Voice For Liberty

Tag: Subsidy

  • Kansas and Wichita quick takes: Wednesday October 13, 2010

    FactFinder 12: Goyle campaign ad. From KWCH Television: “FactFinder 12 found no evidence Sentry International directly outsourced manufacturing work, only that it partners with companies in China and many other countries to purchase foreign made products.” What’s not talked about in regard to this issue is that U.S. companies don’t manufacture products overseas just for the heck of it. Competitive pressures force them to.

    The energy future will look familiar. George Will takes a look at the future of energy in America. But a reminder of the past, in case you forgot: “In 1977, Jimmy Carter said mankind could ‘use up’ all the world’s proven [oil] reserves ‘by the end of the next decade.’ Since then, the world has consumed three times more oil than was in the proven reserves.”

    The truth about our jobs crisis. BankruptingAmerica.org has a short video illustrating the depth and magnitude of the crisis. “The jobs report released on Friday shows that unemployment persists at 9.6 percent. As high as this number is, it doesn’t tell the whole unemployment story.” Additional resources are available at the site.

    Sowell on government greed. “Those who are always accusing people in the private sector of “greed” almost never accuse government of greed, no matter what it does. Indeed, the question of whether the government is greedy almost never comes up, so most of us probably never think about it. … Perhaps one of the most unconscionable acts of greed by government is confiscating people’s homes, in order to turn this property over to other people, who are expected to build things that will pay more taxes.”

    Tweets from Communications Week. At Wichita State University I served on a panel on social media and political campaigns. Some tweets from the audience: “Denae Herrman: Bob Week’s advice for candidates on Twitter: Be more candid & informal. Loosen up! I agree. What makes SM fun is the interactivity.” … “Shae Blevins: @bob_weeks says Goyle, Brownback and Pompeo have failed at using social media for their campaigns in some way. UPDATE your stuff!” … “Lou Heldman: Brownback, Goyle, Pompeo campaigns criticized by @bobweeks on Elliott School panel for sometimes inept use of social media.” I’m sorry, campaigns … but it’s true.

    DCCC cuts back on Moore support. From The Atlantic: “The Democratic Congressional Campaign Committee has pulled some funding from 10 districts, canceling their ad buys in six and reducing their buys in another four. … The committee has also continued cutting time in KS 03, where Stephene Moore (D) is running for her husband’s seat.”

    Liberal Billionaires Take On The Koch Brothers In California Energy Fight. Clare O’Connor in Forbes: “Much has been written about the oil and gas billionaire Koch brothers and their multimillion-dollar donations to right-wing causes. … However, in recent days a handful of liberal billionaires have decided to take on the Kochs in one of the most hotly contested battles this election season: Proposition 23, the California ballot that may well prove a bellwether for the future of energy legislation in the U.S.”

    Election dates to note: October 13 — advance ballots start to be mailed. October 18 — last day to register to vote or change party affiliation. October 29 — last day election office will mail advance voting ballots, so make sure your application arrives at your county election office before this date. November 2 — election day.

    Obama and the Politics of Outsourcing. William S. Cohen, writing in the Wall Street Journal: “For every job outsourced to Bangalore, nearly two jobs are created in Buffalo or other American cities.” … American popular opinion: “A Wall Street Journal/NBC News poll released Sept. 28 found that outsourcing was the top reason cited by Americans as the cause of the country’s economic problems — and that for the first time in years a majority (53%) of Americans say free-trade agreements have hurt the U.S.” This sentiment is unfounded. Continuing: “Most people treat outsourcing as a zero-sum game — one foreign worker replaces one American worker. But this is not how the dynamic global economy works. … [An analysis] found that when U.S. firms hired lower-cost labor at foreign subsidiaries overseas, their parent companies hired even more people in the U.S. to support expanded operations. … Those new U.S. jobs were higher-skilled and better-paying.” The politics of it: “During difficult economic periods, people are tempted to seek refuge in the false promise of protectionism. … Politicians are not above exploiting an issue by appealing to popular sentiment even when that sentiment is belied by economic reality.” Outsourcing of Kansas jobs is the major campaign theme — and attack ad hammer — of Kansas fourth district Congressional Democrat candidate Raj Goyle.

