Voice For Liberty

Tag: Sedgwick county government

  • Sedgwick County needs to slow down, deliberate land purchase

    Sedgwick County seems to be in a rush to make a huge decision that will have far-reaching and long-lasting effects on our county. We don’t have, however, anywhere near all the information we need to make this decision. We need to slow down and decide what role we want to have county government play in economic development.

    The stated goal of Sedgwick County’s purchase of the Bel Aire industrial park is to have a site ready for companies of 1,000 or more employees. The Wichita Eagle article Sedgwick County seeks to attract industry with land plan tells us, though, that there are just five or six deals like this each year. Research by the Eagle reporter found more than 100 sites already exist, from all across the country, that meet the necessary criteria. So we’re entering a contest with pretty long odds.

    On top of that, according to Sedgwick County, the goal of the industrial park is “to welcome only companies in the composites and alternative-energy fields.” This limits the companies the county would pursue to a number smaller than the five or six deals each year mentioned above.

    (It’s worth noting that alternative-energy companies, such as wind turbine companies, exist only because of government subsidy aimed at curing a problem that can’t be fixed. Last year, as the production credit for wind power was about to expire, Congress was told that no further wind power would be developed unless the subsidy was restored.)

    If the county asks “do you need rail access?” and it is provided for free, why wouldn’t any company say they need it? I’ve been told, however, that it’s not uncommon for companies to list rail access as part of their requirements, but then never need any rail cars once the facility opens. Some of the industries that composites may be used in are industries like medical devices. These products aren’t shipped by rail.

    The issue of needing water and sewer utilities in place before the park can be marketed doesn’t make sense. These utilities could, if government wanted to, be installed very quickly, much faster than a building can be built.

    That brings up another point — what about electricity and natural gas service? Depending on the type of industry, these utilities are vitally important. We don’t hear about the lack of these utilities being a problem. The likely reason for this is that electricity and gas are provided by private sector companies (even though most are highly regulated).

    If a private utility can provide complicated and expensive electrical service infrastructure quickly to a building, why can’t a government quickly provide water and sewer?

    It’s also claimed that the reason Wichita didn’t get the Target Distribution Center a few years ago was the lack of land ready to go. “Shovel ready,” so to speak. But according to reporting in the Topeka Capital-Journal, that city had to use eminent domain to forcibly acquire some of the land needed to assemble the tract.

    Topeka used purchase options to secure the availability of land, too. I am told that when this strategy was presented to county staff, they had no idea of what this meant. This is evidence that Sedgwick County is not experienced and equipped to be in the land development business.

    If Sedgwick County is determined to proceed and acquire the industrial park, we need to find some way to mitigate the damage to existing real estate developers in the Wichita area. That’s because when government can give away land, when it can dish out tax exemptions and other perks, the private sector is at a severe disadvantage.

    Some ideas that have surfaced are these:

    • Limit the industrial park to large — very large — buildings only. Don’t allow smaller buildings that compete with what the private sector already has made available.
    • Restrict tenants to companies from outside the Wichita metropolitan area.
    • When existing Wichita-area companies see the perks — free land, etc. — lavished upon companies that move to the industrial park, they will want the same incentives. These incentives could be made available to companies in all industrial parks in the county. After all, we need to retain existing jobs.

    There seems to be a great deal of haste towards making a decision on purchasing this land and the county being in the industrial park development business. This decision process is moving much too quickly. Finding a stable set of facts from which to conduct debate is a problem too, as some of the details in the Sunday Wichita Eagle story are different from what was presented at the commission meeting less than one week before.

    A project of this scope would take from four to six months for experienced land developers to consider and perform due diligence. Sedgwick County has been considering this deal for about two weeks. As we’ve seen, the county is in no way experienced in this type of business.

  • Sedgwick County industrial park requires scrutiny

    At Wednesday’s meeting of the Board of Sedgwick County Commissioners, a seemingly innocent item appeared on the meeting agenda.

    Titled simply “LAND PURCHASE CONTRACT — Presented by Chris Chronis, CFO” and accompanied by a recommendation to approve the contract, this item might have slipped public notice if not for Dion Lefler’s Wichita Eagle story the day before.

    Four members of the public — one being myself — attended the meeting to speak to the commissioners on this matter.

    There was one other person who attended for the same reason. I’m not including him as “public,” because as chairman of a quasi-governmental body, he seems to hold special status before the commission. He was able to give input to the commissioners, while none of the public were able to do the same.

