Voice For Liberty

Tag: James Clendenin

Wichita City Council Member James Clendenin

  • Wichita city council advances economic development

    city-council-chambers-sign-bCan you fill in the blank?

    Wichita City Council says: “By allowing Cessna to avoid paying property taxes, we are showing our support for the company.”

    “By requiring other companies to pay their full share of property taxes, we are showing our ________ for these companies.”

    Yesterday’s action taken by the Wichita City Council regarding economic development incentives granted to Cessna Aircraft Company through the Industrial Revenue Bond program may be confusing to some people. The Wichita Eagle is not helping citizens understand what is happening when the city issues IRBs. The headline and lede of the article illustrate: “Wichita approves $40.2 million in industrial revenue bonds for Cessna improvements.”

    The bonds are a sideshow and not economically relevant. In fact, Wichita has a related program called EDX that implements the benefits of IRBs without the charade of a company buying its own bonds. The Eagle gets around to this, explaining: “Industrial revenue bonds are issued by governments without any taxpayer liability, a type of municipal bond repaid from the proceeds of bond sales. They do not affect the tax revenue or the credit of the issuing governmental entity. The company will buy its own bonds.”

    This explanation isn’t accurate, however. IRBs do affect the tax revenue of the issuing governmental entity, because property purchased under the program is exempt from property taxation, and often sales tax. The article does finally explain why Cessna is applying for the IRBs: “The value of the abated taxes could be as much as $37,197 for the first year.”

    That — or something like it — should have been the headline to this article. The fact that Kansas law grants tax abatements for bond-purchased property is the only reason that Cessna applied for the IRB program. As Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita) explained from the bench and as quoted by the Wichita Eagle: “I’d like to confirm to the public that what we’re doing is voting to allow Cessna to purchase $40 million of their own bonds for all these improvements.”

    I’m glad he understands. We still have to endure the spectacle of a governing body voting to allow a company to issue bonds that the company will purchase from itself. Perhaps someday we will have laws that allow a company to issue debt and purchase that same debt without governmental approval.

    In remarks from the bench, several council members thanked Cessna for its commitment to Wichita. Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) thanked Cessna for showing their commitment to Wichita, “as they have for decades.” I wonder: What do other business owners in Wichita who have to pay their full share of taxes think about Cessna’s commitment to Wichita?

    Clendenin also expressed appreciation for their charitable nature and their “humongous” heart. I wonder: Why doesn’t Cessna pay the same taxes that everyone else has to pay so that we may keep more of our own money to be charitable as we see fit?

    In their remarks, no member of the Wichita City Council made the argument that is often used to justify economic development incentives: economic necessity. No one proffered that absent these tax breaks, Cessna would be unwilling or unable to make this investment. No one wondered that given that Cessna is such a good corporate citizen, why does it ask to be excused from shouldering the same tax burden that almost everyone else has to bear?

    No one spoke on behalf of the other business firms in Wichita that, when wanting to make an investment to expand and hire people, are not able to qualify for the type of favored treatment that companies like Cessna receive.

    No one offered any evidence that these jobs are somehow different from other jobs in Wichita that area created every day without companies receiving special tax treatment.

    No one argued that the tax burden should be applied fairly and evenly to everyone.

    No one made the moral case for free enterprise — rather than cronyism and business welfare — as the way to grow and diversify the Wichita economy.

    FITB - Cessna property tax abatements

  • Wichita contracts, their meaning (or not)

    Is the City of Wichita concerned that its contracts contain language that seems to be violated even before the contract is signed?

    This week the Wichita City Council approved a development agreement for the apartments to be built on the west bank of the Arkansas River. The development agreement the council contemplated included this language in Section 11.06, titled “Conflicts of Interest.”

    section-1106

    No member of the City’s governing body or of any branch of the City’s government that has any power of review or approval of any of the Developer’s undertakings shall participate in any decisions relating thereto which affect such person’s personal interest or the interests of any corporation or partnership in which such person is directly or indirectly interested.

