Voice For Liberty

Tag: Subsidy

  • City of Wichita State Legislative Agenda: Cultural Arts Districts

    City of Wichita State Legislative Agenda: Cultural Arts Districts

    Wichita government spending on economic development leads to imagined problems that require government intervention and more taxpayer contribution to resolve. The cycle of organic rebirth of cities is then replaced with bureaucratic management.

    Commerce Street Arts District P9As the City of Wichita prepares its legislative agenda for 2015, an issue arises for the first year. It seems that the success of government spending on development has created rising property values, which creates higher tax bills, and that is a burden for some. Here’s the issue the city has identified: “Cultural arts enterprises in certain areas are threatened by rising property values and the resulting tax burden.”

    Here’s the solution the city proposes: “The Wichita City Council supports state legislation that would allow local governments to use innovative measures to protect cultural arts enterprises from circumstantial increases in property taxes. The intent is to nurture and preserve arts activity throughout the City of Wichita and the State of Kansas.”

    What are the “innovative measures” the city wants to use? Nothing special; just allowing a special group of people to shirk paying the same taxes that everyone else has to pay. The city wants to be able to use tax abatements for up to ten years. The percentage of taxes that could be forgiven could be as high as 80 percent.

    So there’s really nothing innovative to see here. The city merely wants to broaden the application of tax forgiveness. Which means the tax base shrinks, and the people who still find themselves unlucky enough to still be part of the tax base face increasing demands for their tax payments.

    The city manager said that artists from Commerce Street came to the city looking for a solution to their problem. Which is about the same problem that everyone else has: high taxes.

    Here’s the nub of the problem, as explained by the city manager: “The more successful that we are with the redevelopment, the higher the value of the properties, and therefore harder for them who are on thin margins to begin with to stay in the districts, so they lose their charm of being the artistic or art districts.”

    The proposed solution, which will require a change to state law, is that a government bureaucrat will decide the boundaries of one or more cultural arts districts. The bureaucrat will also decide which types of business firms qualify for discounts on their taxes. Besides Commerce Street, the manager identified Delano, Old Town, and the Douglas Design District as possible districts where artists might receive 80 percent discounts on their property taxes.

    After this, other taxpayers have to make up the lost tax revenue from the artists. That is, unless the city decides to reduce spending by the amount of the tax discounts. I’ve proposed that to the city in other similar circumstances, and the idea was rejected. I believe council members thought I was delusional.

    There are many people and business firms that operate on the same “thin margins” that the city manager wants to help artists escape. We see them come to city hall seeking special treatment. As a result, the city plans and manages an increasing share of the economy, and economic freedom, entrepreneurship, and the potential for a truly dynamic economy decline.

    Who will stake out the next frontier?

    There are many problems with the idea the city is proposing.

    One is that the city is asking poor people to pay their full share of property taxes while granting artists a discount. This is a serious problem of equity, which is that people in similar circumstances should be treated the same. Just because someone chooses art as a business or vocation doesn’t mean they should be treated specially with respect to the taxes they pay.

    Bob Weeks and Bill Goffrier in the artist's studio, Flatiron Building, Wichita, 1982
    Bob Weeks and Bill Goffrier in the artist’s studio, Flatiron Building, Wichita, 1982
    Another problem is that the process of establishing arts districts will interrupt the dynamism of the way cities develop. Arts districts develop because artists want (or need) places with cheap rent. Unless they can persuade city hall to grant property tax discounts, this generally means artists rent space in “bad” parts of town, that is, parts of town that are run down, blighted, and may have high crime rates. Thus, cheap rent.

    If things go well, that is, the artists are successful and a community develops, things get fixed up. Rents rise. Taxes rise. The artists can’t afford the higher rent and taxes and have to move on. Which means the cycle repeats. The artists on the cutting edge find other places to move to, and the cycle repeats. Other parts of the city are reborn — organically — through the benefits of markets, not government bureaucracy. This is good.

    Except: The City of Wichita is proposing to end the cycle by granting discounts on taxes to artists so they may remain where they are.

    We replace dynamism with stagnation by bureaucracy. The city says this is innovative.

  • City of Wichita State Legislative Agenda: Passenger rail

    City of Wichita State Legislative Agenda: Passenger rail

    Instead of calling for the expansion of Amtrak — perhaps the worst of all federal agencies — the City of Wichita should do taxpayers a favor and call for an end to government subsidy of Amtrak everywhere.

