLiberty.TV set 2014-04-29 01 800

WichitaLiberty.TV: Vampires on the prowl in Wichita and the city council’s treatment of citizens.

In this episode of WichitaLiberty.TV: The City of Wichita urges citizens to take steps to stop “vampire” power waste. But before hectoring people to introduce inconvenience to their lives in order to save small amounts of electricity, the city should tackle the real monsters of its own creation. Then proceedings of a recent Wichita City Council meeting are instructive of the factors citizens should consider if they want to interact with the council and city government at a public hearing. Episode 49, broadcast June 29, 2014. View below, or click here to view at YouTube.

Wichita’s monsters on display, again

While the City of Wichita asks citizens to inconvenience themselves by saving “vampire” electrical waste, the city still lights up its own monsters.

Wichita Transit Center, June 27, 2014, 2:03 pm.
Wichita Transit Center, June 27, 2014, 2:03 pm.
Last Friday afternoon most downtown Wichita street lights were switched off. But not all, as can be seen by the many lights switched on at the Wichita Transit Center. They were on Friday afternoon, just as they are on many days.

While waste like this is not acceptable, it is all the more striking considering that Wichita’s transit system is out of money. The city council has recommended that Wichitans vote for higher sales taxes, part of which would fund the transit system. That would include, I suppose, the wasteful spending on burning street lights in the middle of the day. This is indicative of the attitude of the city as explained in Forget the vampires. Let’s tackle the real monsters.

So before considering any extra funding for Wichita transit, let’s ask that it stop wasteful spending like these lights. Even better, before sending any funding, let’s stop this waste.

Wichita downtown street lights 2014-06-27 11.20.30The lights illustrated in this photograph are, undoubtedly, a small portion of the city’s spending. But you don’t have to look very hard to find waste like this, and we know that small examples of waste are multiplied many times. So when city leaders tell us that there is nowhere left to cut in the budget, that everything that can be done to trim the fat has already been done, and that the only thing we can do is raise taxes — well, think of this photograph and others illustrated in Wichita advances in the field of cost savings, Another Friday lunch, and even more lights are on, To compensate, Wichita switched on the street lights, In Wichita, the streetside seating is illuminated very well, In Wichita, the rooftops are well-lit and On a sunny day in downtown Wichita you can see the street lights.

This is not to say that waste like this does not occur in the private sector. Of course it does. But businesses and individuals have a powerful incentive to avoid waste that isn’t present in government: Businesses and people are spending their own money. And even if they waste money, it’s their money, not ours.

WichitaLiberty.TV: Where’s Wichita’s water?

In this excerpt from WichitaLiberty.TV: To solve water supply problems, the City of Wichita seeks to impose austerity on its citizens and force them to pay for others to install water-efficient appliances that save vanishingly small amounts of water. Plus, what happened to past assurances that we had plenty of water? Originally broadcast on March 9, 2014. View below, or click here to view at YouTube.

For more on this issue, see Where’s Wichita’s water?

Water users, not sales tax, should pay for water

By John Todd. A version of this appeared in The Wichita Eagle.

Wichita Area Future Water Supply: A Model Program for Other Municipalities
Wichita Area Future Water Supply: A Model Program for Other Municipalities
An article in the Wichita Eagle (“City Council OKs four projects for proposed 1-cent sales tax” May 27 Eagle) reports that even with the sales tax water rates would increase 1.3 percent, and without the sales tax, rates would go up 6.2 percent for a net increase of 4.9 percent. This means that my $50 per month average home water bill would increase a total of $2.45 per month to pay for what City Council members have said is the most attractive option for a new water source. I’ll take this type of increase anytime over a 1-cent sales tax on everything I purchase each month including groceries.

It strikes me that people and businesses that use water should pay for the water they use including the costs of needed water resource upgrades in their monthly water bills. A sales tax allows public officials to charge different rates for different groups of water users and is not as transparent and fair. By paying for the water I actually use I can control my individual cost for this valuable resource. Paying for water usage through a sales tax reduces any incentive individual and business users might have to conserve water than if they are writing a monthly check to pay for the water they actually use.

kansas-policy-institute-2014-04-willing-to-fund

To fund government, Wichitans prefer alternatives to raising taxes

In this excerpt from WichitaLiberty.TV: Wichita voters told pollsters they prefer adjusting spending, becoming more efficient, using public-private partnerships, and privatization to raising taxes. View below, or click here to view on YouTube. For more on this topic, see To fund government, Wichitans prefer alternatives to raising taxes.

