Voice For Liberty

Tag: Government spending

  • Wichita considers a new stadium

    Wichita considers a new stadium

    The City of Wichita plans subsidized development of a sports facility as an economic driver. Originally published in July 2017.

    West Bank Redevelopment District. Click for larger.
    This week the Wichita City Council will consider a project plan for a redevelopment district near Downtown Wichita. It is largely financed by Tax Increment Financing and STAR bonds. Both divert future incremental tax revenue to pay for various things within the district.1 2

    City documents promise this: “The City plans to substantially rehabilitate or replace Lawrence-Dumont Stadium into a multi-sport athletic complex. The TIF project would allow the City to make investments in Lawrence-Dumont Stadium, construct additional parking in the redevelopment district, initiate improvements to the Delano multi-use path and make additional transportation improvements related to the stadium project area. In addition to the stadium work, the City plans to construct, utilizing STAR bond funds, a sports museum, improvements to the west bank of the Arkansas River and construct a pedestrian bridge connecting the stadium area with the Century II block. The TIF project is part of the overall plan to revitalize the stadium area and Delano Neighborhood within the district.”3

    We’ve heard things like this before. Each “opportunity” for the public to invest in downtown Wichita is accompanied by grand promises. But actual progress is difficult to achieve, as evidenced by the examples of Waterwalk, Kenmar,and Block One.4

    Trends of business activity in downtown Wichita. Click for larger.
    In fact, change in Downtown Wichita — if we’re measuring the count of business firms, jobs, and payroll — is in the wrong direction, despite large public and private investment. 5

    Perhaps more pertinent to a sports facility as an economic growth driver is the Intrust Bank Arena. Two years ago the Wichita Eagle noted the lack of growth in the area. 6 Since then, not much has changed. The area surrounding the arena is largely vacant. Except for Commerce Street, that is, and the businesses located there don’t want to pay their share of property taxes. 7

    I’m sure the city will remind us that the arena was a Sedgwick County project, not a City of Wichita project, as if that makes a difference. Also, the poor economic performance cited above is for Downtown Wichita as delineated by zip code 67202, while the proposed baseball stadium project lies just outside that area, as if that makes a difference.

    By the way, this STAR bonds district is an expansion of an existing district which contains the WaterWalk development. That development has languished, with acres of land having been available for development for many years. We’ve also found that the city was not holding the WaterWalk developer accountable to the terms of the deal that was agreed upon, to the detriment of Wichita taxpayers. 8

    Following, selected articles on the economics of public financing of sports stadiums.

    The Economics of Subsidizing Sports Stadiums

    Scott A. Wolla, “The Economics of Subsidizing Sports Stadiums,” Page One Economics, May 2017. This is a project of the Federal Reserve Bank of St. Louis. Link.
    “Building sports stadiums has an impact on local economies. For that reason, many people support the use of government subsidies to help pay for stadiums. However, economists generally oppose such subsidies. They often stress that estimations of the economic impact of sports stadiums are exaggerated because they fail to recognize opportunity costs. Consumers who spend money on sporting events would likely spend the money on other forms of entertainment, which has a similar economic impact. Rather than subsidizing sports stadiums, governments could finance other projects such as infrastructure or education that have the potential to increase productivity and promote economic growth.”

    What economists think about public financing for sports stadiums

    Jeff Cockrell, Chicago Booth Review, February 01, 2017. Link.
    “But do the economic benefits generated by these facilities — via increased tourism, for example — justify the costs to the public? Chicago Booth’s Initiative on Global Markets put that question to its US Economic Experts Panel. Fifty-seven percent of the panel agreed that the costs to taxpayers are likely to outweigh benefits, while only 2 percent disagreed — though several panelists noted that some contributions of local sports teams are difficult to quantify.”

    Publicly Financed Sports Stadiums Are a Game That Taxpayers Lose

    Jeffrey Dorfman. Forbes, January 31, 2015. Link.
    “Once you look at things this way, you see that stadiums can only justify public financing if they will draw most attendees from a long distance on a regular basis. The Super Bowl does that, but the average city’s football, baseball, hockey, or basketball team does not. Since most events held at a stadium will rely heavily on the local fan base, they will never generate enough tax revenue to pay back taxpayers for the cost of the stadium.”

