Category Archives: Wichita city government

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?

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Notes

City of Wichita social media town hall on Facebook, March 7, 2019. See https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-2019-03-07-c.png. Also https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-2019-03-07.png. ↩

Wichita considers a new stadium

March 19, 2019 Bob Weeks Leave a comment

The City of Wichita plans subsidized development of a sports facility as an economic driver. Originally published in July 2017.

West Bank Redevelopment District. Click for larger.

This week the Wichita City Council will consider a project plan for a redevelopment district near Downtown Wichita. It is largely financed by Tax Increment Financing and STAR bonds. Both divert future incremental tax revenue to pay for various things within the district.¹ ²

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

Trends of business activity in downtown Wichita. Click for larger.

In fact, change in Downtown Wichita — if we’re measuring the count of business firms, jobs, and payroll — is in the wrong direction, despite large public and private investment. ⁵

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.

The Economics of Subsidizing 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.”

What economists think about public financing for sports stadiums

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.”

Publicly Financed Sports Stadiums Are a Game That Taxpayers Lose

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.”

Sports Facilities and Economic Development

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.”

Professional Sports as Catalysts for Metropolitan Economic Development

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.”

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Notes

Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/. ↩
Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/. ↩
Wichita City Council, agenda packet for July 18, 2017. ↩
Weeks, Bob. Downtown Wichita’s Block One, a beneficiary of tax increment financing. Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-block-one-beneficiary-tax-increment-financing/. ↩
Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/. ↩
“Ten years ago, Elizabeth Stevenson looked out at the neighborhood where a downtown arena would soon be built and told an Eagle reporter that one day it could be the ‘Paris of the Midwest.’ What she and many others envisioned was a pedestrian and bike-friendly neighborhood of quaint shops, chic eateries and an active arts district, supported by tens of thousands of visitors who would be coming downtown for sporting events and concerts. It hasn’t exactly turned out that way. Today, five years after the opening of the Intrust Bank Arena, most of the immediate neighborhood looks much like it did in 2004 when Stevenson was interviewed in The Eagle. With the exception of a small artists’ colony along Commerce Street, it’s still the same mix of light industrial businesses interspersed with numerous boarded-up buildings and vacant lots, dotted with ‘for sale’ and ‘for lease’ signs.” Lefler, Dion. 5 years after Intrust Bank Arena opens, little surrounding development has followed. Wichita Eagle. December 20, 2014. Available at http://www.kansas.com/news/local/article4743402.html. ↩
Riedl, Matt. Has Commerce Street become too cool for its own good? Wichita Eagle. April 8, 2017. http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article143529404.html. ↩
Weeks, Bob. Wichita WaterWalk contract not followed, again Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-agreement-not-followed/. ↩

Wichita city government

Wichita city protections for ballpark land development

March 17, 2019 Bob Weeks Leave a comment

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.

Walk away from WaterWalk

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.

The protections

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.

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Notes

Weeks, Bob. Did Wichita forget the interest? Available at https://wichitaliberty.org/wichita-government/did-wichita-forget-interest/. ↩
City of Wichita social media town hall on Facebook, March 7, 2019. See https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-2019-03-07-c.png. Also https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-2019-03-07.png. ↩
City of Wichita social media town hall on Facebook, March 7, 2019. See https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-Waterwalk-2019-03-07.png. ↩
Weeks, Bob. Coverage of Wichita baseball owner Lou Schwechheimer. Available at https://wichitaliberty.org/wichita-government/wichita-baseball-owner-lou-schwechheimer/. ↩

Wichita city government

Wichita ballpark land deal: John Todd

Video March 17, 2019 Bob Weeks Leave a comment

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.

Wichita city government

Wichita vets its baseball partner(s)

March 15, 2019 Bob Weeks Leave a comment

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?

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Notes

Swaim, Chance. Baseball team owners may have broken rules by talking to Wichita behind league’s back. Wichita Eagle, March 13, 2019. Available at https://www.kansas.com/news/politics-government/article227674224.html. ↩
Letter and attachments from Minor League Baseball to City of Wichita 2018-01-16.pdf. Available at https://drive.google.com/open?id=1PIrEaj3X3XoqqX9Ekq1u5m6KCGV9hFDH. ↩
“A bond disclosure document anticipated a development agreement for land surrounding the new Wichita ballpark.’ Weeks, Bob. Wichita ballpark STAR bonds, 2018 issue. Available at https://wichitaliberty.org/wichita-government/wichita-ballpark-star-bonds-2018-issue/. ↩
City of Wichita social media town hall on Facebook, March 7, 2019. See https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-2019-03-07-c.png. Also https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-2019-03-07.png. ↩
Weeks, Bob. Coverage of Wichita baseball owner Lou Schwechheimer. Available at https://wichitaliberty.org/wichita-government/wichita-baseball-owner-lou-schwechheimer/. ↩

Wichita city government

Wichita baseball team travel agreement not known

March 14, 2019 Bob Weeks Leave a comment

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?