    I don’t fault the commission for shutting off the public speakers. Not too much, anyway, as there will be a public hearing on this matter at next Wednesday’s meeting. We’ll ask our questions then. The problem is that we will likely ask questions that haven’t been asked before — questions that need answers. Will the commission be in the mood to delay action another week or more so that these questions can be answered?

    There are many reasons to be skeptical of the claimed need to move forward quickly on this item. One that troubles me is that the organization that wants this industrial park, the Greater Wichita Economic Development Coalition, has been trying to market this very park for over five years. What has changed now? How has this organization earned our trust?

    At Wednesday’s meeting, even basic questions such as the width of the railroad right-of-way could not be answered.

    There’s also the issue of deannexation of the property by Bel Aire. Part of the deal requires Bel Aire to spend $4.1 million to provide water and sewer service to the park. But if the land is no longer in that small city, what incentive do they have to spend this money?

    Perhaps the most important reason is that there are many developers in Wichita who own land — empty buildings too — that are suitable for industrial park-style use. When government gets involved and competes with them, it greatly affects these developers’ business. Government has many advantages that the private sector doesn’t have, such as the ability to buy and develop land, using taxpayer funds, with little consideration of risk. Then, it can — and often does — give it away.

    Under these conditions, what motivation do entrepreneurs have to raise capital and assume huge risk, just to have government step in and destroy their investment?

  • I am now part of the system

    At yesterday’s meeting of the Board of Sedgwick County Commissioners, my nomination to become a member of the county board of zoning appeals was approved. I received a handsome certificate and some recognition for my blogging and activism.

  • Here’s what the Wichita Chamber of Commerce could do

    Today’s Wichita Eagle has a story wondering if economic conditions have affected local chambers of commerce. (Has economy affected area chambers?)

    In particular, Wichita Metro Chamber of Commerce CEO Bryan Derreberry mentioned measures aimed at retaining members.

    The context of this, besides the current economic conditions, is the shift of the local chamber of commerce away from promoting free markets, limited government, and capitalism. But today, as Stephen Moore wrote two years ago in the Wall Street Journal, “chambers of commerce deploy their financial resources and lobbying clout to expand the taxing, spending and regulatory authorities of government.”

    In other words, local chambers now support big-government crony capitalism. See The Decline of Local Chambers of Commerce.

    Recently I asked Derreberry a question based on Moore’s assertion. In an noncommittal response, he disputed that this transformation has taken place in the Wichita Chamber. (See Wichita Chamber of Commerce makes case for interventionism.)

    An illustration of this shift is last year’s election for the third district Sedgwick County Commission seat. One candidate, Karl Peterjohn, had a long and proven record of supporting free markets, limited government, and capitalism. His opponent had no such record, and in fact, had recently presided over a large tax increase in the small town she served as mayor.

    So what did the Wichita Chamber do? Support the proven fiscal conservative?

    No. Its political action committee spent some $19,000 — 44% of all it spent on campaigns — on Peterjohn’s opponent.

    What should the Chamber do? Abandon its present course of supporting government interventionism. Instead, support policies that will generate prosperity for everyone, which are free markets, limited government, and capitalism.

  • Sedgwick County land purchase raises questions

    Wichita Eagle newspaper stories from summer 2003 tell of the City of Bel Aire‘s plans for an industrial park. Today Sedgwick County may purchase this land from the small city.

    This item, described on the agenda — at least I think this is the item — simply as “Land purchase contract” has assumed a sense of urgency.

    The Eagle news stories tell how the city of Bel Aire purchased the land in secret, because it didn’t want the City of Wichita to be aware of its plans.

    But the important questions are these:

    Bel Aire hired real estate developer Steve Martens to develop the industrial park. Recently the Greater Wichita Economic Development Coalition says they’ve lost out on bids to attract industry to Wichita because we don’t have ready-to-go land available for industrial development. Steve Martens has been the chairman of the GWEDC during some of the time since Bel Aire announced plans to develop this industrial park.

    I’m having trouble forming a precise question based on these facts. But I hope you see how I am perplexed by these facts.

    Then, what has changed now that would make us believe that Sedgwick County — a different governmental body, but still government — will have a better experience developing this industrial park?

