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  • In Wichita, the need for campaign finance reform

    In Wichita, the need for campaign finance reform

    Actions of the Wichita City Council have shown that campaign finance reform is needed. Citizen groups are investigating how to accomplish this needed reform, since the council has not shown interest in reforming itself.

    Consider recent actions by the council and its members:

    • The council voted to give a movie theater operator a no-interest and low-interest loan, after having already received the benefit of tax increment financing.
    • A minister dabbling in real estate development made a large contribution to his council representative just before he asked the city council for tax increment financing.
    • The council voted to give a construction company a no-bid contract for a parking garage. When later put out for competitive bid, the same company won the contract, but with a bid 21 percent less costly to taxpayers.
    • Executives of a Michigan construction company made contributions to the campaign of a city council member just before and after the council voted to give the company and its local partner a huge construction contract.
    • When a group of frequent campaign contributors wanted to win a contest for the right to build an apartment project, the city’s reference-checking process was a sham. City and other government officials were listed as references without their knowledge or consent, and none of the people listed as references were actually contacted.
    • A frequent campaign contributor, according to the Wichita Eagle, “represented himself as an agent of the city — without the city ‘s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza.” City officials expressed varying degrees of displeasure. But it wasn’t long before David Burk was receiving taxpayer subsidy again from the city council.
    • The council voted to grant $703,017 in sales tax forgiveness to frequent campaign contributors and the mayor’s fishing buddy.

    Wichita Mayor Carl Brewer with major campaign donor Dave Wells of Key Construction.
    Wichita Mayor Carl Brewer with major campaign donor Dave Wells of Key Construction. Brewer has voted to send millions to Key, including overpriced no-bid contracts.
    What is the common thread running through these incidents? Council members have voted to enrich their significant campaign contributors. Each of these are examples of a “pay-to-play” environment created at Wichita City Hall. It’s harmful to our city in a number of ways.

    First, overpriced no-bid contracts and other giveaways to campaign contributors isn’t economic development. It’s cronyism. It’s wasteful.

    Second: Citizens become cynical when they feel there is a group of insiders who get whatever they want from city hall at the expense of taxpayers. At one time newspaper editorial pages crusaded against cronyism like this. But no longer in Wichita. The Wichita Eagle has reported on some of these issues — sometimes in depth, sometimes in passing, but some have escaped notice. The editorial page of the newspaper sometimes takes notice, but is rarely critical of the council or mayor.

    Third, when it is apparent that a “pay-to-play” environment exists at Wichita City Hall, it creates a toxic and corrosive political and business environment. Companies are reluctant to expand into areas where they don’t have confidence in the integrity of local government. Will I find my company bidding against a company that made bigger campaign contributions than I did? If I don’t make the right campaign contributions, will I get my zoning approved? Will my building permits be slow-walked through the approval process? Will my projects face unwarranted and harsh inspections? Will my bids be subjected to microscopic scrutiny?

    Importantly: Will the Wichita city council prop up a competitor to my company with economic development incentives that place my company at severe disadvantage?

    Wichita's mayor sells his barbeque sauce at movite theaters owned by a campaign contributor who receives city taxpayer subsidies.
    Wichita’s mayor sells his barbeque sauce at movite theaters owned by a campaign contributor who receives city taxpayer subsidies.
    We need laws to prohibit Wichita city council members from voting on or advocating for decisions that enrich their significant campaign contributors. A model law for Wichita is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    We’d also need to add — as does New Jersey law — provisions that contributions from a business owner’s spouse and children will be deemed to be from the business itself. This is because for Kansas municipal and school district elections, only personal contributions may be made. Additionally the contributions of principals, partners, officers, and directors, and their spouses and children, are considered to be from the business itself for purposes of the law. These provisions are important, as many city council members in Wichita receive campaign contributions from business owners’ family members and employees as a way to skirt our relatively small contribution limits. For two examples of how companies use family members, employees, and friends to stack up campaign contributions, see Campaign contributions show need for reform in Wichita.

    Such campaign finance reform would not prohibit anyone from donating as much as they want (up to the current limits) to any candidate. Nor would the law prevent candidates from accepting campaign contributions from anyone.

    This reform, however, would remove the linkage between significant contributions and voting to give money to the contributor. This would be a big step forward for Wichita, its government, and its citizens.

    Proponents see three paths towards campaign finance reform. One would be to press for a law in the upcoming session of the Kansas Legislature. Such a law would be statewide in scope, and could apply to city councils, county commissions, school boards, townships, and other elective bodies.

    A second path would be to use the municipal initiative process. Under this process, a group writes a proposed ordinance. Then, it collects valid signatures on petitions. If a successful petition is verified, the city council must either (a) pass the ordinance as written, or (b) set an election to let the people vote whether the ordinance should become law.

    There is also a third path, which is for the Wichita City Council to recognize the desirability of campaign finance reform and pass such an ordinance on its own initiative.

    If we take the affected parties at their word, this third path should face little resistance. That’s because politicians who accept these campaign contributions say it doesn’t affect their voting, and those who give the contributions say they don’t do it to influence votes.

    If politicians and contributors really mean what they say, there should be no opposition to such a law. Citizens should ask the Wichita City Council to pass a campaign finance reform ordinance that prohibits voting to enrich significant campaign contributors.

    Some incidents

    warren-bailout-poses-dilemmaIn 2008 the Wichita City Council approved a no- and low-interest loan to Bill Warren and his partners. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

    When questioned about election donations:

    “I would never do anything because of a campaign contribution,” said [former council member Sharon] Fearey, who received $500 from David Burk and $500 from David Wells.

    “I don’t think $500 buys a vote,” said [former council member Sue] Schlapp.

    “One has nothing to do with the other,” [Wichita Mayor Carl] Brewer said.

    Also in 2008, the Reverend Dr. Kevass J. Harding wanted to spruce up the Ken-Mar shopping center at 13th and Oliver, now known as Providence Square. Near the end of June, Kevass Harding and his wife contributed a total of $1,000, the maximum allowed by law, to the campaign of Wichita City Council Member Lavonta Williams (district 1, northeast Wichita). This was right before Harding appeared before the city council in July and August as an applicant for tax increment district financing (TIF).

    These campaign contributions, made in the maximum amount allowable, were out of character for the Hardings. They had made very few contributions to political candidates, and they appear not to have made many since then.

    Campaign contributions to Wichita City Council member Lavonta Williams from an applicant for tax increment financing.
    Campaign contributions to Wichita City Council member Lavonta Williams from an applicant for tax increment financing.

    But just before the Ken-Mar TIF district was to be considered for approval, the Hardings made large contributions to Williams, who is the council member representing Ken-Mar’s district. Harding would not explain why he made the contributions. Williams offered a vague and general explanation that had no substantive meaning.

