Voice For Liberty

Category: Wichita city government

  • The Making of the Wichita Mayor 2019

    The Making of the Wichita Mayor 2019

    The Making of the Wichita Mayor 2019

    By Karl Peterjohn

    There are eight major lessons for Wichita voters when they cast their ballots on or before November 5, 2019, concerning the revelations of favoritism involving the mayor, apparently a majority of the city council, and a number of Wichita businesses and businessmen concerning a proposed massive city water plant contract that is close to half a billion dollars.

    The Wichita Eagle’s detailed reporting on this proposed contract, Mayor Longwell’s role deserves scrutiny at several different levels.

    Let me begin with full disclosure. Both Mayor Longwell and I are registered Republicans, and also GOP precinct committeemen in our respective west Wichita precincts. The mayor is now one of the most prominent Republican mayors in the entire country. In 2012, then-city council member Longwell ran against me in the Republican primary for the Sedgwick County Commission. He lost. Subsequently, in 2015, Jeff Longwell defeated Sam Williams in the non-partisan general election for Wichita mayor.

    Finally Exposing Improper City Contract Conduct

    The Wichita Eagle deserves credit for researching city records following an expensive KORA records request. The paper also deserves credit for reporting the story about favoritism, cronyism, and how public-private partnerships” actually have been operating as part of the proposed new water plant at city hall.

    However, this story implicitly treats this type of conduct as new. In reality, there is an extensive history of similar conduct going back for years at city hall. That raises the question, why now?

    News Hole

    The huge volume of space the Wichita Eagle initially provided to cover this front page, above the fold story on a Sunday paper is remarkable. It was extremely large. I doubt that the 1969 moon landing, the 9-11-2001 Islamist terrorist attacks, or pick any of the presidential campaign election results since the 1960s had as much space with as many words above the fold on the front page, and followed with two full pages inside the Sunday paper, and editorial commentary as this city hall story. As a percentage of the total news hole in the paper, a higher percentage was probably contained within this edition of the paper.

    I believe that you would probably need to go back to the JFK assassination for coverage that may have included more space than this Sunday, September 29, 2019 story received.

    This is quite a contrast in local news coverage from past examples of city contracts that were handled in a similar way over many years. Let’s look at why this might have occurred.

    Weakened Local News Media

    The news organizations in Wichita have been decimated by digitization. The digital world has dramatically changed the environment for print and broadcasting, whether it is radio or TV. All of these organizations are smaller, have reduced staffs, and lack the ability to do extensive and expensive research needed to provide any sort of investigative reporting. That is why the Eagle’s reporting on this story is remarkable since the room for news in this shrunken paper is a small fraction of what it was 10 or even just five years ago.

    The Eagle’s reporting is also notable because its parent company, McClatchy Corporation (MCN), is in severe financial distress, with a corporate capital base hovering around $20 million while the firm’s indebtedness is many times larger. Recently, the Eagle announced that it was discontinuing daily publication, and will be printed six times weekly beginning in November.

    McClatchy Corporation stock is now under $3 a share despite having a reverse stock-split that dramatically reduced the number of shares (1 for 10) in this financially distressed firm. To raise cash, McClatchy recently sold their Kansas City Star building. The details of this transaction that included a 15-year leaseback, indicate a company suffering severe financial difficulties.

    Despite these cash flow problems, the resources needed to write this story were provided. The Wichita broadcast news media is now following, and reporting this story too.

    However, this type of reporting could have occurred years ago and wasn’t. Why not?

    Vote for the Leftist With A Chance

    The very liberal Wichita Eagle editorial page is nothing new. When Knight-Ridder owned the eagle, the paper did an in-your-face endorsement of the liberal Michael Dukakis in the 1988 presidential election to its readers in Republican-voting Kansas.

    Now the Eagle knew that their endorsement would not matter. Kansas had not voted for a Democrat for president since 1964, or before that, 1936 when Kansas’ favorite son, Alf Landon, was defeated by FDR. Despite this, they endorsed a Massachusetts leftist who went on to lose in a national landslide, as well as a Kansas landslide in this state. Even if a Republican loses a national election, Kansans overwhelming voted for Bob Dole every time his name appeared on the national election ballot.

    State and local newspaper endorsements are different. This is where the Eagle’s endorsements have had more influence in races where voters may not know as much about the candidates. This is more of a factor in primaries where even less is known about candidates and their positions, than in general elections.

    Now the Eagle’s defenders will take exception to this claim about liberal endorsements. Eagle defenders will claim that the paper has endorsed some Republicans, and occasionally even a conservative. It is true, this has occasionally occurred but only under a narrow set of circumstances. These non-liberal endorsements only occur when it was clear that the conservative was likely to win, and usually would win big regardless of who or how the paper endorsed. The Eagle’s editorial endorsement policy is usually to endorse the most liberal candidate with a reasonable chance to win, and has been in place for more than 40 years I’ve lived in Wichita.

    As the paper’s financial and news resources have weakened, the ability to endorse has diminished with their diminishing circulation but still has substantial influence in low-turnout elections that especially include primaries, and down-ballot races.