    Will Wichita have a government “bank” to fund downtown? The Wichita Eagle reports that the Wichita contingent visiting Louisville is being pitched the benefits of a government-run fund to spur downtown development. Two takeaways: “The fund, says JPMorgan banker Louis Straub II, doesn’t provide ‘free money’ to developers. ‘It’s a loan with much more favorable terms’ than developers would get through a traditional bank loan.” I would say that sounds like free money to me — as long as you consider paying interest on a loan a cost. Then, a real whopper: “Gary Schmitt, executive vice president at Intrust Bank, said the creation of such a fund in Wichita is possible. … there is precedent for Wichita-area banks getting together to help finance downtown projects. He said it was done in the case of the Hyatt Regency Wichita, for which local banks came together and created a participation loan to finance the hotel. ‘History has shown that the banks will come together for the betterment of the community,’ Schmitt said.” So wow did that work out? The Hyatt failed and is now owned by the city of Wichita, and can operate without concerns about profit. In 2001 the Eagle editorialized: “Having a marquee downtown hotel wholly owned by a city can’t be good for stimulating more private hotel development … Who’s going to be willing to finance, build and open a hotel in direct competition with one supported by public dollars?” As we’ve seen by recent action regarding the Broadview Hotel and Fairfield Inn, no one will — unless the government contributes millions in subsidy.

    Wichita Eagle opinion line. “The reason some people can’t find voter fraud in Kansas is the same reason a thief can’t find a policeman.”

  • In Wichita Planeview neighborhood: Yes, we have!

    Developers of a proposed Save-A-Lot grocery store in Wichita’s Planeview neighborhood have made the case that without two forms of subsidy, the store won’t be profitable and won’t be built.

    There is a counterexample, however. On Hillside, just south of Pawnee and just across the street from Planeview, sit two grocery stores that together occupy 13,000 square feet of space. This is close in size to the proposed Save-A-Lot store’s 16,500 square feet.

    While the developer says the Save-A-Lot store can’t be profitable without over $800,000 of taxpayer subsidy, the existence of these grocers proves that it can be done. They are in business, earning a profit, and doing so without government subsidy. The City of Wichita, apparently, is not aware of these success stories, or doesn’t care.

    Reviewing the September 14th meeting of the Wichita City Council gives us an idea of how little the city cares how its actions affect existing business.

    At that meeting, Rob Snyder, developer of the proposed Save-A-Lot store, said he has “researched every possible way” to make the project work. Without the subsidy, he said, there won’t be a grocery store. But the existence of several grocery stores in or near Planeview, operating profitably without government subsidy, shows that Snyder’s claims are false.

    I’m not claiming that Snyder intentionally lied to the city council about the necessity of subsidy for his store. But he has an $800,000 motive to get the council to approve his subsidy. And there’s evidence that corporate welfare like what Snyder requests is not necessary to open and operate a successful grocery store in this part of Wichita.

    During his talk to the council, it became apparent that Snyder thinks corporate welfare is a wise business and political strategy. Snyder lamented the fact that earmarks are now unpopular with the American public and not available to finance his proposed grocery store. An earmark — that is to say, a grant of money paid for by U.S. taxpayers — was used as a large part of the financing for the other Save-A-Lot in Wichita at 13th and Grove. An article by James Arbertha tells of the roll earmarks played in the opening of that store.

    While it may be necessary for Snyder’s store to be propped up by taxpayer subsidy, citizen Wendy Aylworth told council members of the several grocery stores already operating in the Planeview area. Mayor Carl Brewer appeared surprised to learn of these stores and asked Aylworth for their locations.

    The mayor’s surprise is evidence that the city simply does not care about the impact of its corporate welfare policies on existing business. Several people have pointed out to me that these existing stores — with the exception of one large supermarket — are ethnic grocers, although most carry a wide variety of food and household items.

    Is the CID tax necessary?

    One of the issues relating to CIDs is their very necessity. If a business feels it needs to generate additional revenue, why not simply raise its prices? Why is it necessary to have the government collect taxes in order to generate additional revenue for the merchants in the CID?

    Ron Rhodes, who developed the existing Save-A-Lot store in Wichita, addressed the Wichita city council that day. Rhodes referred to the “people who have ability to pay” an extra sales tax, and those who don’t have the ability to pay. Listening to him I couldn’t help be reminded of another slogan: “From each according to his ability, to each according to his needs.”

    Rhodes also spoke of neighborhood pride. But how proud can a neighborhood be when merchants have to rely on corporate welfare to open a store there?

    In later questioning, Rhodes said that a Save-A-Lot store can’t raise its prices due to a “price deck” policy that says that most prices should be uniform in Save-A-Lot stores. This is an internal business policy of Save-A-Lot that should not bind the City of Wichita. It is not relevant to the formation of public policy in Wichita.