    In August 2011 the council voted to award Key Construction a no-bid contract to build the parking garage that is part of the Ambassador Hotel project, now known as Block One. The no-bid cost of the garage was to be $6 million, according to a letter of intent. Later the city decided to place the contract for competitive bid. Key Construction won the bidding, but for a price $1.3 million less.

    The no-bid contract for the garage was just one of many subsidies and grants given to Key Construction and Dave Burk as part of the Ambassador Hotel project. In Wichita city elections, individuals may contribute up to $500 to candidates, once during the primary election and again during the general election. As you can see in this table compiled from Wichita City Council campaign finance reports, spouses often contribute as well. So it’s not uncommon to see the David and DJ Burk family contribute $2,000 to a candidate for their primary and general election campaigns. That’s a significant sum for a city council district election campaign cycle. <a href=”http://wichitaliberty.org/files/wichita-city-council-campaign-contributions-associated-with-ambassador-hotel.pdf”” target=”_blank” title=”Wichita City Council campaign contributions associated with Ambassador Hotel”>Click here for a compilation of campaign contributions made by those associated with the Ambassador Hotel project.

    Council Member Jeff Longwell (district 5, west and northwest Wichita), in his second term as council member, led the pack in accepting campaign contributions from parties associated with the Ambassador Hotel project. For his most recent election, he received $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife. Total from parties associated with the Ambassador Hotel project: $6,000. When Longwell ran for Sedgwick County Commission this summer, these parties donated generously to that campaign, too.

    Council Member Lavonta Williams (district 1, northeast Wichita) received $5,000 from parties associated with the Ambassador Hotel: $3,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

    Wichita Mayor Carl Brewer received $5,000 from parties associated with the Ambassador Hotel: $4,500 from parties associated with Key Construction, and $500 DJ Burk, David Burk’s wife.

    Council Member and Vice Mayor Janet Miller (district 6, north central Wichita) received $3,500 during her 2009 election campaign from parties associated with the Ambassador Hotel: $1,500 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

    For his 2011 election campaign, Council Member Pete Meitzner (district 2, east Wichita) received $3,500 from parties associated with the Ambassador Hotel: $2,500 from parties associated with Key Construction, and $1,000 from David Burk and his wife.

    For his 2011 election campaign, Council Member James Clendenin (district 3, southeast and south Wichita) received $1,500 from parties associated with the Ambassador Hotel: $1,000 from parties associated with Key Construction, and $500 from David Burk and his wife.

    In 2011 nearly all council members approved a no-bid contract for this garage. It was later re-bid at a much lower price.
    In 2011 nearly all council members approved a no-bid contract for this garage. It was later re-bid at a much lower price.
    What citizens need to know is that the Wichita City Council was willing to spend an extra $1.3 million of taxpayer money to reward a politically-connected construction firm that makes heavy campaign contributions to council members. Only one council member, Michael O’Donnell, voted against this no-bid contract. No city bureaucrats expressed concern about this waste of taxpayer money.

    Of interest to current mayoral politics: In 2012 while Jeff Longwell was campaigning for the Sedgwick County Commission, campaign contributions from parties associated with Walbridge, a Michigan-based construction company appeared on Longwell’s campaign finance reports. Why would those in Michigan have an interest in helping a Wichita City Council member fund his campaign for a county office? Would the fact that Walbridge is a partner with Key Construction on the new Wichita Airport terminal provide a clue?

    Michigan contractors headline 500These contributions are of interest because on July 17, 2012, the Wichita City Council, sitting in a quasi-judicial capacity, made a decision in favor of Key and Walbridge that will cost some group of taxpayers or airport customers an extra $2.1 million. Five council members, including Longwell, voted in favor of this decision. Two members were opposed.

    On July 16 — the day before the Wichita City Council heard the appeal that resulted in Key Construction apparently winning the airport contract — John Rakolta, Chairman and Chief Executive Officer of Walbridge and his wife contributed $1,000 to Longwell’s campaign for Sedgwick county commissioner.

    Jeff Longwell vote to help Michigan CompanyThen on July 20, three days after the council’s decision in favor of Key/Walbridge, other Walbridge executives contributed $2,250 to Longwell’s campaign. Besides the Walbridge contributions, Key Construction and its executives contributed $6,500 to Longwell’s county commission campaign. Key and its executives have been heavy contributors to Longwell’s other campaigns, as well as to Wichita Mayor Carl Brewer and many other Wichita City Council members.

  • Wichita’s evaluation of development team should be reconsidered

    Dump truck carrying coinsIn an effort to avoid mistakes made in the past and inspire confidence in the process, parties wishing to receive economic development subsidies for projects in downtown Wichita are evaluated on a variety of measures. The evaluation matrix released for a project to be considered next week by the Wichita City Council, however, ought to be recalculated.

    City documents describe one of two competing projects as this: “River Vista is proposed by River Vista LLC, a development group comprised of George Laham, Dave Burk, Dave Wells and Bill Warren.”

    wichita-evaluation-matrix-2013-08

    It’s this ownership team that ought to cause the city concern. Two of the evaluation criteria are “Past project experience with the City of Wichita” and “References, especially from other municipal partners.” This development team was awarded the maximum number of points possible for each (points being a positive measure). Here are a few things that the evaluation committee may not have considered when awarding these points.

    Dave Wells: Wells is president of Key Construction. Last year the Wichita Eagle reported on “city-financed downtown parking garages that spiraled well over budget.” Noting the cost overruns, reporter Bill Wilson wrote: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.” (Wichita city manager proposes eliminating no-bid construction projects.)

    Despite these two cost overruns on city projects, Wichita Mayor Carl Brewer wrote in a letter recommending Key Construction on a different matter: “Key is known for their consistent quality construction, budget control and on schedule delivery.” Maybe that’s what the evaluation committee relied on.

    Also, two years ago Key Construction proposed — and was awarded by the city council — a no-bid contract for a parking garage. But the city later put the contract to competitive bid. Key, which first bid $6 million, later bid $4.7 million. This no-bid contract awarded to Key was cronyism in the extreme. If the desire of the majority of the city council, including Mayor Carl Brewer, had been realized, Wichita taxpayers would have sent an extra — and unnecessary — $1.3 million to a politically-connected construction company. See Campaign contributions show need for reform in Wichita for an example of how Key Construction has mastered political cronyism.

    By the way, the mayor’s relationship with Wells means he should not participate in voting on this matter.

    Dave Burk, Dave Wells: These two were original partners in WaterWalk, which has received over $40 million in subsidy, with little to show for results.