    Wichita Legislative Agenda, November 2014, page 07, Passenger RailThe City of Wichita’s legislative calls for the pursuit of money to pay for the funding of an environmental study of the proposed passenger rail extension to Oklahoma City. Not an actual rail line, just an environmental study.

    Amtrak is very expensive. In most parts of the country it relies on massive taxpayer subsidy. For example, for the line from Fort Worth to Oklahoma City — the line proposed for extension to Wichita – taxpayers pay a subsidy of $26.76 per passenger for the trip. And that’s a short trip.

    Being expensive, Amtrak is usually pitched as an economic development driver. Yes, taxpayers pay for passengers to ride, but once in your town they spend money there! Never mind that so few people travel on trains (outside the Northeast Corridor) that they are barely noticed. In 2012 intercity Amtrak accounted for 6,804 million passenger-miles of travel. Commercial air racked up 580,501 million passenger-miles, or 85 times as many.

    U.S. Passenger Miles, Air and Amtrak. Note difference in scales.
    U.S. Passenger Miles, Air and Amtrak. Note difference in scales.

    So some people, like Wichita City Council Member Pete Meitzner (district 2, east Wichita) take a different tack. Passenger rail is about boosting business productivity.

    For him and the local business leaders he’s spoken with, it’s all about productive hours. Meitzner says the people who are interested in regional train travel for business are often people who are currently driving to their destinations instead. They’re equipped with smartphones, tablet computers and other technologies, but they can’t use them much, or at all, while they’re driving. Sitting on trains, businesspeople could get work done, he says. He suggests the rise of new mobile technology is one reason passenger rail travel is on the rise. ( Meitzner says there’s a business case for passenger rail in Wichita, Wichita Business Journal, July 18, 2012)

    Unfortunately for Meitzner’s business case, at about this time the New York Times published a piece detailing the extreme frustration Amtrak riders had with on-train wi-fi service, reporting “For rail travelers of the Northeast Corridor, the promise of Wi-Fi has become an infuriating tease.” Contemporary new stories report that Amtrak is still planning to upgrade its wi-fi systems.

    Considering the speed at which government works, by the time a passenger rail line could be established between Wichita and Oklahoma City, it’s quite likely that driverless cars will be a reality. (Remember, we’ve been trying to raise money just for an environmental impact study for many years.) Then, workers can be in their car, use their computers for business productivity, and travel directly to their destination instead of to a train station. Plus, they will be able to do this on their own schedule, not Amtrak’s schedule. That is invaluable, as only one train each day is contemplated.

    Furthermore, if there really is a business case for travel between Wichita and Oklahoma City, I imagine that some of the entrepreneurs who have built a new industry around inter-city bus travel might establish service. These new companies use buses with wi-fi, first class accommodations, and other amenities. Buses are much lower cost than rail, are more flexible, and most importantly, are operated by private sector entrepreneurs rather than government.

    I understand that leaders like Pete Meitzner and others in city hall see federal money being spent elsewhere, and they want that money also spent here. It doesn’t really matter to them whether the spending is worthwhile, they just want it spent here. This greed for federal tax dollars contributes to the cycle of rising spending. We end up buying and building a lot of stuff that doesn’t really work except for lining the pockets of special interest groups. And, in the case of Meitzner’s pet project, we do this with borrowed money.

    We expect this behavior from the progressive members of the council. But conservatives are supposed to stand for something else.

    Those who call for an end to subsidy for one industry are often asked why they don’t oppose subsidy for all industry. It’s a fair question, although it distracts from the main issue, which is why it is raised. So, let’s end subsidies for all forms of transportation. Let’s try to match relevant user fees such as motor fuel taxes as closely as possible with the compatible expenditures.

    The scope of Amtrak subsidy

    In 2010 I reported that Subsidyscope, an initiative of the Pew Charitable Trusts, published a study about the taxpayer subsidy flowing into Amtrak. For the Heartland Flyer route, which runs from Fort Worth to Oklahoma, and is proposed by taxpayer-funded rail supporters to extend into Kansas through Wichita and Kansas City, we find these statistics about the finances of this operation:

    Amtrak reports a profit/loss per passenger mile on this route of $-.02, meaning that each passenger, per mile traveled, resulted in a loss of two cents. Taxpayers pay for that.

    But this number, as bad as it is, is not correct. Subsidyscope calculated a different number. This number, unlike the numbers Amrak publishes, includes depreciation, ancillary businesses and overhead costs — the types of costs that private sector businesses bear and report. When these costs are included, the Heartland Flyer route results in a loss of 13 cents per passenger mile, or a loss of $26.76 per passenger for the trip from Fort Worth to Oklahoma City.