Growth in Local Government Jobs, Wichita and Visioneering Peers. Wichita is the dark line.

Wichita performs well in local government job creation

The Wichita metropolitan area compares well creating jobs in local government, but trails in private sector jobs.

Data from the Bureau of Labor Statistics through 2013 allows us to compare the Wichita metropolitan area with the peers selected by Visioneering Wichita. I’ve gathered BLS data divided by industry sector.

Growth in Local Government Jobs, Wichita and Visioneering Peers. Wichita is the dark line.
Growth in Local Government Jobs, Wichita and Visioneering Peers. Wichita is the dark line.
When considering only government jobs, especially local government jobs, Wichita ranks high. When looking at private sector jobs, however, Wichita is in last place, and by a wide margin.

This is a problem. It is the private sector that generates the taxes that pay for government. When government grows faster than the private sector, economic activity is shifted away from productive activities to unproductive. The economist Dan Mitchell has proposed what he calls the “Golden Rule of Fiscal Policy,” which is: “The Private Sector should Grow Faster than Government.”

In Wichita, we see our local government proposing to grow itself even more by recommending that voters approve increased sales taxes to pay for more government programs. Officials tell us the increased spending is needed so that government can correct problems with Wichita’s economy, water supply, transit, and streets.

Growth in Private Sector Jobs, Wichita and Visioneering Peers. Wichita is the dark line.
Growth in Private Sector Jobs, Wichita and Visioneering Peers. Wichita is the dark line.
On these and other issues, the Wichita Eagle recently quoted Mayor Carl Brewer: “We’ve put them off for too long. We didn’t want the challenges. We didn’t want the tax bills. But now, to maintain our quality of life, we’ve got to catch up.”

Wichita’s government has created problems, by the mayor’s admission. Now, Wichita politicians and bureaucrats ask that we rely on government to fix the problems.

The interactive visualization I’ve created from BLS data lets you compare Wichita’s job growth with our Visioneering peers. You can select various industry sectors for display.

Data is from the Bureau of Labor Statistics of the U.S. Department of Labor. Visualization created by myself using Tableau Public. Click here to open the visualization in a new window.

In Wichita, no difference between business and government?

In this excerpt from WichitaLiberty.TV: Leaders in Wichita often liken government decision making to running a business, but there are important differences. That Wichita’s leaders in both government and business do not understand this is problematic. View below, or click here to view at YouTube. For more on this, see In Wichita, no differentiation between business and government.

Two street lights in downtown Wichita, June 20, 2014.

Forget the vampires. Let’s tackle the real monsters.

Public service announcements on Facebook and Wichita City Channel 7 urge Wichitans to take steps to stop “vampire” power waste. But before hectoring people to introduce inconvenience to their lives in order to save small amounts of electricity, the city should tackle the real monsters of its own creation.

Public service announcement crawler on Wichita's cable channel network, June 17, 2014.
Public service announcement crawler on Wichita’s cable channel network, June 17, 2014.
People are probably vaguely aware that many modern electrical and electronic devices consume electricity even when switched off. One source estimates that a cell phone charger consumes 0.26 watts of electrical power even when a phone is not plugged in. While in sleep mode, a flat panel computer display consumes 1.39 watts. A clock radio uses 2.01 watts. A microwave oven while not in use and with its door closed uses 3.08 watts. (These are average values.) A large Samsung smart television on standby uses 0.3 watts.

While appearing to be wasteful, this “vampire” power consumption often has a benefit. If you unplug your clock radio when you leave for work in the morning, you save a few dozen watts of power. But, you have to reset the clock when you want to use it again. If I unplug my Samsung smart television, I’ll probably have to reprogram it to my preferences. If I want save the power my microwave oven wastes, I’ll have to wrench my back lifting it out of the way so I can reach the outlet it plugs in to. That action, naturally, unleashes a cloud of dust bunnies to dirty my counters and floor.

Wichita city government Facebook page public service advice regarding "vampire" power waste.
Wichita city government Facebook page public service advice regarding “vampire” power waste.
Nonetheless, the City of Wichita uses its Facebook page and cable television network to urge its citizens take steps like these in order to save small amounts of electricity.