    Dave Burk: He’s received many millions from many levels of government, but still thinks he doesn’t get enough. This is what we can conclude by his appeal of property taxes in a TIF district. Those taxes, even though they are rerouted back to him for his benefit, were still too high for his taste, and he appealed. The Wichita Eagle reported in the article (Developer appealed taxes on city-owned property): “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

    rebenstorf-quote-dave-burkA number of Wichita city hall officials were not pleased with Burk’s act. According to the Eagle reporting, Burk was not authorized to do what he did: “Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

    Council member Jeff Longwell was quoted by the Eagle: “‘We should take issue with that,’ he said. ‘If anyone is going to represent the city they obviously have to have, one, the city’s endorsement and … two, someone at the city should have been more aware of what was going on. And if they were, shame on them for not bringing this to the public’s attention.’”

    Council member Lavonta Williams was not pleased, either, according to her quotations: “‘Right now, it doesn’t look good,’ she said. ‘Are we happy about it? Absolutely not.’”

    In a separate article by the Eagle on this issue, we can learn of the reaction by two other city hall officials: “Vice Mayor Jim Skelton said that having city development partners who benefit from tax increment financing appeal for lower property taxes ‘seems like an oxymoron.’ City Manager Robert Layton said that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

    The manager’s quote is most directly damaging. In a tax increment financing (TIF) district, the city borrows money to pay for things that directly enrich the developers, in this case Burk and possibly his partners. Then their increased property taxes — taxes they have to pay anyway — are used to repay the borrowed funds. In essence, a TIF district allows developers to benefit exclusively from their property taxes. For everyone else, their property taxes go to fund the city, county, school district, state, fire district, etc. But not so for property in a TIF district.

    This is what is most astonishing about Burk’s action: Having been placed in a rarefied position of receiving many millions in benefits, he still thinks his own taxes are too high. Now he wants more city taxpayer subsidy.

    warren-bailout-poses-dilemma

    Bill Warren: In 2008 the Old Town Warren Theater was failing and its owners — Bill Warren being one — threatened to close it and leave the city with a huge loss on a TIF district formed for the theater’s benefit. Faced with this threat, the city made a no-interest and low-interest loan to the theater. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

    Besides Warren, you may — or may not — be surprised to learn that the theater’s partners included Dave Wells and Dave Burk, the same two men mentioned above. Also, Mayor Brewer’s relationship with Warren means he should not participate in voting on this matter.

    With the history of these parties working in public-private partnerships, the Wichita City Council needs to question the matrix delivered by the evaluation committee.

  • Wichita performs a reference check, sort of

    Wichita city hall logoFor a video presentation of this material, click on Wichita performs a reference check, the video.

    Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. Cronies, if you will.

    A recent application filed with Wichita City Hall regarding the West Bank Development Project raises two questions: Did the government officials listed as references give their permission, and were any of the references contacted to learn what they knew about the applicants?

    The application filed by the River Vista development team shows this: The team, consisting of George Laham, Dave Wells, Dave Burk, and Bill Warren listed numerous local, state, and federal officials as references. Here’s the list of officials that appeared one or more times:

    Wichita city manager Robert Layton
    Wichita Mayor Carl Brewer
    Wichita City Council Member Jeff Longwell (district 5, west and northwest Wichita)
    Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita)
    Sedgwick County District Attorney Marc Bennett
    Sedgwick County Sheriff Jeff Easter
    Sedgwick County Commissioner Dave Unruh
    Sedgwick County Commissioner Tim Norton
    Kansas Governor Sam Brownback
    U.S. Representative Mike Pompeo

    Except for Jeff Easter, none of these officials gave permission for their names to be used in this way. (We didn’t get a response regarding Tim Norton.)

    Furthermore, none of these officials were contacted by the evaluation committee whose job it is to vet these potential city partners.

    A few questions: First, do you think it is appropriate for the city manager to be listed as a reference, given that anyone who reads this document would take it as an endorsement? No, of course it is not appropriate.

    Related: Do you think it’s appropriate for the city manager to endorse one of the applicants? We don’t know if the presence of the city manager’s name as a reference implies an endorsement, because George Laham did not ask the city manager if he could be listed as a reference. We know this because we asked.

    Further, the committee that evaluated the development teams did not call the city manager to inquire about George Laham. We asked about this, too. But making inquiries of references: Isn’t that what an evaluation committee or vetting team should do? But we know that the evaluation committee did not contact even one of these officials that were listed as references.

    These applicants likely knew that the evaluation committee would not contact these references. Therefore, they freely listed these government officials. Which makes us wonder — what is the point of having an evaluation committee?

    Even further: Is it appropriate for the city to partner with people who think it’s proper to list the city manager as a reference without asking if that was permissible, knowing that the manager wouldn’t be contacted? Same question regarding the mayor, governor, our U.S. Congressman, and district attorney?

    In light of this — numerous government officials listed as references without their permission or knowledge, an evaluation committee that never contacted these officials, and the information that these references could have provided: Do you think the evaluation committee fulfilled its duty to perform due diligence on behalf of the interests of the people of Wichita?

    What the evaluation committee might have learned

    If the evaluation committee had contacted these references, here’s what might have been learned.

    Dave Wells: Wells is president of Key Construction. Last year the Wichita Eagle reported on “city-financed downtown parking garages that spiraled well over budget.” Noting the cost overruns, reporter Bill Wilson wrote: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.” (Wichita city manager proposes eliminating no-bid construction projects.)

    Also, two years ago Key Construction proposed — and was awarded by the city council — a no-bid contract for a parking garage. But the city later put the contract to competitive bid. Key, which first bid $6 million, later bid $4.7 million. If the desire of the majority of the city council, including Mayor Carl Brewer, had been realized, Wichita taxpayers would have sent an extra — and unnecessary — $1.3 million to a politically-connected construction company.

    By the way, the mayor’s relationship with Wells means he should not have voted on this matter.

    Dave Burk, Dave Wells: These two were original partners in WaterWalk, which has received over $40 million in subsidy, with little to show for results.

    Dave Burk: He’s received many millions from many levels of government, but still thinks he doesn’t get enough. This is what we can conclude by his appeal of property taxes in a TIF district. Those taxes, even though they are rerouted back to him for his benefit, were still too high for his taste, and he appealed. The Wichita Eagle reported in the article (Developer appealed taxes on city-owned property): “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

    rebenstorf-quote-dave-burkA number of Wichita city hall officials were not pleased with Burk’s act. According to the Eagle reporting, Burk was not authorized to do what he did: “Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

    Council member Jeff Longwell was quoted by the Eagle: “‘We should take issue with that,’ he said. ‘If anyone is going to represent the city they obviously have to have, one, the city’s endorsement and … two, someone at the city should have been more aware of what was going on. And if they were, shame on them for not bringing this to the public’s attention.’”