    If the GWEDC has a specific prospect in mind for this land — and that may be a very real possibility — it would be reassuring to hear it say so. I understand that the courting of companies looking to relocate or expand may be shrouded in secrecy by necessity. It’s also possible that we’re being used as a bargaining chip. These are problems for a different day.

    What is the plan for future ownership of the land in question? Will the county continue to own it, or will it sell it to companies that locate here?

    Is it possible to have the private sector develop this land even if it’s owned by Sedgwick County? We have many talented real estate developers in this area.

  • Today I may become part of the system

    At today’s meeting of the Board of Sedgwick County Commissioners, my nomination to become a member of the Sedgwick County Board of Zoning Appeals is on the agenda.

    Karl Peterjohn appointed me. Initially I said yes, I would serve on this board. But then I got to thinking. I wondered how I could be part of the system that I cover (and often criticize) in my role as blogger and government watchdog.

    I posed this question to a national network of blogger/activists that I belong to, and everyone said there shouldn’t be a problem with me serving on this board. Karl also said I should serve.

    So I decided to go ahead. Hopefully my nomination will be approved by a majority of the commissioners.

  • Wichita covered with tax-advantaged districts

    Here’s a map of improvement and development districts in Wichita and Sedgwick County.

    Sometimes critics of tax increment financing districts (TIF districts) say things like “If TIF districts are good for development, why not make the entire city a TIF district?” Maybe we’re headed that way.

    Wichita Improvement and Redevelopment Districts, April 2009

  • Wichita Chamber of Commerce makes case for interventionism

    In a talk to the Wichita Pachyderm Club on Friday April 24, 2009, Bryan S. Derreberry, President and CEO of the Wichita Metro Chamber of Commerce, laid out the case for government management of our area’s economic and community development. The title of the talk was “The Basis for Economic Partner Selection and Collaborative Efforts.” The slide presentation is available at the end of this article.

    While the Chamber is, strictly speaking, not an arm of government, it receives a large amount of government funding. Additionally, many of the incentives that it offers to companies require governmental action and funding to implement.

    One of the things I learned — I had suspected this, but now it is confirmed — is that “economic and community development are now the same.” The Chamber views their mission as more than just economic development.

    Moreover, there’s a lot of competition in the economic development field. There are 361 MSA (metropolitan statistical areas) in the United States. There are 18,000 economic development organizations in the United States. All are looking to attract and retain business, just like the Wichita Chamber is.

    The prize being sought — the really large expansion or relocation — is relatively rare, as Derreberry said there are just 200 expansions or relocations that feature 500 or more employees each year.

    Some of the important tangible things companies are looking at, in order of decreasing importance, are highway access, low labor costs, low occupancy and construction costs, tax exemptions, availability of energy and its cost, availability of skilled labor, state and local incentives, fair corporate tax rates, low union profile, and available land and buildings.

    One of the slides Derreberrry presented dealt with the intangible factors that, if aren’t nailed down, “the competition will beat you every time.” These include:

    • Risk minimization for expanding or relocating employer
    • Cooperative, enthusiastic, positive, and sincere public and private leadership — sophisticated and wanting of the project
    • Consultative economic development experts
    • Solutions-oriented negotiations (“we’ll find a way”)
    • Tireless momentum that overcomes obstacles

    Other intangible qualities of a location include attributes such as vitality, earning, learning, social capital, cost of lifestyle, “after hours,” and “around town.” Many of these fall in to what our mayor and others refer to as amenities. It’s now the duty, it seems, of a city to plan for and provide entertainment for its citizens. Among the economic development planners, this is known as the “third place” beyond home and work: Are there other places I can go and feel good about the community I’m in?

    Two years ago Stephen Moore of the Wall Street Journal wrote an important article titled “Tax Chambers.” I’ve commented on it before in Tax Chambers of Commerce, Right Here in Kansas and The Decline of Local Chambers of Commerce. I used this article as the foundation for a question, which went something like this:

    “In February 2007, Stephen Moore wrote a column that appeared in the Wall Street Journal. In it he said ‘Thanks to an astonishing political transformation, many chambers of commerce on the state and local level have been abandoning these goals. They’re becoming, in effect, lobbyists for big government. … In as many as half the states, state taxpayer organizations, free market think tanks and small business leaders now complain bitterly that, on a wide range of issues, chambers of commerce deploy their financial resources and lobbying clout to expand the taxing, spending and regulatory authorities of government. This behavior, they note, erodes the very pro-growth climate necessary for businesses — at least those not connected at the hip with government — to prosper.’ Mr. Derreberry, the Wichita Chamber has supported tax increases, subsidies, centralized government planning, and what I call crony capitalism. Do you think this is valid criticism of this chamber?”

