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Wichita takes a big risk entering in a public-private partnership without knowing its partners.
When entering a public-private partnership, the City of Wichita tells us it vets its partners thoroughly. But this can’t be the case for the partners in the new Wichita baseball stadium and surrounding land.
That’s because we don’t know the identities of all the partners. All we know is that one Lou Schwechheimer is a majority owner. When asked what proportion of the team he owns, the city replied, “Over 50%.” Either the city does not know the number, or is not willing to tell us. 1 There’s a big difference between owning 51 percent of something and, say, 95 percent.
We are supposed to learn these names at some time. The development agreement passed by the city council on March 19, 2019 holds this:
Section 2.03 Conditions to the Effectiveness of this Agreement. Contemporaneously with the execution of this Agreement, and as a precondition to the effectiveness of this Agreement, to the extent they have not already done so, the Developer will submit the following documents to the City:
…
(c) the identity of the manager of the general partner of the Developer;
(d) a list of the Principals of the Developer
I’ve asked the city when the agreement might be executed and become effective.
Once the city receives the names, will it release them to the public? If we’ve learned anything lately, we know the city withholds information from the public. Even when it does not need to.
Will the list of principals reveal the share of ownership of each of the principals?
Is the list of principals that own the team the same as the owners of the surrounding land the city is selling?
What if we don’t like principals? What if they have unsavory reputations or a poor business and credit history? What do we do then?
—
Notes
Kansas hotel guest tax collections presented in an interactive visualization.
Updated with data through January 2019.
Cities and counties in Kansas may levy a transient guest tax collection on hotel guests. It is sometimes called a bed tax or guest tax. The tax is collected as a percentage of total room revenue, not the number of rooms or the rate charged for rooms. While the Kansas Department of Revenue collects the tax, the proceeds are returned to the cities or counties, except for a two percent processing fee. In Wichita the rate is six percent.
Of note, while Wichita is the largest city in Kansas, Overland Park collects the most hotel guest tax. Of the largest markets in Kansas, Wichita is usually one of the lowest-growth cities.
Click here to access the visualization.
—
Notes
An interactive visualization of labor force, employment, and unemployment rate for all metropolitan areas in the United States.
Updated with data through January 2019. Click here to learn more about the visualization and to access it.
Employment in Kansas shows a seasonal decline for February 2019.
Data released this week from the Bureau of Labor Statistics, part of the United States Department of Labor, shows a decline in jobs in Kansas for February 2019.
Using seasonally adjusted data, from January 2019 to February 2019, nonfarm employment in Kansas fell by 2,200, which is 0.2 percent. Over the year, the number of Kansas nonfarm jobs for February 2019 rose by 8,800 or 0.6 percent over last February. This is using seasonally adjusted data. The non-adjusted figure is nearly the same at 7,600.
Over the year (February 2018 to February 2019), the Kansas labor force is up by 0.4 percent, with only small changes over the past three months.
The number of unemployed persons rose from January 2019 to February 2019, rising by 301 persons, or 0.0 percent. The unemployment rate was 3.4 percent in February, down from 3.5 percent from one year ago, and the same as January.
Click charts and tables for larger versions.
The following chart shows the change in nonfarm jobs over the same month one year ago. For the past several years the line for Kansas has been below the line for the nation, meaning jobs were growing slower in Kansas. Recently, however, the gap between the lines is smaller.
The City of Wichita plans subsidized development of a sports facility as an economic driver. Originally published in July 2017.
City documents promise this: “The City plans to substantially rehabilitate or replace Lawrence-Dumont Stadium into a multi-sport athletic complex. The TIF project would allow the City to make investments in Lawrence-Dumont Stadium, construct additional parking in the redevelopment district, initiate improvements to the Delano multi-use path and make additional transportation improvements related to the stadium project area. In addition to the stadium work, the City plans to construct, utilizing STAR bond funds, a sports museum, improvements to the west bank of the Arkansas River and construct a pedestrian bridge connecting the stadium area with the Century II block. The TIF project is part of the overall plan to revitalize the stadium area and Delano Neighborhood within the district.”3
We’ve heard things like this before. Each “opportunity” for the public to invest in downtown Wichita is accompanied by grand promises. But actual progress is difficult to achieve, as evidenced by the examples of Waterwalk, Kenmar,and Block One.4
Perhaps more pertinent to a sports facility as an economic growth driver is the Intrust Bank Arena. Two years ago the Wichita Eagle noted the lack of growth in the area. 6 Since then, not much has changed. The area surrounding the arena is largely vacant. Except for Commerce Street, that is, and the businesses located there don’t want to pay their share of property taxes. 7
I’m sure the city will remind us that the arena was a Sedgwick County project, not a City of Wichita project, as if that makes a difference. Also, the poor economic performance cited above is for Downtown Wichita as delineated by zip code 67202, while the proposed baseball stadium project lies just outside that area, as if that makes a difference.
