Category Archives: Wichita city government

Metropolitan employment and labor force

A visualization of employment, labor force, and unemployment rate for metropolitan areas, now with data through May 2019.

How does the Wichita metropolitan area compare with others regarding employment, labor force, and unemployment rate? A nearby example shows data from the Bureau of Labor Statistics, part of the United States Department of Labor. Considering growth of employment since the start of the decade, the answer is Wichita has not performed well.

This illustration came from an interactive visualization I created from BLS data. Click here to learn more and use the visualization.

Click for larger.

Wichita transit, by the numbers

Transit in Wichita isn’t working very well, and it is expensive.

A recent editorial in the Wichita Eagle proclaims, “If Wichita genuinely wants to be a vibrant, modern city, we have to improve our public transportation.” 1 This was inspired by the recent story of a Wichita State University employee chronicling his experience riding the bus to work for a week. The Eagle reported: “What Lucas found riding the bus for a week was that his regular 11-mile, 17-minute car commute was, on average, an hour and 35 minutes on Wichita Transit. Each way.” 2

There is little doubt that relying on the regular scheduled bus service in Wichita is frustrating for most riders. Some find it unusable. Given that, how much do we pay for transit?

The National Transit Database holds annual profiles for transit agencies. They are not easy to locate, and the numbers are presented in very fine print. I’ve excerpted some data for Wichita for 2017 and present tables nearby. (Clicking may produce larger versions.)

Of note: Fares account for 13.5 percent of operating revenue, not including the costs of buses, which are a capital expense. Someone else pays a lot of the expenses: For operating expenses, 51.4 percent comes from state and federal sources. For capital expenses, 82.4 percent is from federal sources.

For scheduled bus service, the cost per passenger mile is $1.44. and the cost of an unlinked passenger trip is $8.08. (An “unlinked passenger trip” is counted whenever someone boards a bus. For someone who rides a bus downtown and transfers to another bus — like the WSU employee — that counts as two unlinked trips. Two in the morning, then another two in the afternoon, for a total of four unlinked trips each day, or $32.32 for the day.)

Most of these costs for scheduled bus service are fixed in nature, meaning that they don’t increase with additional passengers. With more passengers, these costs on a per-mile or per-trip basis will fall, and if the additional passengers pay fares, the portion of expenses paid by fares will rise.

The costs for bus service in Wichita are not out of line with other similar cities, although costs rose rapidly in Wichita for 2016 and 2017, as can be seen in the nearby chart. (This chart comes from an interactive visualization of national transit data that I developed. Click here learn more about the data and to access the visualization.)

$8.08 per unlinked trip is a lot. $32.32 per day to travel to and from work is a lot. It seems like we ought to be able to provide better service. But I think Wichita provides about the same level of service as other similar cities.


Notes

  1. Suzanne Perez Tobias. Seriously, Wichita, it’s past time to fix our city bus system. Wichita Eagle, July 9, 2019. Available at https://www.kansas.com/opinion/opn-columns-blogs/suzanne-perez/article232442842.html.
  2. Lefler, Dion. A WSU Tech VP tried bus service, finds his 11-mile commute takes 1 1/2 hours each way. Wichita Eagle, July 8, 2019. Available at https://www.kansas.com/news/politics-government/article232316257.html.

Wichita transit center application

Although plans have changed, an application by the City of Wichita holds interesting observations and claims.

Recently the City of Wichita submitted an application to the Federal Transit Administration seeking funds for a proposed transit center in Delano, just north of the new baseball stadium. Plans have changed, and the city’s intent is not clear. Nonetheless, the application is worth of reading and commentary. You can read the application by clicking on The Wichita transit center application. Following, some excerpts from the application and some remarks.

Application: “Employment centers are distributed in several areas around the City and are not concentrated in the downtown core.”

Precisely. This is one of the reasons why mass transit is difficult in Wichita. Transit worked better when downtown was a major employment center, but this is no longer true for most cities.

Application: “Located in the Delano District of the city, an area that is home to new economic development initiatives …”

While Douglas Street in Delano seems to be bustling, the “new economic development initiatives” are mostly in the future, at least as far as producing tangible results. The River Vista apartments are complete, and the new library is open. The new baseball park will not open until next year, and many are skeptical of its value as an economic driver. Other initiatives are still in the planning stage.

Notably, there is a lack of activity at the Delano Catalyst Site, a project slated for 200 apartments with parking garage, a 90 room hotel, and a public transportation hub. (Question: If this project has a public transportation hub, why build another just a few blocks away?) As of a week ago, there was no evidence of any positive construction activity, although it was reported there was some demolition last year. The city’s deadline for completion of this project is October 2020.

Application: “Not only would a new, multi-modal center be key to the growth of the west bank area and mitigate increased traffic, it would replace our old and antiquated transit center.”

Before reading this application, it was unclear to me (and others) whether the proposed transit center in Delano would replace or augment the existing transit center at Topeka and William. Now we know the city’s intent: replacement. Curiously, the application cover page checks off “Bus facility expansion” instead of “Bus facility replacement.”

Application: “Also integral to the boom in this area is a new multi-million dollar public-private economic partnership consisting of private a sports complex and other economic drivers slated to open in April of 2020.”

Regarding “private a sports complex,” I had thought that the City of Wichita would own the new baseball stadium. But this application calls it a private sports complex. While it is scheduled to open in April 2020, it seems unlikely that anything else will have opened by then.

Application: “… it is vital that services connect those areas to downtown employment (which exceeds 5,000 jobs) and to large employers (exceeding 11,000 people).”

Not long ago, city leaders told us there were 26,000 jobs in downtown Wichita. 1 The city and its affiliated agencies no longer use that number, because it was based on a gross misunderstanding and misuse of the data. A better estimate of jobs downtown is perhaps 14,000. 2

So why does this application use 5,000 as the number of jobs in downtown? (Exceeds?)

Application: “However, our aged and outdated transit center, located at William and Emporia Streets is an old design that doesn’t always meet our ever increasing needs.”

Click for larger.

As can be seen in the nearby chart, demand for bus transportation in Wichita is not rising — to say the least — in terms of either trips or passenger-miles.

Application: “Due to its inner city location, it requires constant policing and also sits less than 100 feet from Intrust Arena which hosts numerous events that necessitate closing the streets around the center; making bus operations next to impossible with foot traffic, cars and event activities so close.”

I believe that the proposed location in Delano also qualifies as “inner city.” If the transit center is a crime problem, moving it to Delano will probably also move the problem of crime. Indeed, the likely reason for the city deciding to move the proposed transit center is that developers of nearby property didn’t want a bus station next door.

As far as the present transit station being near an event center, Intrust Bank Arena hosts relatively few events, and very few that generate many thousands of spectators. And, isn’t the proposed location near a baseball stadium that the city hopes will generate much “foot traffic, cars and event activities?”

Application: “The land has also seen a significant increase in its value and will eventually be landlocked by future economic development by the private sector, further reducing accessibility.”

This is a surprise to hear. The only significant development near the present transit station is Commerce Street and the Spaghetti Works District. Property owners on Commerce Street think their property taxes are too high and have asked for relief. The Spaghetti Works district is not complete, so we really don’t know how to gauge its success. Whatever its future, it took millions in public subsidy to achieve.