    At Tuesday’s meeting I read this section of the contract to the council. I believe it is relevant for these reasons:

    Warren Theater Brewer's Best 2013-07-18

    1. Wichita Mayor Carl Brewer is a member of a governing body that has power of approval over this project.

    2. Bill Warren is one of the parties that owns this project.

    3. Bill Warren also owns movie theaters.

    4. Wichita Mayor Carl Brewer owns a company that manufactures barbeque sauce.

    5. Brewer’s sauce is sold at Warren’s theaters.

    The question is this: Does the mayor’s business relationship with Warren fall under the prohibitions described in the language of section 11.06? Evidently not. After I read section 11.06 I asked the mayor if he sold his sauce at Warren’s theaters. He answered yes. But no one — not any of the six city council members, not the city manager, not the city attorney, not any bureaucrat — thought my question was worthy of discussion.

    (While the agreement doesn’t mention campaign contributions, I might remind the people of Wichita that during 2012, parties to this agreement and their surrogates provided all the campaign finance contributions that council members Lavonta Williams and James Clendenin received. See Campaign contributions show need for reform in Wichita. That’s a lot of personal interest in the careers of politicians.)

    I recommend that if we are not willing to live up to this section of the contract that we strike it. Why have language in contracts that we ignore? Parties to the contract rationalize that if the city isn’t concerned about enforcing this section, why should they have to adhere to other sections?

    While we’re at it, we might also consider striking Section 2.04.050 of the city code, titled “Code of ethics for council members.” This says, in part, “[Council members] shall refrain from making decisions involving business associates, customers, clients, friends and competitors.”

    That language seems pretty clear to me. But we have a city attorney that says that this is simply advisory. If the city attorney’s interpretation of this law is controlling, I suggest we strike this section from the city code. Someone who reads this — perhaps a business owner considering Wichita for expansion — might conclude that our city has a code of ethics that is actually observed by the mayor and council members and enforced by its attorneys.

  • Wichita does it again

    Government takes and gives

    Wichita never seems to learn. Its government, that is.

    The last time Key Construction was awarded a no-bid contract for building a parking garage in Wichita, it almost cost Wichita taxpayers an extra 27 percent. Now the Wichita City Council has done it again, awarding Key another no-bid contract for a project paid for by taxpayers.

    In August 2011 the Wichita City 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.

    Today the council voted to award Key another no-bid contract. City officials said that the garage is too intertwined with the rest of the project to be put out to bid. They said that in 2011, too.

    After the 2011 incident, Wichita city manager Robert Layton told the Wichita Eagle that he would seek a policy change against no-bid contracts. But that didn’t happen today.

    So taxpayers are likely to overpay again, and for a project benefiting a politically-connected firm.

    There is hope for the taxpayers, however. After the 2011 award to Key, then-council member Michael O’Donnell objected. It’s said that Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita) also objected. That’s when the city decided to put the garage out to competitive bid and saved taxpayers $1.3 million.

    It’s possible this could happen again. Meitzner was absent for today’s vote. New council member Jeff Blubaugh now represents the same district that O’Donnell did two years ago. Maybe Wichita taxpayers can ask O’Donnell to talk to Blubaugh about this. Perhaps as Meitzner prepares his bid to be the next mayor, he could use this as an opportunity to exercise leadership in favor of taxpayer stewardship instead of protecting the system of cronyism.

    Key Construction and Mayor Carl Brewer

    Should Mayor Carl Brewer have participated in voting on this matter? Here’s a section from the Wichita city code as passed in 2008:

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

    Wichita mayor Carl Brewer with major campaign donor Dave Wells of Key Construction.

    This no-bid contract for the garage is just one of many subsidies and grants given to Key Construction and its partners at taxpayer expense. Key, its executives, and their spouses are heavy campaign contributors to nearly all city council members. Brewer and the head of Key Construction are apparently friends, embarking on fishing expeditions.

    What citizens need to know is that Brewer and the Wichita City Council were 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. At the time, no city bureaucrats expressed concern about this waste of taxpayer money.