    The issue of tax increment financing

    At the same meeting, Greg Ferris, a lobbyist for Snyder, told the council that “there will not be a building on that corner if this is not passed today. There will not be any tax revenue, so we are not taking away any tax money away from schools, police, fire, etc.” He said we have “spent months” trying to figure out how to finance a project in that area. He said that “a grocery store is not going to move into the Planeview area to service those people,” alluding to how a grocery store did not move to the 13th and Grove area until the city subsidized it.

    Ferris contended that there is no city tax money going in to this project that is taken from something else.

    While presenting himself as speaking for the public interest, Ferris is a hired lobbyist for Snyder, the developer of the proposed grocery store. He is being paid to present Snyder’s interests, and those alone. He invokes the standard argument of those seeking corporate welfare through tax increment financing: the “but for” argument. This is the claim that without the benefit of the TIF district, nothing will happen.

    It may be true that without the corporate welfare provided by the TIF district and the CID, Snyder won’t develop the Save-A-Lot store. But that doesn’t mean that it is not possible to run a successful grocery store in that part of town, as we have evidence that it is.

    Ferris’ claim that no tax money from something else will go into this project is false, too. Will the Save-A-Lot store pledge to forgo the use of police, fire, and other city services? As this store wants to escape paying the same taxes that others have to pay, the rest of Wichita has to pay to provide services that Snyder doesn’t want to pay for.

    TIF is not a wise policy. Research on tax increment financing indicates that TIF is a zero-sum game. When someone wins, others lose an equal amount. TIF does not increase the total amount of development that takes place in a city. It simply transfers development from one part of the region to another. This intervention by government may actually decrease the amount of development in a city.

    In the case of Snyder and Ferris, the city’s actions in favoring a politically-connected developer and lobbyist with taxpayer-funded welfare may result in small ethnic grocers and one large established supermarket going out of business. How is this progress?

    The moral hazard

    In visiting with the owner of the large building and one of the grocery stores on Hillside, I asked him if he sought government assistance when developing that property. He answered no, that he didn’t know — speaking in his broken English — “where to dig the money” at that time.

    Now he knows to get a shovel.

    This creates an increasing cycle of dependence on government, particularly Wichita city government, for managing economic development. Entrepreneurship is replaced by bureaucracy and politics, not only for the revitalization of downtown Wichita, but across the city too.

  • Drury request for more Broadview Hotel subsidy should be rejected

    Tomorrow’s meeting of the Wichita City Council features a public hearing on the creation of a Community Improvement District to benefit Drury Southwest, developer of the Broadview Hotel in downtown Wichita.

    CIDs are a creation of the Kansas Legislature from the 2009 session. They allow merchants in a district to collect additional sales tax of up to two cents per dollar. The extra sales tax is used for the exclusive benefit of the CID.

    In this case, Drury is asking hotel guests — these are visitors to Wichita, usually — to pay an extra two cents per dollar sales tax. This CID is being constructed as “pay-as-you-go,” in which the extra sales tax is sent back to the applicant as it is collected.

    The agenda material for this item tells us that Drury suffered increased costs due to “delays to the project caused by legislative changes to the value of historic tax credits.” Last week I told the council how economic development management by government adds political uncertainty to the entrepreneurial process. The Broadview developers chose to operate in the political arena rather than the marketplace. They were hurt — they claim — and now they want politicians to make up for that.

    Drury has already received, or will receive, a huge amount of assistance from government for its work on the Broadview Hotel. Its participation in Kansas’ historic preservation tax credit program means a grant to the developers of perhaps $4 million. It is just as though the state wrote a check to Drury for that amount, and this is money that Kansas taxpayers have to make up.

    Further, Drury will escape paying much of the taxes that the rest of us have to pay. According to city information provided last week, Drury plans to spend $22,797,750 on the hotel. If we use this as the appraised value for the property when it is complete, the annual property taxes due for this property would be $22,797,750 times .25 times 126.323 divided by 1000, or $719,970. This calculation may be rough, but it gives us an idea of the annual operating subsidy being given to this hotel for the next ten years.

    Then, as part of the industrial revenue bond program this hotel is participating in, the hotel will avoid paying sales tax on purchases related to its renovation and furnishing. It’s a little ironic, then, that the hotel asks its guests to pay a special additional sales tax that benefits only the hotel.

    Finally, the city accelerated riverbank improvements that benefit the Broadview, and there’s a sweetheart sale by the city of a parking garage across the street.

    So this hotel is receiving plenty of subsidy from Wichita and Kansas taxpayers.

    Does Wichita trust its planners?

    This request by Drury for more Broadview Hotel subsidy poses a challenge to Wichita city council members. Goody Clancy, the firm that has been planning the revitalization of downtown Wichita, has proposed what seems to be a tougher stance towards government handouts to downtown developers. David Dixon, principal planner for Wichita’s planning effort, was reported in the Wichita Eagle thusly: “Dixon was clear: There will be enough private development downtown to repay taxpayers for the public investments through increases in the tax base.”

