Voice For Liberty

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  • The Wichita Eagle on naysayers: a disservice to Wichita

    Yesterday’s op-ed by Rhonda Holman in The Wichita Eagle reveals a crucial need for a newspaper with at least one conservative voice on its editorial board (Say ‘no’ to naysayers, October 9, 2011). Here are a few ways in which Holman and her newspaper’s editorial section are wrong about downtown Wichita development and a few other issues, and how the op-ed is a disservice to the people of Wichita:

    The real world, according to Holman

    While Holman cites the “real world” as the need to pour massive subsidy into downtown Wichita, I might ask this question: Why is downtown Wichita such an unattractive investment that lavish subsidy must be heaped upon those who invest there?

    Actually, the broader question needs to be asked, as the city often subsidizes development all over town. An example is the new Cabela’s store, an example of “greenfield” development that supposedly sucks away all the money from downtown, and which the elitists despise. In that case the city lent its taxing authority to Cabela’s to be used for its own purposes. A more direct example was when the city granted, through a forgivable loan, $48,000 to The Golf Warehouse, located in a suburban office park.

    So what is it about Wichita? Won’t anyone invest in Wichita without subsidy?

    It turns out, fortunately, that many do.

    In the “real world,” there’s a lot of development going on. It just isn’t always taking place where Holman and other elites think it should be taking place.

    Interestingly, when the elites advocate for public funding of their goals, their own actions often belie their true preferences. For example, a lot of development in Wichita is taking place near Holman’s suburban home. Many other supporters of subsidized downtown development don’t live anywhere near downtown — or even in Wichita, in at least two examples.

    Why this building?

    There’s much more in Holman’s article that deserves discussion. For example, Holman writes: “The Union National Bank building is a prime example: If it could be developed without the use of public tools, it wouldn’t still be empty after 12 years.” Underlying this statement is the assumption that this property should be developed. I don’t know where she and the supporters of subsidized downtown development get these ideas. What is it about this property that gives it priority over other properties in the city or downtown?

    If Holman makes the case that this small piece of land deserves massive public spending to support its development, can’t the same argument be made for every other vacant building or empty plot of land in downtown Wichita? We can anticipate that it will be.

    Scrutiny, by cheerleaders only

    Holman praises the scrutiny that the project has undergone, writing that the project has been “vetted by a public-private evaluation team.” By my reckoning, the committee that performs this function doesn’t have a single member who is skeptical of subsidies for downtown development. Can’t these people tolerate even one person who might voice dissent?

    Further, that committee decided to approve the project despite the involvement of David Burk of Marketplace Properties. Holman’s own newspaper reported this last year: “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. … 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.”

    The development agreement for the current project contains restrictions on the type of behavior that Burk has exhibited in the past. Call it the “Burk clause.”

    Election as referendum?

    Holman claims that the recent spring city elections were a referendum on downtown, and that subsidized downtown development won. (Here again Holman doesn’t make a distinction between “development” and “subsidized development.”)

    But elections are a decidedly poor way to make these decisions. For one thing, policy regarding subsidized downtown development is just one issue that candidates ran on. Voters have to vote for the entire package. They can’t pick and choose among issues, and it’s a reason why we need to leave more economic activity in the realm of markets — where people can pick and choose what they want — rather than turning it over to politics.

    Then, there’s the low turnout for these elections. In the past, Holman described the turnout for the spring primary as “depressingly low.” But now — since the results largely fit her ideology — she describes the election is a “referendum.”

    Then, there’s this: A recent Rasmussen poll carried the headline: “Just 6% Think Most Politicians Keep Their Campaign Promises.” Elaborating, the pollster explained: “Voters remain overwhelmingly convinced that most politicians won’t keep their campaign promises, but they’re a little less convinced that their elected officials deliberately lie.”

    As shown in my reporting of one of the first times two new city council members faced a test, they didn’t fare well at all (Wichita forgivable loan action raises and illustrates issues):

    Politically, Wichitans learned today the value of promises or statements made by most candidates while campaigning. Most candidates’ promises along with $3.75 will get you a small cappuccino at Starbucks — if you don’t ask for whipped cream.

    Particularly interesting is the inability of politicians to admit they were wrong, or that they made a mistake, or that they were simply uninformed or misinformed when they made a campaign promise or statement. … City council members Clendenin and Meitzner could not bring themselves to admit that their votes today were at odds with their statements made while campaigning. This lack of honesty is one of the reasons that citizens tune out politics, why they have such a cynical attitude towards politicians, and perhaps why voter turnout in city elections is so low.

