Voice For Liberty

Tag: TIF districts

  • Naftzger Park construction manager

    Naftzger Park construction manager

    The City of Wichita seeks a construction manager for the construction of Naftzger Park.

    The request for qualification is titled “CONSTRUCTION MANAGER AT RISK to Construct Naftzger Park.” On the city’s purchasing website the relevant information is contained in five separate documents. I’ve gathered them together in one document, which you may access here.

    The city may be getting ahead of itself. The RFQ sets the deadline for submissions as 2:00 pm Tuesday August 15. That morning is when the Wichita City Council will consider approval of the redevelopment project plan. 1 Until that plan is approved by a two-thirds majority of the council, there exists no authorization to spend funds from a tax increment financing district. 2

    Trends of business activity in downtown Wichita. Click for larger.
    Referring to the planning process for downtown Wichita in 2008 and 2009, the document says, “Since that time downtown Wichita has experienced record growth.” This statement isn’t true. Since that time there are fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In all cases, the trend is lower. 3 There is growth in people living downtown.

    Something new appears in this paragraph: “Design and construction are planned to be implemented in phasing to accommodate budget, with the first phase budget of $1,500,000 for design, project administration and construction. The first phase budget will provide for an open and usable park that accommodates as many programming features as budget allows. In addition to the $1,500,000 for phase one, there will also be approximately $500,000 worth of cross site work, demolition, and infrastructure to be completed on the adjacent property.”

    The document doesn’t specify the source of the $500,000, and this is the first mention of that sum, as far as I know. But the fact that management of it is included in this RFQ is more evidence that the redesign of Naftzger Park is really a project being done for the benefit of the nearby private landowner.

    Later, more evidence of the park’s importance to, and benefit of, one company: “Because of the adjacent location and utilization of the park as it relates to the Spaghetti Works Development, it is necessary that TGC’s team play an integrated role; so that the flow and function developed in the park work seamlessly together with the TGC project.”

    Just to emphasize, the proposals are not sent to city hall but to the private company that will benefit from the park redesign: “Sealed Request for Proposal will be received in the office of the TGC Development Group, 125 N Emporia, Suite 202, Wichita, KS 67202, Attn: Blake Heiman.”

    A possible plan for Naftzger Park from the City of Wichita
    And who will make the decision? An addendum to the RPQ holds: “A Selection Committee consisting of staff from various City department and TGC will evaluate submissions.”

    The city has provided an illustration of what a potential redesign might look like. There has been much criticism — including by city council members — especially for the covering of the park with artificial turf. But, the RFQ states: “A summary of programmatic elements will include a flexible use lawn area (with potential of artificial turf).”

    For more about Naftzger Park, see these articles and other information from Voice for Liberty:

    —
    Notes

    1. Weeks, Bob. Upcoming Naftzger Park legislative action. Available at https://wichitaliberty.org/wichita-government/upcoming-naftzger-park-legislative-action/. ↩
    2. Weeks, Bob. Background on tax increment financing (TIF) as applied to Naftzger Park in downtown Wichita. Available at https://wichitaliberty.org/wichita-government/naftzger-park-tax-increment-financing-tif/. ↩
    3. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/. ↩
  • Naftzger Park tax increment financing (TIF)

    Naftzger Park tax increment financing (TIF)

    Background on tax increment financing (TIF) as applied to Naftzger Park in downtown Wichita.

    The City of Wichita has proposed using tax increment financing (TIF) revenue to redevelop Naftzger Park in downtown Wichita. Various city officials have said something along these lines: There is a pot of money — 1.5 million dollars — available for use on Naftzger Park, and this money can’t be used for any other purpose. Also, it’s implied that if this money is not used on Naftzger Park, this money will not be available for any purpose, almost as though the money will be wasted.

    The source of the money is tax increment financing (TIF). This is a method of public finance whereby future property tax revenues are redirected from their normal flow to something else. The amount of taxes that are paid at the time of the formation of the TIF district is called the base, which is a function of the district’s original assessed value. The plan is that as new property is built or existing property renovated in the TIF district, there is more assessed value, and more taxes are levied and collected. The amount of taxes paid each year above the base is called the increment. It is these incremental taxes that are captured and rerouted. Because TIF is usually applied to blighted areas and the property is not highly valued, the base is usually low. In successful TIF projects, the increment can be very large. 1

    To where are the incremental taxes redirected? Generally, to the benefit of property owners in the TIF district. 2 While there are restrictions on how TIF dollars may be spent, I don’t think any developers within TIF districts have not been able to take full advantage of the TIF dollars that are available, although Naftgzer Park is a special case (see below).

