Voice For Liberty

Tag: Government planning

  • Wichita ASR water recharge project: The statistics

    Wichita ASR water recharge project: The statistics

    As Wichita voters consider spending $250 million expanding a water project, we should look at the project’s history. So far, the ASR program has not performed near expectations, even after revising goals downward.

    In November Wichita voters will consider approval of a one cent per dollar sales tax. Of the $400 expected to be collected over five years, $250 million is earmarked for a new water source. The city has decided that the new water supply will be implemented through expansion of the Aquifer Storage and Recovery program or ASR. This is a program whereby water is taken from the Little Arkansas River, treated, and injected in the Equus Beds aquifer. That water is then available in the future as is other Equus Beds water.

    The city believes that ASR is a proven technology that will provide water and drought protection for many years and recommends that voters approve $250 million for its expansion, although there is possibility that the cost may be $200 million.

    According to city documents, the original capacity of the ASR phase II project to process water and pump it into the ground (the “recharge” process) was given as “Expected volume: 30 MGD for 120 days.” That translates to 3,600,000,000 (3.6 billion or 3,600 million) gallons per year. ASR phase II was completed in 2011.

    At a city council workshop in April 2014, Director of Public Works and Utilities Alan King briefed the council on the history of ASR, mentioning the original belief that ASR would recharge 11,000 acre feet of water per year. But he gave a new estimate for production, telling the council that “What we’re finding is, we’re thinking we’re going to actually get 5,800 acre feet. Somewhere close to half of the original estimates.” The new estimate translates to 1,889,935,800 (1.9 billion or 1,900 million) gallons per year.

    Based on experience, the city has produced a revised estimate of ASR production capability. What has been the actual experience of ASR? The U.S. Geological Survey has ASR figures available here. I’ve gathered the data and performed an analysis.

    Annual production

    In 2013 ASR recharged 366 million gallons, or 19 percent of the newly revised estimate of production capacity. In 2014 through September, ASR recharged 275 million gallons, or 14 percent of capacity. Extrapolating this nine months of production to a full year results in 367 million gallons produced for 2014, or 19 percent of capacity, the same value as in 2013. This may or may not be valid, but it gives an idea of how 2014 is proceeding.

    So for the two most recent years, the ASR system has not operated near its designed capacity, even after revising that capacity downwards by half.

    To place these production figures in context, the city uses 56 million gallons per day, on average. So the annual production of the ASR project is about 6.5 days of water usage.

    Monthly production

    Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 1 and phase 2, monthly. Click for larger version.
    Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 1 and phase 2, monthly. Click for larger version.
    The ASR system is able to draw water from the river only when the flow is above a certain level, which is not every day of the year. So we may want to take a look at how the ASR system performs for shorter periods of time. Monthly data is available.

    For a 30-day month, if the plant could be run at full design capacity each day, the production would be 900,000,000 (900 million) gallons. The best month ever for actual production was 192 million gallons, with the second best at 120 million gallons.

    If we take the 12 best months for production, including before ASR Phase II started operations, the amount of water recharged is 924 million gallons. That’s 49 percent of the revised expected annual production of 1.9 billion gallons.

    The cumulative deficit

    Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative. Click for larger version.
    Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative. Click for larger version.
    I’ve produced a chart of the cumulative production of the Wichita ASR project compared with the original projections and the lower revised projections. The lines for projections rise smoothly, although it is expected that actual production is not smooth. The second phase of ASR was completed sometime in 2011, but no water was produced and recharged that year. So I started this chart with January 2012. Data is from U.S. Geological Survey.

    Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative from July 2013. Click for larger version.
    Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative from July 2013. Click for larger version.
    Some have said that since 2013 was a drought year, it isn’t fair to evaluate the production of ASR during a drought. So to present ASR in the best possible light, I’ve prepared a chart starting in July 2013. That was when it started raining so much we had floods, and data from USGS shows that the flow in the Little Arkansas River was much greater. Still, the ASR project is not keeping up with projections, even after goals were lowered.

    The city and the “Yes Wichita” campaign say the ASR project is proven and is working. The available data, however, does not support this claim.