How much electricity do you suppose a city street light consumes? It depends on the type of light, but common street lights use from 100 to 200 watts. During the hours when the sun does not shine, we’re generally willing to pay for that in order to obtain the benefits of lighted streets and sidewalks.

But when street lights are burning in the middle of a day, they provide absolutely no value. Street lights turned on during the day provide none of the convenience of “vampire” power usage, such as not needing to reset your clocks and move your microwave oven every day.

Bench lights and street lights in downtown Wichita switched on in the middle of the day.
Bench lights and street lights in downtown Wichita switched on in the middle of the day.
So while the City of Wichita uses its television channel to hector citizens into adding inconvenience to their lives in order to save vanishingly small amounts of electricity, the city apparently has no misgivings about using large amounts of electricity to needlessly illuminate the noonday sky, week after week.

As I’ve shown, the city often has street lights turned on at noon on days with no clouds in the sky. (See here for examples.) Yesterday dozens of city street lights were turned on at 2:30 in the afternoon on a sunny day for many blocks in downtown Wichita. This is not an isolated mistake. It is a pattern. (Even if it is cloudy and raining, the street lights add no discernible illumination during daylight.)

There’s something else. Each of us can choose the balance between “vampire” power waste and inconvenience based on our own values. If we choose to use “vampire” power in order to add convenience to our lives, we have to pay for it.

Two street lights in downtown Wichita, June 20, 2014.
Two street lights in downtown Wichita, June 20, 2014.
But the Wichita city hall bureaucrats who burn street lights in the noonday sun week after week are spending your money, not theirs.

(Yes, city hall bureaucrats pay taxes to the city just like you and I, so their tax money is also wasted. But because the cost of this waste is spread over the entire city, the motivation for any one person to take steps to eliminate the waste is small. Especially if, like a city hall bureaucrat would, you’d have to actually work in order to achieve savings. But these same bureaucrats and politicians urge you to work harder in your home in order to save small amounts of “vampire” electricity.)

The wasteful expenditures on street lights I’ve been illustrating for several weeks are located in districts of the city represented by Janet Miller and Lavonta Williams. Both express concern for the environment and criticize the purported harm man has caused the earth by emitting greenhouse gases. Here’s an opportunity for them to act on their beliefs.

For Wichita, policies are made to be waived and ignored

The City of Wichita says it wants policies to be predictable and reliable, but finds it difficult to live up to that goal.

From 2009, an example of how the City of Wichita makes policy on the fly to suit the current situation. The policy change benefited a building developed by “The Minnesota Guys,” who, since the time of this article, fell into disfavor with pretty much everyone in Wichita, including the city council.

When the Lofts at St. Francis needed routine repairs, the city waived policies to use special assessment financing.
When the Lofts at St. Francis needed routine repairs, the city waived policies to use special assessment financing.
Regarding public policy, this episode illustrated the city broadening the application of special assessment financing. Traditionally special assessment financing has been limited to instances such as the city building streets and sewers in new areas of town, allowing commercial and residential property owners to repay the costs over 15 years. But the item approved by the council at this meeting was for repair of existing buildings, not construction of new infrastructure. Additionally, the work financed by the special assessment taxes will be owned by the private property owners. When the city uses special assessment financing to build streets and sewers in new neighborhoods the city owns this infrastructure, even though it is paid for by nearby property owners.

To approve this financing, the city had to bend or waive two policies. That’s problematic, as the city tells citizens it wants policies and council behavior to be consistent and predictable. Although this incident is from five years ago, not much has changed since then. See Wichita: No such document for an example from last year. Following is Wichita special assessments for repairs is bad policy. Other articles on this topic are In Wichita, waiving guidelines makes for bad policy and At Wichita city council, special pleading of selfish interests.

——
At Tuesday’s meeting (August 18, 2009) of the Wichita City Council, a privately-owned condominium association is seeking special assessment financing to make repairs to its building. In order for the association to succeed in its request, the council will have to waive two guidelines of Wichita’s facade improvement program.

Special assessment financing means that the cost of the repairs, up to $112,620 in this case, will be added to the building’s property taxes. Actually, in this case, to each of the condominium owners’ taxes. They’ll pay it off over the course of 15 years. (A conversation with the president of the homeowners association brought out the possibility that the actual assessment may be in the neighborhood of $75,000.)