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Notes

City of Wichita agenda packet for September 11, 2018, item IV-3 ↩
“17.9 Emergency Air Travel Fund. The City and the Team acknowledge and agree that, as a condition of the PCL and MiLB approving the relocation of the Team to Wichita, the City and the Team must establish a fund (the “Travel Fund”) to be used to respond to reasonable claims presented by other teams in the PCL relating to accessibility, frequency and ease of travel into and out of Wichita. The Emergency Air Travel Fund Agreement is attached hereto as Exhibit D.” City of Wichita. BALLPARK FACILITY USE AND MANAGEMENT AGREEMENT BETWEEN THE CITY OF WICHITA, KANSAS AND YES2NO, LLC, A MASSACHUETTS LIMITED LIABILITY COMPANY Authorized to do business in Kansas. October 23, 2018. Available at https://www.wichita.gov/Stadium/Documents/Facility%20Use%20%20Management%20Agreement%20-%20Final.pdf. ↩

Wichita city government

Did Wichita forget the interest?

March 14, 2019 Bob Weeks Leave a comment

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.

Presentation to Wichita city council. Click for larger.

The conclusion reached by city officials was: “The $38M equates to over 50% of the $75M stadium debt repayment.” ¹

$38M, or $38,000,000 refers to the sum of the amounts the city expects to receive from these sources:

Incremental sales tax (used to pay STAR bonds)
TIF revenue (incremental property tax revenue)
CID (the extra sales tax customers will pay)
Naming rights
Management fee (the rent the new team plays the city)

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.

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Notes

City of Wichita. Stadium Private Development Agreement. March 5, 2019. Available at https://www.wichita.gov/Council/CC%20Presentations/2019-03-05%20PowerPoint%20Presentations/V-3%20Approve%20the%20Private%20Development%20Agreement%20with%20Wichita%20Riverfront%20LP.pdf. ↩
Municipal Securities Rulemaking Board. CITY OF WICHITA, KANSAS SALES TAX SPECIAL OBLIGATION REVENUE BONDS (RIVER DISTRICT STADIUM STAR BOND PROJECT), SERIES 2018 (KS). Available at https://emma.msrb.org/IssueView/Details/ER387382. ↩

Wichita city government

In Wichita, respecting the people’s right to know

March 13, 2019 Bob Weeks Leave a comment

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.

Example from the Lawrence report. Click for larger.

It’s not like the City of Wichita does not realize the desirability of providing citizens with information. In fact, Wichitans have been teased with the promise of more information in order to induce them to vote for higher taxes. During the campaign for the one cent per dollar Wichita city sales tax in 2014, a city document promised this information regarding economic development spending if the tax passed: “The process will be transparent, with reports posted online outlining expenditures and expected outcomes.” (This is what Lawrence has been doing for several years.)

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:

It would be easy to improve the availability and utility of the city’s legal notices.
When the city supplies doeuments in electronic form, also post them online.
The city could require its tax-funded partners to disclose how they spend taxpayer money.
The city could stop creating taxpayer-funded entities to avoid open records laws.
Hold social media town halls even if the city doesn’t like the questions. See A Wichita social media town hall.

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

For example, in his State of the City address for 2011, Brewer listed as an important goal for the city this: “And we must provide transparency in all that we do.” See https://drive.google.com/open?id=1xgx96BEXALDEgLBRcQdz2Kg0_W5x3e2J. ↩
“The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.” Wichita City New Release. Available at https://www.wichita.gov/News/Pages/2013-03-18b.aspx. ↩
Wichita Eagle Editorial Board. *Fight for transparency during ‘Sunshine Week’ and year-round.” Available at https://www.kansas.com/article227430494.html. ↩

Wichita city government

Wichita legal notices could be more accessible

March 13, 2019 Bob Weeks Leave a comment

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.

Legal publications in the Wichita Eagle, occupying nearly the entire page.

Do you read the legal publications in your local newspaper? Often they are lengthy. Many pertain to just one person or company. All are supplied using ink expressed as fine print on dead trees.

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?

Wichita city government

Wichita ballpark STAR bonds, 2018 issue

March 13, 2019 Bob Weeks Leave a comment

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

STAR Bonds Overview

(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.

The District and the Project

(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)

THE DISTRICT AND THE 2018 PROJECTS

The Original STAR Bond District and the Original Project

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.