    Then, in July 2012 Brewer participated in a decision to award the large contract for the construction of the new Wichita airport to Key Construction, despite the fact that Key was not the low bidder. The council was tasked to act in a quasi-judicial manner, to make decisions whether discretion was abused or whether laws were improperly applied. Brewer’s judgment was in favor of Key Construction, even though its bid had the same defect as the lower bid. This decision cost taxpayers and airport users an extra $2 million, to the benefit of a major campaign donor and fishing buddy.

    In a Wichita Eagle story that reported on “city-financed downtown parking garages that spiraled well over budget” we learned this: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.”

    Despite this personal experience, Brewer wrote a letter recommending Key Construction (and only Key) for a project, observing “Key is known for their consistent quality construction, budget control and on schedule delivery.” The mayor’s recommendation is not consistent with the reality of Key’s experience with the City of Wichita.

    Lavonta Williams and James Clendenin

    Although city code has no prohibition against council members voting to enrich their significant campaign contributors with no-bid contracts, there ought to be such a law. And when the recipient company is a very significant contributor, we can’t help but wonder about the wisdom and stewardship exhibited by the council.

    In 2012, as incumbent council members Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) and Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) were preparing to run for re-election, their campaigns, that year, were financed entirely by two sources. One of these was a group of principals and executives of Key Construction.

    Those associated with Key Construction gave a total of $7,000. Williams received $4,000, and $3,000 went to Clendenin. For Williams, this was the only campaign money she received in 2012.

    With relationships like these, can we have and confidence that the mayor and council are looking out for the interests of the citizens of Wichita, or for the interests of the significant campaign contributors and fishing buddies?

  • WichitaLiberty.TV July 14, 2013

    WichitaLiberty.TV logo

    In this episode of WichitaLiberty.TV, host Bob Weeks explains the attitude of the Wichita City Council regarding ethical behavior and reports on incidents that illustrate the need for campaign finance reform and pay-to-play laws in Wichita and Kansas. Also, Bob notices a document produced this year titled “Wichita Area Future Water Supply: A Model Program for Other Municipalities” and wonders why the city boasts of expensive water projects and long-term planning at the same time it’s forcing an austerity campaign on its citizens. Episode 4, aired July 14, 2013.

  • Starwood calls on Wichita

    Office worker using telephone and computer

    This Tuesday the Wichita City Council considers economic development incentives to Starwood Hotels & Resorts for a call center to open in Wichita.

    Besides the usual problems with cronyism and corporate welfare (see Wichita-area economic development policy changes proposed for explanation of some problems), there are a few issues to consider regarding this item.

    First, the site where the Starwood call center will be located is owned by Max Cole. He and his wife are significant campaign contributors to Wichita City Council Member James Clendenin (district 3, southeast and south Wichita). Under the concept of pay-to-play laws that Wichita needs, Clendenin should refrain from voting on this matter.

    Second, a table of salaries supplied in the agenda packet makes an implied promise that probably won’t be kept. The table shows numbers of jobs (actually full-time equivalents), the hourly pay rate, and the annual wage. The annual wage, in all cases, is 2,080 times the hourly rate, meaning it is assumed that workers will work 40 hours per week, 52 weeks per year.

    Information from the Kansas Department of Commerce offers more detail. Initially, 495 full-time and 55 part-time jobs will be created. In year five, the total will be 860 full-time and 95 part-time total. There is also this notation: “The company will pay at least 50% of employee health insurance benefits.”

    As you may be aware, one of the provisions of Obamacare is that if employees work over 30 hours per week, the employer must provide health insurance or be fined. As a result, many companies across the county are scaling back weekly work hours to less than 30.

    We ought to ask if Starwood intends to hire employees who will work 40 hours per week, if they want to. Will the liberals on the Wichita City Council — Mayor Carl Brewer, Council Member Lavonta Williams (district 1, northeast Wichita), and Council Member Janet Miller (district 6, north central Wichita) — ask that Starwood operate under the standards of Obamacare? The table presents data as “full-time equivalents,” which provides room for Starwood to go either way.