Directly across William Street from the transit center is retail space owned by the City of Wichita whose only tenants have been government and quasi-governmental agencies that pay a fraction of market rent. (The last time I checked, in 2015 Wichita Festivals, Inc. was paying $2.00 per square foot in rent to the city for the entire space. At that time, according to the Weigand Commercial Real Estate Forecast, Class A space in the central business district averaged $16.04, Class B was $9.96, and Class C $7.46. Perhaps the city considers low rent as a contribution to Wichita Festivals. But it’s also an indication of the low value of this space. When built, it was thought that the retail space would lease for $8.70 per square foot, in 1993 dollars. 3 That’s $15.42 in 2019 dollars.)

Catty-corner to the northwest lies new retail space that has largely remained empty since it was built some five years ago.

Application: “While changing attitudes about automobile ownership and driving are evident among the younger population, schedules and route coverage limit expanded ridership.”

This statement echoes a common belief: Young people, specifically Millennials, don’t like to own cars and drive as much as previous generations. This, however, may not be true. A recent research paper holds this in its abstract:

Anecdotes that Millennials fundamentally differ from prior generations are numerous in the popular press. One claim is that Millennials, happy to rely on public transit or ride-hailing, are less likely to own vehicles and travel less in personal vehicles than previous generations. However, in this discussion it is unclear whether these perceived differences are driven by changes in preferences or the impact of forces beyond the control of Millennials, such as the Great Recession.

After describing their research methodology, the authors state their findings:

We find little difference in preferences for vehicle ownership between Millennials and prior generations once we control for confounding variables. In contrast to the anecdotes, we find higher usage in terms of vehicle miles traveled (VMT) compared to Baby Boomers. Next we test whether Millennials are altering endogenous life choices that may, themselves, affect vehicles ownership and use. We find that Millennials are more likely to live in urban settings and less likely to marry by age 35, but tend to have larger families, controlling for age. On net, these other choices have a small effect on vehicle ownership, reducing the number of vehicles per household by less than one percent. 4 (emphasis added)

Commenting on this study, Leonid Bershidsky wrote:

It would, however, be a mistake to reconsider business plans as if consumer preferences were undergoing a radical change. Having a car of one’s own provides, and will continue to provide, a degree of freedom that cannot be matched by any other transportation offering. Data do not bear out the expectation that people will give up that freedom for any reason except being unable to afford it. 5

Looking at data for automobiles sales, Dale Buss wrote this in Forbes last year:

It turns out that Millennials were responsible for all new-vehicle sales growth in North America during the first quarter of 2018, according to data compiled by Experian, the credit-information company. More specifically, Millennial market share increased to 29.7 percent during the period from 27.9 percent in the first quarter of 2017, while market shares from other generations remained unchanged or fell in the same period, when overall U.S. car sales were leveling off after an eight-year boom. 6

I hope that decision-makers in Wichita government have better access to data than this application reflects.


Notes

  1. Weeks, Bob. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.
  2. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/a>.
  3. Weeks, Bob. As landlord, Wichita has a few issues. Available at https://wichitaliberty.org/wichita-government/landlord-wichita-issues/.
  4. Christopher R. Knittel, Elizabeth Murphy. Generational Trends in Vehicle Ownership and Use: Are Millennials Any Different? NBER Working Paper No. 25674, March 2019. Available at https://www.nber.org/papers/w25674.pdf.
  5. Bershidsky, Leonid. Don’t Expect Car Ownership to Become Obsolete. Bloomberg, March 27, 2019. Available at https://www.bloomberg.com/opinion/articles/2019-03-27/millennials-aren-t-making-car-ownership-obsolete.
  6. Buss, Dale. Millennials — Once Viewed As Auto Market’s Lost Generation — Now Are Its Biggest Growth Driver. Forbes, July 27, 2018. Available at https://www.forbes.com/sites/dalebuss/2018/07/27/millennials-once-viewed-as-auto-markets-lost-generation-now-are-its-biggest-growth-driver/.

The Wichita transit center application

The City of Wichita has made an application to the federal government for funding for a new transit center.

Breaking: The Wichita Eagle has reporting on the city’s modification of plans today. Click on Wichita abandons parking garage plan, could buy developer’s property west of stadium instead.

The City of Wichita has submitted an application to the Federal Transit Administration for a project described as “Delano Multimodal Center and Park-N-Ride.” The application was supplied in several documents. I’ve combined them in what I hope is the correct order. Click here to view.

Map submitted with application. Click for larger.
The “Demonstration of Need” section starts with this: “The successful approval of the City of Wichita application will transform public transit in our city as we know it. Not only would a new, multi-modal center be key to the growth of the west bank area and mitigate increased traffic, it would replace our old and antiquated transit center.”

Of note, the application mentions a partnership “consisting of private a sports complex.” I had thought that the City of Wichita would own the new baseball stadium.

Following is more material from this section of the application:

This center is envisioned as containing transit amenities to handle connections from commuter service, connect-ability to the downtown circulator, transfer points to routes meeting education, employment and economic development key to the growth of the west bank area of the Arkansas River. Also integral to the boom in this area is a new multi-million dollar public-private economic partnership consisting of private a sports complex and other economic drivers slated to open in April of 2020. All of which presents countless public transit opportunities. Designed to rest in an urban setting, the development will have limited on-site parking and public transit will be key in providing accessibility for patrons.

With an evolving Wichita Transit and the growth of areas west and east of the city center, it is vital that services connect those areas to downtown employment (which exceeds 5,000 jobs) and to large employers (exceeding 11,000 people). The multi-modal transit center will provide vast opportunities that will meet and enhance Wichita’s education, employment and economic development needs An increase in demand for this types of service could see a huge advantage in the existence of a multi-modal center that contains transit-oriented development (TOD) space, up to 543 parking spaces as well as connect-ability to transit. This also becomes a quick charge area for our electric bus fleet (11 on order and a new application for more), improves access to our bike share program as well as any potential autonomous circulators which become possible with this type of facility.

Wichita Transit continues to explore and adopt new and innovative modes of transportation. However, our aged and outdated transit center, located at William and Emporia Streets is an old design that doesn’t always meet our ever increasing needs. Due to its inner city location, it requires constant policing and also sits less than 100 feet from Intrust Arena which hosts numerous events that necessitate closing the streets around the center; making bus operations next to impossible with foot traffic, cars and event activities so close. The land has also seen a significant increase in its value and will eventually be landlocked by future economic development by the private sector, further reducing accessibility. The multi-modal center will be a multi-functional transit center that works in today’s modern world.

Capital
Without this funding, it will be extremely difficult to fund a multi-modal center. The funding mix utilized for capital purchases up to now (FTA sections 5307 & 5339, and FHWA’s Surface Transportation Program (STP) and Congestion, Mitigation, and Air Quality (CMAQ), etc.) is not sufficient to close the funding gap to replace the transit center, as they are earmarked for normal operations (preventive maintenance, planning, operations, and other capital needs such as fare-boxes, bus IT needs, lift systems, support vehicles, security projects and bus replacements). Possible future CMAQ or STP funding will not be available to Wichita Transit until after 2020, but planned uses of eligible funds in 2021 and 2022 is for para-transit van replacement.

In 2017, Wichita Transit forged many partnership initiatives to increase economic and mobility opportunities for the Wichita community, partnerships that resulted in a 9% increase in fixed route ridership in 2018. Our partners include USD259, Wichita State University (WSU), WSU Tech, Regional Economic Area Partnership (REAP) and Workforce Alliance of South Central Kansas. In order for these minor accomplishments to become major successes it is essential that we create an impactful sustainable public transit system. This multi-modal facility would go a long way toward achieving that goal.

Above all, there is a latent demand for public transportation that is not met by the present system. While changing attitudes about automobile ownership and driving are evident among the younger population, schedules and route coverage limit expanded ridership. To date, the hub-and-spoke system has limited Wichita Transit from playing a role in adding jobs and residents downtown or creating links between employers and employees in the area workforce.