    Subsidy to Amtrak compared to other forms of transporation

    Table 4 Net Federal Subsidies per Thousand Passenger-Miles by Mode FY 1990-2002

    From Federal Subsidies to Passenger Transportation, Bureau of Transportation Statistics, December 2004.

    From Randal O’Toole Stopping the Runaway Train: The Case for Privatizing Amtrak:

    According to the U.S. Bureau of Transportation Statistics, after adjusting for inflation to 2011 dollars, subsidies to domestic air travel averaged about $14 billion a year between 1995 and 2007. Considering that the airlines carried an average of more than 500 billion passenger miles a year during those years, average subsidies work out to about 2.8 cents per passenger mile (see Figure 2).

    Using Bureau of Transportation Statistics’ numbers, highway subsidies over the same time period averaged about $48 billion a year. Highways carried about 4.1 trillion passenger miles per year, for an average subsidy of 1.1 cents per passenger mile. While 95 percent of the airline subsidies came from the federal government, all of the highway subsidies came from state and local governments.

    By comparison, federal Amtrak subsidies over the same time period averaged 25 cents per passenger mile.11 State subsidies averaged another 2.8 cents. Per-passenger-mile subsidies to Amtrak were nearly 9 times subsidies to air travel and nearly 22 times subsidies to highway travel.

    Airline, Highway, and Amtrak Subsidies per Passenger Mile, Cato Institute, 2012

    From Amtrak And The Progressive Sleight Of Hand, Competitive Enterprise Institute:

    The deficit in what Amtrak collects in revenue and what it spends every year cannot even be taken at face value. Unlike most firms, Amtrak does not count maintenance as an operating cost and instead considers it a capital cost. This allows it to treat routine maintenance like long-term investments in new rail and carrier capacity, pushing these costs off its balance sheet.

  • Kansas cities should not unilaterally grant tax breaks

    Kansas cities should not unilaterally grant tax breaks

    When Kansas cities grant economic development incentives, they may also unilaterally take action that affects overlapping jurisdictions such as counties, school districts, and the state itself. The legislature should end this.

    When Kansas cities create tax increment financing (TIF) districts, the overlapping county and school district(s) have an opportunity to veto its creation. These other jurisdictions do not formally have to give their consent to its formation; if they do nothing, it is assumed they concur.

    But for some other forms of incentives, such as tax increment financing district redevelopment plans, property tax abatements, and sales tax abatements, overlapping jurisdictions have no ability to object. There seems to be no rational basis for not giving these jurisdictions a chance to object to the erosion of their tax base.

    This is especially important for school districts, as they are often the largest tax consumer. As an example, when the City of Wichita offered tax abatements to a company in June, 47 percent of the abated taxes would have gone to the Wichita school district. But the school district did not participate in this decision. State law gave it no voice.

    Supporters of economic development incentives may say that the school district benefits from the incentives. Even though the district gives up some tax revenue now, it will get more in the future. This is the basis for the benefit-cost ratios the city uses to justify incentives. For itself, the City of Wichita requires a benefit-cost ratio of 1.3 to one or better, although there are many loopholes the city can use to grant incentives when this threshold is not met. For the June project, city documents reported these benefit-cost ratios for two overlapping jurisdictions:

    Sedgwick County 1.18 to one
    USD 259 1.00 to one

    In this case, the city forced a benefit-cost ratio on the county that the city would not accept for itself, unless it uses a loophole. For the school district, the net benefit is zero.

    The legislature should look at ways to make sure that overlapping jurisdictions are not harmed when economic development incentives are granted by cities. The best way would be to require formal approval of the incentives by counties and school districts.

    Two examples

    In June the City of Wichita granted tax abatements for a new warehouse. City documents gave the benefit-cost ratios for the city and overlapping jurisdictions:

    City of Wichita General Fund 1.30 to one
    Sedgwick County 1.18 to one
    USD 259 1.00 to one
    State of Kansas 12.11 to one

    It is not known whether these ratios include the sales tax forgiveness.

    While the City of Wichita insists that projects show a benefit-cost ratio of 1.3 to one or better (although there are many exceptions), it doesn’t apply that standard for overlapping jurisdictions. Here, Sedgwick County experiences a benefit-cost ratio of 1.18 to one, and the Wichita school district (USD 259) 1.00 to one. These two governmental bodies have no input on the decision the city is making on their behalf. The school district’s share of the forgiven taxes is 47.4 percent.