    In January’s preliminary findings, Goody Clancy told Wichita that there is a strong market for hotels in downtown Wichita. The final report states: “Downtown Wichita offers a strong potential for new lodging developments.” That implies that hotels ought to be profitable without requiring massive subsidy. But right after the preliminary finding, the city broke new ground in granting millions in subsidy to a hotel developer to build a Fairfield Inn downtown.

    The Goody Clancy plan has not yet been before the Wichita city council for formal acceptance. But most members, especially Mayor Carl Brewer, are enthusiastic about the plan.

    Tomorrow’s meeting and the action by the council will let us know if the city has the political will to take Goody Clancy’s findings and advice to heart.

  • Good intentions, and planners, can sap a city’s soul

    The following article by Kansas City writer Jack Cashill, courtesy of Ingram’s Magazine, explains some of the problems with city planning of the type Wichita is undertaking at this time.

    There are two connections to Wichita in this article. The first connection is the Power & Light District in downtown Kansas City, a meticulously planned — and heavily subsidized — redevelopment that has been mentioned by Wichita Mayor Carl Brewer as a model for Wichita. It’s also been featured heavily on the city’s television channel.

    The second connection to Wichita is Cashill’s description of Louisville. That city is the hometown of Wichita Downtown Development Corporation President Jeff Fluhr, not that this fact means anything substantive regarding public policy. But Louisville was one of four cities praised in a case study that is part of a Wichita-produced document that makes the case for downtown revitalization. Also, Visioneering Wichita has a trip to Louisville planned for October.

    I recently spent some back-to-back time in two cities, one run by merchants and one run by planners. The difference between the two is that the planners’ city, a veritable clone of Kansas City, does not work. The merchants’ city does.

    Since 1955, my family has been spending a chunk of every summer in and around the wonderfully vulgar New Jersey burg called Seaside Heights.

    “Vulgar” has several basic meanings. In this case, all of them are apt, and none is necessarily bad. One is “deficient in taste, delicacy, or refinement,” and that certainly fits. So too, in spades, does “offensively excessive in self-display.” It is the third and original definition — “associated with the great masses of people” — that makes the other two come to life in so fruitful a way. Yes, at Seaside, great masses of indelicate people wander about in excessive self-display, but, writ large, it is all glorious to behold.

    If the natives are excessive, it is because they can be. An ethnic hotbed since its inception, Seaside Heights educates international visitors in one visual sweep on the difference between their working classes and ours. If theirs shuffle, heads down, ours strut, swagger even, heads up, plumage on full display. Ours believe in themselves and their futures.

    It was not without calculation that MTV chose Seaside Heights as the locale for its improbable hit, “Jersey Shore,” a show that captures the larger gaudiness of the place and distills it to its truly vulgar essence. Vulgar or not, when my brother-in-law and I spotted two cast members on the beach, we were the envy of every female in our 50-member family compound, almost all of whom have college degrees. Vulgarity sells.

    Seaside Heights works in ways that most cities don’t. Each summer evening, its main thoroughfare, the boardwalk, is jammed from end to end with throngs of people of all ages and stripes spending goo-gobs of money at miscellaneous shops, many of which have no parallel in the free world.

    On the mile-long commercial stretch of the boardwalk, there is not a single vacancy. I don’t remember there ever being one. The Seaside chamber boasts, only a little bit grandly, of thrill rides, a water park, fun-filled amusements, action-packed arcades, Ferris wheels, merry-go-rounds, an overhead chair lift, ski-ball, frog bog, squirt-gun games, balloon darts, ring toss, mini golf, go-karts, old-time photo shops, tattoo parlors, trendy boutiques, massage parlors, bars, discos, numerous Italian restaurants, pizza shops, Philly cheesesteak restaurants, a Mexican Cantina, an Irish Pub, frozen custard and soft-serve ice cream shops, saltwater taffy and fudge shops, a new bakery, and, of course, shops that serve “Seaside Heights staples like the Fried Oreo.”

    Of the above services, how many can you find in the Power & Light District? City planners would hock their first-born to create this kind of pedestrian traffic, but they don’t know how. They can no more plan “fun” than they could anticipate a popular demand for a fried Oreo. This hodgepodge of stuff was driven by the consumers as gauged and tweaked by savvy, on-site merchants over decades.