Wichita Transit has significant capital funding needs; needs that are also funded from the federal apportionment. Using the apportionment to fund operating costs is starving funding needed for capital replacements. The current transit service, system design, route configurations can be challenging for all but the most dedicated riders, who are most often transit-dependent. Providing a sustainable service level reflective of the results of citizen engagement efforts and generating improved outcomes. comparable to the local commitment to public transportation found in other communities.

Service improvement scenarios have been identified in addition to the current system – Introducing a modified grid system to improve connectivity, eliminate transfers, and shorten travel times, express bus services from Andover, Derby, Park City and West Wichita or Goddard would be introduced. Local service would also be extended to the City of Maize and Haysville.

Service enhancements would be expected to generate outcomes, including increased citizen satisfaction with the level of transit services, improved financial sustainability, and increased ridership, particularly ridership supporting downtown and economic development purposes.

Wichita population, according to Mayor Longwell

It is unfortunate that Wichita city and metro populations are falling. It is unimaginable that our city’s top leader is not aware of the latest population trends.

In May, Wichita Mayor Jeff Longwell told viewers of the KPTS Television program Call the Mayor that he was not aware of the latest United States Census Bureau estimates of population for Wichita. (A transcript of this portion of the program is below.)

Mayor Longwell said he wasn’t aware of the estimate, telling the audience, “census estimates are different than the census.” Absolutely correct. The census, which is an attempt to count the population, happens only once every ten years, while census estimates for population are produced annually. With only decennial data, we wouldn’t know much about recent developments.

Estimates are important. We use them in numerous circumstances when producing a count would be expensive. Mayor Longwell said he hasn’t seen estimates for population, but he knows the unemployment rate for Wichita. That is also an estimate produced by a different branch of the federal government. The city uses many estimates. The “City Overview” section of the budget document starts with: “Wichita, the largest city in Kansas with a population 389,965 …” The footnote gives the source of the data as “2015 Census population estimates.”

On Call the Mayor, Longwell said, “our population in Wichita has grown from 2000 by nearly 40,000 people.” Interestingly, if the mayor doesn’t want to use estimates, he should have said the City of Wichita population grew by about 30,000, as that is the difference between the 2010 and 2000 census counts. Based on the estimate of city population for 2018, growth has been almost 37,000.

Wichita and top 100 city population, annual change, through 2018. Click for larger.
It’s too bad that the mayor doesn’t know the latest population estimates, because they don’t hold good news. The City of Wichita proper lost 1,052 in population from 2017 to 2018, a decline of 0.27 percent. 1 For the same period, the Wichita Metropolitan Statistical Area population fell by 740 persons, or 0.11 percent. Net domestic migration for the Wichita metro area showed a loss of 3,023 persons, or 0.47 percent of the population. This change, on a proportional basis, was 301st among the 383 largest metro areas. 2

Wichita’s unemployment rate is low, and has been declining

One of the reasons the Wichita unemployment rate is low is because of a declining labor force. As can be seen in the nearby chart, the unemployment rate (green line) has fallen — and by a lot — since the end of the last recession in 2009. (Click here for an interactive version of the chart.) But the unemployment rate depends on two things, one being the labor force as the denominator of a fraction, or ratio. If the denominator (labor force) falls at a greater rate than the numerator, the unemployment rate will fall. That is what has happened in Wichita.

Wichita labor force and employment. Click for larger.

For example, on January 1, 2010, the labor force in Wichita was 320,287 and the number of unemployed persons was 28,523, resulting in an unemployment rate of 8.9 percent. The number of employed persons was 291,764.

Then, on April 1, 2019, the labor force in Wichita was 311,114 (falling by 9,173 or 2.9 percent) and the number of unemployed persons was 11,576 (falling by 16,947 or 59.4 percent), resulting in an unemployment rate of 3.7 percent. The number of employed persons was 299,538 (rising by 7,774 or 2.7 percent).

If, for example, the current labor force was the same size as on January 1, 2010, and we have the same number of employed people as we do today, there would be 20,749 unemployed people, and the unemployment rate would be 6.5 percent instead of 3.7 percent. (We don’t know what would have happened had the labor force not fallen, but this is an example of how the arithmetic works.)

This is unfortunate

It is unfortunate that the city and metro populations are falling. It is unimaginable that our city’s top leader is not aware of the latest population trends. These numbers are easy to find. Until recently, they would be reported in local news media.

But the city has an economic development staff that ought to be aware of these numbers. There is the Greater Wichita Partnership, responsible for shepherding economic development. There is a city manager, assistant city manager, six city council members, and a fleet of bureaucrats. Didn’t any of these people know the population has declined? If not, why not?

And if any knew the population was declining and didn’t tell the mayor, well, that’s another problem.

Transcript from Call the Mayor, May 30, 2019

Host: We have a Facebook question from Bob. Could you please comment on the recent US Census Bureau population estimates for the city of Wichita and Wichita metro stat area for the year ending July 1, 2018. It’s very specific but the latest on the census for Wichita.

Longwell: So the census estimates are different than the census and so I’m not I haven’t seen the census estimate data specifically. I know the region … Wichita is becoming a destination for health care and so you’re starting to see many people in rural Kansas migrate to big cities and we’re no different. I know that our population in Wichita has grown from 2000 by nearly 40,000 people and so we will continue to see that growth and right now we need more people. We need people to fill these jobs that are in Wichita. Our unemployment’s at historic low right now.

To view the program on YouTube starting at the point of this question, click here.


Notes

  1. Weeks, Bob. Wichita population, 2018. Available at https://wichitaliberty.org/economics/wichita-city-population-2018/.
  2. Weeks, Bob. Wichita population falls; outmigration continues. Available at https://wichitaliberty.org/wichita-government/wichita-population-falls-outmigration-continues/.

Wichita airport hotel ownership unclear

The Wichita City Council plans to use the consent agenda to vote on an item containing confusing language.

For the Tuesday June 25, 2019 meeting of the Wichita City Council meeting, item No. II-17 concerns the city leasing land to a company wanting to build and operate a new hotel near the airport. 1 The agenda packet holds this language:

“Upon execution of the lease, WEH will provide a $2 million good faith security deposit in escrow with the Airport to ensure timely construction of the hotel. Upon completion of the roof construction, the deposit will be available to WEH for additional construction costs. WEH will invest a minimum of $12 million of private funds to build and equip the property, which the structure will be owned by the WAA in accordance with existing policy. During the life of the lease, WEH is required to make periodic capital improvements and re-investment obligations in order to maintain its franchise agreement with a national flag hotel.” (emphasis added)

(WEH is Wichita Eisenhower Hotel, LLC, a private company formed to construct and operate the hotel. WAA is the Wichita Airport Authority, which is the same as the Wichita City Council.)

Reading this, can you tell me who will own the hotel building? I wondered, so I posed this question by email to the city’s public information officer: “The sentence fragment ‘which the structure will be owned by the WAA in accordance with existing policy’ sounds like the hotel building will be owned by the Wichita Airport Authority. Is this correct?”

I received a generic response that illuminated nothing. 2 My follow-up question was not acknowledged by the end of the day.

The council will, at least according to its schedule, consider this item tomorrow morning. Will city council members, acting as the Wichita Airport Authority, have a clear idea of the meaning of this agenda item and the supporting contract?