    In November a project had these dollar amounts of property tax abatement shared among the taxing jurisdictions in these estimated amounts, according to city documents:

    City $81,272
    State $3,750
    County $73,442
    USD 259 $143,038

    The listing of USD 259, the Wichita public school district, is likely an oversight by the city, as the Spirit properties lie in the Derby school district. This is evident when the benefit-cost ratios are listed:

    City of Wichita 1.98 to one
    General Fund 1.78 to one
    Debt Service 2.34 to one
    Sedgwick County 1.54 to one
    U.S.D. 260 1.00 to one (Derby school district)
    State of Kansas 28.23 to one

    Note that the ratio for the Derby school district is 1.00 to one, far below what the city requires for projects it considers for participation. That is, unless it uses a loophole.

  • Wichita to consider tax exemptions

    Wichita to consider tax exemptions

    A Wichita company asks for property and sales tax exemptions on the same day Wichita voters decide whether to increase the sales tax, including the tax on groceries.

    This week the Wichita City Council will hold a public hearing concerning the issuance of Industrial Revenue Bonds to Spirit AeroSystems, Inc. The purpose of the bonds is to allow Spirit to avoid paying property taxes on taxable property purchased with bond proceeds for a period of five years. The abatement may then be extended for another five years. Additionally, Spirit will not pay sales taxes on the purchased property.

    City documents state that the property tax abatement will be shared among the taxing jurisdictions in these estimated amounts:

    City: $81,272
    State: $3,750
    County: $73,442
    USD 259: $143,038

    No value is supplied for the amount of sales tax that may be avoided. The listing of USD 259, the Wichita public school district, is likely an oversight by the city, as the Spirit properties lie in the Derby school district. This is evident when the benefit-cost ratios are listed:

    City of Wichita: 1.98 to one
    General Fund: 1.78 to one
    Debt Service: 2.34 to one
    Sedgwick County: 1.54 to one
    U.S.D. 260: 1.00 to one (Derby school district)
    State of Kansas: 28.23 to one

    The City of Wichita has a policy where economic development incentives should have a benefit cost ratio of 1.3 to one or greater for the city to participate, although there are many loopholes the city regularly uses to approve projects with smaller ratios. Note that the ratio for the Derby school district is 1.00 to one, far below what the city requires for projects it considers for participation. That is, unless it uses one of the many available loopholes.

    We have to wonder why the City of Wichita imposes upon the Derby school district an economic development incentive that costs the Derby schools $143,038 per year, with no payoff? Generally the cost of economic development incentives are shouldered because there is the lure of a return, be it real or imaginary. But this is not the case for the Derby school district. This is especially relevant because the school district bears, by far, the largest share of the cost of the tax abatement.

    Of note, the Derby school district extends into Wichita, including parts of city council districts 2 and 3. These districts are represented by Pete Meitzner and James Clendenin, respectively.

    The city’s past experience

    Wichita Mayor Carl Brewer Facebook 2012-01-04Spirit Aerosystems is a spin-off from Boeing and has benefited from many tax abatements over the years. In a written statement in January 2012 at the time of Boeing’s announcement that it was leaving Wichita, Mayor Carl Brewer wrote “Our disappointment in Boeing’s decision to abandon its 80-year relationship with Wichita and the State of Kansas will not diminish any time soon. The City of Wichita, Sedgwick County and the State of Kansas have invested far too many taxpayer dollars in the past development of the Boeing Company to take this announcement lightly.”

    Along with the mayor’s statement the city released a compilation of the industrial revenue bonds authorized for Boeing starting in 1979. The purpose of the IRBs is to allow Boeing to escape paying property taxes, and in many cases, sales taxes. According to the city’s compilation, Boeing was granted property tax relief totaling $657,992,250 from 1980 to 2017. No estimate for the amount of sales tax exemption is available. I’ve prepared a chart showing the value of property tax abatements in favor of Boeing each year, based on city documents. There were several years where the value of forgiven tax was over $40 million.

    Boeing Wichita tax abatements, annual value, from City of Wichita.
    Boeing Wichita tax abatements, annual value, from City of Wichita.
    Kansas Representative Jim Ward, who at the time was Chair of the South Central Kansas Legislative Delegation, issued this statement regarding Boeing and incentives:

    Boeing is the poster child for corporate tax incentives. This company has benefited from property tax incentives, sales tax exemptions, infrastructure investments and other tax breaks at every level of government. These incentives were provided in an effort to retain and create thousands of Kansas jobs. We will be less trusting in the future of corporate promises.