    Advocates of TIF make it sound as though it is free money. They often say that if the proposed project does not receive TIF financing, it can’t be built. This is the “but for” justification: But for the benefit of TIF, nothing will happen. Without TIF there will be no development, and no future incremental taxes will be collected.

    There are several issues with this line of thinking. First, the but for rationale is subject to abuse. Developers who want to use TIF have a large monetary incentive to make it appear as though their projects are not financially viable without TIF. That’s the meaning of but for. To make their case for TIF, developers supply financial projections to cities, and the city usually accepts them at face value. These financial projections rely on many assumptions about the future, often 20 or more years in the future. For example, what will be the occupancy rate and average room rate for a proposed hotel in 15 years? Forecasting these values for next year is difficult enough. Yet, it is projections like these that form the basis of the necessity of TIF.

    City officials do not have the expertise to evaluate these financial projections. If citizens want to see these projections, the City of Wichita will not supply them, in most cases.

    Second: The pleas for TIF made by developers are sometimes plainly false. In Wichita, a developer wanted to build a grocery store using TIF and other incentives. He told the city he has “researched every possible way” to make the project work, and it would not work without TIF. 3 A representative of the developer told the city council, “There will not be a building on that corner if this [TIF] is not passed today. … That new building would not be built. I absolutely can tell you that because we have spent months … trying to figure out a way to finance a project in that area.”

    The city’s chief economic development official told the council, “We know, for example, from the developer’s perspective in terms of how much they will make in lease payments from the Save-A-Lot operator, how much that is, and how much debt that will support, and how much funds the developer can raise personally for this project. That has, in fact, left a gap, and these numbers that you’ve seen today reflect what that gap is.” 4

    While the city approved TIF, the county did not. So TIF was not available, and the developer abandoned the project. But: A different developer built the same grocery store and additional retail space at the same location without TIF. It is still in operation six years later.

    Third: If it is true that we can’t have new development without TIF, there may be obstacles in place that should be removed so that development can take place without TIF.

    Not free money

    TIF has a cost. A real cost. If we don’t recognize that, then we must reconsider the foundation of local tax policy.

    In Wichita, as in most cities, the largest consumers of property tax dollars are the city, county, and school district. All justify their tax collections by citing the services they provide: Law enforcement, fire protection, education, etc. It is for providing these services that we pay local taxes.

    Within a TIF district, however, the new property tax dollars — the increment — do not go to the city, county, and school district to pay for services. Instead, these dollars are used in ways that benefit the development: Property acquisition, site preparation, utilities, drainage, street improvements, streetscape amenities, public outdoor spaces, landscaping, and parking facilities, according to the city’s explanation.

    Yet, the new development will undoubtedly demand and consume the services local government provides — law enforcement, fire protection, and education. But its incremental property taxes do not pay for these, as they have been diverted elsewhere. (The base property taxes still go to pay for these services, but the base is usually low.) Instead, others must pay the cost of providing services to the TIF development, or accept reduced levels of service as existing service providers are saddled with new demand.

    Supporters of TIF argue that developers aren’t getting a free ride. The city isn’t giving them cash, they say. The owners of the TIF development will be paying their full share of higher property taxes in the future. That’s true. But, these new tax dollars are spent for their benefit, not to pay for the cost of government.

    We’re left with an uncomfortable situation. City officials tell us that we must pay property taxes so the city can provide services. (In fact, right now the Wichita city manager is recommending increasing property taxes to pay for more police officers.)

    At the same time, however, the city creates special classes of people who use services but don’t pay for them.

    Yes, the city and developers cite the but for argument, arguing that without the benefit of TIF, there won’t be new development and new demand for services. But we’ve seen that the but for rationale is dubious and subject to abuse.

    Of note: At a recent public meeting regarding Naftzger Park, someone asked if some of the $1.5 million could be used for more police officers. The answer from city officials was “no.” That answer is correct. But in the normal case, part of this $1.5 million would be available to pay for more police.

    Also: The redevelopment district in which incremental taxes will be redirected to Naftzger Park includes a number of properties that are already developed.