    As one young Wichitan said on her Facebook page after sharing video of the three new council members today, obviously referring to city council district 2’s Pete Meitzner: “How to use your mouth: 1. Campaign under the guise that you are a fiscal conservative. 2. Insert foot.

    Finally, there are the out-sized campaign contributions made by those who ask the city council for money. See Wichita City Council campaign contributions and Douglas Place for details on the campaign contributions made by these developers.

    One more thing: If Holman is advocating using the results of elections as a measure of city sentiment, why oppose this election, where the ballot question addresses one issue, and there can be no confusion as to what the voters mean?

    The naysayers

    Holman, as do many downtown supporters, falsely frames the issue. She writes: “To oppose the Ambassador project is, in effect, to oppose downtown redevelopment.” She uses, as does Mayor Carl Brewer, the term “naysayer.” They don’t mean it as a compliment.

    What I — and the people I ally myself with — oppose is subsidized development. We oppose this whether it is downtown, suburban, or elsewhere. As it turns out, we can’t even have an honest assessment of the level of public involvement in the current project under consideration. While the City of Wichita employs a very narrow definition of public involvement, a more realistic look shows that the hotel benefits from $15,470,000 in public money to get started, and then $321,499 per year for the first five years, with smaller amounts for 22 years.

    Saying no to government intervention doesn’t mean saying no to progress. It does mean saying “no” to the self-serving plans of politicians and bureaucrats and the crony capitalists who seek to profit from political entrepreneurship.

    It means saying “no” to Wichita’s political entrepreneurs, who seek to earn profits through government coercion rather than meeting the needs of customers in the marketplace. It means saying “no” to the public-private partnership, where all too often it is the risk that is public and the profit that is private.

    So yes, I guess I and Wichita’s other naysayers are saying “no” to a lot of things.

    But what we’re saying “yes” to is liberty and freedom. We’re saying “yes” to a civil society that respects the rich diversity of human individuality instead of government planning and bureaucracy. We’re saying “yes” to free people cooperating voluntarily through free markets rather than forced government transfers from taxpayers to politically-favored individuals and programs.

    We’re saying “yes” to consumers choosing which businesses in Wichita thrive, rather than politicians on the city council — and their elitist sycophants — choosing. We’re saying “yes” to people making their own choices, rather than government “incentivizing” the behavior it desires through TIF districts and tax abatements, those incentives being paid for by taxpayers.

  • Wichita waltzing waters dedication a chance to reflect

    This week there will be two dedication ceremonies for the “Waltzing Waters” display at Wichita’s WaterWalk. One is an invitation-only affair for VIPs, while the other is open to the public. While these events are promoted as celebrations, we might use this opportunity to review the history and impact of this project that has absorbed many millions of taxpayer subsidy with few results.

    In 2009 a Wichita Eagle editorial started with this: “Seven years into a project that was supposed to give Wichita a grand gathering place full of shops, restaurants and night spots as well as offices and condos, some City Council members and citizens remain skeptical at best about WaterWalk’s ability to deliver on its big promises. … True, the skepticism to date is richly deserved.”

    The editorial went on to report that public investment in this project has risen to $41 million.

    In any case, there’s little to show for this investment. Even the proposal for the redevelopment of downtown Wichita from the planning firm Goody Clancy realizes that WaterWalk is a failure:

    Indeed, Water Walk might be struggling to fill its space because it has, simply put, hit a ceiling: it is focusing on food and fun, and perhaps there is room for only one such district (Old Town) in Downtown Wichita. The Arena could help in this regard, but until the publicly subsidized Water Walk is a rousing success, it might not make sense to split the pie still further.

    After all the public money put into WaterWalk, in order to get anything else, we’ll probably have to give even more. In 2010, in order to build a Marriott Fairfield Inn and Suites Hotel at WaterWalk, several subsidies were used, including a $2.5 million cash contribution from the City of Wichita. See Waterwalk hotel deal breaks new ground for Wichita subsidies. Will anything else be built at WaterWalk without similar consideration?

    So taxpayers deserve a break and a celebration. Finally, the fountains, purchased in 2008 for $1.6 million, will be working. The entire fountains project cost $3.5 million, says a Wichita city document.