    He replied that the Chamber opposed a tax increase for education in 2002. The Chamber will support “responsible” taxes, he said. He recognized that a high tax and regulatory environment will inhibit the ability to grow communities. He didn’t address subsidy or centralized government planning, and he didn’t agree that this criticism applies to the Wichita Chamber. Something tells me he doesn’t get asked questions like this very often.

    Granting the incentives that the Wichita Chamber wants to offer is expensive. It requires government to pay subsidy directly to companies, or, as is often the case, grant companies relief from paying taxes. Sometimes a company is allowed to use its taxes for its own exclusive benefit, instead of funding the general operations of government.

    All these courses are costly.

    There’s also some question as to how important these subsidies are to companies. Last year, it was reported that North Carolina offered Cessna $200 million to build a new plant there. Between Kansas, Sedgwick County, and the City of Wichita, Cessna received an offer of $35 million, and decided to build the new plant here. To me, it looks like Cessna left $165 million on the table. Is building a new plant in Wichita worth that much? If they left $165 million on the table, would they have left, say, $185 million there too? The cynic in me says that Cessna never seriously considered building the plant outside Wichita, but they nonetheless wanted a reward for being a good corporate citizen.

    The planning that Mr. Derreberry talks about requires government expansion and interventionism on a grand scale. In a newspaper op-ed a few years ago, he mentioned the entrepreneurial spirit of Wichita. Government planning like the downtown revitalization effort underway in Wichita strangles entrepreneurship. So does the public-private partnership.

    Since there’s so much competition in economic development, and since Wichita doesn’t have picturesque mountains or seashore, why don’t we try something really different? We could make Wichita and Kansas a laboratory for economic freedom. That would be something quite unusual these days. There’s no telling to what level of prosperity we might advance.

    The problem is that this would require unilateral disarmament by Wichita in the escalating arms race between states and cities to see who can dish out the greatest incentives. It doesn’t seem likely to happen, especially given the short time frame of most politicians — the next election campaign.

    I spoke to one activist after the talk, and he was distressed at the call for government intervention that Mr. Derreberry called for. This reaction was in the minority, as many seemed appreciate of the Chamber’s efforts.

    Another person I talked to said the Chamber’s action reminded him of a quote from Adam Smith: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.”

    Myself, I thought of a passage by Milton Friedman, which reads: “[The political system] tends to give undue political power to small groups that have highly concentrated interests; to give greater weight to obvious, direct and immediate effects of government action than to possibly more important but concealed, indirect and delayed effects; to set in motion a process that sacrifices the general interest to serve special interests rather than the other way around. There is, as it were, an invisible hand in politics that operates in precisely the opposite direction to Adam Smith’s invisible hand.”

    The basis for economic partner selection and collaborative efforts

  • More money to Wichita government

    A letter in today’s Wichita Eagle places a lot of faith on things not yet seen, and in things we know don’t work.

    “I think it is dumb that people are complaining about the new Intrust Bank Arena. It will bring money and tourists to Wichita, not to mention great entertainment. That means more money brought to our government, and that’s a good thing. — Caleb Beeson, Wichita”

    First, since the Intrust Bank Arena is not yet open, it has no track record. We have absolutely no idea how well it will do, financially or otherwise. A lot of people think it’s “dumb” to count chickens before eggs have hatched.

    Then, there’s this letter writer’s idea that more money in the hands of government is a “good thing.”

    To believe that paying taxes to the government is good requires believing that government spends wisely. There’s little evidence of that.

    Perhaps the writer means that when tourists from out of town travel to Wichita and spend money, our local government will be gathering tax revenue from out of our area. Better to tax someone else than ourselves — that’s the underlying message.

    These taxes serve to suppress travel to cities that levy them. How does it feel to have a city add 13% to the cost of your hotel room, as I have paid in some cities? Or how do you think travelers feel when a city levies fees and charges that add 26% to the cost of renting a car, as some places do?

    Since demand falls with rising prices, these high taxes reduce demand for travel to high-tax cities. Probably worse than that, they leave a bitter aftertaste for those who pay them. Do we want travelers to Wichita to feel that they’ve been soaked by our local taxes? They won’t feel good about coming back again.