By the way, this STAR bonds district is an expansion of an existing district which contains the WaterWalk development. That development has languished, with acres of land having been available for development for many years. We’ve also found that the city was not holding the WaterWalk developer accountable to the terms of the deal that was agreed upon, to the detriment of Wichita taxpayers. 8
Following, selected articles on the economics of public financing of sports stadiums.
Scott A. Wolla, “The Economics of Subsidizing Sports Stadiums,” Page One Economics, May 2017. This is a project of the Federal Reserve Bank of St. Louis. Link.
“Building sports stadiums has an impact on local economies. For that reason, many people support the use of government subsidies to help pay for stadiums. However, economists generally oppose such subsidies. They often stress that estimations of the economic impact of sports stadiums are exaggerated because they fail to recognize opportunity costs. Consumers who spend money on sporting events would likely spend the money on other forms of entertainment, which has a similar economic impact. Rather than subsidizing sports stadiums, governments could finance other projects such as infrastructure or education that have the potential to increase productivity and promote economic growth.”
Jeff Cockrell, Chicago Booth Review, February 01, 2017. Link.
“But do the economic benefits generated by these facilities — via increased tourism, for example — justify the costs to the public? Chicago Booth’s Initiative on Global Markets put that question to its US Economic Experts Panel. Fifty-seven percent of the panel agreed that the costs to taxpayers are likely to outweigh benefits, while only 2 percent disagreed — though several panelists noted that some contributions of local sports teams are difficult to quantify.”
Jeffrey Dorfman. Forbes, January 31, 2015. Link.
“Once you look at things this way, you see that stadiums can only justify public financing if they will draw most attendees from a long distance on a regular basis. The Super Bowl does that, but the average city’s football, baseball, hockey, or basketball team does not. Since most events held at a stadium will rely heavily on the local fan base, they will never generate enough tax revenue to pay back taxpayers for the cost of the stadium.”
Andrew Zimbalist, Government Finance Review, August 2013. Link.
“This article is meant to emphasize the complexity of the factors that must be evaluated in assessing the economic impact of sports facility construction. While prudent planning and negotiating can improve the chances of minimizing any negative impacts or even of promoting a modest positive impact, the basic experience suggests that a city should not expect that a new arena or stadium by itself will provide a boost to the local economy.
Instead, the city should think of the non-pecuniary benefits involved with a new facility, whether they entail bringing a professional team to town, keeping one from leaving, improving the conveniences and amenities at the facility, or providing an existing team with greater resources for competition. Sports are central to cultural life in the United States (and in much of the world). They represent one of the most cogent ways for residents to feel part of and enjoy belonging to a community. The rest of our lives are increasingly isolated by modern technological gadgetry. Sport teams help provide identity to a community, and it is this psychosocial benefit that should be weighed against the sizeable public investments that sports team owners demand.”
Robert A. Baade, Journal of Urban Affairs, 1996. Link.
“To attract or retain a team, cities are offering staggering financial support and rationalize their largesse on economic grounds. Do professional sports increase income and create jobs in amounts that justify the behavior of cities? The evidence detailed in this paper fails to support such a rationale. The primary beneficiaries of subsidies are the owners and players, not the taxpaying public.”
—
Notes
Growth of employment in Wichita compared to the nation.
Overall, since 2001 — roughly the end of the Great Recession — Wichita has been gaining jobs, evidence being its trend line above zero in the nearby chart which shows the change in jobs over the same month one year ago. But the line has not always been above zero, indicating months where the Wichita metropolitan area had fewer jobs than the year before.
Since that time, Wichita’s growth rate has almost always been below the nation’s rate, and by no small amount. The state of Kansas has been lagging behind the nation, too.
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For the Wichita metropolitan area in January 2019, jobs are up, the labor force is up, and the unemployment rate is unchanged when compared to the same month one year ago. Seasonal data shows a slowdown in the rate of job growth and a rising unemployment rate.
Data released this week by the Bureau of Labor Statistics, part of the United States Department of Labor, shows a mostly improving employment situation for the Wichita Metropolitan Statistical Area, although some areas are not improving.
Total nonfarm employment rose from 292,900 last January to 297,900 this January. That’s an increase of 5,000 jobs, or 1.7 percent. (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, jobs in the nation grew by 2.0 percent.
The unemployment rate in January 2019 was 4.1 percent, unchanged from one year ago.
Considering seasonally adjusted data from the household survey, the labor force rose by 739 persons (0.2 percent) in January 2019 from December 2018, the number of unemployed persons rose by 769 6.8 percent), and the unemployment rate rose from 3.6 percent to 3.9 percent. The number of employed persons not working on farms fell to 299,090 in January from 299,120 the prior month, a decrease of 30 persons, or 0.0 percent.
BLS is revising some data and presented this monthly release in a slightly different format than usual.
Click charts for larger versions.
The City of Wichita says it has safeguards built in to the proposed baseball park land development deal.
This week the Wichita City Council will consider a land development deal for land surrounding the new ballpark on the west bank of the Arkansas River downtown. The city assures us that there are safeguards in the deal that protect Wichitans.