    Voice for Liberty Records It

    Former Wichita Mayor Carl Brewer with major campaign donor Dave Wells of Key Construction. Evidently, Wichita city code did not prohibit Brewer from voting to give millions in contracts and subsidy to Key.
    The Voice for Liberty website at wichitaliberty.org pictured former Mayor Carl Brewer, a liberal Democrat, holding a big fish while standing next to a prominent local businessman David Wells of Key Construction Company. Next to this picture Weeks included a Brewer letter on city hall letterhead praising Key Construction Company and identifying it as the special construction company with city hall connections.

    Bob Weeks and Voice for Liberty did everything possible to call out this situation. Interest in the local news media, from the Wichita Eagle to the broadcasters can be described in one word: crickets. Nada, nothing, ain’t going to go there was the Wichita news media reaction. But there are more city hall purchase contract shenanigans, and it is more recent.

    Wichita Eagle Skews

    In July 2012 the city council voted to give a large, nine-figure construction contract to a Michigan company with their select Wichita partners to replace the Wichita Airport terminal. The Michigan company and their local partners, including Key Construction, weren’t the low bidders. The lowest bidder was a Wichita construction company.

    The Michigan company partnered with Key Construction and won the city council vote on this contract. Then-city council member Jeff Longwell voted to give this large contract to the Michigan/Key construction group.

    The day before the city council and Longwell voted the Michigan construction company’s top management and many of their spouses made maximum donations allowed by law to the Longwell for County Commission Campaign. The day after Longwell voted to give them this $100 million-plus contract more maximum legal level donations rolled into the Longwell campaign from the Michigan company’s management and their spouses.

    This all became public record when these were reported on campaign finance reports about 10 days before the election. Naturally, my campaign responded to this outrageous misconduct. Interest from the news media in general, and the Wichita Eagle, which had endorsed the less conservative candidate in this race, Longwell, had no interest in reporting on these outrageous events on their front or editorial pages.

    The Wichita Eagle advertisement. Click for larger.
    My county commission campaign tried to buy a newspaper ad in the Eagle and publicize this outrageous financial misconduct at city hall. The Wichita Eagle’s advertising staff did everything they could to assist my campaign in this ad purchase. However, the rest of the Eagle editorial, management, and news staff attempted to censor my text, and prevent my ad from running in the form it was being used in our other campaign efforts. Eventually, my campaign did run an ad, but without all of the language that we wanted to use, in exposing this financial misconduct on the city’s airport construction contract.

    This story did get to some voters, but only because my county commission campaign successfully mailed this information into voters’ hands, although roughly 40 percent of the voters had already cast ballots before my campaign material could be distributed. I beat Councilman Longwell with over 56% of the vote in the August 2012 GOP county commission primary contest.

    However, when Sam Williams tried to raise this issue in the 2015 mayor’s race, it was treated as ancient history and not reported. Sadly, this history of cronyism at city hall wasn’t reported prior to the primary, and I believe that this would have made Lyndy Wells advance to the general election ballot. Most recently, this is especially true in the way the city has handled the destruction of Lawrence Dumont Stadium, and the sale of approximately 4 acres for $1 an acre around the stadium for the ownership group of an out of state, minor league baseball club. Special city favors for special people within the public-private partnership paradigm is the way municipal government operates here.

    More Wichita Eagle Skews

    This wasn’t the only example of city hall financial transgressions and shenanigans. In 2013 the city was involved in the city-owned land sale for the west bank apartment project, the same sort of financial shenanigans occurred. The city went with their politically favored firm, and Jeff Longwell voted with the majority to go his business buddies, in another example of this “public-private partnership.”

    Sadly, Mayor Longwell continues to defend the “public-private partnerships” model for city development in this latest example of how Wichita city hall operates. This did not receive Wichita Eagle coverage like the most recent example that occurred with 3 weeks away from advanced voting in the 2019 mayor’s race begins, and roughly 5 weeks before the November 5 election day.

    For many Wichitans, “public-private partnerships” is just a politically correct phrase describing cronyism, for ethically conflicted projects, for the special favors for special people environment in Wichita’s city government. Profits are privatized while loses land in taxpayer’s laps. This is what happens without clearly specified bidding, and without procedures for selecting, and protecting the low, winning bidders who meet clear project specifications.

    City Purchases and City Scandals

    Government scandals aren’t limited to city hall. Purchasing scandals have occurred at all levels of government.

    After I joined the Sedgwick County commission in 2009, I was informed about past purchasing scandals in Sedgwick County government. These had all occurred in the last century. This occurred as I began officially reviewing county financial operations. County staff was proud of the protections and safeguards built into the county’s bidding and bid board process.

    That is why almost all county bids were handled as routine, often consent agenda items. That’s how the county had created its bid board, and how there was a major effort to protect taxpayers. This transparent process treated all potential bidders fairly, whether they were local, or not; whether they knew or didn’t know county officials; and it was an open, transparent process. The city needs to move to a clear, transparent, and fair model like the county has enjoyed for several decades.