    Starwood is asking for a forgivable loan of $200,000 from Wichita, and another of the same amount from Sedgwick County. I asked the Kansas Department of Commerce if it would reveal the programs and incentives that Starwood will receive from the State of Kansas. It would not supply that information at this time, but I obtained the information by another means. The state describes its offer to Starwood as worth “up to $1,583,272.” Of this, $750,000 would be in the form of direct cash grants.

    Here is a link to the relevant pages from the Wichita city council agenda: Starwood Hotels & Resorts Economic Development Incentive Agreement with City of Wichita, Kansas. Also, from the Department of Commerce: Starwood Hotels & Resorts Economic Development Incentives offered by State of Kansas.

  • Ambassador Hotel Industrial Revenue Bonds

    The City of Wichita should not approve a measure that is not needed, that does not conform to the city’s policy (based on relevant information not disclosed to citizens), and which is steeped in cronyism.

    This week the Wichita City Council will consider authorizing industrial revenue bonds (IRB) for the Ambassador Hotel project in downtown Wichita.

    In most cases, the major benefit of IRBs is exemption from paying property taxes. Since the Ambassador Hotel is located within a tax increment financing (TIF) district, it’s not eligible for property tax abatement. (Because of the TIF, the developers have already achieved the diversion of the majority of their property tax payments away from the public treasury for their own benefit.)

    Instead, in this case the benefit of the IRBs, according to city documents, is an estimated $703,017 in sales tax that the hotel won’t have to pay.

    The Ambassador Hotel has benefited from many millions of taxpayer subsidy, both direct and indirect. So it’s a good question as to whether the hotel deserves another $703,017 from taxpayers.

    But if we follow the city’s economic development policy, the city should not authorize the IRBs. Here’s why.

    The Sedgwick County/City of Wichita Economic Development Policy states: “The ratio of public benefits to public costs, each on a present value basis, should not be less than 1.3 to one for both the general and debt service funds for the City of Wichita; for Sedgwick County should not be less than 1.3 overall.”

    The policy also states that if the 1.3 to one threshold is not met, the incentive could nonetheless be granted if two of three mitigating factors are found to apply. But there is a limit, according to the policy: “Regardless of mitigating factors, the ratio cannot be less than 1.0:1.”

    In September 2011 the city council passed a multi-layer incentive package for Douglas Place, now better known as the Ambassador Hotel and Block One. Here’s what the material accompanying the letter of intent that the council passed on August 9, 2011 held: “As part of the evaluation team process, the WSU Center for Economic Development and Business Research studied the fiscal impact of the Douglas Place project on the City’s General Fund, taking into account the requested incentives and the direct, indirect and induced generation of new tax revenue. The study shows a ratio of benefits to costs for the City’s General Fund of 2.62 to one.”

    The same 2.62 to one ratio is cited as a positive factor in the material prepared by the city for Tuesday’s meeting.

    So far, so good. 2.62 is greater than the 1.3 that city policy requires. But the policy applies to both the general fund and the debt service fund. So what is the impact to the debt service fund? Here’s the complete story from the WSU CEDBR report (the report may be viewed at Wichita State University Center for Economic Development and Business Research Study of Ambassador Hotel):

                                       Cost-benefit ratio
City Fiscal Impacts General Fund         2.63
City Fiscal Impacts Debt Service Fund    0.83
City Fiscal Impacts                      0.90

    We can see that the impact on the debt service fund is negative, and the impact in total is negative. (A cost-benefit ratio of less than one is “negative.”)

    Furthermore, the cost of the Ambassador Hotel subsidy program to the general fund is $290,895, while the cost to the debt service fund is $7,077,831 — a cost factor 23 times as large. That’s why even though the general fund impact is positive, the negative impact of the much larger debt service fund cost causes the overall impact to be unfavorable.

    The city didn’t make this negative information available to the public in 2011, and it isn’t making it available now. It was made public only after I requested the report from WSU CEDBR. It is not known whether council members were aware of this information when they voted in 2011.