    Seaside represents America’s money culture at work. There is no public transportation anywhere near the town. There is not a single sign on the boardwalk in any language other than English. There is nothing even resembling a dress code. There is no convention center, no hotels, no buildings higher than three or four stories, no parking garages, no subsidies, no strip clubs, no “adult” book stores. Nothing is free, including the beach. And yet each weekend, 100,000 or so people speaking a dozen or so different languages find their way to the boardwalk.

    After a week at Seaside, I flew out of Newark to Louisville, a city I had not yet visited. To round out my New Jersey experience, I sat across from Dominic Chianese, a.k.a. Junior Soprano, on the little express jet. I struck up a conversation, never letting on that I knew who he was. I am sure I had him fooled.

    I arrived on a Sunday evening for a conference at the convention center. Had I not known any better, I would have thought the plane had been diverted to KC’s Power & Light District. Other than the occasional horse statue, there was nothing remotely indigenous about Louisville’s downtown. It had all the stultifying cookie-cutter charm of a place that had been planned and heavily subsidized precisely for the benefit of ungrateful visitors like me.

    My hotel was nice enough, but aren’t all hotels? On Sunday eve, my little group and I wandered up Fourth Street to the city’s entertainment district. I passed a Border’s, a Panera’s, an Einstein Brothers, and a Hard Rock Café. The street was blocked off, and a rock band was playing loudly and badly in the created space. The only problem was that there was little foot traffic and even less audience.

    We ducked into an elaborately fake British pub. To say the least, there was no wait. Our waitress was tarted up to look like Twiggie, but happily, her inner cracker showed through. She was delightful even when botching our order. “Y’all wanted a shepherd’s pie?” My younger comrades wanted to hit the Hard Rock Café next, but I ducked out to watch the season premiere of Mad Men. I had watched not a minute of TV at Seaside.

    There was a time, not that many years ago, when Kansas City competed against the likes of Chicago and Denver and Atlanta. Today, we compete — often unsuccessfully — with Louisville. The reason Louisville can compete with us is because we have become Louisville and Louisville has become us.

    We have taxed our distinctive merchant-driven centers like the Country Club Plaza and Westport — and cannibalized their customer base — to subsidize a soulless, planner-driven Downtown.

    Only four years after its creation, city officials now project that the allegedly self-sustaining Power & Light District will require long-term life support to the tune of $10 million to $15 million in an annual cash subsidy.

    It may be time to scrap all plans, exile all the planners and embrace the fried Oreo.

    The link to the original article is Good Intentions, and Planners, Can Sap a City’s Soul.

  • Subsidy for Planeview Save-A-Lot grocery store bad for Wichita

    By John Todd

    I am troubled by what I see the Wichita city government doing to the owners of the Checkers Grocery store located near the Wichita Planeview neighborhood. At the public hearing before the Wichita City Council on September 14th, one of the Checkers owners testified that their grocery business has been serving the people of Planeview for many years. After listening to the owner’s testimony and listening to testimony presented by Planeview customers at the hearing, it appears obvious to me that the Checkers grocery store’s Planeview customer base is a vital part of their business.

    At the hearing, the Checkers owner expressed his opposition to the massive subsidy our city was offering the developer of the proposed Save-A-Lot grocery store in Planeview. His concern was the unfair economic advantage city government was creating for their competitor through the use of public funding programs.

    The total economic incentive package city officials were offering the Save-A-Lot project through tax increment financing (TIF) and Community Improvement Districts (CID) funding packages was $880,440 of total project cost of $2,083,430. That figure is in excess of 40 percent of the total project cost.

    I believe the Checkers grocery store owner’s concerns are valid, and the massive subsidy that the Wichita City Council has approved for their Save-A-Lot competitor is wrong. The council vote was 7 to 0 in favor of the subsidy with no consideration given by council members for Checkers or any other taxpaying grocery businesses that competes in the Wichita market.

    The CID funding program, as approved by the Wichita city council, allows the Save-A-Lot grocery store to charge an additional two cents per dollar sales tax. This extra sales tax is then given to the project developer. Under the guise of helping an economically “underserved” neighborhood, customers of the new Planeview Save-A-Lot grocery store will soon be paying 9.3 percent sales tax on their grocery purchases. This additional sales tax enriches the developer and punishes the residents of the Planeview neighborhood.

    The TIF funding program, also approved by the city council, diverts future real estate taxes into developers’ pocket instead of paying for police and fire protection and the schools that educate our children.

    The subsidy programs our city is offering the Planeview Save-A-Lot grocery project are great for the developer, but bad for competing businesses and their customers. They create an unfair advantage for other grocery stores and result in increased sales tax for the very residents it is intended to help. The grocery store will no doubt expect fire and police protection and the grocery store customers will want schools for their children. Yet, the store will not be paying anywhere near its fair share for these services, as it will continue to effectively pay the same property taxes as does a vacant lot. Perhaps these programs should be renamed “The Developer Relief Act!”