I think I know what it means. WEH will own the hotel and lease the land from the city. There’s language like this: “The development group requesting a lease agreement has formed a Kansas corporation to own and operate a hotel on the Airport.” (emphasis added)

Further, the lease is priced by the square foot of land (49.6 cents per square foot per year), although after four years that is replaced by a minimum agreed amount or a percent of the revenue of the hotel.

All this points to WEH owning the hotel building, not the city through the Airport Authority, although the Wichita Business Journal has a different opinion. 3 But it’s a shame that we must guess what the city means.

Will city council members also have to guess? Perhaps. This item is on the airport’s consent agenda. Unless a council member speaks up and asks for clarification, there will be no discussion on this item.


Notes

  1. Wichita city council final agenda packet for June 25, 2019. Available at https://wichita.gov/Council/Agendas/06-25-2019%20Final%20Council%20Packet.pdf.
  2. “All buildings and land are owned by the Airport Authority, with just a few exceptions. The FAA owns the control tower and the Post Office and the County owns the buildings at Jabara’s WSU Tech campus. But even in those cases, the land is owned by the Authority. Tenants pay land and building rent but do not pay property taxes.”
  3. The Wichita Airport Authority, which will also own the structure …” McCoy, Daniel. *New hotel planned for Wichita Eisenhower National Airport. Available at https://www.bizjournals.com/wichita/news/2019/06/21/new-hotel-planned-for-wichita-eisenhower-national.html.

Wichita and other airports

How does the Wichita airport compare to others?

The nearby chart shows data starting in 2010 for Wichita and selected airports, as well as all U.S. airports. For all measures except load factor, Wichita is at or near the bottom. Often the trend for Wichita underperforms the other airports, too.

It is not too surprising that the Wichita airport lags others, as the Wichita economy has been underperforming, even losing jobs in 2017. Now we know that the metropolitan area and city proper have lost population.

Local business leaders have formed a campaign to promote using the airport. The statistics in this chart and the visualization end shortly before that campaign started.

This chart was created from a visualization holding data from TranStats, a service of the Bureau of Transportation Statistics (BTS), which is the independent statistical agency within the United States Department of Transportation (DOT). While monthly data is available, this visualization holds annual totals through 2018.

The visualization holds data for all U.S. airports with scheduled flights. To view and use the interactive visualization, click here.

Wichita and selected airports. Click for larger.

New metropolitan rankings regarding knowledge-based industries and entrepreneurship

New research provides insight into the Wichita metropolitan area economy and dynamism.

The Walton Family Foundation has released a study titled “The Most Dynamic Metropolitans,” saying it is new research ranking the economic performance of metropolitan areas in the Heartland and across the country. 1

Of the study, the authors write “Our Most Dynamic Metropolitan Index, and the analysis contained in this report provides objective insight into the communities providing economic opportunity for their residents, separating high performers from the low. Most Dynamic Metropolitans provides fact-based metrics on near-term and medium-term performance and prospects for long-term growth. The index allows economic development officials the ability to monitor their metro’s vivacity relative to others on a national basis or within their region and state.”

In the overall rankings, Wichita was number 319 of 379 metropolitan areas examined. Of note, this research recognizes the importance of young firms:

While most of our metrics are commonly used indicators of economic development, the young firm employment ratio is a relatively new measure. We use factor analysis to test our hypothesis that the ratio is an indicator of longer-term economic growth. Factor analysis is a statistical tool that can derive categories, called factors, from several variables by finding the ways clusters of variables move together. A factor analysis on all of our metrics tells us that we generally have the two factors we claimed to have above: one closely relating to variables such as 2016-2017 growth in average annual pay and 2017-2018 job growth. The second most closely relating to per-capita personal income, 2013-2017 growth in real GDP, 2013-2017 average annual pay growth and the young firm employment ratio. Thus, our hypothesis regarding the young firm employment ratio seems valid.

There have been some rankings showing Wichita doing well in jobs at young firms. 2 That’s good, as young firms — which are different from small business — are vitally important to economic growth. 3

This study, however, shows Wichita lagging in young firm employment ratio. In these rankings, Wichita came in at position 247 of 379 metro areas. That is better than the overall ranking for Wichita, which is at number 319.

The young firm employment ratio is calculated using data from 2016. Perhaps newer data will show something different.


Notes

  1. Walton Family Foundation. New Metropolitan Rankings Show Knowledge-Based Industries and Entrepreneurship Drive Success. June 10, 2019. Press release with links to documents available at https://www.waltonfamilyfoundation.org/about-us/newsroom/new-metropolitan-rankings-show-knowledge-based-industries-and-entrepreneurship-drive-success.
  2. Weeks, Bob. Metro Monitor evaluates the Wichita economy. Available at https://wichitaliberty.org/economics/metro-monitor-evaluates-wichita-economy-2018/.
  3. Jason Wiens and Chris Jackson. The Importance of Young Firms for Economic Growth. Available at https://www.kauffman.org/what-we-do/resources/entrepreneurship-policy-digest/the-importance-of-young-firms-for-economic-growth.

Wichita airport traffic

Traffic is rising at the Wichita airport. How does it compare to others?

Click for larger.
Passenger traffic at Wichita Dwight D. Eisenhower National Airport has been rising. We know that from news reports and social media. While rising activity is good, it’s important to place Wichita in context with other airports.

(The Wichita airport has reported data through April 2019, while comprehensive national data from the Bureau of Transportation Statistics is available through February, so these comparisons are through February.)

Media reporting on the Wichita airport often uses “passengers” as the measure. The industry, however, uses “enplanements” as the most important measure of airport traffic. When Bureau of Transportation Statistics uses the term passengers, the precise meaning of the data is enplanements. 1

Looking at passengers (that is, enplanements) for the Wichita airport, we see that monthly Wichita passenger counts are rising, generally. 2 But not for all months. Over the past year, there were three months when traffic fell, compared to the same month of the previous year.

Compared to the nation, there were seven months in the past year when the increase in passengers in Wichita was greater than the change for all airports, as shown in the bars for each month in the nearby chart. Because of several slow months in Wichita coupled with some the of good months in Wichita being only slightly better than the nation, the overall picture is not as good for Wichita. This can be seen by the lines in the same chart, where the change in passengers over the last year is always higher for the nation.

Besides the number of passengers, we should also consider the number of flights departing an airport. This is particularly important to business travelers, as for them, the availability of a flight today or tomorrow may be more important than a bargain-price fare. In this chart, there are some months where the number of flights fell from the year before. The 12-month trend for Wichita is falling while rising for the nation.

Is the reported rising passenger count at the Wichita airport good news? Of course it is. But a useful assessment requires placing the Wichita data in context. In that context, the Wichita airport is underperforming.

Click charts for larger versions.

In the following chart of passengers, Wichita counts are generally rising, but not as fast as the nation. This data is indexed with January 2011 representing 100. The thicker lines are the average of the prior 12 months in order the smooth the seasonality of the monthly data.

In the following chart of the number of flights, Wichita is on a downward trend generally, although in the last two years the value has increased slightly.


Notes

  1. The government requires carriers to report enplanements, so it is a consistent measure across all airports. Further, airports generate revenue primarily from enplaned passengers rather than arriving passengers. The number of enplanements is almost exactly half the number of passengers. Over the last 15 years, enplanements in Wichita have accounted for 49.88 percent of passengers, with deplanements being 50.12 percent.
  2. Passenger traffic data is highly seasonal. It is not uncommon for passenger counts in the summer months to be 25 or 30 percent higher than winter counts. Therefore, comparisons are to the same month in the previous year.

Naftzger Park, according to Wichita Mayor Jeff Longwell

He had an opportunity to learn the true history of Naftzger Park in downtown Wichita. But Mayor Jeff Longwell didn’t learn, or maybe he doesn’t care.

