Voice For Liberty

Tag: TIF districts

  • The Process Should Be Most Important

    Rhonda Holman’s editorial from yesterday’s Wichita Eagle (Parking plan finally coming together) contains this paragraph:

    A confusing move last week by the Wichita City Council didn’t help build public trust, unfortunately. Without time for public consideration, city leaders added up to $10 million for parking structures to the proposed tax-increment financing plan for the 16-block area around the arena; the council unanimously approved the plan Tuesday. There are good reasons for the council’s action, which simply puts parking in the mix of things that up to $10 million in TIF money can fund in the future along with street improvements, sidewalks, lighting, signage and other basics. But the last-minute handling left much of the public out of the public hearing, raising suspicions that the council sought to slide in the parking dollars under the radar.

    Look at the language here: “confusing move … didn’t help build public trust, unfortunately.” “left much of the public out of the public hearing,” “raising suspicions,” “under the radar.”

    This type of action is corrosive to the democratic process. I think that Ms. Holman realizes that, but she won’t call for the city council to take the proper action, which would be to hold a proper public hearing. No parking facility — indeed, nothing the city could ever build — is so important that it should be approved through this type of process.

  • Wichita Taxes Cancel Development

    Carrie Rengers’ Wichita Eagle column from yesterday (Warehouse plans near airport are called off) reports on two Wichita real estate developers who have canceled a project that would be a valuable addition to our city. The reason for canceling? Wichita’s property tax environment.

    In Wichita, we’re separating real estate development into two classes. There are those who listen to markets and consumers, and try to satisfy the needs that they sense. These are the market entrepreneurs.

    Then, there are the political entrepreneurs. These developers make use of devices such as tax increment financing (TIF districts) to offload large portions of the cost of their developments on the public. They do this by pleasing government officials and bureaucrats, not consumers.

  • Many Wichita developers pay for infrastructure

    A frequent and valued commenter on this blog wrote a comment a few days ago that contains a factual error. I think it’s important to understand this error, because it goes to the heart of the difference between developers working in TIF districts and those who aren’t. Here’s the comment:

    The thing is that real estate developers do not invest in public streets, sidewalks and lamp posts, because there would be no incentive to do so. Why spend millions of dollars redoing or constructing public streets when you can not get a return on investment for that.

    I think this perception, wrong as it is, is common: that when we see developers building something, the City of Wichita magically builds the supporting infrastructure, and at no cost to the developers. But it isn’t quite so. A while ago I had done some research to make sure I correctly understood the relationship between the city and real estate developers. I chose a development on the east side of Wichita, mostly because I live nearby and was familiar with the project. Here’s what I found when I searched for City of Wichita resolutions concerning this project:

    03-637 Water Distribution System Number 448-89901: $54,000
    04-571 Lateral 47, Main 24, War Industries Sewer: $52,500
    04-570 Water Distribution System Number 448-90011: $83,000
    04-572 Left and right turn lanes on 13th Street: $310,000
    05-264 Traffic signalization at the intersection of Waterfront Parkway and Webb Road: $120,000
    05-259 Storm Water Drain No. 189: $400,000
    05-265 Street lighting system: $125,000
    05-262 Left and right turn lanes on Webb Road: $393,000
    05-260 Waterfront Parkway from the North line of 13th Street to the East line of Webb Road: $1,672,000
    03-347 Street lighting system: $125,000

    The total cost of these projects is $3,334,500, and I’m pretty sure I didn’t find all the resolutions and costs pertaining to this project.

    Who pays these amounts? The developers whose project benefited from these improvements. They pay it all: water systems, sewer systems, turn lanes on existing streets, new street construction, traffic lights, etc.

    In a TIF district, these things are called “infrastructure” and will be paid for by the development’s property taxes. Outside of TIF districts, developers pay for these things themselves.

  • Wichita TIF District Reveals Lack of Confidence

    Yesterday, the Wichita Eagle’s Bill Wilson misses the point in his reporting and blogging on business issues.

    In his blog post Seed money for downtown’s future, he wrote this: “The Wichita City Council’s decision to approve tax increment financing for the arena neighborhood’s redevelopment was a welcome vote of confidence in the neighborhood’s future.”