    Waltzing Waters VIP invitation. Click here for a larger version.

    But do VIPs deserve a special celebration? With drinks and hors d’oeuvres, with a desert bar after? Many of these VIPs will be the elected officials and bureaucrats responsible for WaterWalk, a project emblematic of the failure of government planning. Others will be the beneficiaries of Wichita taxpayer subsidies. They should be apologetic, not celebratory. Hopefully the expenses of this event will be borne privately, and not by taxpayers. But that brings up another issue: the pay-to-play environment that exists in Wichita.

    With this glaring example of failure of a public-private partnership staring right at us in downtown Wichita, why do we want to plan for more of this? Shouldn’t we at least wait until WaterWalk is finished (if that ever happens) before we go down the path of throwing more public investment into the hands of subsidy-seeking developers?

    At minimum, we ought to insist that the developers of the WaterWalk project be excluded from any consideration for further taxpayer subsidy. The WaterWalk development team: Dave Burk, Marketplace Properties, LLC; Jack P. DeBoer, Consolidated Holdings, Inc.; Gregory H. Kossover, Consolidated Holdings, Inc.; David E. Wells, Key Construction, Inc.; and Tom Johnson, CRE, WaterWalk LLC need to recognize their failure and the tremendous amount they have cost the Wichita taxpayer. Some of these parties are no longer involved in WaterWalk, but they harm they caused lingers. Some of these parties have received millions in subsidies from the city since then, including a no-bid construction contract awarded to Key Construction. When that contract was put out to public bid, city taxpayers saved $1.3 million on a $6 million project. See No-bid contracts a problem in Wichita.

    Some received a no-interest and low-interest loan from the city to prop up a failing TIF district, and Burk appealed property valuations in a way that caused a tax increment financing district to fall behind.

    The Wichita Eagle reported: “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. … 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.”

    In a later story the Eagle reported “A special tax district formed by Wichita to assist in the development of the Old Town cinema project can’t cover its debt payments because the developers — including the city itself — petitioned a state court and got their property taxes reduced, records show. Now, taxpayers could be on the hook for $190,000 that had been projected to have come from within the cinema district.”

    Wichita taxpayers should be relieved that at least they’re finally getting something for their investment. Let’s use this time, however, to learn the lessons of WaterWalk and centralized government planning.

  • For Wichita Eagle, no concern about relationships

    For Wichita Eagle, no concern about relationships

    Should the Wichita Eagle, a city’s only daily newspaper and the state’s largest, be concerned about the parties to its business relationships?

    It’s a question that the Wichita Eagle should be considering. But the newspaper’s top executives seem to have no concern.

    On February 14 I sent a message to the publisher and executive editor of the Wichita Eagle expressing my concerns about the newspaper’s future landlords. That letter appears below. After several follow-up attempts by email and telephone, neither would respond.

    Sent I sent this message, I’ve found I was mistaken about the ownership of the building to where the Eagle will move and become a tenant. Brandon Steven is not an owner. I had relied on Eagle reporting1 from January, naming Steven as an owner. The reporter confirmed to me that was an error.

    An error in the digital archives of the Wichita Eagle which could easily be corrected.

    Of note, the Eagle portrays itself as a digital entity. One of the things about material published digitally is it can be easily corrected. As of today, the erroneous story from January 3 has not been corrected, even though the reporter knows she made an error.

    Is it important that a newspaper avoid business relationships or entanglements with parties that are frequently in the news? I’ve been told that the Eagle has to rent from someone, and Wichita is a small town. Well, not really. The Eagle owns its current building, which eliminated the relationship with a landlord. And if the newspaper wants to be a rental tenant, it could rent from the many landlords who are not frequent newsmakers, especially those that the Eagle needs to hold accountable.

    This is a sad episode for the Eagle. When Eagle reporters ask someone about uncomfortable topics and the subject does not respond to messages, the newspaper reports that, and in a negative light. Here, the top two executives at the Eagle would not comment on something they may be uncomfortable discussing. I think we deserve a newspaper with greater capacity for self-examination, and one whose executives are responsive to legitimate concerns.

    Following, the message I sent. Note the corrections indicated in footnotes.

    February 14, 2017

    Mr. Roy Heatherly
    Mr. Steve Coffman
    The Wichita Eagle

    I’m writing because I’m concerned about some issues regarding the Wichita Eagle and its news coverage.

