Voice For Liberty

Category: Wichita city government

  • Travel should be the first Wichita expense to be cut

    At tomorrow’s meeting of the Wichita City Council, council members have this item on their agenda:

    “Approval of travel expenses for Council Member Janet Miller and Kelly Harper, Wichita Area Sister Cities President, to attend the International Cities Conference in Paris, France and the Sister Cities Loire Festival in Orleans, France, September 21-27.”

    The city council office didn’t have a specific amount that the council is being asked to approve, and it’s possible that the city might not pay for Harper’s expenses.

    Still, travel to France for nearly a week, even for one person, is expensive.

    Whatever the amount is, it is a small amount when considered next to the magnitude of the city’s entire budget.

    But when people are losing their jobs and the city is cutting its budget, expenses like this are highly symbolic.

  • Wichita special assessments for repairs is bad policy

    Lofts at St. Francis, Wichita, Kansas

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

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

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

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

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

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

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

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

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

    So the city proposes to waive this requirement as well.

    There seems to me to be a defect in the manner of ownership of this building. While the homeowners association and the condominium owners might not have anticipated that repairs would be needed so soon after the building’s opening, they must have contemplated that repairs and maintenance — to either exterior or interior common areas — would be needed at some time. How does the association plan to pay for these?

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

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

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

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

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

    Lofts at St. Francis Agenda Report 2009-08-18

  • Wichita downtown revitalization discussed on Kansas Week

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

    The article referred to is Wichita’s getting ready to plan.

  • Wichita’s getting ready to plan

    As the City of Wichita develops a grand plan for downtown revitalization, can we have a process that is freedom-friendly and respects property rights? I went to Anaheim to find out.

    Leaders in Wichita — both private and public sector — believe that Wichita needs a plan for downtown. To support this, the city is seeking to develop a Downtown Revitalization Master Plan, a “a twenty-year vision for its thriving downtown.” Right away I want to ask: if downtown is thriving, why does it need revitalization?

    The document Wichita used to lure planning firms to apply for the planning job is full of ambitious and colorful language: “a community synergy that is contagious,” “casting a grand vision to realize our potential,” “the bold vision the community is seeking.”

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

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

    Last month I visited Anaheim, California, to learn more about the Platinum Triangle. This is an area of low-rise warehouses and industry that the city thought would be a good place for redevelopment. (Anaheim’s old downtown was redeveloped starting in the 1970s, is fairly nondescript, and has not met expectations.)

    What Anaheim decided to do with the Platinum Triangle is to employ “freedom-friendly” principles in the district’s development. Or, as the subtitle to an article written by Anaheim Mayor Curt Pringle states, a “Foundation of Freedom Inspires Urban Growth.”

    Here are the important things that Anaheim has done that are out of the ordinary:

    No use of eminent domain to take property. The forceful taking of property by government for the purposes of giving it to someone else is one of the worst violations of property rights and liberty that we can imagine. But it’s a prime tool of redevelopment, one that the planning profession says is essential to their efforts to reshape cities.

    In Kansas, we have a relatively new eminent domain law that, on its face, should provide strong protection to property owners. It’s unknown whether this protection will be effective when a city such as Wichita asks the legislature to allow the use of eminent domain, which is what the law requires. If a city makes the case that the success of Wichita and thousands of jobs depend on the use of eminent domain, will legislators go along?

    Overlay zoning that respects existing land use. Instead of replacing existing zoning, the city added an “overlay zone.” This meant that while the land had new permissible uses and restrictions, existing rights were protected. It’s only if existing property owners wanted to pursue new development that they would have to conform to the new development standards contained in the overlay zoning.

    No public subsidies or incentives. In California, they’re called redevelopment districts. In Kansas, we call them tax increment financing or TIF districts. In either case, this mechanism allows property owners to, in effect, retain their own increased property taxes for the benefit of their developments, something that the average taxpayer — or real estate developer not working in a politically-favored area — can’t do.

    The City of Wichita views TIF districts as a powerful tool for development. The city has many existing TIF districts, and we can expect that others will be created to support downtown revitalization. While many people recognize and agree that the taking of land through eminent domain for economic development is bad, the taking of tax revenues through TIF is subtle. Most citizens don’t know this is happening.

    Anaheim did a few other things: it streamlined the permitting process, reduced parking regulation, developed a broad-based environment impact report, and relaxed requirements for balancing commercial and residential uses.

    It also used a “first-come, first served” housing permit allocation process. Instead of allocating housing permits to each parcel, permits were allocated to a much larger district. Developers could claim them through a competitive process and use them flexibly.