    So the matter before the council this week doesn’t meet the city’s economic development policy standards. It’s not even close.

    There are, however, other factors that may allow the city to grant an incentive: “In addition to the above provisions, the City Council and/or County Commission may consider the following information when deciding whether to approve an incentive.” A list of 12 factors follows, some so open-ended that the city can find a way to approve almost any incentive it wants.

    A note: The policy cited above was passed in August 2012, after the Ambassador Hotel incentives package passed. But the 1.3 to one threshold was de facto policy before then, and whether a proposed incentive package met that standard was often a concern for council members, according to meeting minutes.

    Timing and campaign contributions

    Citizens might wonder why industrial revenue bonds are being issued for a hotel that’s complete and has been operating for over three months. The truly cynical might wonder why this matter is being handled just two weeks after the city’s general election on April 2, in which four city council positions were on the ballot. Would citizens disagree with giving a hotel $703,017 in sales tax forgiveness? Would that have an effect on the election?

    Campaign contributions received by James Clendinin from parties associated with Key Construction. Clendenin will vote tomorrow whether to grant sales tax forgiveness worth $703,017 to some of these donors.Campaign contributions received by James Clendinin from parties associated with Key Construction. Clendenin will vote tomorrow whether to grant sales tax forgiveness worth $703,017 to some of these donors. (Click for larger view.)

    Combine this timing with the practice of part of the hotel’s ownership team of engaging in cronyism at the highest level. Dave Burk and the principals and executives of Key Construction have a history of making campaign contributions to almost all city council candidates. Then the council rewards them with overpriced no-bid contracts, sweetheart lease deals, tax abatements, rebates of taxes their customers pay, and other benefits. The largesse dished out for the Ambassador Hotel is detailed here. This hotel, however, was not the first — or the last time — these parties have benefited from council action.

    Campaign contributions received by Lavonta Williams from parties associated with Key Construction. Williams will vote tomorrow whether to grant sales tax forgiveness worth $703,017 to some of these donors.Campaign contributions received by Lavonta Williams from parties associated with Key Construction. Williams will vote tomorrow whether to grant sales tax forgiveness worth $703,017 to some of these donors. (Click for larger view.)

    Campaign finance reports filed by two incumbent candidates illustrate the lengths to which Key Construction seeks to influence council members. Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) and Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) received a total of $7,000 from Key Construction affiliates in 2012. Williams received $4,000, and $3,000 went to Clendenin. For Williams, these were the only contributions she received in 2012.

    A table of campaign contributions received by city council members and the mayor from those associated with the Ambassador Hotel is available here.

    Wichita mayor Carl Brewer with major campaign donor Dave Wells of Key Construction. Brewer will vote tomorrow whether to grant a company Wells is part owner of sales tax forgiveness worth $703,017.

    This environment calls out for campaign finance reform, in particular laws that would prohibit what appears to be the practice of pay-to-play at Wichita City Hall.

    There was a time when newspapers crusaded against this type of governance. Unfortunately for Wichitans, the Wichita Eagle doesn’t report very often on this issue, and the editorial board is almost totally silent. Television and radio news outlets don’t cover this type of issue. It’s left to someone else to speak out.

  • Wichitans have choices; perhaps not information

    The Wichita Eagle publishes a voter guide before each election. While this is a useful civic service, readers of the newspaper might wonder what is the point of allowing candidates to make statements and claims without being held accountable.

    Here are two examples of candidates responding to the question “Assess the city’s success in downtown revitalization so far. How do you see that role evolving in the future?”

    Council Member Lavonta Williams (district 1, northeast Wichita) responded as follows:

    The trend in downtown redevelopment is showing a definite payoff in private investment exceeding $250 million since 2009. People are moving downtown and more private developers are starting projects in the area all of the time. I think that the city will still need to play a role in assuring that infrastructure, especially public green spaces and strategically placed parking, is in place so that private development can be attracted.