    Specifically, I’m concerned about the Eagle entering into business arrangements with the parties who purchased the Eagle building, and then becoming a tenant of the same parties.2

    The three parties are Brandon Steven, Dave Wells, and David Burk. While the Eagle is certainly free to do business with anyone it wants to, these three men are newsmakers that the Eagle has covered in the past, and will likely need to cover in the future.

    Mr. Heatherly, you may remember that last year at a Wichita Pachyderm Club meeting I asked you about the arrest of Brandon Steven (although I did not use his name), and why the Eagle did not cover this news. Other newspapers did, including the Topeka Capital-Journal and The Morning Sun in Pittsburg.3 4 Those newspapers thought the item newsworthy as Steven had recently been an applicant for a Kansas casino license, and factors such as a person’s reputation are relevant to these applications. Many thought it curious that the Eagle did not report this news.

    Regarding David Burk, he is a continual newsmaker in Wichita, and not always in a positive way. A notable incident was his appeal of property taxes on property located within a tax increment financing district, which defeats the purpose of TIF.5 6 Worse, he misrepresented himself as an agent of the city in order to obtain this benefit. When the Eagle reported on this, it rated designation of “special report.” Other than this, Burk is a newsmaker in that he has, for many years, made large and regular campaign contributions to many city council members, and has received much subsidy from the city through many different programs.

    For Dave Wells, a principal of Key Construction, he is often in the news for the same reasons as Burk: Large and continual campaign contributions, and a frequent recipient of subsidy. A particularly troubling matter involving Key Construction and public policy occurred in 2012, regarding the awarding of the contract for the new Wichita air terminal, a contract worth around $100 million. Key was one of the parties pursuing the contract. We learned that Key and its partners were making campaign contributions to one Wichita city council member, Jeff Longwell, immediately before and after he participated in a council vote on awarding the contract to Key.7 Several months later after additional campaign finance reports were filed, we saw that Key made contributions to other council members during the run-up to the contract dispute.8

    When it was announced that the Eagle was selling its building to these parties, I was not comfortable with this transaction. But it was a one-time deal. Later we learned that the Eagle is to become a tenant of the same parties,9 a business relationship that is likely to last for a long time.

    When the Eagle gives these parties free publicity in future news stories, will readers need to be concerned about the motivation for the Eagle printing the stories?

    But more important: When these parties do something wrong, will the Eagle vigorously pursue an investigation? An investigation against its landlord?

    I hope you can understand my concern.

    I would appreciate receiving comments on this matter for a story I am writing for the Voice for Liberty. In addition, if either of you would like to appear on WichitaLiberty.TV to discuss that matter, we can do that too.

    Thank you,
    Bob Weeks

    —
    Notes

    1. Rengers, Carrie. Wichita Eagle signs deal for new downtown headquarters. January 3, 2017. http://www.kansas.com/news/business/article124312049.html ↩
    2. An error. See introduction. ↩
    3. Kansas casino bidder Brandon Steven busted for public nudity. Topeka Capital-Journal, October 1, 2015. http://cjonline.com/blog/tim-carpenter/2015-10-01/kansas-casino-bidder-brandon-steven-busted-public-nudity. ↩
    4. Castle Rock developer arrested. The Morning Sun, October 8, 2015, http://www.morningsun.net/article/20151008/NEWS/151009892.
      ↩
    5. Developer appealed taxes on city-owned property. Wichita Eagle, February 14, 2010. http://www.kansas.com/news/special-reports/article1024583.html. ↩
    6. Report: Errors made in Old Town Cinema district tax appeal. Wichita Eagle, March 10, 2010. http://www.kansas.com/news/local/article1027324.html. ↩
    7. Sedgwick County Commissioner Karl Peterjohn questions out-of-state contributions to challenger Jeff Longwell. Wichita Eagle, August 1, 2012. http://www.kansas.com/news/politics-government/article1096574.html. ↩
    8. Campaign contributions show need for reform in Wichita. Voice for Liberty, January 11, 2013. https://wichitaliberty.org/wichita-government/campaign-contributions-show-need-for-reform-in-wichita/. ↩
    9. An error. See introduction. ↩
  • Old Town Cinema TIF update

    Old Town Cinema TIF update

    A Wichita city report provides a somber look at the finances of a tax increment financing district.