    What’s been the result in the Platinum Triangle? After the district was formed in 2004, development started at a fast pace. But the housing crisis in California has definitely put a damper on the pace of development. An illustration: In a loft project in the Platinum Triangle, condos originally priced at $400,000 are now offered at $250,000. It’s expected that as the housing crisis eases, developers will go ahead with their plans.

    The Platinum Triangle offers a distinctly different model for redevelopment than that practiced in most cities. A few other cities in California have noticed and are adopting Platinum Triangle-style, freedom-friendly, principles.

    The question we in Wichita now face is this: Will Wichita adopt a freedom-friendly approach to downtown revitalization?

  • Light rail not good for Wichita

    A recent letter in the Wichita Eagle by Alden Wilner of Bel Aire worries that “flat, dusty and hot” parking lots in the neighborhood of the Intrust Bank Arena (formerly known as the downtown Wichita arena) in downtown Wichita will hamper downtown revitalization.

    I don’t know if this claim is true or not, but I do know that the solution Wilner proposes — “an area wide light-rail system” — would be an absolute disaster for Wichita. These systems are costly to build and operate, suffer from low ridership almost everywhere they are built, and have many other problems.

    In a recent article, Randal O’Toole presented the costs of light rail versus highways:

    The average mile of light-rail line costs two to five times as much as an urban freeway lane-mile. Yet in 2007 the average light-rail line carried less than one-seventh as many people as the average freeway lane-mile in cities with light rail.

    Do the math: Light rail costs 14 to 35 times as much to move people as highways.

    The Government Accountability Office found that bus-rapid transit—frequent buses with limited stops—provided faster, better service at 2 percent of the capital cost and lower operating costs than light rail.

    Light rail is the mantra of those who hate cars. They must love waste and failure in its place. Portland is an example of an area that’s built a lot of light rail in recent years. O’Toole points out that in 1980 — before the light rail building boom — 9.8 percent of the region’s commuters took transit to work. Now that number, despite the light rail building boom, has declined to 7.6 percent.

    Another article by O’Toole (Light Rail Doesn’t Work) tells of the huge costs, inconvenience, congestion, misallocation of economic development, and increased energy consumption and greenhouse gas output that light rail projects produce.

    O’Toole is the author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future. As Wichita prepares to undertake large-scale planning for the revitalization of downtown, I would urge our leaders to read this book.

  • Public effort should benefit all taxpayers, not a select few

    The following article by Dave Trabert, president of the Flint Hills Center for Public Policy, was printed in yesterday’s Wichita Eagle.

    Trabert makes the case for broad-based policies that will benefit all companies, not just those who happen to qualify for government economic development programs.

    A specific example of a small business struggling but not qualifying for assistance was presented by Steve Compton, owner of the Eaton Steakhouse in Wichita. In February he spoke to the Wichita City Council and explained the difficulties his business is facing. He asked the council to consider small businesses just as much as large businesses and corporations when deciding who will receive economic assistance. My post At Wichita City Council, why are some doors open, and others closed? holds Mr. Compton’s remarks. The post In Wichita, let’s have economic development for all holds further information about this.

    At nearly every Wichita city council meeting, the city dishes out economic development favors. Many are in the form of industrial revenue bonds, which allow companies to buy property without paying property tax for some term of years, and in some cases, they can avoid paying sales tax on the purchase. These favors seek to narrow the tax base at the same time politicians like Mayor Carl Brewer promote broadening the tax base. For those companies who can’t qualify for these economic development programs — not to mention residents — their taxes are higher than they would be.

    Public Effort Should Benefit All Taxpayers, Not a Select Few

    Dave Trabert
    Flint Hills Center for Public Policy

    A recent Wichita Eagle commentary by Doug Stanley, vice chairman of the Greater Wichita Economic Development Coalition, made the case for government to invest taxpayer money in developing “shovel-ready” sites to attract a wide range of new employers, especially large industrial and manufacturing companies. He says consultants who work with large employers on site selection give preference to communities that have made the upfront investment to save them time and obviously, a lot of money.

    The logic is that communities want jobs, so some companies and their site consultants use that carrot to entice local and state governments to absorb a portion of their upfront risk. It’s easy to understand what’s in it for the company receiving a taxpayer-funded inducement to build, and these deals certainly give elected officials a chance to show taxpayers that they’re working to create jobs. Some jobs are created if one of these deals gets done and that’s a good thing, but “buying” those jobs is not the best use of taxpayer money.