  • Again, Wichita policies are fluid

    Again, Wichita policies are fluid

    Wichita city hall promises policies that are clear, predictable and transparent, except when they’re not.

    On July 22, 2104, a presentation to the Wichita City Council sought to assure the council and public that a proposed jobs fund created with money collected by the proposed sales tax would have policies that govern the spending of funds: “GWEDC – Finds businesses to expand, recruit, follows established policies for retention/recruitment.”

    But there’s a problem. It’s difficult for governments to establish policies that will satisfy everyone. How do we know today what we’ll need five or ten years down the road? When governments change policies to fit particular circumstances, taxpayers are rightfully concerned that the alterations are to suit the needs of special people — the cronies that feed from the city hall trough of taxpayer money. When you couple in what public choice theory tells us, which is that the cronies who want money from government have a much stronger motive to succeed than the bureaucrats are motivated to protect citizens and taxpayers, we can have trouble.

    This has happened before in Wichita. Last year when a project didn’t meet the (supposedly) required benefit-cost ratio, the city simply said that it didn’t apply in that case. See Wichita’s policymaking on display.

    Now, Wichita seeks to modify its policies again in response to the wants and desires of one person.

    Here’s the background you need to know. When the city passed a downtown development incentives policy in 2011, here’s what the city said was its goal: “The business plan recommends the development of a prudent public investment policy that is clear, predictable and transparent, maximizes public investment and enhances market-driven development.” (emphasis added)

    The meeting minutes contained further elucidation: “Scott Kneibel Planning Department stated the purpose of the policy is to put in place something that is clear and predictable in terms of how the public would invest in downtown projects through partnership with the private sector. Stated that sort of statement by this governing body has not been made to date. Stated that is the purpose of this policy so that developers will know what types of investments the City of Wichita is interested in making and how the City of Wichita will make those decisions.” (emphasis added)

    But as in the past, we find city proposing the change the standards in the middle of the game. Here’s an excerpt from the agenda packet for Tuesday’s meeting, in which a large incentive package for the redevelopment of Union Station may be considered: “In the opinion of the evaluation team, the established criteria do not adequately address projects such as Union Station where the requested incentives do not involve City debt.”

    For this project we see that city policy is being modified on the fly to meet the circumstances of a particular project. This is not necessarily bad. Entrepreneurship demands flexibility. But the city promises policies that are clear, predictable and transparent, and city officials say Wichita has a transparent, open government.

    Can you imagine conscientious developers who want to invest in downtown Wichita, but after studying the city’s policies, realize their projects don’t conform to the city’s published standards? How many moved on to other cities, not realizing that our standards can be altered and waived?

    As Wichita voters consider the value to give to promises from city hall, they should consider these episodes when the city promises there will be “established policies” for the spending of economic development funds generated by the proposed sales tax.

  • Errors in Wichita Union Station development proposal

    Errors in Wichita Union Station development proposal

    Documents the Wichita City Council will use to evaluate a development proposal contain material errors. Despite the city being aware of the errors for more than one month, they have not been corrected.

    On August 19, 2014 the Wichita City Council considered an agenda item titled “Resolution Considering the Establishment of the Union Station Redevelopment District, Tax Increment Financing.” The purpose of the item was to set October 7, 2014 as the date for the public hearing on the formation of a TIF district. The council passed this resolution.

    On August 27 Bob Weeks inquired this of Wichita city officials based on information contained in city documents that were prepared for the August 19 meeting:

    “On the Union station TIF proposal, there is mentioned ‘$3,766,156 in monetized historic tax credits.’ Do you know whether these are federal or state tax credits, and the face value of the credits? I presume that ‘monetized’ means the value the developers expect to receive when selling the credits at a discount.”

    That same day he received this response from Allen Bell, the city’s Director of Urban Development.

    “The Developer has not yet provided the City with details on the tax credits. However, staff analyzed the project to ascertain a ballpark estimate of how much it could generate in both state and federal tax credits and came up with a similar amount. We assume that $3,766,156 is the amount of net proceeds to be injected into the project from the sale of tax credits and that it is discounted from the face value of the credits.”