    The City of Wichita Department of Finance has prepared an update on the financial performance of the Old Town Cinema Tax Increment Financing (TIF) District. There’s not much good news in this document. The financial performance would be worse if the city had included the costs of the no-interest and low-interest loan made to the owners of property in this TIF district. But it doesn’t appear that those costs are included. Here’s an excerpt from the report:

    In 2000, the appraised value of the southeast retail building and the Warren Theatre declined 12% (from $4.5 to $3.9 million) and 33% from ($4.4 to $2.9 million), respectively. These declines occurred as a result of property tax appeals, which were made by the TIF District’s primary developer. In addition, the total appraised value of the northeast and southeast retail buildings and the Warren Theatre remains more than $3.6 million below estimates in the project plan and overall values have not yet recovered to pre-2009 levels.

    The “property tax appeals” referred to in this paragraph are the doing of David Burk. The Wichita Eagle reported at the time: “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.”

    Several city officials expressed varying degrees of outrage with Burk’s action, with the city manager telling the Eagle that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

    Since then the city has granted several forms of subsidy to Burk and his partners.

    The report from the finance department also told of problems with parking revenue:

    Parking Revenue – The project plan assumed sufficient parking revenue cash flow over a fifteen-year period to provide $1.1 million towards principal debt obligations, assuming an interest rate of 4.5%. The Old Town Cinema TIF Fund has received substantially less parking revenue than was expected in the project plan. In some years, the TIF Fund has received no revenue from parking, and the highest amount received in any year was $51,130 (in 2008). From 2007, when the District first began receiving parking revenue, through 2013, a total of $153,130 in parking revenue has been transferred to the TIF Fund. Based on historical experience, additional parking revenue is not assumed and total parking revenue from 2004 to 2019 is conservatively projected at $153,130.

    Later on, the report holds this:

    Parking revenue collections are also substantially less than projected, because fees have not been increased as originally planned. The City’s general parking fee, which predates the Old Town Cinema TIF District, started at $7.50 per parking space per month. The fee was to increase to $25 per month over an eighteen-year period, with increases starting in approximately1996, according to Property Management. Fee increases never occurred, which were needed to pay for City parking activities. The general City fee differed slightly from that originally charged in the Old Town Cinema District, because the District initially charged a $10 per month fee, but this was reduced in about 2009 to $7.50 per month consistent with the parking fee charged elsewhere in the City, again according to Property Management.

    The report also contains several financial statements. These statements do not contain a form of off-the-books support given to this TIF district. That was the no-interest and low-interest loan made to the Warren Theater, estimated to cost the city $1.2 million.

    Click here to open the city’s report in a new window.

  • In Wichita, historic preservation tax credits an inefficient form of developer welfare

    As part of the subsidy plan for Douglas Place, a downtown Wichita hotel being proposed, developers plan to make extensive use of historic preservation tax credits to fund their project. This form of developer welfare, besides being inefficient, is largely hidden from public view.

    According to Allen Bell, Wichita’s Director of Urban Development, the project’s team, which is lead by David Burk, plans to tap $3.8 million in state tax credits and $3.5 million in federal tax credits, for a total of $7.3 million in this form of subsidy.

    Tax credits may be a mystery to many, but there is no doubt as to their harmful effect on state and federal budgets. When using tax credits, the government, conceptually, issues a slip of paper that says something like “The holder of this document may submit it instead of $500,000 when making a tax payment.”

    This is a direct cost to the government, according to both reason and the Kansas Division of Legislative Post Audit. Last year, after conducting an audit of Kansas tax credit programs, auditors explained: “Tax credits, which the government offers to try to induce certain actions by the taxpayer, reduce income tax revenues because they are subtracted directly from the amount of taxes due.” (emphasis added)

    The audit found that in 2001, when the Kansas historic preservation tax credit program was started, the anticipated cost to the state was about $1 million per year. By 2007, the actual cost to the state was reported at almost $8.5 million.

    Further, the audit found what many already knew: tax credit aren’t an efficient way of transferring subsidy to developers. Most of the time, the developers sell the credits to someone else at a discount, as the audit explains: “The Historic Preservation Tax Credit isn’t cost-effective. That credit works differently than the other three because the amount of money a historic preservation project receives from the credit is dependent upon the amount of money it’s sold for. Our review showed that, on average, when Historic Preservation Credits were transferred to generate money for a project, they only generated 85 cents for the project for every dollar of potential tax revenue the State gave up.”