The Expanded STAR Bond District

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.

The 2018 Projects

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.

Other Anticipated Development in the District

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:

a public greenway/gathering area on the property;
an apartment complex consisting of a minimum of 180 apartment units;
a hotel consisting of a minimum of 90 guest rooms;
a minimum of 114 parking spaces available to the public; and
a minimum of 5,000 square feet of Class A commercial space.

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.

Projected Incremental Tax Revenues

(page 14)

Click here to view Wichita ballpark STAR bonds series 2018 projected incremental tax revenues.pdf

(page 15)

SOURCES AND USES OF FUNDS

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.

Debt Service Requirements

(page 16)

Click here to view Wichita ballpark STAR bonds series 2018 debt service requirements.pdf

Wichita city government

Update: Wichita city sales tax not passed

March 7, 2019 Bob Weeks Leave a comment

There was no successful Wichita city sales tax election. City documents were mistaken, which raises more issues.

The agenda packet for this week’s meeting of the Wichita City Council held a surprise: The city had passed a one cent per dollar sales tax.

In the agenda for March 5, 2019, as part of item V-3, titled “Private Development Agreement with Wichita Riverfront LP (District IV),” there is a development agreement between the city and a group wanting to develop city-owned land near the new baseball stadium. Section 6.03 of the development agreement holds this surprise:

“The 1% City sales tax has been approved at an election, and the City agrees that the City sales tax revenues generated within the STAR Bond District will be committed to pay the principal and interest of the STAR Bonds.” (emphasis added)

It turns out this is a mistake. The city’s chief economic development official told me, “When we draft new agreements, we often cut and paste language from previous agreements to help build a base document.”

This language has been removed from the agreement, he also said, as it has “no purpose in this agreement.”

This still leaves a few questions:

First, from which previous agreement was this copied? Which agreement (or potential agreement) contained a statement that city voters approved a city sales tax? Which election?

Second, what if the council had passed this agreement with this language included?

Third, this is evidence of extreme carelessness. We’ve been told that this development agreement has been in negotiations for several months. Yet, this mistake somehow survived and almost became part of a binding document.

For more on this matter, see:

Wichita city government

In Wichita, no tenant poaching, unless waived

March 7, 2019 Bob Weeks Leave a comment

The city of Wichita has included anti-poaching clauses in development agreements to protect non-subsidized landlords, but the agreements are without teeth.

The Wichita City Council is considering a development agreement between the city and a group wanting to develop city-owned land near the new baseball stadium. In the agenda for March 5, 2019, as part of item V-3, titled “Private Development Agreement with Wichita Riverfront LP (District IV),” there is this in the city’s “analysis” section:

For and in consideration of the Purchase Rights granted Developer herein, from the Effective Date of this Agreement for a period of ten (10) years after the Completion of Construction for the Phase One Development, Developer and each of its members hereby agrees and consents that it shall not, directly or indirectly, market, solicit, promote or attempt to lease commercial space in the Private Development to then-current tenants of properties located within a distance of two (2) miles extending from the outside boundary of the Private Development Site. (emphasis added)

While the city doesn’t provide a reason for this provision of the agreement, we might call it the “anti-poaching” clause. Since the city is giving land to the ballpark developers at (essentially) zero cost, that gives them an advantage over other developers who have not received such subsidy. The ballpark developers could use that cost advantage to lure (poach) tenants from nearby locations. Those landlords who lose tenants might feel they have been discriminated against. They’d be correct.

While this anti-poaching policy seems reasonable, the city gives itself an escape hatch. In the actual agreement between the city and the ballpark developer we find that the developer shall not poach without “the City’s providing written consent waiving this restriction with respect to such Potential Tenant.” ¹

In other words, the city can waive the anti-poaching clause. There is no need for anyone to give a reason why a waiver is necessary. The document is silent as to whether a waiver requires city council approval.

This isn’t the first time the city has included an anti-poaching clause with a waiver provision. On December 19, 2017 the city council considered a development agreement for the Spaghetti Works development near Naftzger Park in downtown. The city’s analysis described an anti-poaching clause, but the actual development agreement lets the city waive the clause. In this case, all the city must do is fail to object to a poached tenant, and the clause is waived. ²