We need safeguards. The city is borrowing to pay for the project, and the city expects to collect a lot of money from surrounding development, necessary to pay off the borrowed money. 1
To spur this development, the city plans to sell (about) 4.25 acres of land to the development team for $1 per acre. If the developer does not perform by building commercial space according to a schedule, the city can buy back land at that same price.
This — the buyback of the land — is promoted as security for the city. There are protections, the city tells us. The city also acknowledges that some past deals like WaterWalk have not had the type of protections built in to the ballpark deal.
But really: What is the value of the safeguards in the ballpark land deal?
If the ballpark developers fail (I’d like to name them, but we don’t know anything about them except for one person 2), the city can get its land back. But what then? Who pays the bonds? (Some of the borrowing is in the form of STAR bonds, which are not obligations of the city. But if these bonds went unpaid, it would be a very large and bad blot on the city’s reputation.)
The city says it would hurry to find another developer. But finding reputable developers willing to take over a failed effort might be difficult. Principal and interest must be paid during this time.
This doesn’t seem like much protection.
Critics of city development projects point to WaterWalk as an example of a failed downtown development. Some $41 million of city funds were spent there with few positive results, and with the recent closing of the Gander Mountain store, fortunes are not looking up.
But WaterWalk is different, the city says. In a recent social media town hall, the city stated, “Waterwalk wasn’t the deal we put together nor did it have the safeguards of this project. Waterwalk is not a city owned development.” 3
I guess it depends on the meaning of “we.” True, most city officials weren’t in office at the time of the WaterWalk deal. Accountability belongs to others is the attitude of Wichita Mayor Jeff Longwell and others.
But most of the people of Wichita are still here, and still waiting for the city’s promises to be realized.
While the city criticizes the WaterWalk deal for not having safeguards, the protections built in the baseball deal aren’t very strong. And while the city says “WaterWalk is not a city owned development,” neither is the ballpark land development deal. Remember, the city is selling the land.
In the Wichita city council agenda packet for March 19, 2019, we find this in item IV-1:
City grants the Developer an initial, exclusive right to purchase the Private Development Site for the development of the hospitality, commercial, retail, office and residential uses, as contemplated herein, for $1.00 an acre. This opportunity extends for ninety (90) days after the start of the first full season of the team’s residency in Wichita.
The next point requires the developer to exercise the purchase rights and meet a series of benchmarks, with a first phase of 30,000 square feet of development starting in 2021, with a second phase of 20,000 square starting the following year, and another 15,000 square feet after that.
Then the purported safeguards:
If the Developer fails to Commence Construction on any Phase by the appointed time or fails to complete construction of any Phase of development within the appointed time. The Developer can forestall a default by providing personal guarantees and making the CID and TIF shortfall payments. The Developer will also forfeit any right to any future phase of development. The City may repurchase any unaffected phase property for the original sale price. If the Developer fails to make the shortfall payments, the City may collect on the personal guarantees and exercise all legal remedies.
There is an escape clause:
Developer may provide personal guarantees reasonably satisfactory to the City as security that Developer will make the City whole for the lost revenue stream required to satisfy the state and local STAR bond repayments, CID and TIF District financing pro forma on an annual basis (Shortfall Payments).
As for accepting personal guarantees, we don’t know the identities of the developers, except for majority owner Lou Schwechheimer. 4 We don’t know the size of the share he owns, except the city tells us it is over 50 percent.
—
Notes
In this short video, John Todd tells us why the city is not acting in the best interest of citizens regarding the land development deal near the new Wichita ballpark. View below, or click here to view at YouTube.
Average game attendance for the Pacific Coast minor league baseball league. All teams except New Oreans, and New Orleans only. Data from Ballpark Digest.
The City of Wichita tells us it has thoroughly vetted the majority owner of the new Wichita baseball team.
It appears that the owners of the New Orleans Baby Cakes baseball team talked with the City of Wichita before the team received permission from Minor League Baseball. The Wichita Eagle reports: “A Minor League Baseball team may have violated league rules by talking to Wichita Mayor Jeff Longwell before seeking approval from the league, according to a letter from the league’s attorney.” 1
While the letter doesn’t name the New Orleans team, the Eagle reported in the same story, “A city official confirmed Wednesday night that Longwell was communicating with the Baby Cakes.”
This revelation is relevant for a few reasons.
First, if we look at the timing of this letter, the city — at least Wichita Mayor Jeff Longwell — knew of this transgression over a year ago. 2
These rules of minor league baseball were considered so sacred that the mayor used them as a pretext for conducting negotiations in secret, particularly withholding disclosure of a side land development deal. (Although the city did disclose, at least somewhat. 3) Apparently, these rules didn’t mean much to the majority owner of the New Orleans team — someone the city says it has “thoroughly vetted.” Now we know that Schwechheimer is alleged to have these rules regarding moving his team to Wichita.
By the way, the rules of minor league baseball that the city shared applied to the team, not the city. The letter the mayor received warned the team could be fined, not the city.