    Not all the Boeing incentives started with Wichita city government action. But the biggest benefit to Boeing, which is the property tax abatements through industrial revenue bonds, starts with Wichita city council action. By authorizing IRBs, the city council cancels property taxes not only for the city, but also for the county, state, and school district.

  • While campaigning for higher sales tax, the Wichita Chamber president seeks an extension of his exemption from that tax

    This is awkward.

    The material below is from the agenda for the October 28, 2014 Wichita City Council meeting. It appeared on the consent agenda, which means it was handled in bulk with other items. The meeting minutes don’t show that there was any discussion on this item.

    Without some background information, it may be difficult to interpret this material, so I’ll do it for you.

    High Touch Technologies in downtown Wichita, with sign calling for higher sales tax.
    High Touch Technologies in downtown Wichita, with sign calling for higher sales tax.
    There is a company in Wichita named High Touch Technologies. Last year it asked the city council for relief from paying property taxes and sales taxes to help pay for the renovation of its headquarters building. Now it has asked for an extension of this tax relief period.

    Shortly after receiving the tax exemptions the company CEO — a man named Wayne Chambers — became chair of the Wichita Metro Chamber of Commerce.

    This year the Wichita Metro Chamber of Commerce is campaigning for a higher sales tax in Wichita.

    Did you know that Kansas is one of only 14 states that apply sales tax to groceries? And that only Mississippi has a higher statewide sales tax rate on groceries than does Kansas?

    I told you this is awkward.

    Here’s an excerpt from the relevant city document.

    On November 19, 2013 the City Council approved a one-year Letter of Intent for the issuance of Industrial Revenue Bonds (“IRBs”) in an amount not to exceed $2,000,000 for the purpose of financing the cost of acquiring and remodeling a 106,000 square foot office building located at 110 S. Main in downtown Wichita, for use as a corporate headquarters for High Touch. One Twenty South Main, LLC is the real estate holding entity that acquired the building and will sublease space to High Touch. One Twenty South Main, LLC originally intended to finance the acquisition and renovation with one bond issue. It is now planning on two bonds issues, one in late 2014 and one in late 2015. The first bond issue will finance the acquisition of the building and repairs to the elevators. The second will finance the cost of tenant improvements to occur in 2015. No additional bonding capacity is being requested. The current Letter of Intent and sales tax exemption expire November 19, 2014. One Twenty South Main, LLC is requesting an extension of the Letter of Intent and the sales tax exemption through December 31, 2015 to accommodate all work contemplated as part of this project.

  • Tax not me, but food for the poor

    This is Union Station in downtown Wichita. Its owner has secured a deal whereby future property taxes will be diverted to him rather than funding the costs of government like fixing streets, running the buses, and paying schoolteachers. This project may also receive a sales tax exemption. But as you can see, the owner wants low-income households in Wichita to pay more sales tax on their groceries.

    Union Station Downtown Wichita 2014-10-24 02'46'19 PM

  • For Wichita Chamber of Commerce chair, it’s sales tax for you, but not for me

    For Wichita Chamber of Commerce chair, it’s sales tax for you, but not for me

    A Wichita company CEO applied for a sales tax exemption. Now as chair of the Wichita Metro Chamber of Commerce, he wants you to pay more sales tax, even on the food you buy in grocery stores.

    High Touch Technologies in downtown Wichita.
    High Touch Technologies in downtown Wichita.
    When High Touch Technologies wanted to purchase and improve the building that houses its headquarters in downtown Wichita, the company asked for and received property tax relief and an exemption from paying sales taxes.

    So far this story is not unusual. Many companies receive this type of tax relief. Some get it year after year, to the tune of some $658 million in the case of Boeing.

    High Touch Technologies campaigns for higher sales taxes, even though it received a sales tax exemption.
    High Touch Technologies campaigns for higher sales taxes, even though it received a sales tax exemption.
    But the case of High Touch Technologies is of more than usual interest. At the time of the request in November 2013 the company’s CEO, Wayne Chambers, had just been selected as chair of the Wichita Metro Chamber of Commerce. The Chamber, along with its subsidiary Greater Wichita Economic Development Coalition, are the main agencies in charge of economic development for the Wichita area. Under Chambers’ leadership, these organizations recommended that the city council authorize a vote on raising the Wichita sales tax for the purposes of economic development. The council did that, and in November Wichita voters will decide whether to create a city sales tax of one cent per dollar. Twenty percent of the proceeds are earmarked for job creation.