    On follow up, Weeks asked this:

    “I was also wondering which incentive program allows for the sales tax exemptions included in the CEDBR analysis.”

    The response from Bell was:

    “The only incentive program available to Union Station that would provide a sales tax exemption is IRBs. The Developer did not request IRBs or a sales tax exemption. I would guess that CEDBR factored it into the cost-benefit analysis to be extra conservative.”

    CEDBR is the Center for Economic Development and Business Research at Wichita State University.

    In addition to Bell, other city officials participating in these emails were Van Williams, Public Information Officer; Mark Elder, Development Analyst; and Scott Knebel, Downtown Revitalization Manager.

    On October 2, when the city released the agenda packet for the October 7 meeting, the tax credits and sales tax information was not changed.

    By the city’s admission, the value of tax credits for this project is a guess, and we don’t know if the project is actually eligible for these tax credits. The sales tax exemption included in the CEDBR is an incentive this project is not eligible for and will not receive. Despite several city officials being aware of these errors, the material the city council will consider on October 7 has not been corrected.

  • Wichita water projections from 2008

    Wichita water projections from 2008

    Do you get the feeling that Wichita’s promises and projections regarding water are quite, well, fluid?

    Wichita's Future Water-Supply Plan Moves Ahead (excerpt)Six years ago a Wichita city news release stated “Through the ASR project, Wichita will receive the water it needs through the year 2050 …” (“Wichita’s Future Water-Supply Plan Moves Ahead,” July 3, 2008)

    But now, Wichitans are told there is a water crises, and the way to solve it is by voting for a sales tax of one cent per dollar. Either that, or the city will meet the crisis by borrowing money and having water users pay an extra $221 million in interest on a $250 million project.

    Perhaps the city’s 2008 news release was based on overly-optimistic engineering. Perhaps the claim of being able to meet our water needs through 2050 is based on all four phases of ASR being completed.

    Now, the most recent city documents promise much less: “A new water supply is expected to delay the year (with no conservation) in which drought protection for a 1% drought is provided. This date is projected to be 2030.”

    Do you get the feeling that the city’s promises and projections regarding water are quite, well, fluid? Do you remember that eleven years ago then-Mayor Bob Knight was told we had sufficient water for the next 50 years?

    An adequate water supply is vitally important. But we are not in a crisis. We had plenty of water this year. Cheney Reservoir has been full most of the year, although currently a little less than full as it’s been dry the last month or so.

    Wichita’s water crisis — to the extent it exists — does not need to be solved in a rush. The risks of making big-dollar mistakes are too high to hurry.

    Speaking of the ASR project: At a time of heightened interest in ASR, the project’s website has been abandoned. Readers will find language like Phase II “will be complete by the end of 2011.” The last newsletter was for December 2011.

    The first years of operation of Phase II of ASR have not been a total success. Maybe that’s why there’s been no news.

    Cheney Reservoir 2014-09-29

  • WichitaLiberty.TV: Wichita’s blatant waste, Transforming Wichita, and how you can help

    WichitaLiberty.TV: Wichita’s blatant waste, Transforming Wichita, and how you can help

    In this episode of WichitaLiberty.TV: Let’s ask that Wichita trim its blatant waste of tax dollars before asking for more. We’ll look back at a program called Transforming Wichita. Then: We need to hold campaigns accountable. I’ll give you examples why, and tell how you can help. View below, or click here to view at YouTube. Episode 57, broadcast September 7, 2014.

  • Wichita planning results in delay, waste

    Wichita planning results in delay, waste

    Wichita plans an ambitious road project that turns out to be too expensive, resulting in continued delays for Wichita drivers and purchases of land that may not be needed.

    A major road construction project in east Wichita is deferred after the design is too expensive, reports the Wichita Eagle. (East Kellogg interchange plan getting major reboot, August 30, 2014)

    It’s bad news that Wichita drivers will suffer through more years of delay as they travel through east Wichita. The value of the lost hours sitting in traffic? It’s impossible to say.

    But here’s something that will probably be easy to appraise: The waste of taxpayer dollars due to the actions of government planners. From the Eagle story:

    It’s unclear how the redesign would affect the ongoing lawsuit between the city of Wichita and 10 property owners whose land was taken by eminent domain for the project. The city also has acquired another 30 parcels in the area.