    Conclusion With a Warning for the Future

    Financial shenanigans have a long history in Wichita city hall. Lack of detailed news coverage of these shenanigans is a hidden story that this non-reporter is going to try and disclose for if nothing else, the historical record now. This is sad that this history has to be provided by a frustrated, non-media, Wichitan who, while I did enjoy an elevated county courthouse observation position for eight years, could only observe these city crony cases from the other side of Central Ave.

    Additional details about these crony stories mentioned here are contained in the Voice for Liberty archives. This information is accessible to everyone on this site. Even the news media.

    Now, this most recent example of city cronyism has received a large amount of well-deserved, and in fact remarkable, huge coverage by the Wichita Eagle. While I am a major critic of the Eagle, I will state that this paper deserves credit for breaking this story.

    This must be placed in the context and contrast with often the lack of interest in the past, especially if the Eagle’s politically favored officials were involved. The major news story is not the continuing cronyism at Wichita city hall but the fact that cronyism was exposed, received major negative news attention, and now continuing news coverage.

    Sadly, I expect that the bottom line is that little or nothing to change the public-private cronyism model that is encased in political concrete in city hall. This model also seems to be encased in Wichita media concrete too. Sadly, this defective economic model enhancing cronyism is likely to prevail regardless of who wins in the mayor’s election contest, or the other city council elections, November 5.

    Postscript

    The cronyism in Wichita and news media flaws that are discussed above are relevant but tiny compared with the egregious corruption nationally in our country. The outrages from the Clinton Crime Foundation, the recent revelations concerning the Biden overseas money schemes, the misuse of government FISA surveillance in the Russian collusion hoax, outline national abuses and governmental scandals that far exceed local government’s defects in Wichita.

    My sources for these national assertions include but are not limited to the financial revelations about misconduct by both Democrats and Republicans in Peter Schweizer’s outstanding books: Secret Empire, Clinton Cash, and Extortion, are excellent. News media flaws nationally are documented by the .

    Are We Rome? by Lawrence Reed is a brief, pamphlet sized outline (see Foundation for Economic Education) of our national financial and governmental challenges. Those who want to explore our national fiscal and institutional problems, I would recommend Dinesh D’Souza’s and Mark Levin’s numerous books. If we don’t get this right, Mark Steyn’s After America: Get Ready for Armageddon moves from a yellow warning light to a hideous, Venezuelan reality.

    Fighting the good fight within government will be tough. Scott Walker’s Unintimidated: A Governor’s Story and a Nation’s Challenge describes the Wisconsin battle in exquisite detail. It is a valuable, but cautionary reality defenders of liberty can find incisive examples of the challenges ahead. Levin’s proposed constitutional amendments in the Liberty Amendments is also valuable reading.

    Sadly, there aren’t any books like this for Kansas, let alone Wichita. Greg Jarrett has left Wichita and gone national with his excellent books. This essay is a report for the legacy of those interested in local government in the early 21st century. This also provides a report for anyone interested in the governmental legacy left for our heirs who will follow us in south-central Kansas.

  • Wichita water planning in 2014, and now

    Wichita water planning in 2014, and now

    In 2014 the City of Wichita advised spending millions on a water project, but it wasn’t for the main water treatment plant replacement, and it wasn’t financed with debt.

    The city tells us it has been planning for a new water plant for many years. This summer the Wichita Eagle reported: “Until recently, not much has been done about building a new plant. It was first identified as a need for the city in 1993. Two years later, Wichita bought land for it near 21st and Zoo Boulevard. But the city didn’t start searching for construction funding until after the assessment in 2017.” 1

    In 2014, however, the city’s attention was focused, at least partly, on water issues. But it wasn’t the main water treatment plant that was of concern.

    Instead, the city was worried about drought protection and the conservation measures that might be imposed during an extended drought. In July 2014, the city prepared a document titled “Strategic Plan Implementation Timetable.” 2 Regarding water, the activity needed was:

    1. Develop a plan that addresses:
    A. New water sources
    B. Conservation strategies
    C. Reuse opportunities for industry
    D. Emphasize water as a priority with the State and Congressional delegation
    E. Work with area communities to ensure water is also a priority for them

    While these are vague and open to interpretation, there’s nothing on this list like “Secure funding to replace our aging main water treatment plant.”

    The city’s solution that it recommended to Wichitans was expansion of the Aquifer Storage and Recharge (ASR) system. This is a project north of Wichita that takes water from the Little Arkansas River, treats it, and injects it into wells in the Equus Beds. That’s an underground aquifer that, along with Cheney Reservoir, supplies Wichita’s water treatment plant. 3

    It was planned that by filling the Equus Beds with river water, that would be water Wichita could draw upon in time of need, like during an extended drought.

    To pay for ASR expansion, the city asked Wichitans to vote on a city sales tax. It would be an additional one cent per dollar, last for five years, and was projected to raise $400 million. Of that, $250 million was planned for ASR expansion. Other sales tax monies would fund economic development, transit, and street repairs.

    Voters did not approve the sales tax, with 62 percent voting against it. Since then, there hasn’t been much talk about the ASR project.

    With that history, we should ask this question: When the city was concerned about drought protection in 2014, was it also concerned about the condition of the main water treatment plant?