    Under TIF, the developer is the winner and the people that pay the city’s bills lose. In other words, one guy wins and the taxpaying public loses. The harm is that by exercising its power to choose winners and losers, government discourages the risk-takers that invest their own money in projects. The potential for abuse of government’s power to create winners and losers in the marketplace creates a sense of regulatory uncertainty.

    This uncertainty serves to keep private capital on the sidelines rather than being invested, as businessmen are justifiably concerned that the city may prop up a subsidized competitor in their same market. Not only do entrepreneurs have to contend with all the usual economic risks they face, they must also face political risk coming from Wichita City Hall. No one can plan ahead with this type of government involvement tampering with markets.

    Unfortunately, as is the case when government exercises its power to influence economic development outcomes, the hidden results of this intervention does more harm than good. Government mandated stimulus programs, even on the local level, are not good public policy.

    State law gives the Sedgwick County Commissionand USD 259 (the Wichita public school district) until October 14th to voice objection to the diversion of tax funds away from county services and schools and into the pocket of the Planeview Save-A-Lot grocery developer. I hope they exercise the check over local government’s abuse of local economic stimulus tools by voting to opt out the county taxpayer from the city’s abuse of their economic power. Sedgwick County commissioners need to step to the line and put a stop to this nonsense!

  • For Wichita city hall, ‘stakeholder’ has a narrow meaning

    Recently the City of Wichita held a stakeholder meeting regarding Community Improvement Districts and the city’s policies regarding them.

    While the term “stakeholder” is vague and means different things to different people, you might think that such a gathering might include representatives from the community at large. In an effort to achieve diversity, you know.

    Instead, the meeting was stacked almost exclusively with those who have an interest in extracting as much economic subsidy as possible from the city.

    There are a few exceptions, notably Wichita developer Johnny Stevens, who is outspoken in his belief in market-driven development. Stan Longhofer is an academic at Wichita State University, and the last time he offered advice to the city council (at least publicly) the council didn’t take his advice, even though they paid him well for it.

    There may be a few other exceptions, but most of the people on this list have benefited from various forms of taxpayer subsidy. Some are presently applying for more.

    One name that is surprising to see on this list is Dave Burk. Earlier this year the Wichita Eagle reported this: “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.”

    After this, I don’t know why the city would be interested in anything Dave Burk has to say.

    When ordinary citizens of Wichita wonder if their voice is valued, or when they wonder if Wichita city hall is overrun by a “good ol’ boy” network of insiders who get what they want from the city, this meeting is additional evidence to help them decide.

    Here’s the list of invitees to the stakeholder meeting:

    Cathy Erickson, Dave Burk, Dave Lundberg, Doug Rupe, Grant Tidemann, Jerry Jones, Johnny Stevens, Larry Weber, Brad Saville, Christian Ablah, Greg Ferris, Jeff Fluhr, Calvin Klaasen, Jay Maxwell, Jeff Walenta, Jim Korroch, Korb Maxwell, Mert Buckley, Robert Snyder, Stan Longhofer, Tim Austin, Wess Galyon, Gary Oborny, Darryl Crotts, David Leyh, Lea Firestone, Troy Farha, Gene Gutschanritter

  • Photos of Wichita Planeview grocery stores

    Carneceria Mexican Food Market in Wichita Planeview neighborhoodCarneceria Mexican Food Market in Wichita Planeview neighborhood

    Supporters of a proposed Save-A-Lot grocery store in Wichita’s Planeview neighborhood claim that there are no grocery stores nearby. Therefore, the city is willing to grant over $800,000 in special tax treatment to this store. This special tax treatment — let’s call it what it is: corporate welfare — is not available to the store’s competitors that already exist in the neighborhood or nearby.

    But Wendy Aylworth’s research and John Todd’s photography show that the claims of the store’s supporters are not true: There are grocery stores — nice ones, too — in Planeview. The Wichita City Council is granting special tax-advantaged status to a competitor to these largely mom-and-pop stores in the form of tax increment financing (TIF) and Community Improvement District additional sales tax.

    Click here to view a set of photographs of Planeview grocery stores taken by Todd.

  • Wichita City Council subsidizes pizza and doughnuts for Planeview

    Here’s some citizen-powered commentary and research from a Wichita citizen, Wendy Aylworth.