—
Notes

Development agreement, section 3.10: “Business Restriction Radius. For and in consideration of the Purchase Rights granted Developer herein, from the Effective Date of this Agreement for a period of ten (10) years after the Completion of Construction for the Phase One Development, Developer and each of its members hereby agrees and consents that it shall not, directly or indirectly, market, solicit, promote or attempt to lease commercial space in the Private Development to then-current tenants of properties located within a distance of two (2) miles extending from the outside boundary of the Private Development Site (“Business Restriction Radius”) as shown on Exhibit L, to avoid and/or minimize material economic impact to the established businesses within the Business Restriction Radius without: (i) the Developer’s providing to the City and the then-current landlord of such potential tenant (“Potential Tenant”) sixty (60) days’ prior written notice of the intent to enter into lease negotiations with such Potential Tenant within the Business Restriction Radius, and (ii) the City’s providing written consent waiving this restriction with respect to such Potential Tenant. This restriction shall not apply to a Potential Tenant if such Potential Tenant (i) has multiple locations within the City of Wichita at the time of such solicitation, or (ii) such Potential Tenant is considering opening up a second location within the Private Development Site in addition to maintaining its current location within the Business Restriction Radius.” ↩
City of Wichita, agenda packet for December 19, 2017, agenda item IV-6, “Petition to Approve a Community Improvement District and approval of a Development Agreement for Spaghetti Works (District I).” From the city’s analysis” “The agreement includes a retail relocation restriction for the first three years following the Certificate of Completion for Phases 1 and 2. The boundaries for the relocation restriction are 1st Street on the north, Waterman Street on the south, Broadway Avenue on the west and Washington Avenue on the east.”
From the development agreement: “Section 4.14. Relocation Restrictions. For a period of three years following the City’s acceptance of a Certificate of Full Completion of Phases 1 and 2 of the SW Project, the Developer or approved assignee shall present to the City a written description of potential retailer or restaurant tenants to be located within Phases 1 and 2 of the SW Project which are relocating from a site within the area bounded by 1st Street on the North, Waterman Street on the South, Broadway Street on the West, and Washington Avenue on the East (the “Restricted Area”). Such description shall be presented to the City within thirty (30) days prior to the date when the Developer or approved assignee expect to enter into any legal obligation for the lease of such retail or restaurant tenant space. The City shall have the absolute right to refuse any such prospective tenant presented by the Developer. If the City Representative does not provide a written objection to Developer within ten (10) business days of presentment, such non-response shall constitute a waiver of any objection to Developer’s proposed sale or lease. The Developers further agree to obtain a covenant from any assignee or purchaser of an ownership interest in the SW Project to abide by the terms of this Section 4.14.” (emphasis added) ↩

Wichita city government

Wichita city sales tax passed

March 6, 2019 Bob Weeks 1 Comment

Wichita voters might be surprised to learn that they passed a city sales tax, according to city documents.

In 2014 the Wichita City Council allowed voters to decide on a temporary one cent per dollar Wichita city sales tax. That would have taken the sales tax in the city from 7.5 percent to 8.5 percent. The matter failed to pass, with 62 percent of voters against the tax.

But wait. According to the agenda packet for the council’s meeting on March 5, 2019, a one-cent city sales tax has been approved at an election.

In the agenda for that day, as part of item V-3, titled “Private Development Agreement with Wichita Riverfront LP (District IV),” there is a development agreement between the city and a group wanting to develop city-owned land near the new baseball stadium. Section 6.03 of the development agreement holds this surprise:

That’s news.

This error — if it is an error — is much more than a simple typographical error or misspelled word. I’ve asked the city for an explanation of what this means.

Something like this must be more than a random mistake. We need to know: How did this statement make its way into an official city document, specifically an agreement between the city and a business partner?

Are city officials planning another sales tax election? Not only planning an election but banking on the passage of the tax?

Is the business partner relying on a new Wichita city sales tax? Did the city promise this?

Is this something else we haven’t been told, like a secret deal to sell city-owned land for $1 per acre?

Is this someone’s idea of a joke?

No matter what explanation the city may provide, it’s difficult to fathom how language like this appears in an official city document unless someone is thinking about this — and wishes for new taxes.

I’ll let you know if I get a response from Scot Rigby, who is Assistant City Manager, Director of Development Services for the City of Wichita.

Update: It was a mistake, the city says. See Update: Wichita city sales tax not passed.

Excerpt from Wichita city council agenda packet. Click for larger.

Wichita city government

Coverage of Wichita baseball owner Lou Schwechheimer

March 6, 2019 Bob Weeks Leave a comment

Press coverage of new Wichita baseball team majority owner Lou Schwechheimer.

We don’t know much about the ownership team of the new Wichita baseball team, led by majority owner Lou Schwechheimer. But here’s a look at some of the press coverage from November 2015, when Schwechheimer was announced as part of the new owners of the New Orleans Zephyrs AAA minor league baseball team (later renamed the Baby Cakes).