    In a separate article by the Eagle on this issue, Wichita city manager Robert Layton said that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

    The manager’s quote is most directly damaging. In a tax increment financing (TIF) district, the city borrows money to pay for things that directly enrich the developers, in this case Burk and possibly his partners. Then their increased property taxes — taxes they have to pay anyway — are used to repay the borrowed funds. In essence, a TIF district allows developers to benefit exclusively from their property taxes. For everyone else, their property taxes go to fund the city, county, school district, state, fire district, etc. But not so for property in a TIF district.

    This is what is most astonishing about Burk’s action: Having been placed in a rarefied position of receiving many millions in benefits, he still thinks his own taxes are too high. Now he wants more city taxpayer subsidy.

    warren-bailout-poses-dilemma

    Bill Warren: In 2008 the Old Town Warren Theater was failing and its owners — Bill Warren being one — threatened to close it and leave the city with a huge loss on a tax increment financing (TIF) district formed for the theater’s benefit. Faced with this threat, the city made a no-interest and low-interest loan to the theater. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

    Besides Warren, you may — or may not — be surprised to learn that the theater’s partners included Dave Wells and Dave Burk, the same two men mentioned above. Also, Mayor Brewer’s relationship with Warren means he should not have voted on this matter.

  • In Wichita, a quest for campaign finance reform

    Actions of the Wichita City Council have shown that campaign finance reform is needed. Citizen groups are investigating how to accomplish this needed reform, since the council has not shown interest in reforming itself.

    Consider recent actions by the council and its members:

    The common thread running through these incidents? Council members voting to enrich their campaign contributors. Each of these — and there are others — are examples of a “pay-to-play” environment created at Wichita City Hall. It’s harmful to our city in a number of ways.

    First, overpriced no-bid contracts and other giveaways to campaign contributors isn’t economic development. It’s cronyism. It’s wasteful and abusive of taxpayers and erodes their trust in government.

    Second: Citizens become cynical when they feel there is a group of insiders who get whatever they want from city hall at the expense of taxpayers. At one time newspaper editorial pages crusaded against cronyism like this. But no longer in Wichita.

    Additionally, when it is apparent that a “pay-to-play” environment exists at Wichita City Hall, it creates a toxic and corrosive political and business environment. Companies are reluctant to expand into areas where they don’t have confidence in the integrity of local government. Will I find my company bidding against a company that made bigger campaign contributions than I did? If I don’t make the right campaign contributions, will I get my zoning approved? Will my building permits be slow-walked through the approval process? Will my projects face unwarranted and harsh inspections? Will my bids be subjected to microscopic scrutiny?

    We need laws to prohibit Wichita city council members from voting on or advocating for decisions that enrich their significant campaign contributors. A model law for Wichita is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    We’d also need to add — as does New Jersey law — provisions that contributions from a business owner’s spouse and children will be deemed to be from the business itself. Additionally the contributions of principals, partners, officers, and directors, and their spouses, are considered to be from the business itself for purposes of the law. These provisions are important, as many city council members in Wichita receive campaign contributions from business owners’ family members and employees as a way to skirt our relatively small contribution limits.

    Such campaign finance reform would not prohibit anyone from donating as much as they want (under the current restrictions) to any candidate. Nor would the law prevent candidates from accepting campaign contributions from anyone.

    This reform, however, would remove the linkage between significant contributions and voting to give money to the contributor. This would be a big step forward for Wichita, its government, and its citizens.

    Proponents see three paths towards campaign finance reform. One would be to press for a law in the upcoming session of the Kansas Legislature. Such a law would be statewide in scope, and could apply to city councils, county commissions, school boards, and other elective bodies.

    A second path would be to use the municipal initiative process, which was used by community water fluoridation advocates in Wichita this year. Under this process, a group writes a proposed ordinance. Then, it must collect about 6,200 valid signatures on petitions. If a successful petition is verified, the city council must either (a) pass the ordinance as written, or (b) set an election. For the fluoridation initiative the council voted to call an election, which was held as part of the November general election. (The initiative failed to obtain a majority of votes, so the proposed ordinance did not take effect.)

    There is also a third path, which is for the Wichita City Council to recognize the desirability of campaign finance reform and pass such an ordinance on its own initiative.

    If we take the affected parties at their word, this third path should face little resistance. That’s because politicians who accept these campaign contributions say it doesn’t affect their voting, and those who give the contributions say they don’t do it to influence votes.

    If politicians and contributors really mean what they say, there should be no opposition to such a law. Citizens should ask the Wichita City Council to pass a campaign finance reform ordinance that prohibits voting to enrich significant campaign contributors.

    Incidents

    In 2008 the Wichita City Council approved a no- and low-interest loan to Bill Warren and his partners. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

    When questioned about election donations:

    “I would never do anything because of a campaign contribution,” said [former council member Sharon] Fearey, who received $500 from David Burk and $500 from David Wells.

    “I don’t think $500 buys a vote,” said [former council member Sue] Schlapp.

    “One has nothing to do with the other,” [Wichita Mayor Carl] Brewer said.

    Also in 2008, the Reverend Dr. Kevass J. Harding wanted to spruce up the Ken-Mar shopping center at 13th and Oliver, now known as Providence Square. Near the end of June, Kevass Harding and his wife contributed a total of $1,000, the maximum allowed by law, to the campaign of Wichita City Council Member Lavonta Williams (district 1, northeast Wichita). This was right before Harding appeared before the city council in July and August as an applicant for tax increment district financing (TIF).

    These campaign contributions, made in the maximum amount allowable, were out of character for the Hardings. They had made very few contributions to political candidates, and they appear not to have made many since then.

    But just before the Ken-Mar TIF district was to be considered for approval, the Hardings made large contributions to Williams, who is the council member representing Ken-Mar’s district. Harding would not explain why he made the contributions. Williams offered a vague and general explanation that had no substantive meaning.

    In August 2011 the council voted to award Key Construction a no-bid contract to build the parking garage that is part of the Ambassador Hotel project, now known as Block One. The no-bid cost of the garage was to be $6 million, according to a letter of intent. Later the city decided to place the contract for competitive bid. Key Construction won the bidding, but for a price $1.3 million less.

    The no-bid contract for the garage was just one of many subsidies and grants given to Key Construction and Dave Burk as part of the Ambassador Hotel project. In Wichita city elections, individuals may contribute up to $500 to candidates, once during the primary election and again during the general election. As you can see in this table complied from Wichita City Council campaign finance reports, spouses often contribute as well. So it’s not uncommon to see the David and DJ Burk family contribute $2,000 to a candidate for their primary and general election campaigns. That’s a significant sum for a city council district election campaign cycle. Click here for a compilation of campaign contributions made by those associated with the Ambassador Hotel project.