When the city was notified that the team had broken the rules, didn’t this raise a warning flag?
Second, the city says it vets its partners thoroughly, including baseball team majority owner Lou Schwechheimer. But in this case, we don’t know the identities of all the partners. All we know is that one Lou Schwechheimer is a majority owner. When asked what proportion of the team he owns, the city replied, “Over 50%.” Either the city does not know the number, or is not willing to tell us. 4 There’s a big difference between owning 51 percent of something and, say, 95 percent.
The team owners are breaking their stadium lease in New Orleans in order to move to Wichita. There is much press coverage of the owners making grand promises to the people there, only to start planning to move the team within two years. 5
Now the majority owner makes grand promises to Wichita. But the city says he’s been “thoroughly vetted,” and relies on long-term agreements with him.
Why won’t Schwechheimer reveal the identities of his partners or the percent of the team he owns? Why is the city willing to enter expensive and long-term agreements without knowing this?
—
Notes
Part of the agreement with the new Wichita baseball team is, apparently, unknown.
In the September 2018 agreement between the City of Wichita and the owners of the new Wichita baseball team, there is this regarding an air travel fund: 1
Section 10.6 Emergency Air Travel Fund. The City and the Team acknowledge and agree that, as a condition of the Pacific Coast League and Minor League Baseball approving the relocation of the Team to Wichita, the City and the Team must establish a fund (the “Travel Fund”) to be used to address some of the concerns raised about accessibility, frequency and ease of travel into and out of Wichita. Each of the City and the Team will be required to make an initial deposit of $100,000 into the Travel Fund, for a total of $200,000, and each Party will be required to replenish the Travel Fund each year in case of claims made against the Travel Fund during the prior year. The terms and conditions for the payout of funds and other issues related to the Travel Fund will be as set forth in a separate agreement among the City, the Team and the Pacific Coast League.
In October the city produced a formal agreement (marked “execution copy”) between the city and the baseball team owners. That document references a travel fund in a general way, saying it is attached as exhibit D. 2
But exhibit D is blank.
I’ve asked the city for the travel fund agreement. It hasn’t been supplied.
We can easily see that Pacific Coast League baseball team owners might seek to make maximum use of the air travel fund. And why not? To them, it’s just asking for free money.
I’m sure the mayor and city officials will tell us to trust them and the team owners. They may cite the term “reasonable.” But this is a mayor that withheld the fact of a side land deal until recently, and now expresses regret for doing so.
This is one more action by the city that breeds distrust. Until we know more, we need to delay any further decisions.
And: Wasn’t years of subsidies and a shiny new airport supposed to fix the problems with air travel in Wichita?
—
Notes
In a presentation, Wichita economic development officials ignore the cost of borrowing money.
In a presentation to the Wichita City Council on March 5, 2019, the council was shown a pro forma cash flow statement regarding the new baseball stadium.
$38M, or $38,000,000 refers to the sum of the amounts the city expects to receive from these sources:
The pro forma statement shows these cash flows starting in 2020 and continuing through 2042.
$75M, or $75,000,000, refers to the cost of the baseball stadium. (In this illustration the city has not included the $6,000,000 the city plans to borrow to pay for the pedestrian bridge and riverfront improvements.)
What’s missing? Interest on borrowed money.
If the presentation said, “The $38M equates to over 50% of the $75M stadium debt principal repayment,” that would be correct. But to tell the council that it costs just $75,000,000 to repay the stadium debt ignores the fact that the city is borrowing this money.
There will be a lot of interest to pay. We don’t know how much, as the bonds have not been sold, except for the STAR bonds. The city has planned to borrow $42,140,000 in STAR bonds. In the disclosure for these bonds, the interest payments alone total $24,647,850. In some years the interest payment alone is $1,828,556. 2
Citizens should ask the city what will be the total cost of repaying the stadium debt, and not settle for answers that ignore millions of dollars in interest.
—
Notes
The City of Wichita says it values open and transparent government. But the city’s record in providing information and records to citizens is poor, and there hasn’t been much improvement.
The City of Wichita is proud to be an open and transparent governmental agency, its officials say. Former Mayor Carl Brewer often spoke in favor of government transparency. 1
When the city received an award for transparency in 2013, Wichita City Manager Robert Layton said the city was honored. 2
Mayor Jeff Longwell penned a column in which he said, “First off, we want City Hall to be open and transparent to everyone in the community.” And the mayor’s biography on the city’s website says, “Mayor Longwell has championed many issues related to improving the community including government accountability, accessibility and transparency …”
But the reality is different. It shouldn’t be. Nearly four years ago the city expanded its staff by hiring a Strategic Communications Director. When the city announced the new position, it said: “The Strategic Communications Director is the City’s top communications position, charged with developing, managing, and evaluating innovative, strategic and proactive public communications plans that support the City’s mission, vision and goals.”