    A court-appointed panel of three appraisers awarded the owners of the 10 parcels a collective $19.6 million for their properties in November.

    The Wichita City Council approved the award, as required by the court, but the amount far exceeded an internal estimate in the $4 million to $5 million range.

    In December, the city sued the landowners to see if a court would reduce the valuations.

    Some of that land probably would not be needed if the interchange is redesigned.

    Did you catch that? The city spent nearly five times as much as original estimates to seize property through eminent domain, and also purchased other property. Buildings with remaining useful life have been razed. Now, we learn that this land may not be needed.

    As Wichita city hall asks citizens to trust the plans for the proceeds of a new sales tax, remember lessons like this.

  • Economic development incentives in Wichita: A few questions

    Economic development incentives in Wichita: A few questions

    Wichita justifies its use of targeted economic development incentives by citing benefit-cost ratios that are computed for the city, county, school district, and state. If the ratio exceeds a threshold, the project is deemed worthy of investment.

    Wichita City Budget Cover, 1962The process assumes that these benefit-cost ratios are valid. This is far from certain, as follows:

    1. The benefits in the calculation are not really benefits. Instead, they’re in the form of projected higher tax revenues collected by governments. This is very different from the profits that private sector companies earn from their customers in voluntary market transactions.

    2. Even if government collects more tax by offering incentives, it should not be the goal of government to grow just for the sake of growing.

    3. Government claims that in order to get these “benefits,” incentives are necessary. But often the new economic activity (relocation, expansion, etc.) would have happened without the incentives.

    4. Why is it that most companies are able to grow without incentives, but only a few companies require incentives? What is special about these companies? Why do some companies receive incentives year after year?

    5. If the relatively small investment the city makes in incentives is responsible for such wonderful outcomes in terms of jobs, why doesn’t the city do this more often? If the city has such power to create economic growth, why is anyone unemployed?

  • A development plan for downtown Wichita

    Development plan for downtown Wichita as prepared by RTKL Associates, Inc. January, 1989. View below, or click here to open in new window.

  • For Wichita, policies are made to be waived and ignored

    The City of Wichita says it wants policies to be predictable and reliable, but finds it difficult to live up to that goal.

    From 2009, an example of how the City of Wichita makes policy on the fly to suit the current situation. The policy change benefited a building developed by “The Minnesota Guys,” who, since the time of this article, fell into disfavor with pretty much everyone in Wichita, including the city council.

    When the Lofts at St. Francis needed routine repairs, the city waived policies to use special assessment financing.
    When the Lofts at St. Francis needed routine repairs, the city waived policies to use special assessment financing.
    Regarding public policy, this episode illustrated the city broadening the application of special assessment financing. Traditionally special assessment financing has been limited to instances such as the city building streets and sewers in new areas of town, allowing commercial and residential property owners to repay the costs over 15 years. But the item approved by the council at this meeting was for repair of existing buildings, not construction of new infrastructure. Additionally, the work financed by the special assessment taxes will be owned by the private property owners. When the city uses special assessment financing to build streets and sewers in new neighborhoods the city owns this infrastructure, even though it is paid for by nearby property owners.

    To approve this financing, the city had to bend or waive two policies. That’s problematic, as the city tells citizens it wants policies and council behavior to be consistent and predictable. Although this incident is from five years ago, not much has changed since then. See Wichita: No such document for an example from last year. Following is Wichita special assessments for repairs is bad policy. Other articles on this topic are In Wichita, waiving guidelines makes for bad policy and At Wichita city council, special pleading of selfish interests.

    ——
    At Tuesday’s meeting (August 18, 2009) of the Wichita City Council, a privately-owned condominium association is seeking special assessment financing to make repairs to its building. In order for the association to succeed in its request, the council will have to waive two guidelines of Wichita’s facade improvement program.

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

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

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

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

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

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

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

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

    So the city proposes to waive this requirement as well.

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

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

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

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

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

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

    Lofts at St. Francis Agenda Report 2009-08-18 by Bob Weeks