    Allowed uses: It’s just infrastructure

    In their justification of TIF, proponents may say that TIF dollars are spent only on allowable purposes. Usually a prominent portion of TIF dollars are spent on things that are related to infrastructure, as listed above. This allows TIF proponents to say the money isn’t really being spent for the benefit of a specific project. It’s spent on infrastructure, they say, which they contend is something that benefits everyone, not one project specifically. Therefore, everyone ought to pay.

    But this isn’t the case. Often non-TIF developers pay for significant infrastructure at their own expense. An example is the Waterfront development in northeast Wichita. There is a street that winds through the development, Waterfront Parkway. To anyone driving or walking in this area, they would think this is just another city street — although a very nicely designed and landscaped street. But the city did not pay for this street. Private developers paid $1,672,000 for this infrastructure, and then deeded it to the city. The same developers paid for street lights, traffic signals, sewers, water pipes, and turning lanes on major city streets. In order to build the Waterfront development, private developers paid for infrastructure, with a total cost of these projects at one time being $3,334,500. It has likely risen since then. 5

    In the case of Naftzger Park, it’s argued that the park benefits everyone. Therefore, it’s akin to infrastructure. In reality, the park is more like the front yard of a proposed hotel and a nearby building, being developed for their owner’s benefit. The developers of these are managing, along with the city, the plans for Naftzger Park. Incredibly, applications to be the park’s architect were sent not to the city, but to the private developers. 6

    Further: Park improvements were not an allowed use of TIF funds when the Center City South TIF was formed in 2007. So the city amended the TIF district plan to allow for TIF funds to be used to redevelop Naftzger Park. 7

    Redirect your taxes, not mine

    The Wichita Downtown Development Corporation (WDDC) is funded, primarily, by property taxes. A district known as the Self-Supported Municipal Improvement District (SSMID) levies a property tax in a district roughly defined as from Kellogg north to Central, and the Arkansas River east to Washington Street. In 2011 the mill levy was 5.950 and raised nearly $600,000 in revenue. 8 For 2016 the mill levy was 7.140. With an assessed value of $92,901,423, the SSMID tax ought to raise about $663,000. 9

    All the property tax money raised by the SSMID is used to fund WDDC.

    Now, WDDC — one of the leading advocates for the use of TIF in downtown Wichita — is quite happy to see incremental tax dollars redirected away from the city, county, and school district to benefit TIF developers. You might think that WDDC would also participate in this — purportedly — beneficial arrangement, consenting for its share of property tax to also be redirected for the benefit of developers.

    Guess again. The SSMID — nearly the only source of funding for WDDC — is exempted from having its tax revenue capture by TIF and redirected to another purpose.

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    Notes

    1. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/. ↩
    2. The Center City South TIF district is an unusual case in that only 70 percent of the incremental taxes are redirected. ↩
    3. Weeks, Bob. In Wichita Planeview neighborhood: Yes, we have! Available at https://wichitaliberty.org/wichita-government/in-wichita-planeview-neighborhood-yes-we-have/. ↩
    4. Weeks, Bob. For Wichita, Save-A-Lot teaches a lesson. Available at https://wichitaliberty.org/wichita-government/for-wichita-save-a-lot-teaches-a-lesson/. ↩
    5. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/. ↩
    6. City of Wichita. Request for Qualification No. – FP740043. Available at https://drive.google.com/file/d/0B97azj3TSm9MQ1ZVcXVsNVQ2dkE/view?usp=sharing. ↩
    7. Wichita city council agenda packet for May 16, 2016, agenda item IV-1. ↩
    8. Wichita city ordinance 48-786. Available at http://wichitaks.granicus.com/MetaViewer.php?view_id=2&clip_id=820&meta_id=65004. ↩
    9. Sedgwick County Clerk’s Office and author’s calculations. ↩
  • Upcoming Naftzger Park legislative action

    Upcoming Naftzger Park legislative action

    The redesign of Naftzger Park in downtown Wichita is not a done deal, at least not legally.