    At the September 14th Wichita City Council meeting the public was treated to tales of the helpless nature of Wichita’s Planeview residents. It sounded as if residents are being held in an open-air prison, victims of society, greedy QuikTrip stores, and price-gouging cab companies, unable to obtain the necessities of life without trekking an entire ONE mile to get groceries! (See City OKs tax at Planeview store, Wichita Eagle, September 15, 2010)

    There are in fact four grocery stores right across the street from Planeview on Hillside, and one more just around the corner from Hillside on 31st Street South. Two are owned by Americans of Latino descent and three by Americans of southeast Asian descent. Perhaps the race of the owners is the reason the media refuses to report that these are indeed grocery stores and carry milk, eggs, apples, oranges, fish, fresh meats, lettuce, cheese, cereals, spices and all the other basics of a good, healthful diet.

    However, one does have to go to QuikTrip if one wants pizza. Thus the “need” for a Save-a-Lot financed by you and me. Cheaper pizza, that staple of food stamp life.

    Save-A-Lot will also provide a variety of 129 snack foods including potato chips and microwave popcorn with theater butter! Finally junk food will be available within 1.1 miles of Planeview at prices lower than QuikTrip!

    And although residents speaking to the city council on Tuesday complained about having to go to QuikTrip for milk, the truth is QuikTrip carries milk at prices rivaling the cheapest in town. The price was $3.29 gallon on Wednesday, Sep 15th. On other days it’s on sale for $2.99 gallon. But Save-A-Lot should have a lower regular price on bacon. Pop might also be cheaper!

    The claim by the government-subsidized developer that this chain grocery store must be built because there are large numbers of residents of Planeview who don’t have cars (and thus have to walk to QuikTrip to get pizza) is also false. There are a few; only a few. One Planeview resident explained that those not having vehicles could take a cab or get a ride — and the bus drives right through Planeview. The City of Wichita on one hand pushes for residents to make greater use of the public buses, yet the city council members clearly believe residents can’t possibly go shopping using a bus. Still, people who live in cities like San Francisco, New York, and Portland shop via subway and bus every day. The Wichita City Council is hypocritical, forever at odds with itself, and constantly undermining families who start businesses in an attempt to meet the needs of fellow citizens.

    The grocery stores the media ignores, in case you’d like to show them your support, are:

    Thai An Oriental Market at 2425 South Hillside Street, Wichita, KS, telephone 440-7888. Open everyday 9:00 am to 8:00 pm, except they close early at 7:00 pm on Mondays. This is a large store in a brand new building the owner built from the ground up.

    Super Del Centro at 2425 South Hillside Street, Wichita, KS, open 9:00 am to 9:00 pm 7 days a week This store shares the new building with the Thai An market.

    Four Star Asian Market at 2441 South Hillside Street, Wichita, KS, telephone 684-0966. This is a smaller family business, but still carries a great selection.

    Lao Food Market at 3141 South Hillside Street, Wichita, KS. This is a large family-owned store in a building built in 1994, very clean and well-kept. Open 9:00 am to 9:00 pm everyday and often stays open even later on Saturdays and Sundays, if a customer needs.

    Carniceria Mexicana Super Tienda at 3108 E 31st St South. Open 7 days a week 8:00 am to 9:00 pm They have probably the largest avocados in town!

    No, none of these stores on Hillside have doughnuts, but they all have cookies!

    There’s also Checkers grocery store at the southeast corner of Pawnee and K-15, open 6:00 am until Midnight everyday. It’s locally owned and run and is only one mile from Planeview, and 1.3 miles from the new, smaller grocery store the city council is subsidizing.

  • Economic development planning in Wichita on tap

    Tuesday’s meeting of the Wichita City Council features four public hearings concerning Community Improvement Districts. One CID also will have a public hearing on its application for tax increment financing (TIF).

    CIDs are a creation of the Kansas Legislature from the 2009 session. They allow merchants in a district to collect additional sales tax of up to two cents per dollar. The extra sales tax is used for the exclusive benefit of the CID.

    Under tax increment financing (TIF), developers get to use their property taxes to pay for the same infrastructure (or other costs) that everyone else has to pay for. That’s because in TIF, the increment in property taxes are used to pay off bonds that were issued for the exclusive benefit of a development. Or, as in the case with a new form of TIF called pay-as-you-go, the increment in property taxes are simply given back to the developer. (Which leads to the question: why even pay at all?)

    The developments seeking this form of public financing include a grocery story in Plainview, a low-income and, according to the application, underserved area of town. Material on this hearing provided by the city is at Plainview Grocery Store CID and TIF in Wichita, Kansas.

