Tag: STAR bonds

Wichita taxing district to expand
Wichita city government

Wichita taxing district to expand

The City of Wichita plans to expand a special tax district. Next week the Wichita City Council will consider expanding an existing CID, or Community Improvement District, in the Delano neighborhood near downtown Wichita. A map provided by the city is nearby. Community Improvement Districts are a mechanism whereby extra sales tax is collected within a district. For this CID, the city asks to collect an extra two cents per dollar, which is the maximum allowed in Kansas. CIDs are distinguished from STAR bonds, in which incremental sales tax revenue in a district is captured and handled differently from the base sales tax. The sales tax rate remains as before. The ballpark and surrounding area use both CID and STAR bonds, as well as other public funding. In its analysis appearing in the ag...
Wichita considers a new stadium
Wichita city government

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. 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. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/.] [1. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.] City documents promise this: "The City plans to substantially rehabilitate or replace Lawrence-Dumont Stadium into a multi-sport athl...
From Pachyderm: Economic development incentives
Economics

From Pachyderm: Economic development incentives

A look at some of the large economic development programs in Wichita and Kansas. Here's video of a presentation I gave at the Wichita Pachyderm Club this week on economic development incentives. The video was produced by Paul Soutar of Graphic Lens. View below, or click here to view at YouTube. Following, articles that address some of the topics I presented: Industrial revenue bonds in Kansas: Industrial Revenue Bonds are a mechanism that Kansas cities and counties use to allow companies to avoid paying property and sales taxes. Wichita TIF projects: some background: Tax increment financing disrupts the usual flow of tax dollars, routing funds away from cash-strapped cities, counties, and schools back to the TIF-financed development. TIF creates distortions in the way cities develop, a...
In Wichita, spending semi-secret
Wichita city government

In Wichita, spending semi-secret

The Wichita City Council authorized the spending of a lot of money without discussion. At its March 27, 2018 meeting, the Wichita City Council passed a resolution authorizing the spending of funds for the River Vista development on the west bank of the Arkansas River in downtown. The agenda packet for the meeting gave the details: "The overall project budget is $7,862,999 with STAR Bonds financing $4,750,000 of the costs and the City financing $1,050,000. The balance of the project costs will be assessed against the Improvement District." (STAR bonds are a mechanism whereby future sales tax revenue is routed to the project developer, rather than paying for the cost of state and Sedgwick County government. The "Improvement District" is the development itself, and the "City" is, of cours...
In Wichita, new stadium to be considered
Wichita city government

In Wichita, new stadium to be considered

The City of Wichita plans subsidized development of a sports facility as an economic driver. 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. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/.] [1. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.] 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...
On Wichita’s STAR bond promise, we’ve heard it before
Wichita city government

On Wichita’s STAR bond promise, we’ve heard it before

Are the City of Wichita's projections regarding subsidized development as an economic driver believable? This week the Wichita City Council will consider a project plan for a STAR bonds district near Downtown Wichita. These bonds divert future incremental sales tax revenue to pay for various things within the district.[1. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/.] City documents promise this: "The City plans to substantially rehabilitate or replace Lawrence Dumont Stadium as a modern multi-sport stadium as part of a larger project to develop the river and stadium areas. ... Combined, the museum, pedestrian bridge, waterfront improvements and multi-sport stadium will generate significant new visitor tourism as well as p...
Kansas economic development programs
Kansas state government

Kansas economic development programs

Explaining common economic development programs in Kansas. TIF projects: Some background Tax increment financing disrupts the usual flow of tax dollars, routing funds away from cash-strapped cities, counties, and schools back to the TIF-financed development. TIF creates distortions in the way cities develop, and researchers find that the use of TIF means lower economic growth. Click here. Tax increment financing (TIF) resources Resources on tax increment financing (TIF) districts. Click here. STAR bonds in Kansas The Kansas STAR bonds program provides a mechanism for spending by autopilot, without specific appropriation by the legislature. Click here. Industrial Revenue Bonds in Kansas Industrial Revenue Bonds are a mechanism that Kansas cities and counties use to allow companies to av...
In Wichita, an incomplete economic development analysis
Wichita city government