    While the city says it has been planning for the main treatment plant’s replacement, that didn’t seem to be evident in 2014. A review of city documents, news reports, and memory finds no mention of the upcoming need for a new main water treatment plant. All the attention was on ASR and the need for drought protection, not basic water treatment and supply.

    I think this means one of two things: The main water treatment plant wasn’t a concern or priority in 2014, no matter what the city says now.

    Or, if the main water treatment plant was in the planning stages at the same time the city was recommending spending $250 million on a different water project, we have to ask why the city didn’t tell us that?

    Hiding the need for a new plant, if that’s what the city did, would have been a grand deception. The city should have told voters this in 2014: “We recommend you spend $250 million on the ASR expansion project, and oh by the way, we also need to spend twice that much on a new main treatment plant in a few years.”

    But the city didn’t tell us that. 4

    Currently, the city tells us, “Our current water treatment facility is 80 years old and is in need of replacement.” 5

    Well, in 2014 the plant was 75 years old. Wasn’t it foreseeable that the plant needed replacement then?

    There’s also this: The expanded ASR plant would not have worked without a functioning main water treatment plant, as that’s where ASR water goes. In fact, the city planned to spend $86,579,022 of sales tax proceeds to build a parallel pipeline from the ASR facility to the existing main water treatment plant.

    Paying for water

    Click for larger.

    In 2014, the city recommended against debt as a means of paying for the ASR project. A city document advised, “The use of sales tax funding for the project would save the community $221 million in financing costs over 20 years.”

    Debt was discouraged. Paying now, through the sales tax, was advised.

    So, what has changed? Is debt now good, simply because the city believes it can participate in a low-interest federal loan?

    In 2014, the city advised raising $250 million for water through a sales tax. The entire sales tax that the city proposed — one cent per dollar for five years — would raise $400 million, which is pretty close to the bill for the new main water treatment facility.

    If a sales tax for water was good in 2014, why not now? Especially considering that the 2014 water project was non-essential, while the need for a new main water treatment plant is seen as vital to the region’s future.

    A sales tax of one cent per dollar for six years would raise $480 million, based on the projections used in 2014. It would likely raise more now. Is this an option the city should consider?

    Then, let’s wonder who to hold accountable for this not being an issue in 2014.

    —
    Notes

    1. Swaim, Chance. Wichita’s water plant: ‘Every hour that thing is running, it could fail’. Wichita Eagle, July 21, 2019. Available at https://www.kansas.com/news/politics-government/article232826482.html. ↩
    2. City of Wichita. Strategic Plan Implementation Timetable. July 22, 2014. Archived on Google Drive here. ↩
    3. Weeks, Bob. For Wichita, water supply decisions loom. Available at https://wichitaliberty.org/wichita-government/wichita-water-supply-decisions-loom/. ↩
    4. Weeks, Bob. In Wichita, revision of water history. Available at https://wichitaliberty.org/wichita-government/wichita-revision-of-water-history/. ↩
    5. City of Wichita. Available at https://wichita.gov/pwu/nwwtf/Pages/default.aspx. ↩
  • From Pachyderm: Wichita City Council Candidates

    From Pachyderm: Wichita City Council Candidates

    From the Wichita Pachyderm Club this week: Wichita city council candidates from district 2. This audio presentation or podcast was recorded on October 11, 2019. Todd Johnson is the moderator.

    Candidates are, in order of first speaking, Rodney Wren, Becky Tuttle, and Joseph Scapa.

  • What the Block 1 amendment says about downtown Wichita

    What the Block 1 amendment says about downtown Wichita

    The amending of a retail lease tells us a lot about the economics of downtown Wichita.

    This week the Wichita City Council amended a lease for some retail space at 360 East William in downtown Wichita. This is the retail space on the ground floor of the Block 1 parking garage at the northwest corner of Topeka and William.

    Block One retail space sits half empty. Click for larger.

    The first lease, passed by the council in 2011, refers to “ground level of the Parking Structure retail space containing approximately 8,400 square feet of surface floor area.” 1 The lease was between the city and a master tenant, which was Douglas Place, LLC. The master tenant, it was thought, would find retail tenants and earn profits based on the difference between the rent it collects from them and the rent it pays to the city.

    Earning profits seemed virtually guaranteed for the master tenant, because the rent it paid to the city for the entire 8,400 square feet was to be according to this schedule (along with my computations of rent per square foot, the common way commercial rents are quoted):

    First five years: $1 per year
    Years 6 through 15: $21,000 per year, or $2.44 per square foot
    Years 16 through 20: $63,000 per year, or $7.33 per square foot

    So for the first five years of the lease, the master tenant faced virtually no cost in obtaining and controlling rentable space. Other commercial landlords must pay to build structures in order to collect rent, but not this master tenant.

    The deal was even better than that for the master tenant, as the city would pay for tenant build-out. This is the cost of making space ready for tenants by building things like walls, floors, ceilings, restrooms, heating, air conditioning, etc.

    According to the lease, at the end of 20 years, the master tenant could either continue to manage the property for the city for a fee, or purchase the property for $1,120,000, or do nothing.