    Council Member Jeff Longwell (district 5, west and northwest Wichita), in his second term as council member, led the pack in accepting campaign contributions from parties associated with the Ambassador Hotel project. For his most recent election, he received $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife. Total from parties associated with the Ambassador Hotel project: $6,000. When Longwell ran for Sedgwick County Commission this summer, these parties donated generously to that campaign, too.

    Council Member Lavonta Williams (district 1, northeast Wichita) received $5,000 from parties associated with the Ambassador Hotel: $3,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

    Wichita Mayor Carl Brewer received $5,000 from parties associated with the Ambassador Hotel: $4,500 from parties associated with Key Construction, and $500 DJ Burk, David Burk’s wife.

    Council Member and Vice Mayor Janet Miller (district 6, north central Wichita) received $3,500 during her 2009 election campaign from parties associated with the Ambassador Hotel: $1,500 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

    For his 2011 election campaign, Council Member Pete Meitzner (district 2, east Wichita) received $3,500 from parties associated with the Ambassador Hotel: $2,500 from parties associated with Key Construction, and $1,000 from David Burk and his wife.

    For his 2011 election campaign, Council Member James Clendenin (district 3, southeast and south Wichita) received $1,500 from parties associated with the Ambassador Hotel: $1,000 from parties associated with Key Construction, and $500 from David Burk and his wife.

    What citizens need to know is that the Wichita City Council was willing to spend an extra $1.3 million of taxpayer money to reward a politically-connected construction firm that makes heavy campaign contributions to council members. Only one council member, Michael O’Donnell, voted against this no-bid contract. No city bureaucrats expressed concern about this waste of taxpayer money.

    Finally: This summer while Longwell was campaigning for the Sedgwick County Commission, campaign contributions from parties associated with Walbridge, a Michigan-based construction company appeared on Longwell’s campaign finance reports. Why would those in Michigan have an interest in helping a Wichita City Council member fund his campaign for a county office? Would the fact that Walbridge is a partner with Key Construction on the new Wichita Airport terminal provide a clue?

    These contributions are of interest because on July 17, 2012, the Wichita City Council, sitting in a quasi-judicial capacity, made a decision in favor of Key and Walbridge that will cost some group of taxpayers or airport customers an extra $2.1 million. Five council members, including Longwell, voted in favor of this decision. Two members were opposed.

    On July 16 — the day before the Wichita City Council heard the appeal that resulted in Key Construction apparently winning the airport contract — John Rakolta, Chairman and Chief Executive Officer of Walbridge and his wife contributed $1,000 to Longwell’s campaign for Sedgwick county commissioner.

    Then on July 20, three days after the council’s decision in favor of Key/Walbridge, other Walbridge executives contributed $2,250 to Longwell’s campaign. Besides the Walbridge contributions, Key Construction and its executives contributed $6,500 to Longwell’s county commission campaign. Key and its executives have been heavy contributors to Longwell’s other campaigns, as well as to Wichita Mayor Carl Brewer and many other Wichita City Council members.

  • Claycomb connection to real estate developer criticized

    Claycomb connection to real estate developer criticized

    A Wichita developer makes generous campaign contributions to a city council candidate, raising questions about both parties. (more…)

  • TIF and other subsidies harm Wichita

    Everyone who cares about Wichita — the entire city, not just special interests — ought to be opposed to the continued use of tax increment financing (TIF) districts and other forms of subsidy that direct benefits to a small group at the expense of everyone else.

    Proponents of these programs such as Wichita Eagle editorial writer Rhonda Holman, most elected officials, and nearly all bureaucrats, need to justify these incentives. They make their case, of course, but the case is shallow. We need to look at research that studies these programs. We need to consider the effect of these programs on the city as a whole, and on the civic attitudes of Wichitans. When we do, we find that these programs just don’t deliver what they promise, unless you focus only on the special interest groups that feed off these programs. We also see that these programs contribute to the cynicism that is destructive to a civil society where people exist and trade harmoniously.

    What is the purpose? Development? Jobs?

    Some people want TIF because it promises development that otherwise would not happen. Others want the jobs that they see TIF create.

    The problem is that both promises are false — if you are able to look beyond stage one. There’s no doubt that things happen in TIF districts, usually. Buildings are built or renovated. Businesses open. People go to work.

    This simple analysis appeals to elected officials and newspaper editorial writers. But if we are concerned about the overall prosperity of our city, we need to look beyond the borders of the TIF district. When we do that, we come to a different assessment.

    Regarding the effect of TIF on overall development, economists Richard F. Dye and David F. Merriman have studied tax increment financing extensively. Their article Tax Increment Financing: A Tool for Local Economic Development states in its conclusion:

    TIF districts grow much faster than other areas in their host municipalities. TIF boosters or naive analysts might point to this as evidence of the success of tax increment financing, but they would be wrong. Observing high growth in an area targeted for development is unremarkable.

    So TIFs are good for the favored development that receives the subsidy — not a surprising finding. It’s what self-serving elected officials, bureaucrats, and newspaper editorial writers can see and focus on. But what about the rest of the city? Continuing from the same study:

    If the use of tax increment financing stimulates economic development, there should be a positive relationship between TIF adoption and overall growth in municipalities. This did not occur. If, on the other hand, TIF merely moves capital around within a municipality, there should be no relationship between TIF adoption and growth. What we find, however, is a negative relationship. Municipalities that use TIF do worse.

    We find evidence that the non-TIF areas of municipalities that use TIF grow no more rapidly, and perhaps more slowly, than similar municipalities that do not use TIF. (emphasis added)

    So if we are concerned about overall growth in Wichita, we need to realize that TIF simply shifts development from one place to another. The overall impact, according to uncontroverted research, is negative: less growth, not more.

    What about jobs? Paul F. Byrne of Washburn University authored a recent report titled Does Tax Increment Financing Deliver on Its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth. In its abstract we find this conclusion regarding the impact of TIF on jobs:

    Increasingly, municipal leaders justify their use of tax increment financing (TIF) by touting its role in improving municipal employment. However, empirical studies on TIF have primarily examined TIF’s impact on property values, ignoring the claim that serves as the primary justification for its use. This article addresses the claim by examining the impact of TIF adoption on municipal employment growth in Illinois, looking for both general impact and impact specific to the type of development supported. Results find no general impact of TIF use on employment. However, findings suggest that TIF districts supporting industrial development may have a positive effect on municipal employment, whereas TIF districts supporting retail development have a negative effect on municipal employment. These results are consistent with industrial TIF districts capturing employment that would have otherwise occurred outside of the adopting municipality and retail TIF districts shifting employment within the municipality to more labor-efficient retailers within the TIF district. (emphasis added)

    While this research might be used to support a TIF district for industrial development, TIF in Wichita is primarily used for retail development. And, when looking at the entire picture, the effect on employment is negative.