In March, Wichita Mayor Jeff Longwell answered a question about Naftzger Park, telling viewers of the KPTS Television program Call the Mayor that:

“Actually what we found out is when our city fathers put in that park years ago they put the park in on private development land and so the development’s actually not on Naftzger Park. Naftzger Park used to be planted on private development land and so they had to change the boundaries of the park.”

The mayor blamed past city administrations for not being to read a survey. (Click here to view the video starting with this question.)

Chase M. Billingham, who is assistant professor of sociology at Wichita State University, has researched the history of this part of downtown. 1 He submitted a piece to the Wichita Eagle shortly after that episode of Call the Mayor aired. He wrote:

This claim — that the public park was erroneously built on privately owned land — has been one of the most common arguments offered by city officials in favor of their strategy to bulldoze Naftzger Park and rebuild it on a new footprint. This argument has been voiced repeatedly by elected officials and city staff during City Council meetings and public hearings. As the developers of the Spaghetti Works property have begun to build a new mixed-use development there, the city has maintained that it must fix that previous error and restore the developers’ property rights by relinquishing Naftzger Park’s eastern edge.

The claim that Naftzger Park was built on private land is wrong, however, and it epitomizes the disregard for history and due diligence that has characterized much of the city’s disjointed effort to overhaul this key public downtown space.

Billingham then explained the documented history of land ownership in the area, with the upshot being this: “As a result, small areas on the eastern edge of the park did, indeed, sit on privately owned land. But it was not because the park was built on private land; instead, it was because Wichita sold parts of its own public park to private owners for far less than it had paid for the land just a few years earlier.” (emphasis added)

Concluding, he wrote:

When city officials argue that destroying and rebuilding Naftzger Park was necessary, in part, because their predecessors mistakenly built the public park on private land, they are not being truthful. Among other questions surrounding the demolition of that important public space, then, Wichitans deserve to know why their leaders were so eager to relinquish the public access to this land that they had been entitled to for decades.

Why is this incident from March relevant today, two months later? Because on the May 30, 2019 edition of the monthly show Call the Mayor, Longwell repeated the same falsehood.

I’m reluctant to call someone a liar, as a lie means “a false statement deliberately presented as being true” or “something meant to deceive.” But as Billingham wrote, Wichita city officials, including Longwell, are not telling the truth.

Mayor Longwell, along with other Wichita city officials, had an opportunity to learn the truth in both the online and print editions of the largest newspaper in Kansas. If they did not agree with Billingham’s research and conclusion, there are many ways to have a public dialog on the matter. For example, the city has a popular website and social media presences, with the city’s Facebook page being liked by 27,230 people. 2 The city has a communications staff, including a strategic communications director, marketing services director, assistant director of strategic communications, and communications and special events manager. 3 There is a city manager, assistant city manager, six city council members, and a fleet of bureaucrats.

Don’t any of these people care about the truth? Don’t they want to help the mayor of the city present accurate and truthful information?


Notes

  1. Billingham is also the author of a fascinating history of the area, but it was published in an academic journal that is not freely available online. See Billingham, C. M. (2017) “Waiting for Bobos: Displacement and Impeded Gentrification in a Midwestern City”, City & Community, 16(2), pp. 145–168. doi: 10.1111/cico.12235.
  2. Facebook, https://www.facebook.com/cityofwichita/, observed on May 31, 2019.
  3. City of Wichita. Meet the Communications Team. Available at https://www.wichita.gov/News/Pages/Team.aspx.

What could be done with WaterWalk

There is an opportunity for Wichita to break the logjam holding up development at 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, With the closing of the Gander Mountain store, its fortunes were trending downwards until the King of Freight deal was announced. Although, it is debatable whether offices are a good use for this property, given its promotion as “Wichita’s Next Great Gathering Place,” a center of retail, entertainment, and residence. 1

The King of Freight deal might be a way to get something from a failed development, at least for now. But the city could do more.

The city has many excuses for the failure of WaterWalk. In a recent social media town hall concerning the new baseball stadium and surrounding development, the city’s attitude was clear: WaterWalk is different, the city says. In the 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.” 2

(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.)

What is the meaning of “we?” True, most current city officials weren’t in office at the time of the WaterWalk deal. KFDI reported “Mayor Longwell said it was unfair to “armchair quarterback” the decision that led to the the Waterwalk, especially since everyone on the council, including the Mayor, were not there for the decisions that led to the Waterwalk.”

Accountability belongs to others is the attitude of Wichita Mayor Jeff Longwell and other city officials.

But there is a grain of truth in the city’s answer. The city granted development rights for the WaterWalk property to a private development group, and there are about 85 years left in the agreement. That group is now headed by Jack P. DeBoer. He is in control of the land and its use.

That’s troubling. Recently DeBoer confessed to being “confounded” by WaterWalk, telling the Wichita Eagle, “It’s a business I don’t know anything about.” 3

DeBoer has had many years to produce development at WaterWalk. He has the ability to earn profit. But having produced very little and being “confounded” by WaterWalk, I think the key to moving forward is for the city to remove DeBoer and his group from the picture.

DeBoer has a long-term development deal with the city. Now he is asking the city to reconfigure a lease in which he is the tenant. Presumably, the changes he wants are worth something to him.

That’s an opportunity for the city to get something in return. I don’t know what that “something” might be, but this is an opportunity for the city to get some type of modification that might lead to progress at WaterWalk.


Notes

  1. Wichita Mayor Carl Brewer, 2008 State of the City Address. Available at https://www.wichita.gov/Council/CityCouncilDocument/2008%20State%20of%20the%20City%20Address.pdf.
  2. 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.
  3. Then, of course, there’s his WaterWalk development downtown, which seems to be confounding him a bit.

    “It’s a business I don’t know anything about,” DeBoer says.

    A Bass Pro Shop once was planned for the mixed-use development and a Gander Mountain opened instead and then closed last year.

    “I’ve had opportunities to do, you know, a restaurant or something, and I’ve said, ‘No.’ ”

    DeBoer says he’s willing to take more time to be sure he makes the right decisions.

    “It’s the key piece of land in all of Wichita,” he says. “I don’t want to spend my life screwing it up.” Rengers, Carrie. Jack DeBoer talks life after Value Place and WoodSpring Suites. Wichita Eagle, November 2, 2018. Available at https://www.kansas.com/news/business/biz-columns-blogs/carrie-rengers/article220992720.html.

King of Freight move a step sideways

A Wichita firm plans to move its offices to what was billed as the city’s premier entertainment district.

King of Freight, a Wichita freight brokerage firm, is planning to move its operations to the vacant Gander Mountain building in WaterWalk. This requires a modification to the lease of the land.

It’s important to recognize that King of Freight is not the tenant in the lease. The landlord is the City of Wichita. The tenant is WaterWalk LLC, a Kansas limited liability company, whose president is Jack P. DeBoer. The lease covers only the land, not the building. The city does not own the building. While the city rents the land to DeBoer, there is undoubtedly a deal between him and King of Freight. Details of that are unknown.

When WaterWalk was conceived, the goal was a destination of retail, entertainment, and residences, and some $41 million of tax money was spent. The original lease for the Gander Mountain ground reflected that. Now, that a non-retail firm will be using the ground, a change was needed.

The reason is that the original lease included a provision for “additional annual rent.” If the business — Gander Mountain — exceeded certain financial parameters, the city could collect additional rent. The additional rent clause was never triggered. Other WaterWalk deals with similar provisions have never paid additional rent, either. 1)

The new lease abolishes the additional rent provision, although it could be reinstated if employment goals are not met. Since the additional rent clause is toothless, so there is no real penalty.