The New Orleans Times-Picayune contributed this quote: ¹

“Our goal is to make the New Orleans Zephyrs one of the top franchises in all of Minor League Baseball. With the great South Louisiana fans, the love of sports here and our hard work, we have every reason to believe that we will succeed,” Schwechheimer said.

“New Orleans will be in the top tier of attendance, because this is a great town. This is a resilient town. This is a magical town. … I can promise you this ballpark will come alive. We will provide first class family entertainment where families can come out with their kids, where grandparents can bring their grandkids to their first game, where young couples can go on their first date. It’ll be a family place. We only ask the fans in New Orleans one thing: just come once. Let us earn your trust one time and I promise you’ll be back.”

The news organ of minor league baseball reported this: “Our goal is to make the New Orleans Zephyrs one of the top franchises in all of Minor League Baseball,” Schwechheimer said. “With the great South Louisiana fans, the love of sports here, and our hard work, we have every reason to believe that we will succeed.” ²

In 2016, local media reported this: “Schwechheimer, announced Monday as manager and controller of a company that has bought 50 percent of the New Orleans Zephyrs, said that type of diligence, dedication and now experience will be used to turn around this city’s Triple-A team.” ³

In 2018, at least a few people in New Orleans weren’t happy with Schwechheimer’s plans to move the team to Wichita: “Relocating the Baby Cakes to Wichita, a city with one-third the market of New Orleans would be in many ways the final act of betrayal by owner Lou Schwechheimer. First, Schwechheirmer changed the team name from the Zephyrs, which New Orleans embraced, to the Baby Cakes. The name is loathed by most in the New Orleans area.” ⁴

An unhappy fan submitted this letter to The Times-Picayune: ⁵

The Babycakes were never committed to New Orleans

After only two years, the cleat finally dropped. The organization that owns the team formerly known as the Zephyrs is decamping New Orleans for the friendlier and far more lucrative confines of a new ballpark in Wichita, Kan. Hope they come up with a catchy nickname.

This group of carpetbaggers from New England were on their way out the door the day they walked into New Orleans. They clearly demonstrated their utter lack of regard for this community and for the game of baseball when they adopted the most demeaning, the most nonsensical and the least authentic nickname they could have come up with. It wasn’t even a part of our community’s well-known idiosyncratic idiom.

Sure, they sold tons of merchandise the first year, then in only two years presided over the dissolution of a quarter of a century of AAA baseball in a major league market. That was no accident. To demonstrate how bush league these guys are, they didn’t even sew the logo or the numbers — much less player names — on their jerseys. They simply printed the shirts. Even Little League teams have numbers and team names sewn on.

The New Orleans Times-Picayune also reports that the Baby Cakes will be leaving before the end of the team’s stadium lease: “The New Orleans Baby Cakes have filed an application to relocate the team to Wichita, Kansas, according to the Louisiana Stadium and Exposition District. The LSED said in a release Thursday (Sept. 6) the team is expected to stay until the expiration of the lease through the 2021 season. The Wichita Eagle reports the city hopes to have a team in place by 2020. That would make 2019 the final season for the Cakes in the New Orleans market.” ⁶ Minutes of the October 25, 2018 meeting of LSED confirm that the lease runs through 2021. ⁷ This means the Baby Cakes, if playing in Wichita in 2020 as planned, will have left New Orleans with two seasons remaining on the lease.

—
Notes

Boudwin, Julie. New Orleans Zephyrs announce new ownership group, day-to-day management team. The Times-Picayune, November 30, 2015. Available at https://www.nola.com/baby-cakes/2015/11/new_orleans_zephyrs_1.html. ↩
MiLB.com. Schwechheimer introduced as Z’s owner. November 30, 2015. Available at . ↩
Williams, Darrell. New owner Lou Schwechheimer tasked with turning New Orleans Zephyrs around. The New Orleans Advocate, April 22, 2016. Available at https://www.theadvocate.com/new_orleans/sports/zephyrs/article_0119ed0a-4d00-5a7e-be97-00d430c0f819.html. ↩
Boyd, Kevin. BREAKING: New Orleans Baby Cakes Are Heading To Wichita After 2019. Available at https://thehayride.com/2018/09/breaking-new-orleans-baby-cakes-are-heading-to-wichita-after-2019/. ↩
Letters, September 14, 2018. Available at https://www.nola.com/opinions/2018/09/babycakes_leaving.html. ↩
Dabe, Christopher. Baby Cakes on the move: team to leave after lease expires, LSED says. The Times-Picayune, September 6, 2018. Available at https://www.nola.com/baby-cakes/2018/09/baby_cakes_moving_wichita.html. ↩
Available at https://www.lsedgov.com/uploads/1/0/9/6/109696749/october_minutes.pdf. ↩

Wichita city government

Slow down on Wichita ballpark land deal

March 4, 2019 Bob Weeks Leave a comment

A surprise deal that has been withheld from citizens will be considered by the Wichita City Council this week.