But there has been little, perhaps no, improvement in the data and information made available to citizens. The Wichita Eagle has editorialized on the lack of sharing regarding the details surrounding the new baseball team. 3
While this is important and a blatant example, there are many things the city could do to improve transparency. Some are very simple.
For example, it is very common for governmental agencies post their checkbooks on their websites. Sedgwick County does, as does the Wichita school district. But not the City of Wichita.
Until a few years ago, Wichita could supply data of only limited utility. What was supplied to me was data in pdf form, and as images, not text. It would be difficult and beyond the capability of most citizens to translate the data to a useful format. Even if someone translated the reports to computer-readable format, I don’t think it would be very useful. This was a serious defect in the city’s transparency efforts.
Now, if you ask the city for this data, you’ll receive data in an Excel spreadsheet. This is an improvement. But: You may be asked to pay for this data. The city says that someday it will make check register data available, but it has been promising that for many years. See Wichita check register for the data and details on the request.
Another example: For several years, the Kansas city of Lawrence has published an economic development report letting citizens know about the activities of the city in this area. The most recent edition may be viewed here.
The Lawrence report contains enough detail and length that an executive summary is provided. This report is the type of information that cities should be providing, but the City of Wichita does not do this.
The city should implement this reporting even though the sales tax did not pass. If it’s good for citizens to have this type of information if the sales tax had passed, it’s good for them to know in any circumstance, because the city (and other overlapping governmental jurisdictions) still spends a lot on economic development.
Why is this information not available? Is the communications staff overwhelmed, with no time to provide this type of information?
During the sales tax campaign Wichita city staff had time to prepare news releases with titles like “City to Compete in Chili Cook-off” and “Jerry Seinfeld Returns to Century II.” Now the city produces headlines like “Wichita Transit to Receive Good Apple Award.”
But if you want to know how the city spends economic development dollars, you won’t find that.
There are other things:
Most of all, the city simply needs to change its attitude. Here’s an example.
Citizen watchdogs need access to records and data. The City of Wichita, however, has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Wichita Downtown Development Corporation, Visit Wichita (the former Go Wichita Convention and Visitors Bureau), and Greater Wichita Economic Development Coalition, now the Greater Wichita Partnership. Each of these agencies refuses to comply with the Kansas Open Records Act, using the reasoning that they are not “public agencies” as defined in the Kansas law that’s designed to provide citizen access to records.
The city backs this interpretation. When legislation was introduced to bring these agencies under the umbrella of the Kansas Open Records Act, cities — including Wichita — protested vigorously, and the legislation went nowhere.
Recently the City of Wichita added a new tax to hotel bills that may generate $3 million per year for the convention and visitors bureau to spend. Unless the city changes its attitude towards citizens’ right to know, this money will be spent in secret.
This attitude has been the policy of the city for a long time. In 2008, Randy Brown, at one time the editorial page editor at the Wichita Eagle wrote this:
I’m fairly well acquainted with Bob Weeks, our extraconservative government watchdog. It’s fair to say that I agree with Weeks no more than one time in every 20 issues. But that one time is crucial to our democracy.
Weeks is dead-on target when he says that conducting the public’s business in secret causes citizens to lose respect for government officials and corrupts the process of democracy (“TIF public hearing was bait and switch,” Dec. 5 Opinion). And that’s what happened when significant 11th-hour changes to the already controversial and questionable tax-increment financing plan for the downtown arena neighborhood were sneaked onto the Wichita City Council’s Tuesday agenda, essentially under cover of Monday evening’s darkness.
This may not have been a technical violation of the Kansas Open Meetings Act, but it was an aggravated assault on its spirit. Among other transgressions, we had a mockery of the public hearing process rather than an open and transparent discussion of a contentious public issue.
The Wichita officials involved should publicly apologize, and the issue should be reopened. And this time, the public should be properly notified.
Randy Brown
Executive director
Kansas Sunshine Coalition for Open Government
A few years later, Brown noticed the attitude had not improved. Although he did not mention him by name, Brown addressed a concern expressed by Wichita City Council Member Pete Meitzner (district 2, east Wichita). He accurately summarized Meitzner’s revealed attitude towards government transparency and open records as “democracy is just too much trouble to deal with.”
I don’t think things have improved.
—
Notes
Kansas law requires publication of certain notices in newspapers, but cities like Wichita could also make them available in other ways that are easier to use.
But some legal publications are important and of interest to the general public.
Kansas law requires that many legal notices must be printed in a newspaper. That law needs to be changed. As you might imagine, newspapers resist this reform, as it might mean a loss of revenue for them. (That’s right. Newspapers don’t print these notices as a public service.)
Although the law requires publishing notices in a newspaper, it doesn’t prohibit publishing them in electronic form. If governmental agencies would make their legal publications available in ways other than the newspaper, citizens would be better served.
The City of Wichita does some posting of legal notices on its website. Under the City Clerk section, there is a page titled “Legal Notices” that holds notices of bidding opportunities. This is good, but the notices that are important to most people are not on the city’s website.