    First of all, it’s a roll of the dice as to whether spending money on shovel-ready sites will actually result in job creation, and even when it does, it’s not unheard of for some recipients of taxpayer money to close or leave town. Sometimes they even threaten to leave if they don’t get more money for new projects. It’s not unlike betting money in Las Vegas; you might win once in a while but the House is the only winner in the long run. Come to think of it, though, the bettor always wins in this case. If they place a bet on a site and eventually land some jobs, they get the credit; if they lose, well, it wasn’t their money … it belonged to taxpayers.

    The real conundrum, though, is why government and economic development entities place risky bets that only really pay off for a select few instead of going after a sure thing where everyone wins. A new employer coming to town with a few hundred or even a thousand jobs gets a lot of headlines and large employers are certainly important, but they pale in comparison to the jobs provided by small business. According to Dun & Bradstreet data analyzed at YourEconomy.org, 73.5% of Kansans employed in 2007 worked for businesses that employed fewer than 100 people.

    Instead of picking winners and losers, government should be doing things that benefit all taxpayers and employers of all sizes. Find ways to operate more efficiently and reduce property, sales and income taxes. Eliminate a lot of the bureaucratic red tape in the licensing and permitting process. Creating a stable, pro taxpayer environment is the best kind of economic development; instead of costing taxpayers money, it puts money in their pockets.

    There’s no doubt that governments and economic development agencies feel pressure to compete with communities that offer inducements to potential employers, but they should be creating strategies that benefit all taxpayers instead of a select few.

  • Wichita budget hearing reveals fundamental problem with government

    At yesterday’s public hearing regarding the City of Wichita budget, the attitude of Wichita’s public employee union became clear: more tax revenue is needed.

    Speaking to the council, Harold Schlechtweg, business representative of Service Employees International Union Local 513 suggested that the city consider raising taxes by raising the mill levy (property taxes). “We don’t believe taxes are too high in the City of Wichita,” he said.

    This illustrates a fundamental problem of government: in order for the employees in Schlechtweg’s union to be paid anything at all — much less to receive a raise in pay — the city must levy taxes. (The city collects some revenue in fees, but most revenue is taxes.)

    Furthermore, if the city is to levy taxes in order to provide services such as public parks, the city must figure out how many parks to provide, where those parks should be located, and what features those parks should have.

    Even a simple matter such as the level of parks maintenance is a difficult question. Presently the city is considering replacing all or most of the workers with contract workers by outsourcing the work to a private-sector contractor.

    Schlechtweg, who represents parks workers through the union, expressed concerns with “[the] accountability of contractors, quality of work that can be expected, and whether contract labor can efficiently do all the work expected of city employees.”

    He and other advocates for parks workers believe that the present workers provide services that contract workers will not. The claim is that the present workers provide, as I termed it yesterday, a gold-plated level of service to the people of Wichita.

    The problem the city faces, as do all governments, is that it really has no idea how many parks (and related details of those parks) the people of Wichita would like, and it has no way to answer this question.

    That’s because the decisions about parks are made in the realm of politics. The politicians and bureaucrats making the decisions aren’t spending their own money, except for the very small portion of their own taxes that go to the parks.

    The people who take the time to get involved and testify before boards and commissions are a small group of enthusiasts. They’re quite happy for taxpayers across the city to pay for something they themselves make great use of, but the average taxpayer uses only infrequently.

    The parks workers and their union, of course, depend on a high level of parks spending for the livelihoods.

    This illustrates the nature of many government programs that I mentioned in yesterday’s hearing: Many government programs have a small number of beneficiaries, but the cost is dispersed across a large number of people. To the large number, it’s just a few cents here, a few dollars there. But to the small group that benefits, it’s a job or a nice park near their home with gold-plated maintenance.

    If the small group — the special interest — works hard enough, they can get what they want. Many times no one else notices what’s going on.

    So how can the city learn the number of parks (and details about these parks) that people really want? How does the city figure out how many McDonald’s restaurants or movie theaters are needed in Wichita? And what movies would these theaters show? The answer is that it doesn’t. It leaves decisions about these matters to markets.

    The city could do this with its parks, too. It could let people and entrepreneurs decide how many parks are needed, where they should be, and what features the parks should have. Through the market process, we’d then know that we have the types of parks that people really want.

    As government extends its reach into more areas of the economy, it’s getting harder to find examples where markets are free to work. The movie theater example above: there’s not really a free market for movie theaters in Wichita. The city council has decided to subsidize a movie theater in Old Town, thereby intervening and overriding the decision the marketplace made.

  • Wichita needs a bargain on parks maintenance

    As the City of Wichita struggles to make its budget work, one proposal is to reduce the number of parks workers, replacing them with contract workers. The city believes it could save $1 million per year. Parks workers and the union officials that represent them are opposed to this plan. Taxpayers, however, should be relieved that the city is considering this action, and should be asking why this wasn’t done last year.