Wichitans were probably surprised to learn Sunday that the city plans to sell land near the new baseball stadium to the owners of the new baseball Wichita team.

Surprised for several reasons: First, while the city completed an agreement with the new team last year, the land sale was not disclosed to the public. There appears to be no prior public mention of this.

Second, the city plans to sell land for $1 per acre.

Third: While the Wichita Eagle reported this story Sunday ¹ We might have known as early as Friday, except that city council agendas were not available due to a website problem. The website was fixed Monday afternoon.

Here’s what the agenda packet holds for item V-3, titled “Private Development Agreement with Wichita Riverfront LP (District IV).”

“As part of the City’s effort to attract affiliated baseball to Wichita and secure development activity to help pay for the stadium STAR and TIF bonds, the City extended the invitation for interested team ownerships to have development opportunities surrounding the stadium. The New Orleans’s team ownership did express that as a requirement for their interest in Wichita they required development rights around the stadium.”

This is the first time the city has revealed that development opportunities surrounding the stadium were a requirement of the baseball team deal.

From the agenda: “City grants the Developer 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.”

How much land at one dollar per acre? Earlier, the agenda holds this: “The City owns approximately 24 acres at the former Lawrence Dumont Stadium site. After securing the final footprint of the stadium site, adjacent streets, infrastructure and riverfront enhancements, it is estimated that the remaining property available for private development will be 4.25 acres.” (The Eagle article reported the sale would be 24 acres, but the agenda contradicts that.)

It is troubling that the city has not been forthright in sharing this with us before now. Besides the agenda, the Eagle reported this:

“It goes back to the partnership that we have worked out with the team,” said Scot Rigby, assistant city manager and director of development services, whose department came up with the agreement.

“That’s where we struck that agreement on the value of the ground. For the city, we’ve already owned that property,” he said. “If we didn’t do anything with it, it would be undeveloped property. So the value for us is to get it in development as quickly as possible.”

Also, from the Eagle:

Having the baseball team expand its operations from baseball to real estate along the river has been part of the plan since talks started between the team owners and city officials about three years ago, and it played a major role in attracting the team to Wichita, officials with the city and the team said.

“We needed a team that played the level of baseball that was attractive for the community and important in terms of affiliated baseball at the Triple-A level. But we also wanted a team that could deliver on the development,” Layton said.

Why didn’t the city feel it could share that with us at the time the deal was struck for the team to move to Wichita?

There’s also this. We don’t know much about the ownership team, led by Schwechheimer. At least some in New Orleans weren’t happy with his plans to move the team from there to Wichita: “Relocating the Baby Cakes to Wichita, a city with one-third the market of New Orleans would be in many ways the final act of betrayal by owner Lou Schwechheimer. First, Schwechheirmer changed the team name from the Zephyrs, which New Orleans embraced, to the Baby Cakes. The name is loathed by most in the New Orleans area.” ²

More troubling is this: Schwechheimer bought the New Orleans team in 2016. At the time, local media reported this: “Schwechheimer, announced Monday as manager and controller of a company that has bought 50 percent of the New Orleans Zephyrs, said that type of diligence, dedication and now experience will be used to turn around this city’s Triple-A team.” ³

The Eagle reports this: “Having the baseball team expand its operations from baseball to real estate along the river has been part of the plan since talks started between the team owners and city officials about three years ago, and it played a major role in attracting the team to Wichita, officials with the city and the team said.”

If all this reporting is true, talks about moving the team from New Orleans started in 2016, the same year Schwechheimer purchased the team and said he would use “diligence” and “dedication” to turn around the New Orleans team.

That’s something to think about. Is this a reliable person?

Also: The $1 per acre reminds us of other $1 dollar deals the city has crafted. In 2012, the city leased land it owned in Waterwalk for $1 per year for 93 years. There were apartments built, but the city did not follow through on an important part of the deal. ⁴ Other developments in Waterwalk were leased for $1 per year. ⁵

In these instances, apartments and a hotel were built. But in general, Waterwalk has been a dismal failure, and in recent years its fortunes have declined farther.

In 2011 the city decided to build a parking garage downtown with retail space. It leased 8,500 square feet of that space to Dave Burk for $1 per year. Much of that space has remained vacant since it was built.

Can’t we see some progress on these projects before the city does it again?