    Council Member Janet Miller (district 6, north central Wichita) answered this way:

    Wichita adopted its Downtown Master Plan in 2010 following an 18-month process involving input from several thousand Wichitans. Since the plan’s adoption, there has been a growing confidence in downtown development, which has resulted in more than $150 million in private investment. The City’s role will be to continue to foster private investment supported by public infrastructure improvements where needed.

    Both incumbent candidates claim a large investment in downtown Wichita. Although they didn’t make this claim in these answers, it’s usually claimed that the taxpayer investment in downtown pays off in the form of increased tax revenues. This is the cost-benefit analysis that the city relies on and uses to justify taxpayer investment in projects.

    Wichita Downtown Self-supporting Municipal Improvement District SSMID Assessed Valuation 2013-02 b

    But evidence of a payoff for the taxpayer is hard to find. At the same time hundreds of millions in investment is claimed, the assessed value of property in downtown Wichita is declining.

    We’re left to wonder whether readers of the Wichita Eagle are aware of the apparent contradiction between candidates’ claims and evidence from the real world.

    On another issue, the influence of campaign contributions, readers of the Eagle will probably also be uninformed about candidates’ actions. In response to the question “How would you handle a vote on an issue involving a campaign contributor?” Council Member James Clendenin (district 3, southeast and south Wichita) supplied this answer:

    No different than any other vote. I will vote for the best interest of the citizens Wichita and District III. I answer directly to the voters.

    Williams answered the same question this way:

    I would continue to handle it the way I always have. The city has good campaign finance laws that make sure no one individual or group can buy a council person’s vote. The law limits the contributions to a low enough amount that no one contribution can make or break a campaign. I treat each donation whether large or small the same and thank the community for their faith and support in what I do.

    The candidates’ lofty claims of independence from campaign contributions are difficult to believe. There is simply too much money given, and the candidates’ actions are too suspect.

    As an example, in 2012, these two candidates received campaign contributions from two sources: A group of principals and executives of Key Construction, and another group associated with theater owner Bill Warren. Except for $1.57 in unitemized contributions to Clendenin, these two groups accounted for all contributions received by these two incumbents.

    Those associated with Key Construction gave a total of $7,000. Williams received $4,000, and $3,000 went to Clendenin.

    Those associated with Warren gave $5,000, all to Clendenin.

    The problem is that both of these groups have benefited from the cronyism of the Wichita City Council, in particular members Williams and Clendenin.

    Here’s one example, perhaps the worst. 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.

    Both Williams and Clendenin voted for this no-bid contract that was contrary to the interests of taxpayers. They didn’t vote for this reluctantly. They embraced it.

    Last summer Williams and Clendenin, along with the rest of the council, participated in a decision to award the large contract for the construction of the new Wichita airport to Key Construction, despite the fact that Key was not the low bidder. The council was tasked to act in a quasi-judicial manner, to make decisions whether discretion was abused or whether laws were improperly applied.

    Judges shouldn’t preside over decisions that hugely enrich their significant campaign contributors. No matter what the merits of the case, this is bad government.

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

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

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

    By the way, this project, under Harding’s management, foundered until the city council offered a bailout. By then Harding had found new partners. No surprise these partners included Key Construction, Williams’ sole source of campaign funds in 2012.

    Wichitans who rely on the Wichita Eagle for advice on voting won’t likely be aware of these facts regarding these candidates.

  • Wichita economic development and the election

    Ballot boxAs Wichitans decide their preference for city council members, voters should take a look at the numbers and decide whether they’re satisfied with our city’s performance in economic development.

    As shown in the article Wichita economic statistics, Wichita is not doing well in key economic statistics. Debt has risen rapidly in recent years. Growth of private sector jobs lags far behind the nation and the state of Kansas, and government jobs have grown faster than private sector jobs. While inflation-adjusted spending per person is holding relatively steady, the city is cutting services and generally sending a message of budgetary distress.

    Perhaps most astonishing: With all the public money poured into downtown redevelopment, with all the claims of new projects being competed, and with all the talk of building up the tax base, assessed valuation in downtown Wichita is declining.