    The audit concluded this is not efficient: “That’s not a cost-effective means of generating funds for these projects because 15% of the money gets pulled out and never actually goes for preservation activities.”

    (Besides this efficiency problem the audit also found that the Kansas Department of Revenue was not accurately tracking the tax credits after their issue. See Kansas historic preservation tax credits audit reveals inefficiency, data problems.)

    In the case of the Douglas Place project in Wichita, the inefficiencies that Legislative Post Audit found are present. According to Bell, the developers plan to sell the tax credits for 87 cents on the dollar. So they’re doing a bit better than the average project.

    Still, Kansas taxpayers will give up $3.8 million in tax revenue in order to give Burk and his team about $3.3 million cash. Federal taxpayers will give up $3.5 million in order to give Burk $3 million.

    And it is a gift. It’s not an exemption from paying property or sales taxes, or letting a hotel keep 75 percent of the guest tax it generates, or tax increment financing for a garage, or the state charging customers extra sales tax that the hotel keeps, or sweetheart lease deals. Burk and his partners are getting all that, too.

    The tax credits stand out as a direct transfer of money from taxpayers to private parties. But being accomplished through the tax system shrouds the process in mystery. And, no direct action is required by any legislative body. The tax credit program is in place. The developer applies, and if accepted, the credits are granted. No one — at least no one elected by and accountable to voters — votes to grant the specific credits.

    The historic preservation tax credit program, in a short time, has grown from a program designed to help spruce up a few old buildings here and there to a developer welfare program on steroids. The Drury Plaza Hotel Broadview in downtown Wichita benefited from this program too, costing Kansas taxpayers over $4 million to pay for its tax credits, and that’s on top of other forms of subsidy.

  • For Wichita city hall, ‘stakeholder’ has a narrow meaning

    Recently the City of Wichita held a stakeholder meeting regarding Community Improvement Districts and the city’s policies regarding them.

    While the term “stakeholder” is vague and means different things to different people, you might think that such a gathering might include representatives from the community at large. In an effort to achieve diversity, you know.

    Instead, the meeting was stacked almost exclusively with those who have an interest in extracting as much economic subsidy as possible from the city.

    There are a few exceptions, notably Wichita developer Johnny Stevens, who is outspoken in his belief in market-driven development. Stan Longhofer is an academic at Wichita State University, and the last time he offered advice to the city council (at least publicly) the council didn’t take his advice, even though they paid him well for it.

    There may be a few other exceptions, but most of the people on this list have benefited from various forms of taxpayer subsidy. Some are presently applying for more.

    One name that is surprising to see on this list is Dave Burk. Earlier this year the Wichita Eagle reported this: “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.”

    After this, I don’t know why the city would be interested in anything Dave Burk has to say.

    When ordinary citizens of Wichita wonder if their voice is valued, or when they wonder if Wichita city hall is overrun by a “good ol’ boy” network of insiders who get what they want from the city, this meeting is additional evidence to help them decide.

    Here’s the list of invitees to the stakeholder meeting:

    Cathy Erickson, Dave Burk, Dave Lundberg, Doug Rupe, Grant Tidemann, Jerry Jones, Johnny Stevens, Larry Weber, Brad Saville, Christian Ablah, Greg Ferris, Jeff Fluhr, Calvin Klaasen, Jay Maxwell, Jeff Walenta, Jim Korroch, Korb Maxwell, Mert Buckley, Robert Snyder, Stan Longhofer, Tim Austin, Wess Galyon, Gary Oborny, Darryl Crotts, David Leyh, Lea Firestone, Troy Farha, Gene Gutschanritter

  • Kansas and Wichita quick takes: Sunday October 17, 2010

    Roots of tea party. Richard A. Vigeurie writing in Politico: “Asked about what stirred the tea party movement, [Former VU.S. Senator from Virginia George] Allen blamed President Barack Obama and the Democrats. ‘It’s what has happened in the last year,’ he said. Allen is flat-out wrong. Americans didn’t elect Obama, Senate majority leader Harry Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.) as much as they threw out Republicans in 2006 and 2008. Americans were angry about the GOP officials’ lack of discipline and courage, and their profligate spending and abandonment of small-government, Republican principles.” Washington Examiner’s Mark Tapscott reacts: “Viguerie is right, of course, and his oped ought to be a reminder to all professional politicians in both major political parties that the Tea Party movement is at its most fundamental a reaction to the horrendous mess they have made of things in the nation’s capital.”