    The amended lease the council passed this week holds these terms for rent: 2

    First four years: $1 per year
    2024 through 2035: $10,000 per year, or $1.16 per square foot
    2036 through 2043: $20,000 per year, or $2.33 per square foot

    At the end of this term, the tenant has the option to purchase the property for $400,000. That’s a reduction of $720,000, or 64 percent, from the option price in the 2011 lease. As part of the amended lease, the city will not pay for tenant build-in.

    City documents now state the amount of retail space as 8,600 square feet, up from 8,400 in 2011.

    City real estate administrator John Philbrick told the council that half of the space was built out. (Video is at the end of this article.) Real estate experts told me that build-out costs for space like this could be around $50 per square foot, although there is a wide variation. With 4,300 square feet remaining, this amounts to something like $215,000 in savings for the city.

    In summary, with the amended lease the period of nearly free rent ($1 per year for the entire space) starts again, this time for four years. The step-ups in rent to the city have been discounted. Instead of some years when the city would collect $2.44 per square foot, it now stands to collect $1.16. For the next step-up, the city will collect $2.33 per square foot instead of $7.33. The step-up schedule in the amended lease doesn’t precisely align with the original lease, but the step-up rates are much lower.

    Besides these aspects, there is a political angle to this matter. See here.

    Block One, the origin point for future growth

    Click for larger.

    Block One, or Block 1, is the downtown Wichita block bounded by Douglas on the north, William on the south, Broadway on the west, and Topeka on the east. The downtown Wichita development agency (formerly the Wichita Downtown Development Corporation, now called simply Downtown Wichita) once billed this block as “the first complete city block of development along the core of Douglas Avenue.”

    In promotional material, the agency promoted the area’s bright future: “Block One is the origin point for future growth.”

    Block One ribbon cutting, March 2013.

    That was in 2013, six years ago. There has been progress. The Ambassador Hotel and its restaurant are still open. The Kansas Leadership Center is complete. But the former Henry’s building languished until this year. Plans call for it to become a culinary school instead of the retail, restaurant, and office center that was originally promoted.

    But the retail space on William Street has not been successful. In this week’s city council meeting administrator Philbrick told the council that about half of the space was leased, with the two existing leases at the rates of $4 and $6 per square foot.

    Block One promotional material. Click for larger.

    How do these rates compare with other downtown retail space? In the Weigand Commercial Retail Forecast for 2012, for total retail space in the central business district, the quoted rent was $9.84 per square foot. For 2015 it was $10.54, with class A space at $14.00. (No quote for class A was given for 2012.) For 2019 it was $10.65, with no quote for class A space, $11.59 for class B, and $5.35 for class C.

    For the entire city, the Weigand forecast reports that class A retail space rents for $19.81.

    Why has this retail space been difficult to lease? Philbrick told the council, “[The] market at the time was not strong and it continued to weaken.”

    With the city proposing to rent the space for $1 per year for four years, then increasing according to the schedule shown above, Council Member Jeff Blubaugh (district 4, south and southwest Wichita) asked Philbrick if this is a market rent, saying if the value of the building is $400,000, the monthly rent should be about one percent of that.

    Blubaugh’s valuation of $400,000 may be reasonable. (Or maybe not, as it is the option price to purchase the property after the lease expires in 2043. Currently, Sedgwick County appraises the property at $620,600.) If it is, a landlord should be able to collect $4,000 rent per month, or $48,000 per year. With 8,600 square feet of available space, that implies rent of $5.58 per square foot.

    Philbrick replied: “The two current leases are at very low rates. I mean, the two current leases are at, I think, four dollars per square foot triple net and six dollars per square foot.”

    Blubaugh followed up: “So there’s just not … it’s just not competitive down there, then?”

    Philbrick: “There’s very, very little demand.”

    That is the most sobering realization, that after years of subsidy, investment, and promotion, downtown Wichita is not doing well. That’s about the only conclusion we can make when we see the city renting nice retail space for nearly zero rent, and doing this not just once, but twice.

    Other indicators

    For downtown population, Wichita economic development officials use a convoluted method of estimating the population of downtown Wichita, producing a number much higher than Census Bureau estimates. See Downtown Wichita population.

    On jobs, we find that employment in downtown continues to decline. On the plus side, Wichita officials no longer blatantly misapply Census Bureau statistics regarding downtown jobs. See Downtown Wichita jobs, sort of and Downtown Wichita report omits formerly prominent data.

    The assessed value of property in downtown is not growing very rapidly. According to data compiled by Downtown Wichita, assessed value hit a recent low of $78,573,959 in 2012 – 2013. 3 For 2018 – 2019 the value is reported as $85,766,869, an increase of 9.15 percent in six years, barely more than one percent per year. Assessed value is the property tax base, the building of which officials tell us is an important goal. It’s how the city pays for services, they say.

    But assessed value has barely grown in downtown Wichita despite hundreds of millions in investment, both public and private. And some of the assessed value is captured by tax increment financing districts and diverted away from paying for the cost of government services.

    View video of the council meeting with added commentary below, or click here to view at YouTube.