Posting all city legal notices on the city’s website would be easy to do. It would be quite inexpensive, as the copy is already in electronic form. The notices would become searchable through Google and other methods. Interested parties could capture and store notices this material for their own use. Once people get used to this method of publication, it will make it easier to get state law changed.
Government transparency would increase.
So why doesn’t the City of Wichita post its legal notices on its website?
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A bond disclosure document anticipated a development agreement for land surrounding the new Wichita ballpark.
When offering bonds for sale, issuers file a disclosure document that is often full of interesting detail. In the disclosure for the STAR bonds for the new Wichita ballpark, we learn this:
The City and the owner of the minor league team are anticipated to enter into a development agreement whereby the owner has the ability to develop approximately 15 acres of property surrounding the stadium. The development agreement is anticipated to require development to commence within 18 months of completion of the stadium and include the development of a hotel, retail spaces, restaurants and bars to complement the stadium and surrounding areas.
This is from a documente dated November 1, 2018 and filed with the Municipal Securities Rulemaking Board on November 16, 2018. This seems to contradict a claim made by Wichita Mayor Jeff Longwell and other city officials that the city was barred from disclosing the fact of land development negotiations until last week. The bond disclosure is silent regarding terms of an agreement.
Following are some excerpts from the disclosure. The complete document is available at https://emma.msrb.org/IssueView/Details/ER387382.
$42,140,000
City of Wichita, Kansas
Sales Tax Special Obligation Revenue Bonds
(River District Stadium Star Bond Project)
Series 2018
Official Statement dated November 1, 2018
(page 1)
“Sales tax and revenue” bonds (“STAR Bonds”) are authorized to be issued by the City pursuant to K.S.A. 12-17,160. et seq., as amended (the “STAR Bond Act”), The STAR Bond Act provides a form of tax increment financing that enables the issuance of bonds payable from certain State and local sales and compensating use tax revenues generated from STAR Bond projects constructed within a STAR Bond district.
To implement STAR Bond financing, a local government must adopt a resolution that specifies a proposed STAR Bond project district’s boundaries and describes the overall district plan, hold a public hearing on the district and the plan, and pass an ordinance that establishes the STAR Bond project district.
There may be one or more proposed STAR Bond projects within a STAR Bond project district. As with the STAR Bond project district, the local government must adopt a resolution, hold a hearing, and pass an ordinance that establishes each such STAR Bond project. Each project also must have a project plan that includes a description and map of the project area, a plan for relocating current residents and property owners, a detailed description of the proposed buildings and facilities and a feasibility study showing that the project will have a significant economic impact, generate enough tax revenues to pay off STAR Bonds proposed to be issued to finance the project, and not adversely affect existing businesses or other STAR Bonds that have already been issued. STAR Bonds can be used to pay for certain costs of a STAR Bond project, including property acquisition, site preparation, infrastructure improvements, certain hard construction costs, bond issuance costs, bond financing costs, loan financing costs, and related soft costs.
(page 2)
In 2007, the City adopted the River District STAR Bond Project Plan (the “Original Project Plan”) for an approximately 210 acre tract known as the East Bank Redevelopment District (the “Original District” or the “Phase I Project Area”). The Original Project Plan anticipated a $155.8 million redevelopment project along the banks of the Arkansas River (the “River”) through the City’s Central Business District.
In December 2016, the City adopted an ordinance to expand the boundaries of the Original District by adding approximately 64 acres located on the west bank of the River north from Kellogg Avenue to approximately 1st Street (the “Additional Property.” the “West Bank Project Area” or the “Phase II Project Area”). The West Bank Project Area includes commercial properties, the City’s Lawrence-Dumont Baseball Stadium, the Wichita Ice Center and the Wichita Public Library’s Advanced Learning Library. The Original District, as expanded by the Additional Property, is referred to herein as the “STAR Bond District” or the “District.”
The West Bank Project Area was added to the Original District to fund additional riverbank improvements between Douglas Avenue and the Kellogg Avenue Bridge, to install a pedestrian bridge to connect the performing arts area on the East Bank with the sports and entertainment area on the West Bank, to construct a multi-sport athletic facility that will replace the existing Lawrence-Dumont Baseball Stadium on the same site and to construct a baseball-themed spoils museum in conjunction with the multi-sport athletic facility. On December 20, 2016. the Secretary of Commerce of the State of Kansas (the “Secretary”) determined that the District, as expanded by the Additional Property, is an “eligible area” within the meaning of the STAR Bond Act.
On January 3, 2017, the City adopted an ordinance to approve the Project Plan Amendment to the STAR Project Plan, dated as of December 2016 (the “STAR Bond Project Plan Amendment”). The STAR Bond Project Plan Amendment included a pedestrian bridge across the River, a baseball/sports museum, riverbank improvements and design and site work related to the baseball stadium. Major components of the STAR Bond Project Plan Amendment and the Phase II Project Plan (the “2018 Projects”) include the following:
(i) the replacement of the City’s existing Lawrence-Dumont Baseball Stadium expected to be the home a Triple-A minor league affiliate of the Miami Marlins;
(ii) a museum and home of the National Baseball Congress; and
(iii) a pedestrian bridge across the River.