    While the City of Wichita is engaging citizens and planning for the future of Naftzger Park, there is still another legislative step the city must take in order to fully proceed. In Kansas, use of tax increment financing requires at least two steps. The first step is that cities or counties establish the boundaries of the TIF district. After the TIF district is defined, cities then must approve one or more project plans that authorize the spending of TIF funds in specific ways. (The project plan is also called a redevelopment plan.) In Kansas, overlapping counties and school districts have an opportunity to veto the formation of the TIF district, but this rarely happens. Once the district is formed, cities and counties have no ability to object to TIF project plans. 1

    Center City South Redevelopment TIF District, July 2017. Click for larger.
    In the case of Naftzger Park, the TIF district (named Center City South) was formed some years ago, and there have been redevelopment plans adopted that cover portions of this rather large TIF district. Now a new redevelopment project area is proposed that includes Naftzger Park and some surrounding property. In the nearby map from the city, the Center City South TIF district is shown. The redevelopment project area under consideration is labeled “11.”

    In order to pass a redevelopment plan into statute, Kansas law requires a public hearing and passage of the redevelopment plan by a two-thirds majority of the governing body. For the Wichita city council, that means five votes are needed to adopt the project plan and start spending money. 2

    Documents from the city explain: “The next step in establishing the legal authority to use TIF is the adoption by the City Council of a redevelopment project plan, within the district, which provides more detailed information on the proposed project and how TIF would be used, and demonstrates how the projected increase in property tax revenue will amortize the costs financed with TIF.” 3

    Just for emphasis, from the same document: “Once adopted, the City will be authorized to use TIF to finance eligible project costs.”

    (The terminology may be confusing. Some documents use the term “project plan” and sometimes “redevelopment plan.” TIF districts are also sometimes referred to as “redevelopment districts.”)

    On July 11, 2017 the Wichita city council set August 15 as the date for the public hearing. Presumably a vote on adoption of the redevelopment plan will be at the same meeting, although votes like this have been delayed. And, there’s no guarantee there will be five votes in favor of adopting the plan.

    Since the redevelopment plan has not been adopted, you may be wondering how the city is going to use TIF funds to pay the architects. That’s a good question. It is the city’s declared intent to use TIF funding for work that is currently being done: “The park design is anticipated to be provided by Tax Increment Financing and is identified in the proposed 2018 CIP.” 4

    Another consideration: The city is proceeding at full speed — “an aggressive timetable” is the quote from the city manager — on the plan to redevelop Naftzger Park. 5 Public sentiment seems to be that it is a “done deal.” It’s going to happen, people are resigned to say.

    To his credit, the city manager is also quoted in the same Eagle article showing his understanding that the process is not complete: “If the process doesn’t allow us to do it, it doesn’t allow us to do it,”

    But other city officials act as though the design of Naftzger Park is inevitable, that the TIF money is there waiting to be spent, and those funds will be lost if not spent on the park.

    With attitudes like this, I wonder why we should bother holding a public hearing.

    —

    Following is an excerpt from the July 11, 2017 city council agenda packet:

    The next step in establishing the legal authority to use TIF is the adoption by the City Council of a redevelopment project plan, within the district, which provides more detailed information on the proposed project and how TIF would be used, and demonstrates how the projected increase in property tax revenue will amortize the costs financed with TIF. …

    In accordance with state law, a TIF Project Plan has been prepared in consultation with the Wichita-Sedgwick County Metropolitan Area Planning Commission, which has made a finding that the project is consistent with the Comprehensive Plan for development of the area. In order to adopt a TIF Project Plan, the City Council must first set a public hearing no less than 30 and no more than 70 days from adoption of the resolution setting the hearing. The date of August 15, 2017, at the regular City Council meeting is proposed for the public hearing on the Naftzger Park Project Plan.

    If adopted by the City Council, the attached resolution setting the August 15, 2017 public hearing will be sent to the owners and occupants of all property located within the proposed Naftzger Park Project Area, by certified mail. The resolution will also be published in the Wichita Eagle and copies will be provided to the Board of County Commissioners and Board of Education and their appropriate staff.

    After closing the public hearing on August 15, 2017, the City Council may adopt the TIF Project Plan by ordinance, by two-thirds majority vote. Once adopted, the City will be authorized to use TIF to finance eligible project costs.

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    Notes

    1. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/. ↩
    2. 7 city council members times 2 divided by 3 equals 4.67, which must be rounded up to 5. ↩
    3. Wichita city council agenda packet for July 11, 2017, item IV-1. ↩
    4. Wichita city council agenda packet for July 18, 2017, item IV-3. ↩
    5. Finger, Stan. Contentious crowd gathers to discuss Naftzger Park’s future, redesign. Wichita Eagle, July 27, 2017. Available here: http://www.kansas.com/news/politics-government/article164112397.html. ↩
  • In Wichita, new stadium to be considered

    In Wichita, new stadium to be considered

    The City of Wichita plans subsidized development of a sports facility as an economic driver.