The tenant will continue to pay the city $1 per year in rent. King of Freight will pay $15 per month to use city parking spaces. This is perhaps half the market rate for long-term parking arrangements.

Is the move of King of Freight a good deal for the city and its citizens? King of Freight anticipates adding jobs in the future, and the new lease with the city requires certain job goals to be met. But immediately, the effect is simply moving employees from one downtown office to another. When King of Freight occupies new space, empty space will be left behind.

While putting the Gander Mountain building to use is good, its use as office space moves away from the original concept for WaterWalk, once touted as “Wichita’s Next Great Gathering Place.” 2

Will retail and entertainment establishments wish to locate near an office building? They didn’t want to locate in WaterWalk anyway, so maybe there is no change.

Of interest is DeBoer’s confession of being “confounded” by WaterWalk, recently telling the Wichita Eagle, “It’s a business I don’t know anything about.” 3

Before that, he told the Eagle that whatever becomes of the Gander Mountain building, it will be “something fun and good for the city.” 4

I don’t think that goal has been realized.

Of note: DeBoer told the Eagle he’s had opportunities to “do a restaurant or something,” but he declined. Former Wichita Mayor Carl Brewer, in State of the City addresses, promised specific named restaurants would be opening in WaterWalk. 5

In more detail

Excerpts from the city’s agenda packet for this item:

“The lease’s current rent requirement, which was drafted for a retail use, would be suspended if the job requirement is met, and would terminate in 10 years if KOF and its entities maintains the presence of 400 net new jobs in Wichita through the 10-year period.”

“KOF has also agreed to pay for parking spaces at an initial rate of $15/month per space. Revenue from KOF’s employee parking is estimated at approximately $70,000/year.”

From the lease agreement: “Section 5.01. Minimum Rent. As of the date first written above, Tenant has paid Landlord a minimum fixed annual rent (“Minimum Rent”) of One Dollar ($1) in one (1) installment covering the Term of this Lease as defined in Article I above.”

“Section 5.02. Additional Rent. The Tenant will also pay, without notice, and without abatement, deduction, or setoff, except as otherwise specifically allowed herein, as additional rent, all sums, taxes, assessments, costs, expenses, and other payments which the Tenant in any of the provisions of this Lease assumes or agrees to pay, and, in the event of any nonpayment thereof, the Landlord shall have (in addition to all other rights and remedies) all the rights and remedies provided herein or by law in the case of nonpayment of rent.”

This section then describes the mechanism of calculating “Additional Annual Rent.” This mechanism was crafted for a retail store so that if “Adjusted Net Cash Flow” was ever positive, the city would be paid 25 percent of that. But the activity of the retail store, Gander Mountain, never triggered the payment of additional rent. 6

The section goes on to modify the additional rent provision for uses other than retail, like an office: “No Additional Retail Rent and no Additional Rent involving any payment of any portion of the Adjusted Net Cash Flow shall be owed for any use of the Premises that is not a Retail Use under codes 4400 through 454390 of the 2017 NAICS.”

The property will be paying property taxes: “Section 6.01. Taxes. Tenant shall pay as additional rent during the Term and any extensions thereof, all ad valorem taxes, and all other governmental taxes or charges that may be levied against the Premises.”

Since the property is within a tax increment financing (TIF) district, the taxes flow to that, not to fund the general operations of government.

“Section 9.03. Parking. The parties agree that Tenant’s employees will have nonexclusive access to the 430-space Parking Garage and the 60 spaces of surface parking under U.S. 400 (“Kellogg”) for an initial rate of $15/month per employee for parking between the hours of 8:00 a.m. – 6:00 p.m., Mondays-Fridays. Tenant shall be responsible for providing a monthly report of the number of employees who are parking in Parking Garage and on surface parking lot under Kellogg, and shall remit $15.00 per employee on a monthly basis. At each one-year anniversary of this agreement, the parking rate shall increase 3%.”

“Section 16.06. Assignment; Sublease. Tenant may freely assign or sublease all or any portion of the Premises without Landlord’s consent.”


Notes

  1. Weeks, Bob. Wichita WaterWalk contract not followed, again. Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-contract-not-followed/.
  2. Wichita Mayor Carl Brewer, 2008 State of the City Address. Available at https://www.wichita.gov/Council/CityCouncilDocument/2008%20State%20of%20the%20City%20Address.pdf.
  3. Then, of course, there’s his WaterWalk development downtown, which seems to be confounding him a bit.

    “It’s a business I don’t know anything about,” DeBoer says.

    A Bass Pro Shop once was planned for the mixed-use development and a Gander Mountain opened instead and then closed last year.

    “I’ve had opportunities to do, you know, a restaurant or something, and I’ve said, ‘No.’ ”

    DeBoer says he’s willing to take more time to be sure he makes the right decisions.

    “It’s the key piece of land in all of Wichita,” he says. “I don’t want to spend my life screwing it up.” Rengers, Carrie. Jack DeBoer talks life after Value Place and WoodSpring Suites. Wichita Eagle, November 2, 2018. Available at https://www.kansas.com/news/business/biz-columns-blogs/carrie-rengers/article220992720.html.

  4. “It’s a great building,” DeBoer says.

    “It’s just scratch your head, now what the hell’s going to happen?” he says. “We will come up with a plan.”

    The “we” includes George Laham of Laham Development and J.P. Weigand & Sons.

    “George and his team are the best,” DeBoer says.

    “Everything’s on the table.”

    That includes potential office, retail or entertainment uses – and a possible redesign for the building to make better use of the river behind it.

    “We just have to be sure of the direction,” DeBoer says. “We’re going to be very careful and think it through.”

    Whatever it is, he says that it will be “something fun and good for the city.”

    “We don’t have to depend on a guy who’s not as interested as we are.” 3. Rengers, Carrie. WaterWalk owner to make new plans for Gander Mountain building. Wichita Eagle, September 11, 2017. Available at https://www.kansas.com/news/business/biz-columns-blogs/carrie-rengers/article172482736.html.

  5. In his 2008 address, Brewer promised specific development at the struggling Waterfront development, which is heavily subsidized. Beaming with pride, Brewer said to the audience: “And, great strides are being made at Wichita Waterwalk. The topping out ceremony for Waterwalk Place is scheduled for this Thursday and I invite everyone to this event. I am pleased to announce two more national tenants that will be a part of the WaterWalk restaurant and entertainment development. … I am pleased to announce two more national tenants that will be a part of the WaterWalk restaurant and entertainment development. Joining Saddle Ranch Chop House will be Funny Bone Comedy Club and Wet Willies restaurant and daiquiri bar. These are just a couple of the fun and exciting tenants that will help make WaterWalk — Wichita’s Next Great Gathering Place.” This address was delivered a year before DoBoer took full control over WaterWalk, although he was involved before that.
  6. Email with Wichita City Manager Layton, May 10, 2019.

More Wichita planning on tap

We should be wary of government planning in general. But when those who have been managing and planning the foundering Wichita-area economy want to step up their management of resources, we risk compounding our problems.

As announced by the City of Wichita, “In response to recent recommendations from Project Wichita and the Century II Citizens Advisory Committee, community organizations and their leadership are stepping forward to take the next step to create a comprehensive master plan and vision that connects projects and both banks of the Arkansas River.”