(page 5)
The proceeds of the Series 2018 Bonds, along with other available fluids, will be used to (i) pay a portion of the costs of the 2018 Projects; (ii) fond a deposit to the Capitalized Interest Fund established under the Indenture for the Series 2018 Bonds to be used to pay interest on the Series 2018 Bonds through September 1, 2020; and (iii) pay certain costs related to the issuance of the Series 2018 Bonds.
(Page 8)
In 2007, the City adopted the Original Project Plan for the Original District. The Original Project Plan anticipated a $155.8 million redevelopment project along the banks of the River through the City’s Central Business District. The first phase of the project plan extended from the First/Second Street Bridge to the Central Avenue (Little Arkansas) and Seneca Street (Big Arkansas) bridges. It included upgrades to the area surrounding the Keeper of the Plains statue at the confluence of the rivers. Additional construction included a portion of the South Riverbank to the west of Exploration Place, two cable-stayed pedestrian bridges linking the Keeper of the Plains monument to the outer banks of each river, and work along the East Riverbank from Central to First Street. The first phase also included construction of the Fountains at WaterWalk, a fountain attraction incorporating programmed water jets linked to lights and music.
The East Riverbank Project was completed in 2011 as part of the Drury Plaza Hotel Broadview redevelopment. The $2,500,000 STAR revenue financed project involved extensive East Riverbank improvements north of Douglas Avenue. This project phase supported the $29 million Drury Plaza Hotel redevelopment project. Improvements included a venue space, pedestrian access from Waco Street and river overlook areas.
The recently completed West Bank Apartments Project, located within the boundaries of the Original District, included a West Riverbank promenade between Second Street and Douglas Avenue and the Chisholm Trail McLean Memorial Fountain area, riverbank improvements with landscaping, fountains and walking/bike paths along the River. These improvements are associated with a tax increment financing and community improvement district development that includes an apartment complex, parking garage and a boat and bike rental facility. STAR Bonds financed $4,750,000 of West Riverbank improvements associated with the West Bank Apartments Project.
In December 2016, the City adopted an ordinance to expanded the boundaries of the Original District by adding approximately 64 acres located on the west bank of the River north from Kellogg Avenue to approximately 1st Street (the “Additional Property,” the “West Bank Project Area” or the “Phase II Project Area”). The West Bank Project Area includes commercial properties, the City’s Lawrence-Dumont Baseball Stadium the Wichita Ice Center and the Wichita Public Library’s Advanced Learning Library. The Original District, as expanded by the Additional Property, is referred to herein as the “STAR Bond District” or the “District.” A map depicting the boundaries of the District, is set forth above.
The West Bank Project Area was added to the Original District to fund additional riverbank improvements between Douglas Avenue and the Kellogg Avenue Bridge, to install a pedestrian bridge to connect the performing arts area on the East Bank with the sports and entertainment area on the West Bank, and to construct a baseball-themed sports museum on the site of the Lawrence-Dumont Baseball Stadium. On December 20, 2016, the Secretary of Commerce of the State of Kansas (the “Secretary”) determined that the District, as expanded by the Additional Properly, is an “eligible area” within the meaning the of the STAR Bond Act.
On January 3, 2017, the City adopted an ordinance adopting the STAR Bond Project Plan Amendment which provided for additional development within the District. On March 20, 2017, the Secretary took the following actions with respect to the District and the STAR Bond Project Plan Amendment:
(1) found and determined that the District, as expanded, is a major commercial entertainment and tourism area and an “eligible area” within the meaning of the STAR Bond Act;
(2) approved and designated improvements to the West Bank of the Arkansas River and enhanced public improvements within the District as part of a “STAR bond project” within the meaning of the STAR Bond Act; and
(3) approved the issuance of up to $19,500,000 (exclusive of approved financing costs) in STAR Bond financing for the improvements and amenities related to the STAR Bond Project Plan Amendment.
On May 2, 2017, the City adopted an ordinance adopting the River District Phase II STAR Bond Project Plan (the “Phase II Project Plan”) which provides for the redevelopment of the West Bank Project Area. On April 30, 2018, the Secretary took the following actions with respect to the District and the Phase II Project Plan:
(1) found and determined that the District, as expanded, includes a “major multi-sport athletic facilities” and museum components and is an “eligible area” within the meaning of the STAR Bond Act;
(2) approved and designated improvements to the East Bank of the Arkansas River and enhanced public improvements within the District as part of a “STAR bond project” within the meaning of the STAR Bond Act; and
(3) approved the issuance of up to $20,500,000 (exclusive of approved financing costs) in STAR Bond financing for the improvements and amenities related to the Phase II Project Plan.
Major components of the Phase II Project Plan (also known as the “2018 Project”) include the following:
(i) the replacement of the City’s existing Lawrence-Dumont Baseball Stadium which is expected to be the home a Triple-A minor league affiliate of the Miami Marlins;
(ii) a museum and home of the National Baseball Congress; and
(iii) a pedestrian bridge across the River.