    Sports Facilities and Economic Development

    Andrew Zimbalist, Government Finance Review, August 2013. Link.
    “This article is meant to emphasize the complexity of the factors that must be evaluated in assessing the economic impact of sports facility construction. While prudent planning and negotiating can improve the chances of minimizing any negative impacts or even of promoting a modest positive impact, the basic experience suggests that a city should not expect that a new arena or stadium by itself will provide a boost to the local economy.

    Instead, the city should think of the non-pecuniary benefits involved with a new facility, whether they entail bringing a professional team to town, keeping one from leaving, improving the conveniences and amenities at the facility, or providing an existing team with greater resources for competition. Sports are central to cultural life in the United States (and in much of the world). They represent one of the most cogent ways for residents to feel part of and enjoy belonging to a community. The rest of our lives are increasingly isolated by modern technological gadgetry. Sport teams help provide identity to a community, and it is this psychosocial benefit that should be weighed against the sizeable public investments that sports team owners demand.”

    Professional Sports as Catalysts for Metropolitan Economic Development

    Robert A. Baade, Journal of Urban Affairs, 1996. Link.
    “To attract or retain a team, cities are offering staggering financial support and rationalize their largesse on economic grounds. Do professional sports increase income and create jobs in amounts that justify the behavior of cities? The evidence detailed in this paper fails to support such a rationale. The primary beneficiaries of subsidies are the owners and players, not the taxpaying public.”

    —
    Notes

    1. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/. ↩
    2. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/. ↩
    3. Wichita City Council, agenda packet for July 18, 2017. ↩
    4. Weeks, Bob. Downtown Wichita’s Block One, a beneficiary of tax increment financing. Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-block-one-beneficiary-tax-increment-financing/. ↩
    5. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/. ↩
    6. “Ten years ago, Elizabeth Stevenson looked out at the neighborhood where a downtown arena would soon be built and told an Eagle reporter that one day it could be the ‘Paris of the Midwest.’ What she and many others envisioned was a pedestrian and bike-friendly neighborhood of quaint shops, chic eateries and an active arts district, supported by tens of thousands of visitors who would be coming downtown for sporting events and concerts. It hasn’t exactly turned out that way. Today, five years after the opening of the Intrust Bank Arena, most of the immediate neighborhood looks much like it did in 2004 when Stevenson was interviewed in The Eagle. With the exception of a small artists’ colony along Commerce Street, it’s still the same mix of light industrial businesses interspersed with numerous boarded-up buildings and vacant lots, dotted with ‘for sale’ and ‘for lease’ signs.” Lefler, Dion. 5 years after Intrust Bank Arena opens, little surrounding development has followed. Wichita Eagle. December 20, 2014. Available at http://www.kansas.com/news/local/article4743402.html. ↩
    7. Riedl, Matt. Has Commerce Street become too cool for its own good? Wichita Eagle. April 8, 2017. http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article143529404.html. ↩
    8. Weeks, Bob. Wichita WaterWalk contract not followed, again Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-agreement-not-followed/. ↩
  • Naftzger Park costs up, yet again

    Naftzger Park costs up, yet again

    The cost of fixing an oversight in the design of Naftzger Park in downtown Wichita is rising, and again we’re not to talk about it, even though there are troubling aspects.

    Last week the Wichita City Council was scheduled to consider an item regarding the rebuild of Wichita City Council. That item was removed from the agenda the day before the meeting. It now appears on the agenda for the February 12 meeting, and with a higher price tag.

    (“Consider” is not quite the right term, as the item was on the council’s consent agenda. That’s where items are passed in bulk, usually without discussion.)

    As the city explains in the agenda packet for this week, “Naftzger Park currently has a small pond that acts as a storm water retention facility during rain events. Proposed improvements to Naftzger Park will eliminate the pond and all available storm retention. The project does not include funding for replacing the retention capacity.” The cost is given as $115,000, up from last week’s $85,000.

    As explained last week, this seems like a major oversight in the original project plans. The city has regulations regarding stormwater retention that private sector developers must follow. Didn’t any city planners consider these regulations as the project was planned? Didn’t any council member or bureaucrat look at the plans and wonder about stormwater drainage? Wasn’t there a highly-regarded architect designing the park? What about TGC Development, the developer of the surrounding property, to whom the city effectively outsourced the development of Naftzger Park? The construction manager?