So the city is not giving this money to the building’s owners. They’ll have to pay it back. The city is, however, setting new precedent in this action.

Special assessment financing has traditionally been used to fund infrastructure such as streets and sewers, and new infrastructure at that. The city, under its facade improvement program, now allows this type of financing to be used to make repairs and renovations to existing buildings. That’s if the building is located in one of the politically-favored areas of town.

By using special assessment financing in this way, the city seeks to direct investment towards parts of town that it feels doesn’t have enough investment. This form of centralized government planning is bad public policy. The city should stop doing this, and let people freely choose where to invest.

Besides this, two guidelines in the city’s facade improvement program must be waived for this project to obtain special assessment financing.

The first is the private investment match. This is designed to ensure that the property owners have “skin in the game” and that the taxes will be paid back.

Here, the city is proposing that since the building’s owners have made a past investment in this property, there’s no need to require a concurrent investment. It hardly needs to be noted that anyone who has purchased property has made a past investment in that property.

Second, facade improvement projects are required to undergo a gap analysis to “prove” the need for public financing. According to the city’s report: “This project does not lend itself to this type of gap analysis; however, staff believes that conventional financing would be difficult to obtain for exterior repairs to a residential condominium property like this.”

So the city proposes to waive this requirement as well.

There seems to me to be a defect in the manner of ownership of this building. 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. How does the association plan to pay for these?

So what will happen if the city council doesn’t approve the special assessment financing? The agenda report states “Each individual condo owner would be required to fund a share of the cost.”

Isn’t that what private property owners do: fund the cost of repairs to their property?

According to the Sedgwick County Treasurer’s office, the appraised values of these condos range from $103,000 to $310,200, with an average value of $201,943. The maximum amount being added to each condo’s assessment is $4,022, although the actual amount may be closer to $3,000.

That’s along the lines of what it might cost to perform a few repairs and paint a house that’s worth what these condos are worth.

Let’s ask that these owners do just what thousands of homeowners in Wichita do every year: take responsibility for the maintenance of their own property without looking to city hall for help.

Lofts at St. Francis Agenda Report 2009-08-18 by Bob Weeks

WichitaLiberty.TV set 2014-04-29 01 800

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

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

Wichita City Council Chambers

Wichita city council schools citizens on civic involvement

Proceedings of a recent Wichita City Council meeting are instructive of the factors citizens should consider if they want to interact with the council and city government at a public hearing.

At the June 17, 2014 meeting of the Wichita City Council, one agenda item was a public hearing to consider adding a property to the city’s facade improvement program. Susan Estes of Americans for Prosperity-Kansas appeared before the council during the hearing to express concern that a member of AFP (me) had made a request for information on the item, but had not received the information by the time of the public hearing. Background on my request and its importance to public policy can be found at In Wichita, a public hearing with missing information. Video of this meeting is below, or click here to view at YouTube.

From the bench, Council Member Pete Meitzner (district 2, east Wichita) said that this Pete Meitzer District 2 2012item had been “discussed in length last week,” referring to what would be the June 10, 2014 meeting. A reading of council agendas and minutes shows that it was actually at the June 3 meeting when the item was presented. Further, the June 3 matter was a different item. It’s a small detail, but the purpose of the June 3 item was to approve and accept the property owners petition and set the date for a public hearing. That public hearing was held on June 17.

At the June 3 meeting, contrary to Meitzner’s assertion, there was no substantive discussion on this item except for the presentation by city staff. There really was no need for discussion at that time, as the purpose of the agenda item was to accept the petition and set a date for a public hearing. If the petition is valid in its form, I don’t believe the council has any choice but to accept it and set a date for a public hearing. The purpose of the public hearing is to, naturally, hear from the public.

At the June 17 meeting during the public hearing, Meitzner questioned Estes and city staff. He asked if there was a “gap analysis” performed on all special assessments the city establishes. When told no, he asked Open Recordswhy is the gap analysis needed for this project and not for others. The assistant city manager explained that it is required for economic development projects like the one under consideration today, but not for others.