    In his news story Arena TIF seen as ‘a vote of confidence’, we read the remarks of Jeff Fluhr, the new president of the Wichita Downtown Development Corporation: “It’s most definitely a vote of confidence in the future of the neighborhood.”

    Tell me, if real estate developers require an incentive to do something, what does that tell us about their level of confidence?

    It tells me that they have no confidence. They’d rather invest their capital elsewhere, and they’re doing that. It’s only when the city votes to give them money — and that’s what TIF districts do, contrary to Mr. Wilson’s misinformation — can they be “incentivized” to do what they won’t do with their own money.

  • Wichita TIF public hearing was bait and switch

    This appeared in today’s Wichita Eagle.

    On Tuesday December 2, 2008, the Wichita City Council held a public hearing on the expansion of the Center City South Redevelopment District, commonly known as the downtown Wichita arena TIF district. As someone with an interest in this matter, I watched the city’s website for the appearance of the agenda report for this meeting. This document, also known as the “green sheets” and often several hundred pages in length, contains background information on items appearing on the meeting’s agenda.

    At around 11:30 am Monday, the day before the meeting, I saw that the agenda report was available. I download it and printed the few pages of interest to me.

    At the meeting Tuesday morning, I was surprised to hear council member Jim Skelton expressed his dismay that a change to the TIF plan wasn’t included in the material he printed and took home to read. This change, an addition of up to $10,000,000 in spending on parking, is material to the project. It’s also controversial, and if the public had known of this plan, I’m sure that many speakers would have attended the public hearing.

    But the public didn’t have much notice of this controversial change to the plan. Inspection of the agenda report document — the version that contains the parking proposal — reveals that it was created at 4:30 pm on Monday. I don’t know how much longer after that it took to be placed on the city’s website. But we can conclude that citizens — and at least one city council member — didn’t have much time to discuss and debate the desirability of this parking plan.

    The news media didn’t have time, either. Reporting in the Wichita Eagle on Monday and Tuesday didn’t mention the addition of the money for parking.

    This last-minute change to the TIF plan tells us a few things. First, it reveals that the downtown arena TIF plan is a work in progress, with major components added on-the-fly just a few days before the meeting. That alone gives us reason to doubt its wisdom. Citizens should demand that the plan be withdrawn until we have sufficient time to discuss and deliberate matters as important as this. What happened on Tuesday doesn’t qualify as a meaningful public hearing on the actual plan. A better description is political bait and switch.

    Second, when the business of democracy is conducted like this, citizens lose respect for both the government officials involved and the system itself. Instead of openness and transparency in government, we have citizens and, apparently, even elected officials shut out of the process.

    Third, important questions arise: Why was the addition of the parking plan not made public until the eleventh hour? Was this done intentionally, so that opponents would not have time to prepare, or to even make arrangements to attend the meeting? Or was it simple incompetence and lack of care?

    The officials involved — council members Jeff Longwell and Lavonta Williams, who negotiated the addition of the parking with county commissioners; Allen Bell, who is Wichita’s director of urban development; and Mayor Carl Brewer — need to answer to the citizens of Wichita as to why this important business was conducted in this haphazard manner that disrespects citizen involvement.

    Additional coverage:
    Wichita TIF Districts Mean Central Government Planning
    Downtown Wichita Arena TIF District Testimony
    Jim Skelton is Frustrated
    Downtown Wichita Arena TIF District Still a Bad Idea
    Wichita Mayor and City Council Prefer to Work Out of Media Spotlight
    Wichita’s Naysayers Are Saying Yes to Liberty
    Tiff over Wichita TIFs
    Downtown Wichita Arena TIF District
    Do Wichita TIF Districts Create Value?
    Wichita City Council’s Misunderstanding of Tax Increment Financing
    Tax Increment Financing in Wichita Benefits Few
    Tax Increment Financing in Iowa

  • Wichita TIF districts mean central government planning

    As the City of Wichita moves towards more government subsidy and planning instead of entrepreneurship, we should make sure we know what we’re relying on. An article by Steven Greenhut from the July/August issue of The Freeman: Ideas on Liberty provides some useful background and advice.