    To summarize: A Wichita company CEO applied for a sales tax exemption. Now he wants you to pay more sales tax, even on the food you buy in grocery stores.

  • Old Town Cinema TIF update

    Old Town Cinema TIF update

    A Wichita city report provides a somber look at the finances of a tax increment financing district.

    The City of Wichita Department of Finance has prepared an update on the financial performance of the Old Town Cinema Tax Increment Financing (TIF) District. There’s not much good news in this document. The financial performance would be worse if the city had included the costs of the no-interest and low-interest loan made to the owners of property in this TIF district. But it doesn’t appear that those costs are included. Here’s an excerpt from the report:

    In 2000, the appraised value of the southeast retail building and the Warren Theatre declined 12% (from $4.5 to $3.9 million) and 33% from ($4.4 to $2.9 million), respectively. These declines occurred as a result of property tax appeals, which were made by the TIF District’s primary developer. In addition, the total appraised value of the northeast and southeast retail buildings and the Warren Theatre remains more than $3.6 million below estimates in the project plan and overall values have not yet recovered to pre-2009 levels.

    The “property tax appeals” referred to in this paragraph are the doing of David Burk. The Wichita Eagle reported at the time: “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

    Several city officials expressed varying degrees of outrage with Burk’s action, with the city manager telling the Eagle that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

    Since then the city has granted several forms of subsidy to Burk and his partners.

    The report from the finance department also told of problems with parking revenue:

    Parking Revenue – The project plan assumed sufficient parking revenue cash flow over a fifteen-year period to provide $1.1 million towards principal debt obligations, assuming an interest rate of 4.5%. The Old Town Cinema TIF Fund has received substantially less parking revenue than was expected in the project plan. In some years, the TIF Fund has received no revenue from parking, and the highest amount received in any year was $51,130 (in 2008). From 2007, when the District first began receiving parking revenue, through 2013, a total of $153,130 in parking revenue has been transferred to the TIF Fund. Based on historical experience, additional parking revenue is not assumed and total parking revenue from 2004 to 2019 is conservatively projected at $153,130.

    Later on, the report holds this:

    Parking revenue collections are also substantially less than projected, because fees have not been increased as originally planned. The City’s general parking fee, which predates the Old Town Cinema TIF District, started at $7.50 per parking space per month. The fee was to increase to $25 per month over an eighteen-year period, with increases starting in approximately1996, according to Property Management. Fee increases never occurred, which were needed to pay for City parking activities. The general City fee differed slightly from that originally charged in the Old Town Cinema District, because the District initially charged a $10 per month fee, but this was reduced in about 2009 to $7.50 per month consistent with the parking fee charged elsewhere in the City, again according to Property Management.

    The report also contains several financial statements. These statements do not contain a form of off-the-books support given to this TIF district. That was the no-interest and low-interest loan made to the Warren Theater, estimated to cost the city $1.2 million.

    Click here to open the city’s report in a new window.

  • In Wichita, pro-sales tax campaign group uses sales tax-exempt building as headquarters

    In Wichita, pro-sales tax campaign group uses sales tax-exempt building as headquarters

    While “Yes Wichita” campaigns for higher sales taxes, it operates from a building that received a special exemption from paying sales tax.

    Many Wichitans remember the building at the northwest corner of First and Market Streets as the Kansas Gas and Electric Building. Today, under new ownership, it’s being converted to luxury apartments under the name “The Lux.”

    “Yes Wichita” campaign headquarters, located in a building that received a sales tax exemption.
    “Yes Wichita” campaign headquarters, located in a building that received a sales tax exemption.
    The new owners of The Lux felt that they shouldn’t have to pay sales tax on things they purchase (like construction materials) while renovating the building. So they approached the city. On October 2, 2012 the city granted their request and initiated the process whereby The Lux will avoid paying sales taxes.

    Fast forward two years. Now there’s a proposal to add one cent per dollar to the sales tax in Wichita. A group named “Yes Wichita” formed to promote the higher sales tax.

    When “Yes Wichita” — a group that campaigns for you to pay higher sales taxes on nearly everything from baby formula to automobiles — needed campaign headquarters, do you know where it decided to locate?

    That’s right. In The Lux, a building that does not have to pay sales tax on materials used in its conversion to luxury apartments.

    Really. I’m not kidding.