Questioning at the meeting also revealed that there are legal issues regarding whether the gap analysis can be disclosed to the public. The city has told me it will respond to my request for the document by June 20. The city is treating my friendly request for the document as a request made under the Kansas Open Records Act. That law is permeated with loopholes and exceptions that give government many pretexts to avoid disclosure of documents.

The meeting also featured an impassioned attack on Estes and her allies from a citizen speaker. The attack was based on incorrect information, as was explained to the citizen in the meeting.

What citizens can learn from this meeting

If you don’t ask for information on a schedule that pleases the city council, you may be criticized by multiple council members.

Council members may criticize you based on incorrect facts.

Council members may grill you based on their lack of knowledge of — or incorrect understanding of — city policy.

If you ask for information from the City of Wichita, but don’t also ask for the same from other jurisdictions, a city council member may seek to discredit you.

city-council-chambers-sign-800

In Wichita, a public hearing with missing information

The Wichita City Council is holding a public hearing, but citizens don’t have information that would be useful if they’re interested in conducting oversight.

Wichita City Library, 1965Wichita’s facade improvement program provides for the financing of the exterior faces of buildings in certain areas of the city. The money that is advanced to the developers, along with interest charges, are added to the property tax bills for the property, spread over 15 years. In this respect the program is similar to when the city builds streets and sewers in new areas of town and allows homeowners to pay these costs over 15 years. Except, the facade improvement program is for repair of existing buildings, not construction of new infrastructure. Additionally, the work financed by the facade improvement program is owned by the private property owner. When the city constructs streets and sewers in new neighborhoods, the city owns them.

There’s another difference. In the item to be considered today, there is a grant of $20,000. This is a gift of cash with few strings attached, except that it be spent on something the owner must spend anyway.

City documents indicate this is a project with a cost of $2,500.000.

Here’s the public policy angle. City documents state, regarding this item:

In 2009, the Facade Improvement Program was revised to require that private funding for overall project costs be at least equal to public funding and that applicants show a financial need for public assistance in order to complete the project, based on the owner’s ability to finance the project and assuming a market-based return on investment.

Later on, the same document states

The Office of Urban Development has reviewed the economic (“gap”) analysis of the project and determined a financial need for incentives based on the current market.

In other words, without the benefit of the facade improvement loan and grant, the project would not be economically feasible. Which, to me, seems curious. A $20,000 grant for a $2,500,000 Economists use a decimal pointproject is 0.8 percent of the project. The lower interest rate for the $156,034 being financed under the program provides some small additional benefit. These values are small compared to the scope of the project. It is not possible to forecast future revenues and expenses with the precision necessary to conclude that the facade improvement program boosts this project over the bar of economic feasibility, whatever that is.

We’ll probably not know what that bar is. I asked for the “gap” analysis. It doesn’t appear that it will be available before today’s meeting. I asked for it Thursday evening, and the city’s public information officer has followed up with me to see if I received the document, but I do not have it. The public doesn’t have it. I doubt if city council members have it.

The item today is a public hearing. The law requires it to be held so that the council can receive input from the public. Whether the public is informed — that’s a different matter.

Who reads the agenda

The agenda packet for the previous week contained a mistake. It was a mistake that is easy to make and not of any serious consequence. The wrong pages appeared for an item, and the correct pages were not in the packet. When I inquired about this late Monday afternoon — not long before the Tuesday meeting — the city’s public information office thanked me for bringing this to the city’s attention. A correction was promptly published.

Which leads me to wonder: Had anyone else read the agenda with sufficient attention to notice that mistake?

In Wichita, the news is not always news the city thinks you should know

In February 2012 the City of Wichita held an election, but you wouldn’t have learned of the results if your only news source was the city’s website or television station. In the following article from March 2012, I wonder why news of the election results was overlooked by the city.

After last week’s election results in Wichita in which voters canceled an ordinance passed by the city council, I noticed there was no mention of the election results on the city’s website. So I dashed off a note to several responsible authorities, writing this:

The City of Wichita's website reports news stories like this, but not the results of a city election held two weeks later.
The City of Wichita’s website reports news stories like this, but not the results of a city election held two weeks later.
“I notice that the city’s website carries no news on the results of the February 28th election. Is this oversight unintentional? Or does the city intend to continue spending its taxpayer-funded news producing efforts on stories with headlines like ‘Valentine’s at Mid-Continent Airport,’ ‘Rain Garden Workshops in February,’ and ‘Firefighter Receives Puppy Rescued at Fire Scene’?”