Then, these developers are from out-of-town, like — dare I say — the Minnesota Guys. At one time the toast of the town, their multi-count criminal indictment for securities fraud is on appeal to the Kansas Supreme Court on a jurisdictional matter. Other than that, they left a trail of broken promises and bad debts in downtown Wichita.

For these reasons — a surprise announcement that has been withheld from citizens, a broken website, repeating a pattern that hasn’t been successful — we need to take at least a few weeks to mull over this deal.

Then, there’s this: In the agenda packet, section 6.03 of the development agreement holds this surprise: “The 1% City sales tax has been approved at an election, and the City agrees that the City sales tax revenues generated within the STAR Bond District will be committed to pay the principal and interest of the STAR Bonds.”

I have no idea what this means. But how did this appear in an official city document and an agreement with a developer?

—
Notes

Swaim, Chance. Wichita plans to sell riverfront property near new ball park for $1 an acre. Wichita Eagle, March 3, 2019. Available at https://www.kansas.com/news/politics-government/article226994834.html. ↩
Boyd, Kevin. BREAKING: New Orleans Baby Cakes Are Heading To Wichita After 2019. Available at https://thehayride.com/2018/09/breaking-new-orleans-baby-cakes-are-heading-to-wichita-after-2019/. ↩
Williams, Darrell. New owner Lou Schwechheimer tasked with turning New Orleans Zephyrs around. The New Orleans Advocate, April 22, 2016. Available at https://www.theadvocate.com/new_orleans/sports/zephyrs/article_0119ed0a-4d00-5a7e-be97-00d430c0f819.html. ↩
Weeks, Bob. Wichita WaterWalk apartment deal not good for citizens. Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-apartment-deal-not-good-for-citizens/. ↩
Weeks, Bob. Waterwalk hotel deal breaks new ground for Wichita subsidies. Available at https://wichitaliberty.org/wichita-government/waterwalk-hotel-deal-breaks-new-ground-for-wichita-subsidies/. ↩

Wichita city government

Is the Wichita mayor satisfied with this?

February 17, 2019 Bob Weeks Leave a comment

A gloomy jobs forecast is greeted with apparent approval by Wichita Mayor Jeff Longwell.

We have to wonder: Did Wichita Mayor Jeff Longwell read before tweeting?

A recent Longwell tweet references news reports regarding a forecast from Intrust Bank Wealth Services. Titled 2019 Economic Outlook and Market Perspectives, it contains this regarding Wichita:

The Wichita economy saw jobs lost in 2017, but improved last year. Job growth is expected to trend slightly higher in 2019, buoyed by manufacturing and professional services. We anticipate the Wichita economy to expand this year, but grow at slower rate than the U.S. and the majority of metro areas. Business/consumer optimism and aerospace demand should help power the local economy; however, trade issues, commodity prices, lack of skilled labor, and slow population growth will likely limit growth in southeast Kansas.

There’s not much good news in this forecast, except that job growth is expected to grow rather than decline as it did two years ago. So we have to wonder why the mayor retweeted — presumably approvingly — this grim forecast.

It’s a continuation of a trend:

Several times Longwell and other city officials have promoted a study claiming Wichita is a highly “recession-proof” city. That study is nonsense and ignores key economic data and the definition of a recession. See Wichita mayor promotes inaccurate picture of local economy and Wichita, a recession-proof city.
Responding to a different forecast of job growth in Wichita for 2019, Scot Rigby, who is Assistant City Manager, Director of Development Services for the City of Wichita, tweeted “great news.” But that forecast is as gloomy as the Intrust forecast, with job growth expected to be about half the national rate. See Job growth in Wichita: Great news?
Generally, Wichita officials are pleased with the local economy (Former Wichita City Council Member Pete Meitzner: “We have enjoyed great progress and growth during my two terms as a City Council member and I plan to do my part to assure Sedgwick County is part of this continued success.”) But the available statistics are grim and are improving only slowly. See Growing the Wichita economy.

If Wichitans don’t read beyond the rosy headlines and tweets from the mayor and city officials, they will be uninformed, and unfortunately, misinformed by people we should be able to trust.

Wichita city government

Another Wichita survey, another set of problems

February 17, 2019 Bob Weeks Leave a comment

The Wichita Eagle editorial board notices problems with a survey gathering feedback on Century II.

What will we learn from a survey gathering public opinion on the future of Century II in downtown Wichita? Not much, according to a Wichita Eagle editorial. ¹

The editorial presents evidence from an expert indicating the survey will produce results that “will be neither scientifically valid nor representative of the city as a whole.” The problems lie with the nature of the questions and self-selected participants unlikely to be representative of the city.