    The article is here: Central Planning Comes to Main Street. Following are a few excerpts:

    The theory is that the city deserves the new tax dollars because its efforts are improving the supposedly blighted area. But the reality is quite different. Cities don’t often use TIF to fix up blight, but to increase their tax base. Often they engage in what is called “growth capture” — city planners wait until a stable or depressed area is starting to bounce back on its own. They then brand the area “blighted” and use that as an excuse to capture the new values and transfer the gain from the old owners, who held onto the properties during the lean years, to new developers who savor the prospect of getting prime property for far-below-market rates.

    This concept of “growth capture” is what’s happening in Wichita. Assessed valuations of property surrounding the arena have already risen. The area appears on an upward path on its own. Why the need for a TIF district, then?

    “Does the tax abatement method meet with success?” asked Michael LaFaive of the Mackinac Center for Public Policy in a 1999 article. “Not as much as if local officials simply would keep taxes low in the first place. CRC [Citizens Research Council of Michigan] found that economic growth takes place in jurisdictions where taxes are low and which consequently grant fewer abatements.”

    Yes, let’s have low taxes overall, instead of just for favored developers working in politically-favored areas. Or, as John Todd said, think of what could happen if there was a TIF district city-wide.

    Local economic planning, especially the creation of redevelopment project areas, actually slows down neighborhood improvement. Once an area is deemed a redevelopment area, property owners stop investing in their properties because they are not sure that they will ultimately reap the benefit of the investment. They become subjects of the central planners who will make the main decisions that affect the economic vitality of the area.

    This is another important point. Individual projects in the TIF district must be planned in a way that will be able to gain approval of government planners. This happened in Tuesday’s Wichita city council meeting, where the first project in a TIF district known as C.O.R.E was brought before the council for approval. How many developers want to work with city bureaucrats looking over their shoulder?

    There’s much more valuable insight in this article.

  • Downtown Wichita Arena TIF District Testimony

    At the December 2, 2008 meeting of the Wichita City Council, John Todd and I testified against the expansion of the Center City South Redevelopment tax increment financing (TIF) District, commonly known as the downtown Wichita arena TIF district.

    You can read John’s remarks here, or watch a video from YouTube here. Bob’s remarks are here, or click here for the YouTube video.

  • Sedgwick County Commission Urged to Veto Wichita Arena TIF District

    From Darrell Leffew.

    The Wichita City Council voted December 2nd. to approve the TIF District for the Arena area, including a large sum for parking. As a voter and taxpayer in the County and Wichita, I respectfully request each of you on the Board of County Commission to veto that TIF.

    The Arena sales tax collections to build the project included parking expenditures. To use a TIF for more funding is double taxation. I say that for this reason: as the property taxes increase in the TIF district to pay back the City, business owners paying those increases always pass the cost on to their customers. While not directly a “tax”, it has the same effect. And this continued effort to support a downtown while ignoring the business owners elsewhere creates distrust, anger and unhappy voters.

    We, the consumer, will continue paying. Sure we have a choice as to whether we spend money at those businesses. But should we choose to NOT trade there, we actually are doing the opposite of what the TIFs were intended for.

    I am opposed to this TIF. And as member of District Advisory Board V, I have received more than three dozen calls from citizens since noon Tuesday who want a veto from our County Commission.

    I know the parking associated with the Arena is a tough issue. I read the most recent study. And I have been an opponent of the Arena. But it is being built. I therefore hope is is the most successful arena ever built. Taxing an overtaxed community during a recession is bad timing, bad government and bad politics. Hold a public hearing on the matter. Ask, no demand, the voters get involved in your process. Isn’t that how our Representative form of government is supposed to work?

    Again, I and many others who have voiced concern to me, urge you to veto that TIF.

  • Jim Skelton is Frustrated

    At yesterday’s meeting of the Wichita City Council, council member Jim Skelton expressed his frustration with last-minute additions to the plan for the Center City South Redevelopment tax increment financing (TIF) District, commonly known as the downtown Wichita arena TIF district.

    The problem is two-fold: First, when plans change at the last minute, there is no time for any debate or discussion about the changes. Citizens, and even newspaper reporters, don’t have time to prepare. Second, when a major project — one costing many millions and requiring multi-year commitments by local governments — is apparently planned on the fly, it doesn’t inspire much confidence in the people in charge.