It’s not as though city staff doesn’t have time to produce a story on the election. The city’s public affairs department employs 15 people with an annual budget of some $1.3 million. While some of these employees are neighborhood assistants, there are still plenty of people who could spend an hour or two writing a story announcing the results of the February 28th election.

Except: That doesn’t fit in with the city’s political strategy. That strategy appears to be to ignore the results of the election, or to characterize the election as a narrowly-focused referendum on one obscure economic development tool.

At one time, however, the attitude of city hall was that the election was over the entire future of downtown Wichita. Mayor Carl Brewer said the election would cause “turmoil inside the community, unrest.” Council member Pete Meitzner (district 2, east Wichita) said we needed to have an early election date so “avoid community discourse and debate.” He later backpedaled from these remarks.

But now that city hall and its allies lost the election, the issue is now cast as having been very narrow, after all. Citizens aren’t against economic development incentives, they say. They’re just against hotel guest tax rebates.

This narrow interpretation illustrates — again — that we have a city council, city hall bureaucracy, and allied economic development machinery that is totally captured by special interests. Furthermore, the revealed purpose of the city’s public affairs department, including its television channel, is now seen as the promotion of Wichita city government, not Wichita and its citizens. These are two very different things.

Located across the street from the Transit Center, the city-owned garage on William Street suffers from maintenance issues that diminish its value for its intended use: retail space.

Would you rent space from this landlord?

Located across the street from the Transit Center, the city-owned garage on William Street suffers from maintenance issues that diminish its value for its intended use: retail space.
Located across the street from the Transit Center, the city-owned garage on William Street suffers from maintenance issues that diminish its value for its intended use: retail space.

Commercial retail space owned by the City of Wichita in a desirable downtown location was built to be rented. But most is vacant, and maintenance issues go unresolved.

At one time it was thought that the Wichita city-owned parking structure in the 400 block of East William Street would house retail shops along the street. But the present state of the property should cause us to be wary of government economic development efforts.

As reported by the Wichita Eagle twenty years ago on Wednesday, October 20, 1993:

The council also approved a plan to spend about $76 a square foot to construct roughly 6,000 square feet of retail space on the first floor of the parking garage. The space would lease for an estimated $8.70 a square foot.

Council member Sheldon Kamen questioned that part of the plan. ”I just can’t visualize spending $76 a square foot,” he said. “If I was a developer I wouldn’t spend $76 a square foot for retail space on William street.”

Council member Joan Cole disagreed with Kamen, calling $8.70 a “very good price” that would attract tenants. ”It is my feeling there are small operations that would find this kind of small space very attractive,” she said.

(Adjusted for inflation, these prices would be $122 and $14 today)

What has been the results of the city’s venture into commercial real estate? As can be seen in this video from September, a Wichita city government office occupied some of the space, but the office had moved to another location. Now, Wichita Festivals occupies some of the space, but much is still empty.

Rusted awnings near retail space in the city-owned garage on William Street in Wichita,
Rusted awnings near retail space in the city-owned garage on William Street in Wichita,

Inspecting the building last September, I found that this city-owned property had maintenance issues that might, in some circumstances, be considered as contributing to blight. Based on a recent walk-by, maintenance hasn’t improved in the ten months since then. Maybe that’s why there’s apparently little demand to rent this space.

At the city-owned garage on William Street in Wichita, a duct tape repair is still in use after ten months.
At the city-owned garage on William Street in Wichita, a duct tape repair is still in use after ten months.

It’s not as though the building has many of advantages that city planners tell us are needed for a vital downtown Wichita. It’s adjacent to the block with the Eaton Hotel and the Wichita Downtown Development Corporation, the agency charged with promoting downtown. This retail space is right across the street from the city’s bus transit center. It’s also one block away from the Intrust Bank Arena, which was promoted as a driver of commerce and activity for the surrounding area. Its Walk Score — a measure promoted by city planners — is 71, which is deemed “Very Walkable. Most errands can be accomplished on foot.”

Considering all the advantages this government-owned property has, it’s failing. It’s becoming blighted. The best thing the city could do is sell this property so that the benefits of markets and the profit-and-loss system can replace management by Wichita city hall bureaucrats.