The city says these organizations will be involved:

We should note that these organizations have been responsible for developing the Wichita-area economy for many years. Despite recent developments like Cargill and Spirit Aerosystems, the Wichita economy has performed below the nation. While improving, our economic growth is perhaps half the national rate, and just two years ago Wichita lost jobs and population, and economic output fell.

Thus, the question is this: Why these organizations?

Then, recent behavior by the city, specifically surrounding the new ballpark, has resulted in a loss of credibility. Few seem happy with the city’s conduct. To this day, we still do not know the identities of the partners except for one.

In the future, can we trust the city and its partners are telling us the truth, and the whole truth?

Then, there are the problems with government planning. Randal O’Toole is an expert on the problems with government planning. His book The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future

Planning seems like a good thing. But O’Toole tells us the problem with government plans: “Everybody plans. But private plans are flexible, and we happily change them when new information arises. In contrast, special interest groups ensure that the government plans benefiting them do not change — no matter how costly.”

He continues: “Like any other organization, government agencies need to plan their budgets and short-term projects. But they fail when they write comprehensive plans (which try to account for all side effects), long-range plans (two to 50 years or more), or plans that attempt to control other people’s land and resources. Many plans try to do all three.”

Other problems with government planning as identified by O’Toole (and many others):

  • Planners have no better insight into the future than anyone else
  • Planners will not pay the costs they impose on other people
  • Unlike planners, markets can cope with complexity

Some will argue that the organizations listed above are not government entities and shouldn’t exhibit the problems inherent with government planning. But their plans will undoubtedly need to be approved by, and enforced by, government.

Further, some of these organizations are funded substantially or nearly entirely by government, are in favor of more government (such as higher taxation and regulation), and campaign vigorously for candidates who support more taxes and planning.

Following, from Randal O’Toole as published in 2007.

Government Plans Don’t Work

By Randal O’Toole

Unlike planners, markets can cope with complexity and change.

After more than 30 years of reviewing government plans, including forest plans, park plans, watershed plans, wildlife plans, energy plans, urban plans, and transportation plans, I’ve concluded that government planning almost always does more harm than good.

Most government plans are so full of fabrications and unsupportable assumptions that they aren’t worth the paper they are printed on, much less the millions of dollars taxpayers spend to have them written. Federal, state, and local governments should repeal planning laws and shut down planning offices.

Everybody plans. But private plans are flexible, and we happily change them when new information arises. In contrast, special interest groups ensure that the government plans benefiting them do not change — no matter how costly.

Like any other organization, government agencies need to plan their budgets and short-term projects. But they fail when they write comprehensive plans (which try to account for all side effects), long-range plans (two to 50 years or more), or plans that attempt to control other people’s land and resources. Many plans try to do all three.

Comprehensive plans fail because forests, watersheds, and cities are simply too complicated for anyone to understand. Chaos science reveals that very tiny differences in initial conditions can lead to huge differences in outcomes — that’s why megaprojects such as Boston’s Big Dig go so far over budget.

Long-range plans fail because planners have no better insight into the future than anyone else, so their plans will be as wrong as their predictions are.

Planning of other people’s land and resources fails because planners will not pay the costs they impose on other people, so they have no incentive to find the best answers.

Most of the nation’s 32,000 professional planners graduated from schools that are closely affiliated with colleges of architecture, giving them an undue faith in design. This means many plans put enormous efforts into trying to control urban design while they neglect other tools that could solve social problems at a much lower cost.

For example, planners propose to reduce automotive air pollution by increasing population densities to reduce driving. Yet the nation’s densest urban area, Los Angeles, which is seven times as dense as the least dense areas, has only 8 percent less commuting by auto. In contrast, technological improvements over the past 40 years, which planners often ignore, have reduced the pollution caused by some cars by 99 percent.

Some of the worst plans today are so-called growth-management plans prepared by states and metropolitan areas. They try to control who gets to develop their land and exactly what those developments should look like, including their population densities and mixtures of residential, retail, commercial, and other uses. “The most effective plans are drawn with such precision that only the architectural detail is left to future designers,” says a popular planning book.

About a dozen states require or encourage urban areas to write such plans. Those states have some of the nation’s least affordable housing, while most states and regions that haven’t written such plans mostly have very affordable housing. The reason is simple: planning limits the supply of new housing, which drives up the price of all housing and leads to housing bubbles.

In states with growth-management laws, median housing prices in 2006 were typically 4 to 8 times median family incomes. In most states without such laws, median home prices are only 2 to 3 times median family incomes.

Few people realize that the recent housing bubble, which affected mainly regions with growth-management planning, was caused by planners trying to socially engineer cities. Yet it has done little to protect open space, reduce driving, or do any of the other things promised.

Politicians use government planning to allocate scarce resources on a large scale. Instead, they should make sure that markets — based on prices, incentives, and property rights — work.

Private ownership of wildlife could save endangered species such as the black-footed ferret, North America’s most-endangered mammal. Variably priced toll roads have helped reduce congestion. Pollution markets do far more to clean the air than exhortations to drive less. Giving people freedom to use their property, and ensuring only that their use does not harm others, will keep housing affordable.

Unlike planners, markets can cope with complexity. Futures markets cushion the results of unexpected changes. Markets do not preclude government ownership, but the best-managed government programs are funded out of user fees that effectively make government managers act like private owners. Rather than passing the buck by turning sticky problems over to government planners, policymakers should make sure markets give people what they want.

State of the City, Wichita: Employment strength

Wichita Mayor Jeff Longwell’s State of the City video relies on flimsy evidence and plucks scant good news from a sea of bad. This is a problem.

Recently Wichita Mayor Jeff Longwell delivered the State of the City video. It was posted to YouTube on March 28, 2019, and may be viewed here.

In this video, the mayor said, “The recent Livability.com study measured employment rates strength over time, affordability, and community amenities.” This isn’t the first time the mayor and other city officials have mentioned this study, if we can even call it that. 1 In January, a tweet from the official @CityofWichita Twitter account contained: “We have been named one of the top two recession-proof cities in the nation by @Livability. Wichita was praised for its ability to withstand turbulence in the national economy, steady job growth and the state’s low income-to-debt ratio.” 2

What does the data tell us? The nearby chart illustrates that since the end of the last recession, job growth in Wichita has been below job growth in the nation as a whole. Generally, job growth in Wichita has been at about half the rate of the nation. In 2017, Wichita lost jobs. Yet, City of Wichita officials, including Mayor Longwell, tout “steady job growth,” relying on a study that obviously isn’t based on evidence.

Click for larger.

The mayor also said: “Wichita’s unemployment rate is at a historically low 3.5%, and WSU forecasts that Wichita is expected to see an across-the-board increase in overall jobs this year.”

Look at the data. In this table, we see that the unemployment rate (monthly average) for 2018 is nearly unchanged from 1999. Also nearly unchanged for these 19 years are the civilian labor force and number of jobs. Both values are slightly lower now. This is not “steady job growth,” as Wichita officials proclaim. It is stagnation.

It’s not only employment that has been bad news. In 2017 the Wichita economy contracted, which is the definition of a recession. 3 Personal income has grown only slowly. 4

Regarding jobs, the mayor accurately reports what the Center for Economic Development and Business Research at Wichita State University forecast said: Jobs are forecast to rise in Wichita for 2019. 5 Specifically, the report said: “Wichita is estimated to add approximately 2,500 jobs in 2018, and growth is projected to increase modestly to 0.9 percent in 2019, with more than 2,700 new jobs added.”

Is 0.9 percent job growth good? Nationally, the economy is expected to continue strong growth, although perhaps slightly slower than in 2018. 6 Nationally, job growth is forecast at 1.7 percent for 2019. 7 Wichita’s forecast rate of 0.9 percent is 53 percent of the national rate.