In Wichita, an incomplete economic development analysis

The Wichita City Council will consider an economic development incentive based on an analysis that is nowhere near complete. Tomorrow the Wichita City Council will consider granting a sales tax exemption for a real estate development in northeast Wichita. (For background, see In Wichita, benefitting from your sales taxes, but not paying their own.) As evidence of the goodness of the project and why the city should forego collecting sales tax, the council has been presented with these benefit-cost figures: City of Wichita General Fund: 44.67 to 1 City of Wichita Debt Service Fund: NA Sedgwick County: 100.23 to 1 USD 375: NA State of Kansas: 65.28 to 1 Undoubtedly council members will congratulate themselves on their wisdom and foresight for being able to invest $1.00 and ge...
In Wichita, benefitting from your sales taxes, but not paying their own
Wichita city government

In Wichita, benefitting from your sales taxes, but not paying their own

A Wichita real estate development benefits from the sales taxes you pay, but doesn't want to pay themselves. In Kansas, the STAR bond program allows cities to issue bonds (that is, to borrow money), give the proceeds (that is, cash) to a private business firm, and then pay off the bonds with the sales taxes paid by the business firm's customers. But sometimes this gift by taxpayers isn't sufficient. In Wichita, despite benefitting from STAR bonds, a company wishes to skip paying sales taxes itself. This is what the Wichita City Council will consider tomorrow. The Wichita Sports Forum (WSF) project on North Greenwich Road, according to city documents, is a project with a cost of $14,025,000. Of that, $7,525,000 (53.6 percent) may be paid for by the STAR bonds. These bonds will be...
STAR bonds in Kansas
Kansas state government

STAR bonds in Kansas

The Kansas STAR bonds program provides a mechanism for spending by autopilot, without specific appropriation by the legislature. Under the State of Kansas STAR bonds program, cities sell bonds and turn over the proceeds to a developer of a project. As bond payments become due, incremental sales tax revenue make the payments. It's only the increment in sales tax that is eligible to be diverted to bond payments. This increment is calculated by first determining a base level of sales for the district. Then, as new development comes online -- or as sales rise at existing merchants -- the increased sales tax over the base is diverted to pay the STAR bonds. Often the STAR bonds district, before formation, is vacant land, and therefore has produced no sales tax revenue. Further, the district ...
What incentives can Wichita offer?
Wichita city government

What incentives can Wichita offer?

Wichita government leaders complain that Wichita can't compete in economic development with other cities and states because the budget for incentives is too small. But when making this argument, these officials don't include all incentives that are available. In making the case for an economic development fund paid for by a sales tax, the argument goes like this: "Wichita and Sedgwick County compete conservatively with incentives. The City of Wichita and Sedgwick County have a total of $1.65 million in new uncommitted funds for cash incentives this year with any unused money going back to the general fund." (Will Wichita Accelerate Competition for Primary Jobs?, presentation made to Wichita city council.) This statement is true only if we use a very narrow definition of the word "in...
Wichita: We have incentives. Lots of incentives.
Wichita city government

Wichita: We have incentives. Lots of incentives.

In this excerpt from WichitaLiberty.TV: Wichita government leaders complain that Wichita can’t compete in economic development with other cities and states because the budget for incentives is too small. But when making this argument, these officials don’t include all incentives that are available. View below, or click here to view on YouTube. More information on this topic is at Contrary to officials, Wichita has many incentive programs.
Contrary to officials, Wichita has many incentive programs
Wichita city government

Contrary to officials, Wichita has many incentive programs

Wichita government leaders complain that Wichita can't compete in economic development with other cities and states because the budget for incentives is too small. But when making this argument, these officials don't include all incentives that are available. The document Will Wichita Accelerate Competition for Primary Jobs? contains contradictory information about money available for economic development incentives in Wichita. The usual argument that officials make is represented by this quotation from the report: "Wichita and Sedgwick County compete conservatively with incentives. The City of Wichita and Sedgwick County have a total of $1.65 million in new uncommitted funds for cash incentives this year with any unused money going back to the general fund." But the same report con...
Politics

Carl Brewer: The state of Wichita, 2013

Much like President Barack Obama in his recent inaugural address, Wichita Mayor Carl Brewer displayed his collectivist instincts in his "State of the City" address for 2013. His speech, as prepared, may be read here. Opening, the mayor said "Wichita has overcome great challenges in the past and will overcome these as well, but we’ll need to work together." Near the close, the mayor said "THE TIME FOR ACTION IS NOW! We have reached a point where we MUST come together as a community, and create a plan that defines our priorities and the City we are to become." And then: "For all of our differences, I have never doubted this community’s ability to come together and protect what matters most." (The capitalization is in the mayor's prepared text.) But what's really important to Wichita...
Free markets