    In his recent State of the City Address, Wichita Mayor Carl Brewer called for increased effort and funding for economic development, specifically job creation. He, and most of Wichita’s political and bureaucratic leaders, believe that more targeted economic development incentives are needed to boost Wichita’s economy.

    Whether these incentives are good economic development policy is open for debate. I don’t believe we need them. Kansas and Wichita should chart another course to increase economic freedom in Kansas. That, in turn, will make our area appealing to companies. But our local bureaucrats, most business leaders, and nearly all elected officials believe that targeted incentives are the way to attract and retain business.

    Even if we believe that an active role for government in economic development is best, we have to conclude that our efforts aren’t working. In most years, the number of jobs that officials take credit for creating or saving is just a small part of the labor force, often less than one percent.

    Rarely mentioned are the costs of creating these jobs. These costs have a negative economic impact on those who pay them. This means that economic activity and jobs are lost somewhere else in order to pay for the incentives.

    Also, some of these jobs would have been created without the city’s efforts. All the city should take credit for is the marginal activity that it purportedly created. Government usually claims credit for everything, however.

    Several long-serving politicians and bureaucrats that have presided over this failure: Mayor Carl Brewer has been on the city council or served as mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for many years.

    Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s starting to become part of the legacy of Wichita’s efforts in economic development.

    The incumbents running for reelection to city council have been in office varying lengths of time. All, however, subscribe to the interventionist model of economic development championed by the mayor. That’s the model that hasn’t been working for Wichita.

    If voters in Wichita are truly concerned about economic development for everyone, next week’s election provides an opportunity to make a positive change by bring new voices to the city council.

  • Is graft a problem in Wichita?

    Is graft a problem in Wichita?

    Dump truck carrying coins

    In his paper History and Constitutionality of Pay-to-Play Campaign Finance Restrictions in America Greg Schmid explains the problems that result from the “soft corruption” that pay-to-play laws combat.

    Is this a problem in Wichita? Is it possible that “Graft takes the collective wealth of working taxpayers and transfers that wealth to the benefit of corrupt government officials and their private sector accomplices” in Wichita?

    Yes. Absolutely. As explained in In Wichita, a quest for campaign finance reform, we have a problem.

    An example: In August 2011 the Wichita City 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. Both of these parties are heavy campaign contributors to nearly all city council members.

    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.

    As elections approach, Wichita voters ought to remember that the three incumbents running for reelection all accepted campaign contributions from the parties that they voted to reward with an overpriced no-bid construction contract.

    Following, Greg Schmid explains the problem in this excerpt from History and Constitutionality of Pay-to-Play Campaign Finance Restrictions in America:

    The Problem
    Graft is nothing new in the world, especially soft “white collar” corruption involved in the award of government contracts based on “special relationships” between public officials and government contractors. Particular acts of corruption are often hard to detect, one at a time, but the aggregate effects of “Pay to Play” are reflected by the heavy financial toll that corrupted actors within our government system take on the taxpayer. Graft takes the collective wealth of working taxpayers and transfers that wealth to the benefitof corrupt government officials and their private sector accomplices. Graft increases the cost of government by motivating officials “on the take” to mismanage government project spending. An inside deal, that is good for the corrupt official personally, usually leads to a bad economic decision for the public because the extra cost of corruption must be passed on to the taxpayer; a bought politician tends to make distorted choices. This “mismanagement effect” is costly to the public trust. One dollar of corruption is estimated to impose a burden of $1.67 on the taxpayers. …

    Efforts to make government transactions transparent are met with disdain and with incredulous personalized claims that people who don’t trust their public officials are just paranoid, and should not be allowed to interrupt the people’s business by prying into the inner workings of government procurements. Fear of being targeted for ridicule or worse by society’s powerful elite makes it easy to look the other way, live in denial, or just accept government corruption as the way of the world. This is the most dangerous attitude of all; the perception that our government system is just unethical and corrupt and that there is nothing anyone can do about it. By this attitude, the perception of pervasive corruption at all levels of government, citizens lose hope and lose faith in their governing institutions. When this fundamental disconnect occurs people disengage from government, and self-governance is at risk.