The estimated overall plan of finance for the 2018 Projects includes the use of fluids provided from other available City fluids or borrowings, including proceeds of general obligation bonds and revenues from tax increment financing districts and community improvement districts, which proceeds are expected to be available in the first half of 2019. The following table provides a summary of the sources and uses of such funds:
Sources of Funds
STAR Bonds: 40,000,000.00
Available City Funds & Financing: 43,000,000.00
Total Sources: 83,000,000.00
Uses of Funds
Stadium & Museum: 75,000,000.00
Pedestrian Bridge: 3,000,000.00
Riverbank Improvements: 3,000,000.00
Parking & Infrastructure: 2,000,000.00
Total Uses: 83,000,000.00
The existing Lawrence-Dumont Baseball Stadium was constructed in 1934 as part of the Works Progress Administration during the Great Depression. The stadium previously served as the home to the Wichita Wranglers (Class AA Texas League) through the 2007 baseball season. As part of the plans to continue to redevelop the City’s downtown area, the City has estimated the demolition of the current stadium by year end 2018 and completion of the new stadium by March 2020. The new facility is estimated to include 6,500 to 7,000 fixed seats, with group areas and other spaces bringing total capacity to around 10,000. The stadium will serve as the home for a to-be-named Triple A minor league affiliate of the Miami Marlins and be used to hold concerts and various high school and collegiate sporting events.
The City and the owner of the minor league team are anticipated to enter into a development agreement whereby the owner has the ability to develop approximately 15 acres of property surrounding the stadium. The development agreement is anticipated to require development to commence within 18 months of completion of the stadium and include the development of a hotel, retail spaces, restaurants and bars to complement the stadium and surrounding areas.
Anticipated future phases of development expected to occur within the West Bank Project Area include: (i) completion of the west bank corridor improvements from Douglas Avenue south to Kellogg with an estimated $5 million in STAR Bond funded improvements for a plaza and riverbank amenities designed to complement the stadium and surrounding Delano neighborhood; (2) an East Bank Catalyst Site north of the Broadview Hotel redevelopment site and across the River from the West Bank Apartments Project (as described above), with an anticipated $40 million mixed-use development along the river that complements both the River corridor and adjacent Broadview Hotel and includes an estimated $4 million in STAR Bond financed plaza and River bank amenities; and (3) development of the area referred to as the Upper Reach, extending from the Seneca Street Bridge to Sim Park on the opposite side of the River.
The City and EPC Real Estate Group. LLC (the “Delano Catalyst Site Developer”) have entered into a Development Agreement relating to certain property within the West Bank Project Area, consisting to the property south and east of the Wichita Public Library’s Advanced Learning Library. Pursuant to the Development Agreement, the Delano Catalyst Site Developer has agreed to develop the property to include the following:
The Delano Catalyst Site Developer has agreed to meet certain project milestones in connection with the development of the property, including full project completion by October 1, 2020.
(page 14)
Click here to view Wichita ballpark STAR bonds series 2018 projected incremental tax revenues.pdf
(page 15)
The following sets forth the estimated sources and uses of fluids relating to the proceeds of the Series 2018 Bonds:
Sources of Funds
Series 2018 Bond Principal: 42,140,000.00
Net Original Issue Premium: 1,733,967.20
Total Sources: 43,873,967.20
Uses of Funds
Deposit to Project Fund: 40,000,000.00
Deposit to Capitalized Interest Fund: 3,276,163.30
Costs of Issuance(1): 597,803.90
Total Uses: 43,873,967.20
(1) Includes underwriters’ discount (see “UNDERWRITING” herein) and other costs of issuance related to the Series 2018 Bonds.
(page 16)
Click here to view Wichita ballpark STAR bonds series 2018 debt service requirements.pdf
Employment in Kansas continues to grow, but slower than the nation.
Data released today from the Bureau of Labor Statistics, part of the United States Department of Labor, shows a mostly improving jobs picture for Kansas in January 2019.
Over the year (January 2018 to January 2019), the Kansas labor force is up by 0.7 percent, also rising slightly over the past three months.
The number of unemployed persons rose from December 2018 to January 2019, rising by 931 persons, or 1.9 percent. The unemployment rate was 3.4 percent in January, down from 3.5 percent from one year ago, but up by 0.1 percentage points from December. This is because the labor force grew by a larger proportion than did workers.
Click charts and tables for larger versions.
The number of Kansas nonfarm jobs for January 2019 rose by 14,300 or 1.0 percent over last January. This is using seasonally adjusted data. The non-adjusted figure is nearly the same at 14,000.
From December 2018 to January 2019, nonfarm employment in Kansas grew by 500, which is 0.04 percent.
Using seasonal data, nonfarm employment in Kansas grew by 0.85 percent from January 2018 to January 2019. Over the same period, job growth in the nation was 1.68 percent.