    Verge of corruption

    The ability and willingness of local elected officials to dish out TIF and other forms of subsidy places them, as Randal O’Toole has written, “on the verge of corruption.” In Wichita, David Burk and the principals of Key Construction make extensive use of political campaign contributions, and have benefited handsomely from TIF and other forms of subsidy. A recent analysis of campaign contributions by these parties to Wichita City Council members showed just how prevalent are these contributions.

    In Wichita city elections, individuals may contribute up to $500 to candidates, once during the primary election and again during the general election. As you can see in this table complied from Wichita City Council campaign finance reports, spouses often contribute as well. So it’s not uncommon to see the David and DJ Burk family contribute $2,000 to a candidate for their primary and general election campaigns. That’s a significant sum for a city council district election campaign cycle. Click here for a compilation of campaign contributions made by those associated with the Douglas Place project, a recent collaboration between Burk, Key Construction, and others.

    Council Member Jeff Longwell (district 5, west and northwest Wichita), in his second term as council member and with his heart set on becoming the next mayor, leads the pack in accepting campaign contributions from parties associated with the Douglas Place project. For his most recent election, he received $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife. Total from parties associated with the Douglas Place project: $6,000.

    Lavonta Williams, (district 1, northeast Wichita), who is also vice mayor, received $5,000 from parties associated with Douglas Place: $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

    Mayor Carl Brewer received $4,000 from parties associated with Douglas Place: $3,500 from parties associated with Key Construction, and $500 DJ Burk, David Burk’s wife.

    Council Member Janet Miller (district 6, north central Wichita) received $3,500 during her 2009 election campaign from parties associated with Douglas Place: $1,500 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

    For his 2011 election campaign, newly-elected Council Member Pete Meitzner (district 2, east Wichita) received $2,500 from parties associated with Douglas Place: $1,500 from parties associated with Key Construction, and $1,000 from David Burk and his wife.

    The people who make these contributions and the officeholders who receive them deny that they make any difference. That’s hard to believe. These donors don’t often contribute to candidates for the Kansas Legislature or U.S. Congress. That’s because these bodies don’t have the power to dish out the subsidies that the Wichita City Council does. I’d say these donors are acting rationally, in their self-interest.

    If you’re still not convinced, consider the case of Reverend Kevass Harding, who wanted to redevelop the Ken-Mar shopping center, and Wichita City Council member Lavonta Williams, (district 1, northeast Wichita), who is presently serving as vice mayor.

    As reported in 2009, Harding and his wife made campaign contributions to Williams. These campaign contributions, made in the maximum amount allowable, were out of character for the Hardings. They had made very few contributions to political candidates, and they appear not to have made many since then.

    But in June 2008, just before the Ken-Mar TIF district was to be considered for approval, the Hardings made contributions in the maximum allowable amount to Williams, who represents Ken-Mar’s district. Harding would not explain why he made the contributions. Williams offered a vague and general explanation that had no substantive meaning.

    The close linkage between these political contributions the awarding of money illustrates the need for pay-to-play laws in Wichita and Kansas. These laws impose various restrictions on the activities of elected officials and the awarding of contracts or other largesse to those who have made political contributions.

    Citizens become cynical when they feel there is a group of insiders — commonly called the “good ol’ boy network” — who get whatever they want from city hall at the expense of taxpayers. It’s surprising that the Wichita Eagle editorial board is either not aware of this, or doesn’t see it as a problem. In the meantime, our newspaper, along with those in the network of city hall insiders, continue to contribute to the destruction of civil society in Wichita.

    Additional Reading:

    • Wichita property taxes are high, leading to other problems: “An ongoing study by the Minnesota Taxpayers Association tells us that Wichita has high business property taxes. This may be a reason why the Wichita City Council feels it is necessary to offer relief from these taxes, but it is not an effective economic development strategy.”
    • Tax increment financing: The right tool for Wichita jobs?: “Tax Increment Financing (TIF) is an economic development tool that uses the expected growth (or increment) in property tax revenues from a designated geographic area of a municipality to finance bonds used to pay for goods and services calculated to spur growth in the TIF district. The analysis performed for this study found TIF does not tend to produce a net increase in economic activity; favors large businesses over small businesses; often excludes local businesses and residents from the planning process; and operates in a manner that contradicts conventional notions of justice and fairness. We recommend seeking alternatives to TIF and reforms to TIF that make the process more democratic and the distribution of benefits more fair to residents of TIF districts.”
    • Giving away the store to get a store: “Largely because it promises something for nothing — an economic stimulus in exchange for tax revenue that otherwise would not materialize — this tool is becoming increasingly popular across the country. Originally used to help revive blighted or depressed areas, TIFs now appear in affluent neighborhoods, subsidizing high-end housing developments, big-box retailers, and shopping malls. And since most cities are using TIFs, businesses such as Cabela’s can play them off against each other to boost the handouts they receive simply to operate profit-making enterprises.”
    • Wichita’s economic development strategy: rent seeking: “It is wealth, after all, that defines prosperity. Our goal ought to be to create an environment where everyone lives in an environment conducive to creating prosperity and wealth. But in a misguided effort, our city leaders, week after week, take actions that produce just the opposite.”
    • Wichita economic development: And then what will happen?: “Critics of the economic development policies in use by the City of Wichita are often portrayed as not being able to see and appreciate the good things these policies are producing, even though they are unfolding right before our very eyes. The difference is that some look beyond the immediate — what is seen — and ask “And then what will happen?” — looking for the unseen.
    • Wichita and its political class: “Discussion at a Wichita City Council meeting provided an opportunity for citizens to discover the difference in the thinking of the political class and those who value limited government and capitalism.”
    • Wichita on corporate welfare, again: “An award of $2.5 million by the City of Wichita to aircraft manufacturer Hawker Beechcraft to ward off a threatened move to Louisiana stands out as an example of corporate welfare given for its own sake, and not in response to any real threat.”
    • Wichitans mislead on Warren IMAX incentives: “With the possibility of another IMAX theater being built not too far from Wichita, we now know that Wichitans were mislead in awarding economic development incentives.”
    • Wichita again to bet on corporate welfare as economic development: “The Wichita City Council may take action that promotes corporate welfare and the city’s economic development policy.”
    • In Wichita and Kansas, economic development is not working: “The effort of Wichita and Kansas to retain Hawker Beechcraft, one of our leading employers and a Wichita institution, provides a lesson in the futility of corporate welfare as an economic development policy: Someone is usually willing to pay more. We would be much better off if we start transforming Kansas to a state where all companies are nurtured, not by bureaucratic and political oversight and handouts, but by a low taxing and spending environment, and a reasonable regulatory regime.”
    • Tax increment financing is not free money: “Cato Institute Senior Fellow Randal O’Toole has written extensively on the subject of urban planning, development, and tax increment financing (TIF) districts. The following article contains many points that the Wichita City Council may wish to consider as it considers expansion of a downtown Wichita TIF district at tomorrow’s council meeting.”