It’s good news that jobs are set to grow rather than shrink. But in a surging national economy, that’s setting a low standard for success.

What’s unfortunate is the mayor and city promote things like this as good news. But when we use readily accessible data from sources like the Bureau of Labor Statistics (part of the United States Department of Labor) and Bureau of Economic Analysis (a division of the United States Department of Commerce), we easily see that we’re not being told the entire story. “Recession-proof” glosses over recent years of declining production. “Historically low” unemployment rates ignore a stagnant and declining labor force. “An across-the-board increase in overall jobs this year” doesn’t contextualize that the forecast rate of growth for Wichita is anemic compared to the nation.

What we need to know is this: Are the mayor and city officials aware of the actual statistics, or are they ignorant?


Notes

  1. Weeks, Bob. Wichita, a recession-proof city. Available at https://wichitaliberty.org/wichita-government/wichita-recession-proof-city/.
  2. Twitter, January 22, 2019. https://twitter.com/CityofWichita/status/1087832893274157059.
  3. “For 2017, the Wichita metropolitan area GDP, in real dollars, fell by 1.4 percent. Revised statistics for 2016 indicate growth of 3.8 percent for that year. Last year BEA reported growth of -1.4 percent.” Weeks, Bob. Wichita economy shrinks, and a revision. Available at https://wichitaliberty.org/economics/wichita-economy-shrinks-and-revision/.
  4. “For all metropolitan areas in the United States, personal income rose by 4.5 percent. For the Wichita metro area, the increase was 2.3 percent. Of 383 metropolitan areas, Wichita’s growth rate was at position 342.” Weeks, Bob. *Personal income in Wichita rises, but slowly. Available at https://wichitaliberty.org/economics/personal-income-in-wichita-rises-but-slowly/.
  5. Center for Economic Development and Business Research at Wichita State University. Wichita Employment Forecast. January 8, 2019. Available at http://www.cedbr.org/forecast-blog/forecasts-wichita/1558-economic-outlook-wichita-2019-january-revision.
  6. Minutes of the Federal Open Market Committee. December 18-19, 2018. Available at https://www.federalreserve.gov/monetarypolicy/fomcminutes20181219.htm.
  7. Yandle, Bruce. Block out the noise: Here’s the 2019 economic outlook. Available at https://www.washingtonexaminer.com/opinion/block-out-the-noise-heres-the-2019-economic-outlook.

State of the City, Wichita: The bright future

Wichita Mayor Jeff Longwell’s State of the City video doesn’t seem to be based on reality.

Recently Wichita Mayor Jeff Longwell delivered the State of the City video. It was posted to YouTube on March 28, 2019, and may be viewed here.

Not long into the address, the mayor says, “… we must embrace the challenges we face and forge ahead into the bright future that is just around the corner.”

Wichita MSA population, percent change from prior year. Click for larger.
On that bright future: Since the mayor spoke, learned that the Wichita metropolitan area lost population during the year ending July 1, 2018. 1 So at the time of the address, Longwell didn’t know the area had lost population, but he should have known that the trend of population growth has been slowing, as can be seen in the nearby chart.

What about the population of Wichita city proper, as that is the jurisdiction the mayor was elected to represent? (It’s better to look at the MSA, for a number of reasons. 2 For one, several major “Wichita” employers are not located within the Wichita city limits. Major portions of Spirit Aerosystems, for example, lie outside the city, and the city certainly takes credit for job creation there.)

Wichita and top 100 city population, annual change. Click for larger.
City populations are available through July 1, 2017. 3 From 2011 to 2017, the top 100 cities averaged annual growth of 1.03 percent. For the City of Wichita, the average was 0.29 percent, barely more than one-fourth the rate. (Wichita was the 50th largest city in 2017.) The trendline of growth for Wichita is down, as it is for the top 100 cities in general.

We have to ask: With a population growing much slower than the nation — and declining in the most recent year — what is the future of Wichita?

More importantly: Is Mayor Longwell aware of these statistics, and if so, why does he not recognize them? I hope this isn’t what he means by “embrace the challenges.”


Notes

  1. Weeks, Bob. Wichita population falls; outmigration continues. Available at https://wichitaliberty.org/wichita-government/wichita-population-falls-outmigration-continues/.
  2. Weeks, Bob. Wichita metropolitan area population in context. Available at https://wichitaliberty.org/wichita-government/wichita-metropolitan-area-population-in-context/.
  3. Annual Estimates of the Resident Population for Incorporated Places of 50,000 or More, Ranked by July 1, 2017 Population: April 1, 2010 to July 1, 2017 U.S. Census Bureau, Population Division. Release Date: May 2018

Wichita population falls; outmigration continues

The population of the Wichita MSA fell from 2017 to 2018, and net domestic migration continues at a high level.

New data from the United States Census Bureau shows the Wichita Metropolitan Statistical Area losing population from July 1, 2017, to July 1, 2018.

The population estimate for 2017 was 645,628, and for 2018, 644,888. This is a decline of 740 persons, or -0.11 percent. Population changes in the seven years before 2018 averaged 0.30 percent each year.

The Wichita MSA ranked 89th largest among 383 metro areas, falling from rank 82 as recently as 2011.

Net domestic migration for the Wichita metro area showed a loss of 3,023 persons, or 0.47 percent of the population. This change, on a proportional basis, was 301st among the 383 metro areas. It is less than the loss of 3,235 persons the year before.

Click charts for larger versions.

Wichita MSA population and change from prior year.
Wichita MSA population, percent change from prior year.
Rank of Wichita MSA population.
Rank of Wichita MSA population one-year change.
Wichita MSA net domestic migration.

Pay no attention to the Ferris wheel on the riverbank

When the City of Wichita shows architectural renderings, are we to treat them as promises, or as someone’s unrealizable dream?

Click for larger.
A rendering of the new Wichita baseball stadium and environs shows — prominently — a large Ferris wheel. Is this something Wichitans and visitors can look forward to?

No, as Wichita City Council Member Cindy Claycomb (district 6, north central Wichita) found out when she asked, there will be no Ferris wheel on the banks of the Arkansas River in downtown Wichita.

Or maybe not. On Facebook, Council Member Bryan Frye (district 5, west and northwest Wichita) wrote, “Doesn’t mean that a Ferris Wheel can’t happen somewhere else in the footprint.”

Of course, there could also be a roller coaster and a petting zoo with unicorns.

So what is the value of architectural renderings like this? Does the existence of a Ferris wheel constitute a promise to deliver?

It’s not like the city showed a Ferris wheel that’s 100 feet tall but delivered one just 75 feet tall. Maybe we could excuse that.

But there will be no Ferris wheel.

I don’t know who created the illustration with the Ferris wheel, but someone in authority at Wichita city hall included it in a presentation to the city council and people of Wichita.

Things like this are meant to generate excitement and enthusiasm. But this is done by making false promises.

Since we know there is no Ferris wheel, what else in the illustration is just sizzle without substance?

And when the city shows renderings of the next project (performing arts center, convention center, etc.), will we have to figure out what is real, and what is only vaportecture?

In Wichita, we don’t know who we’re dealing with

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

Wichita considers a new stadium

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.”


Notes

  1. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/.
  2. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.
  3. Wichita City Council, agenda packet for July 18, 2017.
  4. 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/.
  5. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.
  6. “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.
  7. 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.
  8. Weeks, Bob. Wichita WaterWalk contract not followed, again Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-agreement-not-followed/.

Wichita city protections for ballpark land development

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.


Notes