Wichita STAR bonds project not good for capitalism

Tomorrow the Wichita City Council considers approval of the project plan for a STAR bonds project in Wichita. The formation of the district has already been approved. This action by the council will consider the development plan and the actual authorization to spend money. If approved, the city will proceed under the State of Kansas STAR bonds program. The city will sell bonds and turn over the proceeds to the developer. As bond payments become due, sales tax revenue will make the payments. It's only the increment in sales tax that is eligible to be diverted to bond payments. This increment is calculated by first determining a base level of sales for the district. Then, as new development comes online -- or as sales rise at existing merchants -- the increased sales tax over the b...
Kansas state government

Kansas STAR bonds vote tests beliefs in capitalism, economic freedom

An upcoming vote in the Kansas Legislature, possibly today, will let Kansans know who is truly in favor of economic freedom, limited government, and free market capitalism -- and who favors crony capitalism instead. The bill is Senate Substitute for HB2382: AN ACT concerning economic development; concerning the STAR bonds financing act; relating to the provisions regarding STAR bond projects; extending the sunset date. Under current law, the Kansas STAR bonds program will expire on July 1, 2012. This bill extends the program's life for five years. The STAR bonds program allows increases in sales tax revenue to be directed to private interests rather than feeding the state treasury. The mechanism is that local governments like cities can sell bonds and give the proceeds to developers....
Capitalism

Political cronyism has become the way

"A society whose businesses engage in cronyism instead of serving people will not be prosperous, and in America it is clear that cronyism is becoming a more common choice," writes Sam Patterson at EconomicFreedom.org. Cronyism is the practice of seeking business success through government rather than through markets. The difference is that business succeeds in the market by providing goods and services that people are willing to buy. Political cronyism, on the other hand, results in people being forced to buy from, or to otherwise involuntarily subsidize, certain business firms that have succeeded in the political arena. In Kansas, despite the fiscal conservatism of Kansas Governor Sam Brownback and many members of the legislature, political cronyism thrives. An example is the increa...
Wichita city government

Wichita to hold public hearing, again

On Tuesday the Wichita City Council will consider whether to set June 5th as the date to re-hold the public hearing on the K-96 Greenwich STAR Bond District Plan. The council held a public hearing on this matter in February, but there was a mistake in the ordinance accompanying the original public hearing. Therefore, the need for the second public hearing. I find myself torn, not wanting to root for the competent administration of bad policies. But Wichita seems to have administrative difficulties implementing the bad programs it has passed. A history of blunders, and worse This is not the only recent example of the city making such a mistake. Last October the city had to re-hold a public hearing regarding a tax abatement. The reason was a mistake in the dates published regarding th...
Kansas state government

In Kansas, STAR bonds vote uplifted cronyism over capitalism

Recently both chambers of the Kansas Legislature passed similar bills authorizing a five year extension of the Kansas STAR bonds program. In the House the bill passed 92 to 31. In the Senate the vote was 27 to 13. The STAR bonds program provides a way to redirect sales taxes to project developers instead of the state treasury, which is where most people think taxes go -- or should go. Not so with STAR bonds. In the words of the Kansas Department of Commerce, the program offers "municipalities the opportunity to issue bonds to finance the development of major commercial, entertainment and tourism areas and use the sales tax revenue generated by the development to pay off the bonds." This description, while generally true, is not accurate. A proposed STAR bond district in Wichita inc...
Kansas state government

Kansas STAR bonds vote a test for capitalism

Update: The bill passed in the House of Representatives 92 to 31. A similar bill passed in the Senate 27 to 13. An upcoming vote in the Kansas House of Representatives will let Kansans know who is truly in favor of economic freedom, limited government, and free market capitalism -- and who favors crony capitalism instead. The bill is HR 2561: Extension of the STAR bonds financing act sunset provision regarding STAR bond projects. Under current law, the Kansas STAR bonds program will expire on July 1, 2012. This bill extends the program's life for five years. The STAR bonds program allows increases in sales tax revenue to be directed to private interests rather than feeding the state treasury. The mechanism is that local governments like cities can sell bonds and give the proceeds...
Learn how you can support the Voice for Liberty. Click here.