  • Kansas historic tax credits should end

    The Wichita Business Journal reports that without historic tax credits, some redevelopment projects might stop.

    In other words — the Business Journal isn’t quite so blunt — if taxpayers don’t give developers money, some of their projects might not be economically feasible. Or so the developers say.

    Spotlighted in Wichita Business Journal reporting is Dave Burk, a well-known developer in Wichita who specializes in getting the taxpayer to fund portions of his developments.

    Often the funding comes in the form of TIF district financing or special assessment financing used in ways it’s not normally used.

    These complicated financial arrangements serve to hide what’s really happening. Developers like Burk say that these financing schemes don’t cost government or the taxpayer anything. But they go to great lengths to secure them. In the case of Burk, he makes sure to make plenty of campaign contributions.

    But tax credits are pretty easy to understand. They excuse someone from paying taxes. If they’re refundable tax credits, the government will even send you a check.

    This is a lot different from a tax deduction, in which case you get to reduce your income. That usually leads to a reduced tax liability, but by a much smaller amount. Maybe even nothing, if your business has a loss for the year.

    Instead, tax credits reduce your tax liability on a dollar-for-dollar basis. And unless government reduces its spending by an equal amount, the rest of the taxpayers have to make up the difference.

    The Kansas Legislature recognizes this, and in an effort to save from losing some revenue in a tough budget year, placed a cap on the amount of tax credits that could be issued over the next two budget years.

    That’s what has Burk concerned. Without his gift from the taxpayers, he doesn’t know if he can complete his project.

    Tomorrow, though, something might happen to change his prospects. That’s when the legislature meets for its ceremonial closing. Sometimes actual business is done, and there’s some talk, according to Hawver’s Capitol Report, that legislative action could be taken to help subsidized developers like Burk.

    Let’s hope that the legislature decides in favor of free markets. If people want to live in historic buildings, let them pay the full cost of what it costs to produce these properties. Anything else means that the taxpayers at large pay for a privileged few like Burk and his tenants.

    Sources tell me that Burk continually has his hand out a city hall, looking for whatever subsidy he can get — even to the point of annoying former city manger Chris Cherches.

    It’s time to let free markets work. If Dave Burk has an idea he can sell to the public and make a heap of money, more power to him. But let’s stop the taxpayer-subsidized gravy train.

  • In Wichita, private tax policy on the rise

    In a free society with a limited government, taxation should be restricted to being a way for government to raise funds to pay for services that all people benefit from. An example is police and fire protection. Even people who are opposed to taxation rationalize paying taxes that way. But in the city of Wichita, private tax policy is overtaking our city.

    The Douglas Place project, a downtown hotel to be considered tomorrow by the Wichita City Council, makes use of several of these private tax policy strategies.

    By private tax policy, I mean that the proceeds of a tax are used for the exclusive benefit of one person (or business firm), instead of used for the benefit of all. And in at least one case, private parties are being allowed to determine the city’s tax policy at their discretion.

    The taxes collected by this private tax policy is still collected under the pretense of government authority. But instead of going to pay for government — things like police, fire, and schools — the tax is collected for the exclusive benefit of one party, not the public.

    In Wichita and across Kansas, one example of taxation being used for the benefit of one person or business is the Community Improvement District (CID). Under this program, the business collects an extra tax that looks just like sales tax. Except — the proceeds of the extra CID tax are funneled back for the exclusive benefit of the people who own property in the district. The Douglas Place project is asking to collect an extra tax of two cents per dollar for its own benefit.

    CIDs are a threat to unsuspecting customers who likely won’t be aware of the extra tax they’ll be paying until after they complete their purchases, if at all. Wichita decided against disclosing to citizens the amount of tax they’ll be paying with signage on stores. Instead, the city settled for a sign that says nothing except to check a city website for information about CIDs.

    CIDs also present the City of Wichita as a high-tax place to live and do business. It’s a risk to our city’s reputation. Especially when you consider the Jeff Longwell strategy, which is that since these taxes are often used by hotels and other businesses that cater to visitors, Wichitans don’t pay them as much as do visitors.

    Another example of private tax policy is when a tax such as Wichita’s hotel guest tax is redirected from its original goal. According to a description of the Tourism and Convention Fund in the city’s budget, the goal of the guest tax is to “support tourism and convention, infrastructure, and promotion of the City.” Its priorities are to be “Fund priorities are: 1) debt service for tourism and convention facilities, 2) operational deficit subsidies and 3) care and maintenance of Century II.”

    But in the case of the Douglas Place project, the city is asking for a charter ordinance to be passed that would route 75 percent of this tax directly back to the Douglas Place owners. That’s not the proclaimed purpose of the guest tax, unless we consider private hotels to be part of the city’s tourism infrastructure. (I think some people think that way.)

    At least in the case of Douglas Place the city is being more upfront with its citizens. The charter ordinance requires a two-thirds vote of the city council for passage, a higher bar than in the past. And, the city isn’t borrowing money to give to the hotel. That’s what the city has done in the past, as in the case of the Fairfield Inn & Suites Wichita Downtown that is part of the WaterWalk project. One of the many layers of subsidy going in to that hotel was that the city simply gifted the hotel $2,500,000, to be paid back by the hotel’s guest tax receipts.

    Some will say that’s not really a gift, as the hotel will pay back the loan. But the loan is being repaid with taxes the hotel — more properly, its guests — must pay anyway. This is public taxation for private enrichment.

    If you need further evidence that the city is turning over taxation to private hands, consider this: The charter ordinance is subject to a protest petition, and if sufficient signatures are gathered, the city council would have to either overturn the ordinance or hold an election to let the people decide.

    Now, if such a tax is truly in the public interest, the city would hold such an election and bear its costs itself. But that’s not the case. In the agreement between the city and the Douglas Place developers, we see this: “If Developer requests a special election solely for the purpose of passing the charter ordinance in the event a sufficient protest petition is submitted, Developer shall reimburse the City for the actual out of pocket costs and expenses of conducting such election.”

    In other words, the city is turning over to private interests the decision as to whether to have such an election. At least the citizens of Wichita won’t have to pay for it, if such an election happens.