    Wichita Mayor Carl Brewer announces run for reelection. Here’s a list of Brewer’s prominent supporters, as reported by the Wichita Eagle’s Brent Wistrom: “Jack DeBoer, chairman of Consolidated Holdings and owner of WaterWalk; downtown developer David Burk; theater mogul Bill Warren; council member Sue Schlapp; Dave Wells, president of Key Construction; and Jeff Turner, CEO of Spirit AeroSystems, where Brewer worked before being elected in 2007.” As noted in comments to the article, the business people listed have benefited mightily from the city’s corporate welfare programs, which Brewer wholeheartedly supports as he readily accepts campaign contributions from those who benefit. Curious is the inclusion of city council member Sue Schlapp, who is quick to remind us of her conservative credentials, but nearly always votes for developer giveaways that end up costing city taxpayers. One name that is surprising to see on this list is Dave Burk. Earlier this year the Wichita Eagle reported this: “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.” It’s telling that Brewer would have him stand nearby as he announces his reelection plans.

    Overheard on This Week in Kansas. Referring to Louisiana possibly using federal relief funds to pay for incentives to entice Wichita’s Hawker Beechcraft to relocate near the Baton Rouge airport, I said: “If we’re talking about Hurricane Katrina money being used to get these jobs, to my knowledge Baton Rouge wasn’t destroyed by Hurricane Katrina. It’s not like these jobs are going to the ninth ward in New Orleans, which was hurt.”

    Many Americans see government as a threat. Gallup Poll via ARRA News Service: “The percentage of Americans who think the federal government poses ‘an immediate threat’ to the rights and freedoms of ordinary citizens has increased significantly over the last seven years, rising from 30 percent to 46 percent, according to a Gallup poll. Only 51 percent of Americans now say they do not think the federal government poses ‘an immediate threat’ to the rights and freedoms of ordinary citizens. Similarly, the percentage of Americans who think the federal government has too much power has also significantly increased, from 39 percent in 2002 to 59 percent today.” I would be interested in seeing similar polls for state, county, and city government, as well as school districts.

    Markets tell us the worth of things. William Anderson writing in the Freeman: “A public-works project such as the proposed tunnel makes sense if over time the marginal benefits outweigh the marginal costs. If they do not, then it provides a benefit to some at the expense of others, something the ancients might have called ‘unjust.’ Since the output of public works is not priced in the market, how would we know if costs exceed benefits? … Today, we see economic analysis turned on its head. Projected cost overruns suddenly are justified because ‘they provide jobs,’ as though higher costs mean more wealth created.” As Wichita begins to plan for spending on downtown Wichita revitalization, we need to rely on market signals for the relative worth of things. Despite the claims of planning firm Goody Clancy that downtown Wichita will be market-driven, it is in fact driven by politics, which is the opposite of markets. Nonetheless, the Wichita Eagle covers downtown revitalization as a business story, when it is really a political story.

  • In Wichita, Jeff Longwell has the solution to cronyism

    Wichita City Hall SignAt a recent Wichita City Council meeting, Council Member Jeff Longwell (district 5, west and northwest Wichita) was critical of topics broached by two speakers, admonishing them to “take a different approach.”

    The speakers had mentioned votes made and actions taken by the council and the appearance of influence or linkage to campaign contributions.

    Longwell’s concern is understandable. As perhaps the most accomplished practitioner of cronyism on the council, he’s dished out millions in taxpayer subsidy to his significant campaign contributors. His acceptance of campaign contributions last summer from a Michigan construction company that had business before the council lifted cronyism to new heights.

    After that, I thought that we wouldn’t ever see a more blatant instance of the appearance of impropriety. That is, until Mayor Carl Brewer started selling his barbeque sauce at a movie theater he’s voted to grant taxpayer subsidy to, several times.

    These incidents are embarrassing for Wichita. So I can understand that Longwell doesn’t want them mentioned in public. I’m sure that’s what he would prefer.

    That’s why it’s surprising that he would speak out at a council meeting. Why call additional attention to your bad behavior?

    I think I know the answer: It is not possible to shame Longwell, Brewer, and most other council members. They believe their conduct is honest, forthright, and above reproach. They believe it is their critics who are harming the city’s reputation.