    —
    Notes

    1. Wichita City Council Agenda Packet for September 13, 2011. Exhibit 1, Parking Structure Retail Lease, page 205. ↩
    2. Wichita City Council Agenda Packet for October 1, 2019. Agenda Item No. V-4, Assignment and Amendment of Lease of Retail Space at Block 1 Garage, 360 East William (District I). ↩
    3. Downtown Wichita. 2019 State of Downtown Report. Available at https://downtownwichita.org/development/state-of-downtown. ↩
  • Contribute to a campaign, get (nearly) free rent

    Contribute to a campaign, get (nearly) free rent

    Citizens may not have noticed that a campaign contributor to Wichita Mayor Jeff Longwell received a large benefit from the city this week.

    This Tuesday the Wichita City Council voted to amend an existing lease. In a nutshell, the city council voted to lease to a tenant 8,600 square feet of retail space for $1.00 per year.

    Not $1.00 per square foot per year, but $1.00 per year for all 8,600 square feet. That’s for the first four years of the lease.

    Computed as rent per square foot, which is the common way to quote rent for commercial space, the rent is $0.00. Essentially free, that is.

    According to the lease, the rent will increase in future years, first to $1.16 per square foot, then to $2.33.

    The Block 1 garage on East William Street in 2014.
    The real estate is at 360 East William in downtown Wichita. It’s on the north side of William between Broadway and Topeka. This is the first floor of the Block 1 parking garage built as part of the Ambassador Hotel project.

    It’s been difficult to rent this space. According to John Philbrick, the city’s real estate administrator, half of the space has been leased to two tenants. One lease is at $4 per square foot; the other at $6. According to the Weigand Commercial Retail Forecast for 2019, for total retail space in the central business district, the quoted rent was $10.65 per square foot. Across the city, class A retail space rents for $19.81, from the same source.

    Who is the new tenant that will pay essentially no rent for four years, then steeply discounted rent thereafter? It is Douglas Market Development, LLC. Its manager is Sudha Tokala. According to its annual report, the only person who owns more than five percent of the company is her.

    Tokala is notable for her involvement in the redevelopment of the former state office building, the former Henry’s building (which is next to the 360 East William Street retail space), and other nearby buildings.

    These developments are receiving various forms of government subsidy, which might be justified for fostering economic growth in downtown.

    But free (nearly free) rent? Is that really necessary to promote development in downtown Wichita?

    Then, there’s this. On March 21 of this year, a company named Natman Real Estate International LLC contributed $500 to the campaign of Wichita Mayor Jeff Longwell. That’s the maximum amount allowed by law.

    According to the company’s annual report, the only person who owns more than five percent of the company is Sudha Tokala. That’s the same person who is receiving four years of (almost) free rent, courtesy of the City of Wichita, Jeff Longwell, Mayor.

    It’s good that buildings in downtown Wichita — or anywhere in Wichita, for that matter — are being put to productive use. We should be able to celebrate the initiative and accomplishments of entrepreneurs who do this.

    But when there is such a close linkage between a campaign contribution and the conveyance of a large economic benefit — well, reasonable people will wonder. At least, they should.

    Pay to play

    There is no law in Wichita or Kansas prohibiting what happened here. But wouldn’t you feel better if Mayor Longwell had abstained from voting on this matter? Or if he acknowledged that he received campaign contributions from someone who is asking for a favor from the city?

    Some jurisdictions have laws known as pay-to-play. These laws may prohibit political campaign contributions by those who seek government contracts, prohibit officeholders from voting on laws that will benefit their campaign donors, or the laws may impose special disclosure requirements.

    In general, these laws prohibit officials from enriching their campaign contributors.

    Kansas and Wichita have no such laws. In my experience, there are few elected officials in favor of a pay-to-play law.

    Click images for larger versions.

  • City code on ethical conduct in Wichita

    Wichita has a city code governing ethical conduct by council members, but it seems to have no teeth.

    Here’s an excerpt from the Wichita city code as passed in 2008 (full section below):

    “[Council members] shall refrain from making decisions involving business associates, customers, clients, friends and competitors.”

    When asked about a specific application of this city law relating to former Wichita Mayor Carl Brewer, the Wichita city attorney supplied this interpretation:

    Related to the Mayor’s participation in the item, yes, City Code advises Council members to “refrain from making decisions involving business associates, customers, clients, friends and competitors. … ” but the Code does not provide definitions or limits to these broad categories of constituents. Further, the City Code clearly requires Council members to “vote on all matters coming before the City Council except in those particular cases of conflict of interest. …” The city Code does not define what constitutes a conflict but the Council has historically applied the State law for that definition.

    Applying that State law specific to local municipalities, the Mayor does not have any substantial interest in Douglas Place LLC, and therefore no conflict. Under the State ethics law, there was no requirement that the Mayor recuse himself from voting on the Ambassador Project.

    Former Wichita Mayor Carl Brewer with major campaign donor Dave Wells of Key Construction. Evidently, Wichita city code did not prohibit Brewer from voting to give millions in contracts and subsidy to Key.
    So we have statutory language that reads “shall refrain,” but Gary Rebenstorf, the city attorney at that time, interpreted that to mean “advises.”

    We also have statutory language that reads “business associates, customers, clients, friends and competitors.” But the city attorney felt that these terms are not defined, and therefore the mayor and city council members need not be concerned about compliance with this law.