    Of note: This week the agenda tells us this: “Funding is available for transfer due to the scope of project being adjusted to remove some the structural repairs and the abutment treatment after discussion with the railroad were not successful.” This sounds like structural repairs were planned but not executed. This deserves discussion, but with the item being on the consent agenda, discussion is not likely.

    Of further note: The February 5 agenda stated, “Funding is available for transfer due to underruns of bid items upon project completion and favorable bid pricing.” This made it sound like all planned work was completed and the city spent less than budgeted, even if through happenstance. This week we’re being told something different.

  • Facade improvement program raises issues in Wichita

    Facade improvement program raises issues in Wichita

    An incentive program in Wichita should cause us to question why investment in Wichita is not feasible without subsidy.

    At its February 5, 2019 meeting, the Wichita City Council will consider an item regarding economic development in Delano. The owner of a building there has applied for financial assistance under the city’s facade improvement program.

    The purpose of the facade improvement program, according to city documents, is to provide “low-cost loans and grants” to help improve the appearance of buildings “located in defined areas needing revitalization, including the City’s core area.”

    The matter before the council this week is to accept the petition of the property owner and set February 19, 2019 for the public hearing.

    Undoubtedly council members will praise the property owner for deciding to invest in Wichita. I’m glad he is, and it sounds like the project will improve the Delano area. But the need for this item raises a few questions regarding public policy in Wichita that are more important than any single project.

    First, city documents state: “The Office of Economic Development has reviewed the economic (‘gap’) analysis of the project and determined there is a financial need for incentives based on the current market.” In other words, the city has determined that this project is not economically feasible unless it receives a government subsidy. Will any council members ask why is it not possible to renovate a building in the core of Wichita without subsidy? What factors in Wichita — specifically Delano — make it impossible to have investment like this without subsidy?

    Second: Wichita officials, especially Wichita Mayor Jeff Longwell, tell us that the city doesn’t use cash as an economic development incentive. But this proposal includes a cash grant of $30,000. This is not a low-cost loan that must be repaid. Instead, it is an incentive, a gift — and it’s cash.

  • Naftzger Park cost rising, and we’re not to talk about it

    Naftzger Park cost rising, and we’re not to talk about it

    The cost of the Naftzger Park makeover is rising, will be paid for with borrowed funds, and possibly handled without public discussion.

    The cost of the Naftzger Park project in downtown Wichita is rising, according to an item the Wichita City Council will consider at its Tuesday February 5, 2019 meeting. According to city documents, an additional $85,000 is needed for stormwater retention, a function the former pond provided.

    This seems like a major oversight in the original project plans. The city has regulations regarding stormwater retention that private sector developers must follow. Didn’t any city planners consider these regulations as the project was planned? Didn’t any council member or bureaucrat look at the plans and wonder about stormwater drainage? Wasn’t there a highly-regarded architect designing the park? What about TGC Development, the developer of the surrounding property, to whom the city effectively outsourced the development of Naftzger Park? The construction manager?

    The extra cost is proposed to come from savings realized in another nearby project. That requires a waiver of policy, according to the agenda: “Staff requested waiver of City Council Policy No. 2 regarding the use of projects savings to allow this transfer of funds.”

    On top of that, this money will be borrowed. An accompanying resolution (number 19-048) provides the authorization: “Section 2. Project Financing. All or a portion of the costs of the Project, interest on financing and administrative and financing costs shall be financed with the proceeds of general obligation bonds of the City.”

    Borrowing this money, even though it is a small amount, is a significant public policy issue. The city decided to use tax increment financing (TIF) to pay for this project. City officials pitch this as a method of financing that costs the general public nothing, as the TIF bonds are repaid from a project’s future property taxes.

    In this case, as the surrounding development by TGC starts to pay higher property taxes, these taxes would be used to pay for Naftzger Park. (Never mind who pays for the public services the development will consume.)

    But now, some expenses of the project have been shifted away from TIF to the general city.

    The equitable way of handling this is to charge this expense to the TIF district. Either that, or to the responsible parties whose oversight, we now see, was lacking.

    By the way, this item is on the consent agenda, meaning there will be no discussion unless a city council member requests the item to be “pulled” for discussion and a potentially separate vote. (A consent agenda is a group of items that are voted on in bulk with a single vote. An item on a consent agenda will be discussed only if a council member requests the item to be “pulled.” If that is done, the item will be discussed. Then it might be withdrawn, voted on by itself, or folded back into the consent agenda with the other items. Generally, consent agenda items are considered by the city to be routine and non-controversial, but that is not always the case.)