    But in many cities, the routine practice of most Wichita City Council members would be a violation of the city’s ethics code, or even of city law. An example is from Westminster, Colorado. Its charter reads:

    The acceptance or receipt by any Councillor or member of that Councillor’s immediate family, or an organization formed to support the candidacy of that Councillor, of any thing of value in excess of one-hundred dollars ($100) from any person, organization, or agent of such person or organization, shall create a conflict of interest with regard to that Councillor’s vote on any issue or matter coming before the Council involving a benefit to the contributing person, organization, or agent, unless such interests are merely incidental to an issue or question involving the common public good.

    In commenting on this ordinance, CityEthics.org noted:

    Westminster goes right to the heart of the matter — not the contribution itself, which is central to citizens’ expressions of their political preferences — but the effect of the other sort of contribution, the large contribution intended, possibly, not only to express a political preference (or not even, since often large contributions are given to both or all candidates by the same individual or entity), but also to influence the candidate.

    If the contribution was not intended to influence the candidate, then the contributor won’t mind that the candidate cannot participate or vote on any matter dealing with the contributor’s interests. In addition, the candidate will not be placed in the position of appearing to favor someone who gave him or her a sizeable contribution or — and this is certainly possible if the candidate is truly independent — having to vote against a strong supporter. It’s a win-win situation for everyone, so long as there was no intent to influence.

    In Wichita, we don’t have any laws or codes of ethics that prohibit or discourage what Westminster, Colorado does. We don’t even have many council members who think these are desirable.

    Instead, the solution preferred by Wichita’s political class is to follow Jeff Longwell’s advice: Just don’t talk about it.

    Troubling incidents involving Council Member Jeff Longwell

    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.

    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.

    Then, last 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? Why should we in Wichita care if they do?

    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.

    When asked about the Michigan contributions, Longwell stated “We often get contributions from a wide variety of sources, including out-of-town people,” according to the Wichita Eagle.

    But analysis of Longwell’s July 30, 2012 campaign finance report shows that the only contributions received from addresses outside Kansas are the Walbridge contributions from Michigan, which contradicts Longwell’s claim. Additionally, analysis of ten recent campaign finance reports filed by Longwell going back to 2007 found only three contributions totaling $1,500 from addresses outside Kansas.

  • Wichita’s Waterwalk failure breeds skepticism

    A recent Wichita Eagle editorial starts with this: “Seven years into a project that was supposed to give Wichita a grand gathering place full of shops, restaurants and night spots as well as offices and condos, some City Council members and citizens remain skeptical at best about WaterWalk’s ability to deliver on its big promises. … True, the skepticism to date is richly deserved.”

    The editorial goes on to report that public investment in this project has risen to $41 million. I don’t know if this figure includes long-term land leases for $1 per year.

    In any case, there’s little to show for this investment. Even the proposal for the redevelopment of downtown Wichita from the planning firm Goody Clancy realizes that WaterWalk is a failure:

    Indeed, Water Walk might be struggling to fill its space because it has, simply put, hit a ceiling: it is focusing on food and fun, and perhaps there is room for only one such district (Old Town) in Downtown Wichita. The Arena could help in this regard, but until the publicly subsidized Water Walk is a rousing success, it might not make sense to split the pie still further.

    With this glaring example of failure of a public-private partnership staring right at us in downtown Wichita, why do we want to plan for more of this? Shouldn’t we at least wait until WaterWalk is finished (if that ever happens) before we go down the path of throwing more public investment into the hands of subsidy-seeking developers?

    At minimum, we ought to insist that the developers of the WaterWalk project be excluded from any consideration for further taxpayer subsidy. The WaterWalk development team: Dave Burk, Marketplace Properties, LLC; Jack P. DeBoer, Consolidated Holdings, Inc.; Gregory H. Kossover, Consolidated Holdings, Inc.; David E. Wells, Key Construction, Inc.; and Tom Johnson, CRE, WaterWalk LLC need to recognize their failure and the tremendous amount they have cost the Wichita taxpayer.

    Some of these people — Burk and Wells to be specific — are partners in the failed Old Town Warren Theater TIF district. In that case, the city felt it had to make a no-interest (later becoming a low-interest) loan to protect its interests.

    It’s a near certainty that the plans for downtown Wichita — at least plans as grand as revitalization supporters must be thinking of — will require massive subsidy. Already new taxes are being talked up. We don’t have a good record of protecting the taxpayers’ investment in Wichita. What makes us think we can change now?

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