    I wonder whose interests the city attorney represents. The people of Wichita, who want to be governed in a fair and ethical manner? It doesn’t seem so.

    I wasn’t satisfied with the city attorney’s response, so I and others engaged attorneys to research the law and see if it could be clarified and enforced. We received an opinion that we, as citizens of Wichita, likely did not have standing to bring a lawsuit against either the city or the mayor. We were told that the law would probably find that we suffered no harm. A city council member might have standing, however, because if an ineligible council member voted, that would unlawfully dilute the value of other members’ votes. We attempted to recruit council members to file a suit, but couldn’t find one who was interested.

    I thought that was sad. Today, city hall ethics, at least in the mayor’s chair, have not improved. As we’ve learned this week, the current city attorney says council members “are left to police themselves on that city law,” according to Wichita Eagle reporting. 1

    If the city attorney’s interpretation of this law is controlling, I suggest we strike this section from the city code. Someone who reads this — perhaps a business owner considering Wichita for expansion — might conclude that our city has a code of ethics that is observed by the mayor and council members and enforced by its attorneys.

    Giving that impression, though, would be false — and unethical.

    Wichita city code

    Sec. 2.04.050. — Code of ethics for council members.

    Council members occupy positions of public trust. All business transactions of such elected officials dealing in any manner with public funds, either directly or indirectly, must be subject to the scrutiny of public opinion both as to the legality and to the propriety of such transactions. In addition to the matters of pecuniary interest, council members shall refrain from making use of special knowledge or information before it is made available to the general public; shall refrain from making decisions involving business associates, customers, clients, friends and competitors; shall refrain from repeated and continued violation of city council rules; shall refrain from appointing immediate family members, business associates, clients or employees to municipal boards and commissions; shall refrain from influencing the employment of municipal employees; shall refrain from requesting the fixing of traffic tickets and all other municipal code citations; shall refrain from seeking the employment of immediate family members in any municipal operation; shall refrain from using their influence as members of the governing body in attempts to secure contracts, zoning or other favorable municipal action for friends, customers, clients, immediate family members or business associates; and shall comply with all lawful actions, directives and orders of duly constituted municipal officials as such may be issued in the normal and lawful discharge of the duties of these municipal officials.

    Council members shall conduct themselves so as to bring credit upon the city as a whole and so as to set an example of good ethical conduct for all citizens of the community. Council members shall bear in mind at all times their responsibility to the entire electorate, and shall refrain from actions benefiting special groups at the expense of the city as a whole and shall do everything in their power to ensure equal and impartial law enforcement throughout the city at large without respect to race, creed, color or the economic or the social position of individual citizens.

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    Notes

    1. Swaim, Chance. Wichita’s mayor steered multi-million-dollar water plant contract to friends. Wichita Eagle, September 29, 2019. Available at https://www.kansas.com/news/politics-government/article234701932.html. ↩
  • The power and influence of the Wichita mayor

    The power and influence of the Wichita mayor

    When pursuing a large Wichita city contract, did the winning company lobby all council members, or primarily Mayor Jeff Longwell?

    The role of Wichita Mayor Jeff Longwell in the awarding of the contract for the new Wichita water plant has been in the news. A recent Wichita Eagle article showed how the mayor steered the award to a company other than the company recommended by the city’s selection committee. 1

    Central to the story is the relationship between the mayor and the company he favored. There was, according to Eagle reporting, a close relationship including a cash gift that was not disclosed 2 and some eerily chummy emails. 3

    The mayor, however, downplayed his role. In a response from Longwell posted on the city’s Facebook page, he said he is part of a team: “A team that deliberately keeps each other in check. We question and challenge each step, and that is an intentional process designed to ensure we have the best deal for our city.” 4

    Some council members agree. In the Eagle article, two council members were interviewed, Brandon Johnson (district 1, northeast Wichita) and James Clendenin (district 3, southeast and south Wichita):

    Johnson and Clendenin both downplayed Longwell’s role in awarding the contract, saying the mayor is just one vote.

    “You give the mayor too much credit,” Johnson said.

    “Yeah, this idea that the mayor of the city of Wichita has enough power to make any decision he would like is something that I think is a misconception,” Clendenin said.

    What, then, is the power of the mayor to lead or steer the council in his preferred direction?

    The answer to this question holds the answer: Did the winning company (Wichita Water Partners) lobby, flatter, or gift any Wichita City Council members with anything approaching the consideration directed to Mayor Jeff Longwell?

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    Notes

    1. Swaim, Chance. Wichita’s mayor steered multi-million-dollar water plant contract to friends. Wichita Eagle, September 29, 2019. Available at https://www.kansas.com/news/politics-government/article234701932.html. ↩
    2. “Before Longwell cast the deciding vote, the president of one of the Water Partners’ companies paid for Longwell to enter a $1,000-per-person charity golf tournament. … Nor did Longwell disclose the $1,000 entry fee on a state ethics form for local officials that he filed in February.” ↩
    3. “They frequently referred to each other in emails by nicknames — Your Eminence, His Highness, Homecoming Queen, Eye Candy, Jethro and Wine Delivery Guy, after Young, the president of PEC, offered to drop off to Longwell leftover wine from a previous dinner party.” ↩
    4. Longwell, Jeff. City of Wichita Facebook page. Available at https://www.facebook.com/cityofwichita/posts/2535037446542240. ↩
  • From Pachyderm: Wichita mayoral candidates

    From Pachyderm: Wichita mayoral candidates

    From the Wichita Pachyderm Club this week: Wichita mayoral candidates Jeff Longwell and Brandon Whipple. This audio presentation or podcast was recorded on September 27, 2019. Todd Johnson is the moderator.