    Following, an excerpt from the February 5, 2019 city council agenda:

    Background: Naftzger Park currently has a small pond that acts as a storm water retention facility during rain events. Proposed improvements to Naftzger Park will eliminate the pond and all available storm retention. The project does not include funding for replacing the retention capacity.

    Analysis: With the elimination of the existing pond, underground on-site storage is necessary to prevent a negative impact on the area storm sewer system and the surrounding developments during rain events.

    Financial Considerations: Currently, the Stormwater Utility does not have funding available for these improvements. Staff proposes transferring $85,000 in General Obligation bond funding from the Douglas Underpass project. Funding is available for transfer due to underruns of bid items upon project completion and favorable bid pricing. Staff requested waiver of City Council Policy No. 2 regarding the use of projects savings to allow this transfer of funds. The total budget for the stormwater retention facility would be $85,000 and the revised budget for Douglas Underpass would be $2,015,000.

  • Kansas agency expenditures

    Kansas agency expenditures

    Data regarding State of Kansas agency spending presented in an interactive visualization.

    The source of this data is KanView, the Kansas transparency portal, through its download center. Data from multiple years are combined into one database. Data starts with fiscal year 2011.

    This visualization is experimental. I would appreciate feedback on views of this data that would be useful.

    Click here to access the visualization.

    Example from the visualization. Click for larger.
  • Efficiencies in Sedgwick County government

    Efficiencies in Sedgwick County government

    A document that hasn’t been made public details savings achieved in Sedgwick County over a recent period of nearly three years.

    A document prepared within the Sedgwick County Division of Finance details savings of $6,308,097 over a period of almost three years, starting in November 2015. That is the month when Michael Scholes joined Sedgwick County as County Manger. His last day as manager was November 30, 2018, after being dismissed by the county commission. This document is dated August 29, 2018.

    An example of a savings is: “Eliminated 6.0 FTEs and associated funding due to the outsourcing of EMS Billing ($304,027).”

    The document contains a summary:

    • Priority 1 – Safe & Secure Communities had a total savings listed of $3,959,137, where the categories of efficiencies included technology changes, process improvements, consolidation, training, grants to offset costs, and staffing changes.
    • Priority 2 – Human Services & Cultural Experiences had a total savings listed of $1,931,447, where the categories of efficiencies included technology changes, process improvements, staffing changes, consolidation, training, and collaboration with other entities.
    • Priority 3 – Communications & Engagement had efficiencies in transparency and elections process with the purchase of new voting equipment.
    • Priority 4 – Effective Government Organization had a total savings listed of $417,513, where the categories of efficiencies included technology changes, process improvements, and staffing changes.

    To the best of my knowledge, this document has not been shared with the public, and is not found on the county’s website. I make it available here.

  • WichitaLiberty.TV: Economic development incentives

    WichitaLiberty.TV: Economic development incentives

    In this episode of WichitaLiberty.TV: A look at some economic development incentive programs in Wichita and Kansas. Second in a series. Tax increment financing (TIF) is prominent in this episode. View below, or click here to view at YouTube. Episode 219, broadcast November 25, 2018.

    Shownotes

  • WichitaLiberty.TV: Economic development incentives

    WichitaLiberty.TV: Economic development incentives

    In this episode of WichitaLiberty.TV: A look at some economic development incentive programs in Wichita and Kansas. First in a series. View below, or click here to view at YouTube. Episode 218, broadcast November 18, 2018.

    Shownotes

  • Kansas school salaries

    Kansas school salaries

    An interactive visualization of Kansas school salaries by district and category.

    This visualization holds salaries of Kansas school superintendents, principals, and teachers. The visualization shows the average for each of these categories for each school district. The values are adjusted for inflation to the most current year values. Some data is presented on a per-pupil basis using full-time equivalent student counts.

    The visualization includes both tables and charts. The source of the data is Kansas State Department of Education for salaries and enrollments, United States Bureau of Labor Statistics for price levels, and author’s calculations.

    Click here to access the visualization.

    Kansas school salaries. Click for larger.
    Kansas school salaries on a per-student basis. Click for larger.
    Example from the visualization. Click for larger.