I commend the editorial board for bringing this issue to our collective attention. It’s important, and not unprecedented in Wichita. If we look beyond this survey, we’ll find other examples of the same:

The Project Wichita survey suffers from the same faults, as I show in Project Wichita survey.
In 2014 the city was quite proud of its engagement and positive response regarding the proposed city sales tax. But on election day, 62 percent of voters said no to the tax.
In 2013 the city established a website and program called “Activate Wichita.” It was a virtual town hall where citizens and officials could propose ideas and collect feedback. But as I showed, when using the voting system there was no option for expressing disagreement or disapproval with an idea. “Neutral” was as much dissent as Wichitans could express in this system.

—
Notes

Wichita Eagle Editorial Board. Will Century II survey tell city leaders what Wichitans really think? No. February 15, 2019. Available at https://www.kansas.com/opinion/editorials/article226286910.html. ↩

Wichita city government

Naftzger Park costs up, yet again

February 10, 2019 Bob Weeks Leave a comment

The cost of fixing an oversight in the design of Naftzger Park in downtown Wichita is rising, and again we’re not to talk about it, even though there are troubling aspects.

Last week the Wichita City Council was scheduled to consider an item regarding the rebuild of Wichita City Council. That item was removed from the agenda the day before the meeting. It now appears on the agenda for the February 12 meeting, and with a higher price tag.

(“Consider” is not quite the right term, as the item was on the council’s consent agenda. That’s where items are passed in bulk, usually without discussion.)

As the city explains in the agenda packet for this week, “Naftzger Park currently has a small pond that acts as a storm water retention facility during rain events. Proposed improvements to Naftzger Park will eliminate the pond and all available storm retention. The project does not include funding for replacing the retention capacity.” The cost is given as $115,000, up from last week’s $85,000.

As explained last week, this seems like a major oversight in the original project plans. The city has regulations regarding stormwater retention that private sector developers must follow. Didn’t any city planners consider these regulations as the project was planned? Didn’t any council member or bureaucrat look at the plans and wonder about stormwater drainage? Wasn’t there a highly-regarded architect designing the park? What about TGC Development, the developer of the surrounding property, to whom the city effectively outsourced the development of Naftzger Park? The construction manager?

Of note: This week the agenda tells us this: “Funding is available for transfer due to the scope of project being adjusted to remove some the structural repairs and the abutment treatment after discussion with the railroad were not successful.” This sounds like structural repairs were planned but not executed. This deserves discussion, but with the item being on the consent agenda, discussion is not likely.

Of further note: The February 5 agenda stated, “Funding is available for transfer due to underruns of bid items upon project completion and favorable bid pricing.” This made it sound like all planned work was completed and the city spent less than budgeted, even if through happenstance. This week we’re being told something different.

Wichita city government

From Pachyderm: Wichita Mayor Jeff Longwell

Audio February 8, 2019 Bob Weeks Leave a comment

From the Wichita Pachyderm Club: Jeff Longwell, Mayor of the City of Wichita. This was recorded February 8, 2019.

Wichita city government

Facade improvement program raises issues in Wichita

February 2, 2019 Bob Weeks Leave a comment

An incentive program in Wichita should cause us to question why investment in Wichita is not feasible without subsidy.

At its February 5, 2019 meeting, the Wichita City Council will consider an item regarding economic development in Delano. The owner of a building there has applied for financial assistance under the city’s facade improvement program.

The purpose of the facade improvement program, according to city documents, is to provide “low-cost loans and grants” to help improve the appearance of buildings “located in defined areas needing revitalization, including the City’s core area.”

The matter before the council this week is to accept the petition of the property owner and set February 19, 2019 for the public hearing.

Undoubtedly council members will praise the property owner for deciding to invest in Wichita. I’m glad he is, and it sounds like the project will improve the Delano area. But the need for this item raises a few questions regarding public policy in Wichita that are more important than any single project.

First, city documents state: “The Office of Economic Development has reviewed the economic (‘gap’) analysis of the project and determined there is a financial need for incentives based on the current market.” In other words, the city has determined that this project is not economically feasible unless it receives a government subsidy. Will any council members ask why is it not possible to renovate a building in the core of Wichita without subsidy? What factors in Wichita — specifically Delano — make it impossible to have investment like this without subsidy?

Second: Wichita officials, especially Wichita Mayor Jeff Longwell, tell us that the city doesn’t use cash as an economic development incentive. But this proposal includes a cash grant of $30,000. This is not a low-cost loan that must be repaid. Instead, it is an incentive, a gift — and it’s cash.

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Individual liberty, limited government, economic freedom, and free markets in Wichita and Kansas