    Shownotes

    From left: Brandon Whipple, Jeff Longwell, and moderator Todd Johnson.
  • Downtown Wichita population

    Downtown Wichita population

    Wichita economic development officials use a convoluted method of estimating the population of downtown Wichita, producing a number much higher than Census Bureau estimates.

    How many people live in downtown Wichita? The answer, according to Downtown Wichita, is 2,749.

    This value comes from the 2019 State of Downtown Report, published by Downtown Wichita. 1 It is for zip code 67202, which is commonly recognized as greater downtown Wichita. While this report highlights the number of people living in downtown Wichita, it no longer reports the number of people working in downtown. 2

    How does Downtown Wichita arrive at the number of residents in downtown? An endnote from the report gives the details:

    The 2010 U.S. Census states the population in the 67202 area code [sic] is 1,393. Per Downtown Wichita records, 1,228 units rental units have opened in the Downtown SSMID district since 2010 when the Census was taken. Per data provided directly from the Downtown residential rental properties, the absorption rates of the market rate units has an average of 85%. Per the U.S. Census Bureau, 2013-2017 American Community Survey 5-Year Estimates, the average size of renter-occupied units is 1.3 persons. Therefore, an estimate for the current population is 2,749. 3

    What Downtown Wichita has done is to take a reliable figure (the 2010 decennial census) and extrapolate forward to 2018. (Presumably 2018, as the report doesn’t say.)

    There is a problem with this approach. The DW calculation makes use of two estimates, absorption rate 4 and size of renter-occupied units. Each of these is an estimate that has its own error probabilities, and those errors compound when multiplied.

    There is no need to go through this roundabout calculation, as the Census Bureau has provided an estimate for the population of downtown in 2017. Data from the American Community Survey 5 estimates that the population in downtown Wichita for 2017 was 1,587, with a 90 percent confidence interval of plus or minus 221. 6 This means the Census Bureau is confident the population of downtown Wichita in 2017 was in the range of 1,366 to 1,808, that confidence factor being 90 percent. (2018 values should be available soon.)

    But Downtown Wichita says the population of downtown is 2,319, which is far — really far — outside the range the Census Bureau gives for the 2017 population. While Downtown Wichita’s population estimate is probably for 2018, it still lies far outside the range of probability, based on Census Bureau estimates.

    A nearby chart plots the Census Bureau’s population estimates (labeled ACS, for American Community Survey) with the lower and upper bounds of 90 percent confidence levels. This is compared with Downtown Wichita’s population estimate. From 2015 to 2017, Downtown Wichita’s population estimates are far above the Census Bureau’s estimates. The probability that Downtown Wichita’s figures are correct is vanishingly small.

    It’s curious that Downtown Wichita, if it wants to know how many people live in downtown, doesn’t simply use the Census Bureau estimate of population. That estimate is available annually in the Bureau’s American Community Survey. Downtown Wichita didn’t use that number, but it relied on the same body of data to get “average size of renter-occupied units.”

    Why would Downtown Wichita use the Census Bureau for one datum but not another, especially when the Census Bureau data reports the statistic Downtown Wichita is trying to estimate in a roundabout manner?

    It’s simple. DW’s calculations produce 2,319 people living in downtown. The Census Bureau estimate is a much smaller number: 1,587.

    By the way, DW’s calculations start with the 2010 Census Bureau population for downtown. Of the downtown population of 1,393 that year, 253 were men living in institutions like the Kansas Department of Corrections Wichita Work Release facility at Emporia and Waterman Streets. It has a capacity of 250. 7

    Click for larger.

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    Notes

    1. Downtown Wichita. 2019 State of Downtown Report. Available at https://downtownwichita.org/development/state-of-downtown. ↩
    2. Weeks, Bob. Downtown Wichita report omits formerly prominent data. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-report-omits-formerly-prominent-data/. ↩
    3. 2019 State of Downtown Report, page 51. ↩
    4. “Absorption is the amount of space or units leased within a market or submarket over a given period of time (usually one year). Absorption considers both construction of new space and demolition or removal from the market of existing space.” Institute of Real Estate Management. Calculating Absorption. Available at https://www.irem.org/education/learning-toolbox/calculating-absorption. ↩
    5. U.S. Census Bureau, 2013-2017 American Community Survey 5-Year Estimates ↩
    6. U.S. Census Bureau. American Community Survey Multiyear Accuracy of the Data (5-year 2013-2017). Available at https://www2.census.gov/programs-surveys/acs/tech_docs/accuracy/MultiyearACSAccuracyofData2017.pdf. ↩
    7. See https://www.doc.ks.gov/facilities/wwrf. ↩