    A second applicant asks to charge an extra one cent per dollar sales tax for Central Park Place, a proposed suburban shopping center. Read more here: Community Improvement District at Central Park Place, Wichita, Kansas.

    Then the developers of Bowllagio, a proposed bowling alley and entertainment district, will make their pitch to add two cents per dollar sales tax. Read more here: Community Improvement District for Bowllagio (Maize 54 Development).

    Finally, the developers of the downtown Wichita Broadview Hotel will ask to add two cents per dollar sales tax on purchases made by the hotel’s visitors. Read more here: Community Improvement District for Broadview Hotel, Wichita, Kansas.

    All of these applications should be turned down by the city council, and for a variety of reasons.

    For example, the goal of the Plainview grocery store is to serve a low-income area of town. To do that, however, the store will be charging its customers an extra $1 for every $50 spent. Supporters make the case that many of the potential customers presently shop at Quik-Trip, which is not an inexpensive store, so the city is really doing these people a favor. The developer makes the case that he’s just trying to do something for the community, giving back something.

    But if the developer really wants to do something for the community, he should agree to pay his share of property taxes like almost everyone else pays. That won’t happen, as most of the taxes he will pay will be routed right back to him through the TIF district.

    The extra sales tax is a consumer protection issue, both in the case of the Plainview grocery store and the suburban shopping center. Shoppers won’t have any idea that they’re going to be paying extra sales tax by shopping at these merchants until after they get their receipt. Most people probably won’t notice then.

    There are several council members who normally would be in favor of exposing greedy merchants who overcharge people, but they haven’t shown this concern so far regarding Community Improvement Districts.

    The Broadview hotel is already the recipient of potentially $4.75 million in Kansas historic preservation tax credits. Despite the name of the program, the tax credits are in effect a grant of money to the developers — the state might as well write the developers a check. The City of Wichita has also assisted the hotel in several ways. But now it’s back at the government trough asking for even more corporate welfare.

    We ought to ponder the wisdom of renovating this hotel if it can’t survive without so much government assistance. And having plowed so much into an economically unfeasible project, we can easily see sometime a few years down the road where owner Drury Hotels come to the city saying they can’t make a profit, and they need some other form of assistance.

    Having given so much already, the city won’t be able to turn down the request for a little more. It’s happened before.

    Even pointing out how the city works at cross-purposes with itself doesn’t impress the council. We spend millions every year subsidizing airlines so that airfares to Wichita are low. Then we turn around and add extra tax to visitors’ hotel bills, with Vice Mayor Jeff Longwell and the Wichita Eagle editorial board approving this as a wise strategy.

    People remember high taxes. I don’t think it’s a good strategy to establish high-tax districts designed to capture extra tax revenue from visitors to our city. A good strategy for Wichita to pursue would be to establish itself as a low-cost destination, but we’re going the other way.

    Then we must consider: does all this economic development planning work? The answer, emphatically, is: No. City leaders tell us that they do these things to grow Wichita’s economy. The activity of developers who seek subsidy like this is called, in economic terms, rent seeking, and city leaders encourage it. But evidence shows that rent seeking activity harms economic growth.

    It’s usually pretty good for the favored developers who receive such economic rents (subsidy). But it’s a bad deal for everyone else. It illustrates one of the primary problems with government taxation and spending. John Stossel explains:

    The Public Choice school of economics calls this the problem of concentrated benefits and dispersed costs. Individual members of relatively small interest groups stand to gain huge rewards when they lobby for government favors, but each taxpayer will pay only a tiny portion of the cost of any particular program, making opposition pointless.

    We see this in play nearly every week in Wichita as the city seeks to manage economic development. City leaders portray “success stories” (that’s when a company accepts subsidy from the city to build something) as evidence of people having faith in Wichita. Someone has confidence in Wichita because they’re investing here, they say.

    But I wonder why these people won’t invest in Wichita unless they receive millions of dollars through preferential tax treatment such as tax abatements, CID, TIF, STAR bonds, forgivable loans, and other forms of local corporate welfare.

    These preferential tax treatments increase the cost of government for everyone else in the city. That fuels the cycle of people coming to city council saying their plans are not feasible unless they receive tax breaks. This expanding role of Wichita in centralized economic planning is great if you’re a city hall bureaucrat like Wichita city manager Bob Layton and Wichita economic development director Allen Bell. It satisfies the incentives and motivations of bureaucrats. But it’s bad for economic freedom and the people of Wichita.

    Finally, perhaps the simplest public policy issue is this: If merchants feel they need to collect additional revenue from their customers, why don’t they simply raise their prices? Why the roundabout process of the state collecting extra sales tax, only to ship it back to the merchants in the CID?