    There’s a lot of misconceptions surrounding this issue. At a public hearing held on July 1, a speaker said that the private sector lays off workers because there’s no demand, and that’s not the case with the city’s parks.

    That’s not entirely true. Sometimes companies reduce employment levels because of the need to reduce costs. The same amount of work — sometimes even more — must be done.

    This speaker went on to say that layoffs won’t save taxpayers money because the workers will need to pay for health care, retirement, food, rent, and mortgages. “Dumping these people on the street,” therefore, means that the taxpayer pays for these things in other ways. This is false. While taxpayers may pay for unemployment benefits and some social services, they’re not going to pay for things like retirement plans for laid off workers.

    It seems as though this speaker — and a few others — view the city as a magical moneymaking machine. Pour in a few tax dollars, some work gets done, and the money spent on salaries magically creates wealth in our community.

    This is exemplified by another speaker’s remarks on the effect of the parks workers on the local economy: “For every one dollar we earn, it has a 10 to 15 dollar effect to the positive.”

    This is absurd. If such a statement were in fact true, we should pay the parks workers — all city workers, for that matter — more. And we should hire as many as we can find.

    We must remember that it is taxpayers who pay the wages and other costs of city employees. If allowed to keep more of their money instead of sending it to the government in the form of taxes, taxpayers will spend and invest that money in ways that generate economic activity and jobs. There’s nothing magic about government spending in this regard.

    In fact, government spending produces less benefit than private spending. One of the seven principles of sound public policy as defined by Lawrence W. Reed is “Nobody spends somebody else’s money as carefully as he spends his own.”

    While the parks workers have spoken and their union representatives have written op-eds in the newspaper, few have spoken for the beleaguered taxpayer. And in a time of reduced employment in our community, it’s important to keep the cost of government as low as possible.

    The city has a responsibility to its citizens to operate as efficiently as possible. If it is possible to have work such as park maintenance done less expensively, the city should do so. It should have done so long ago.

  • Wichita’s economic development is expensive, risky

    Sunday’s Wichita Eagle carried an op-ed piece written by Doug Stanley, vice chairman of the Greater Wichita Economic Development Coalition. As we might expect, he calls for more government involvement and management of economic development.

    Stanley makes the point that economic development organizations like GWEDC have customers, going so far as to cite the saying “the customer is king.”

    The idea of a customer, however, implies willing and voluntary participants on both sides of the transaction. While the companies that receive benefits from the taxpayer are willing participants, the taxpayers are not.

    Reading Stanley’s op-ed, you might conclude that Wichita has no industrial sites available. Conversations will several local developers indicate that the opposite is true: there are many industrial sites — some complete with existing buildings — available for immediate occupancy. It may be true that we don’t have the 800 acre site that Sedgwick County wants in an industrial park, but we have many sites that even very large companies could use.

    And it’s a rare company that could use even a small fraction of 800 acres.

    Critics might say that these sites, owned by private interests, won’t be as responsive to the needs of companies making site selections. But who do you trust to be more proactive and responsive: entrepreneurs looking for survival and profit, or government bureaucrats like those working for GWEDC?

    The problem, of course, is that private entrepreneurs don’t have government largess funded by taxpayers to offer.

    That leads to something that Stanlely doesn’t mention: Chasing jobs through economic development is expensive. A 1996 PBS report stated “The strategy of offering cheap land, cheap labor, and sizeable tax breaks has worked well for the southern and southeastern states, but it is getting expensive. In 1980, landing a new Nissan plant cost Tennessee $11,000 per job created. In 1985, recruiting the Saturn Corporation cost the state $26,000 per job. In 1992, it cost South Carolina more than $68,000 per job to bring in a BMW plant, and the estimates range from $150,000 to $200,000 per job for the Mercedes Benz plant in Alabama.”

    This arms race among states needs to stop. Last year Cessna used the fact of an offer from other states to extract subsidy from Kansas, Sedgwick County, and the City of Wichita. But how else could political leaders in Kansas react? It would have been political suicide to let one of Kansas’ most famous companies escape.

    Not that Cessna was planning to leave Wichita altogether. Instead, the decision was where to build a plant to produce a new airplane model. Since last year, Cessna has scrapped plans for the new plane. To its credit, Cessna is returning or not using the subsidies. But this is an indication of the risk that government assumes when engaging in economic development.

    Government has a dismal record of picking winners and losers. Instead of making decisions based on economic factors, decisions are made for political reasons. Those reasons often have little to do with sound economic prospects and more to do with the next campaign for re-election.

    Action at the federal level is needed to stop this wasteful competition between states. Then, all states can disband their economic development organizations and let business be business.