    Another example of private tax policy that the Douglas Place project is using is Tax increment financing, or a TIF district. This mechanism routes property taxes back to the development. In the case of Douglas Place, $3,325,000 of its own property taxes are being used to pay for its parking garage. That’s a deal most citizens can’t get.

    Normally property taxes are used for the general operation of government. Not so in TIF districts, another example of public taxation for private enrichment. Again, these are taxes that the property must pay anyway.

    Private taxation funds political entrepreneurship

    In Wichita, especially in downtown, we see the rise of private tax policy, that is, the taxation power of government being used for private purposes. This private tax policy is pushed by Wichita’s political entrepreneurs. These are the people who would rather compete in the realm of politics rather than in the market.

    Examples of Wichita’s political entrepreneurs include the developers of Douglas Place: David Burk of Marketplace Properties, and the principals of Key Construction.

    Competing in the political arena is easier than competing in the market. To win in the political arena, you only have to convince a majority of the legislative body that controls your situation. Once you’ve convinced them the power of government takes over, and the people at large are forced to transfer money to the political entrepreneurs. In other words, they must engage in transactions they would not elect to perform, if left to their own free will.

    In the free marketplace, however, entrepreneurs have to compete by offering products or services that people are willing to buy, free of coercion. That’s hard to do. But it’s the only way to gauge whether people really want what the entrepreneurs are selling.

    One of the ways that political entrepreneurs compete is by making campaign contributions, and the developers of Douglas Place have mastered this technique. Key Construction principles contributed $13,500 to Mayor Carl Brewer and four city council members during their most recent campaigns. Council Member Jeff Longwell alone received $4,000 of that sum, and he also accepted another $2,000 from managing member David Burk and his wife.

    All told, Burk and his wife contributed at least $7,500 to city council candidates who will be voting whether to give Burk money. Burk and others routinely make the maximum contribution to all — or nearly all — candidates, even those with widely varying political stances. How can someone explain Burk’s (and his wife’s) contributions to liberals like Miller and Williams, and also to conservatives like Longwell, Meitzner, and former council member Sue Schlapp?

    The answer is: Burk will be asking these people for money.

    Wichitans need to rise against these political entrepreneurs and their usurpation of a public function — taxation — for their own benefit. The politicians and bureaucrats who enable this should realize they should be serving the public interest, not the narrow and private enrichment of the few at the cost of many.

  • Wichita turns taxation over to private interests

    In a free society with a limited government, taxation should be restricted to being a way for government to raise funds to pay for services that all people benefit from. But in the city of Wichita, taxation for private gain is overtaking our city.

    The Ambassador Hotel, part of a project known as Douglas Place, makes use of several of these private tax policy strategies. By private tax policy, I mean that the proceeds of a tax are used for the exclusive benefit of one person (or business firm), instead of used for the benefit of all. In one example related to this hotel, the Wichita City Council is allowing private parties to determine the city’s tax policy at their discretion, not the city’s.

    The tax in question is Wichita’s hotel guest tax. According to a description of the Tourism and Convention Fund in the city’s budget document, the goal of the guest tax is to “support tourism and convention, infrastructure, and promotion of the City.” Its priorities are to be “Fund priorities are: 1) debt service for tourism and convention facilities, 2) operational deficit subsidies and 3) care and maintenance of Century II.”

    But in the case of the Ambassador Hotel project, the city passed a charter ordinance that would route 75 percent of this tax directly back to the hotel owners for their own use. That’s not the proclaimed purpose of the guest tax.

    Instead, this is public taxation for private enrichment.

    Those who benefit from things like this and tax increment financing (TIF) districts say they aren’t really benefiting, as they are, in fact, paying taxes.

    But when taxes you must pay are routed back to you for your own exclusive use, what else can you call it except capture of a public function for your own personal use?

    Failure of Wichita city leadership

    If you need further evidence that Wichita is turning over taxation to private hands, consider this: The charter ordinance is subject to a protest petition. In the normal case, if sufficient signatures are gathered, the city council would have to either a) overturn the ordinance, or b) hold an election to let voters decide whether the ordinance takes effect. An effort that I have been involved with expects to turn in enough signatures this week to force this decision.

    Now, if this tax policy regarding the Ambassador Hotel is truly in the public interest, we would expect that the city council would decide whether to hold such an election and bear its costs itself. But that’s not the case. In the agreement between the city and the Douglas Place developers, we see this: “If Developer requests a special election solely for the purpose of passing the charter ordinance in the event a sufficient protest petition is submitted, Developer shall reimburse the City for the actual out of pocket costs and expenses of conducting such election.”

    In other words, the city is turning over to private interests the decision as to whether to have such an election, and also the responsibility for paying for it. This is a failure of Wichita city leadership to do the things that government, not private interests, should do.

    Private taxation funds political entrepreneurship

    In Wichita, especially in downtown, we see the rise of private tax policy, that is, the taxing power of government being used for private purposes. The above example is just one example. This private tax policy is pushed by Wichita’s political entrepreneurs. These are the people who would rather compete in the realm of politics rather than in the market.

    Examples of Wichita’s political entrepreneurs include the developers the Ambassador Hotel: David Burk of Marketplace Properties, and the principals of Key Construction.

    Competing in the political arena is easier than competing in the market. To win in the political arena, you only have to convince a majority of the legislative body that controls your situation. Once you’ve convinced them the power of government takes over, and the people at large are forced to transfer money to the political entrepreneurs. In other words, they must engage in transactions they would not elect to perform, if left to their own free will.

    In the free marketplace, however, entrepreneurs have to compete by offering products or services that people are willing to buy, free of coercion. That’s hard to do. But it’s the only way to gauge whether people really want what the entrepreneurs are selling. It’s also the way that wealth and prosperity are created. Government spending on business does not have this effect.

    One of the ways that political entrepreneurs compete is by making campaign contributions, and the developers of Douglas Place have mastered this technique. Key Construction principles contributed $13,500 to Mayor Carl Brewer and four city council members during their most recent campaigns. Council Member Jeff Longwell alone received $4,000 of that sum, and he also accepted another $2,000 from managing member David Burk and his wife.

    All told, Burk and his wife contributed at least $7,500 to city council candidates who will be voting whether to give Burk money. Burk and others routinely make the maximum contribution to all — or nearly all — candidates, even those with widely varying political stances. How can someone explain Burk’s (and his wife’s) contributions to liberals like Miller and Williams, and also to conservatives like Longwell, Meitzner, and former council member Sue Schlapp?

    The answer is: Burk will be asking these people for money.

    Wichitans need to rise against these political entrepreneurs and their usurpation of a public function — taxation — for their own benefit. The politicians and bureaucrats who enable this should realize they should be serving the public interest, not the narrow and private enrichment of the few at the cost of many.

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