    West Bank Redevelopment District. Click for larger.
    This week the Wichita City Council will consider a project plan for a redevelopment district near Downtown Wichita. It is largely financed by Tax Increment Financing and STAR bonds. Both divert future incremental tax revenue to pay for various things within the district.1 2

    City documents promise this: “The City plans to substantially rehabilitate or replace Lawrence-Dumont Stadium into a multi-sport athletic complex. The TIF project would allow the City to make investments in Lawrence-Dumont Stadium, construct additional parking in the redevelopment district, initiate improvements to the Delano multi-use path and make additional transportation improvements related to the stadium project area. In addition to the stadium work, the City plans to construct, utilizing STAR bond funds, a sports museum, improvements to the west bank of the Arkansas River and construct a pedestrian bridge connecting the stadium area with the Century II block. The TIF project is part of the overall plan to revitalize the stadium area and Delano Neighborhood within the district.”3

    We’ve heard things like this before. Each “opportunity” for the public to invest in downtown Wichita is accompanied by grand promises. But actual progress is difficult to achieve, as evidenced by the examples of Waterwalk, Kenmar,and Block One.4

    Trends of business activity in downtown Wichita. Click for larger.
    In fact, change in Downtown Wichita — if we’re measuring the count of business firms, jobs, and payroll — is in the wrong direction, despite large public and private investment. 5

    Perhaps more pertinent to a sports facility as an economic growth driver is the Intrust Bank Arena. Two years ago the Wichita Eagle noted the lack of growth in the area. 6 Since then, not much has changed. The area surrounding the arena is largely vacant. Except for Commerce Street, that is, and the businesses located there don’t want to pay their share of property taxes. 7

    I’m sure the city will remind us that the arena was a Sedgwick County project, not a City of Wichita project, as if that makes a difference. Also, the poor economic performance cited above is for Downtown Wichita as delineated by zip code 67202, while the proposed baseball stadium project lies just outside that area, as if that makes a difference.

    By the way, this STAR bonds district is an expansion of an existing district which contains the WaterWalk development. That development has languished, with acres of land having been available for development for many years. We’ve also found that the city was not holding the WaterWalk developer accountable to the terms of the deal that was agreed upon, to the detriment of Wichita taxpayers. 8

    Following, selected articles on the economics of public financing of sports stadiums.

    The Economics of Subsidizing Sports Stadiums

    Scott A. Wolla, “The Economics of Subsidizing Sports Stadiums,” Page One Economics, May 2017. This is a project of the Federal Reserve Bank of St. Louis. Link.
    “Building sports stadiums has an impact on local economies. For that reason, many people support the use of government subsidies to help pay for stadiums. However, economists generally oppose such subsidies. They often stress that estimations of the economic impact of sports stadiums are exaggerated because they fail to recognize opportunity costs. Consumers who spend money on sporting events would likely spend the money on other forms of entertainment, which has a similar economic impact. Rather than subsidizing sports stadiums, governments could finance other projects such as infrastructure or education that have the potential to increase productivity and promote economic growth.”

    What economists think about public financing for sports stadiums

    Jeff Cockrell, Chicago Booth Review, February 01, 2017. Link.
    “But do the economic benefits generated by these facilities — via increased tourism, for example — justify the costs to the public? Chicago Booth’s Initiative on Global Markets put that question to its US Economic Experts Panel. Fifty-seven percent of the panel agreed that the costs to taxpayers are likely to outweigh benefits, while only 2 percent disagreed — though several panelists noted that some contributions of local sports teams are difficult to quantify.”

    Publicly Financed Sports Stadiums Are a Game That Taxpayers Lose

    Jeffrey Dorfman. Forbes, January 31, 2015. Link.
    “Once you look at things this way, you see that stadiums can only justify public financing if they will draw most attendees from a long distance on a regular basis. The Super Bowl does that, but the average city’s football, baseball, hockey, or basketball team does not. Since most events held at a stadium will rely heavily on the local fan base, they will never generate enough tax revenue to pay back taxpayers for the cost of the stadium.”

    Sports Facilities and Economic Development

    Andrew Zimbalist, Government Finance Review, August 2013. Link.
    “This article is meant to emphasize the complexity of the factors that must be evaluated in assessing the economic impact of sports facility construction. While prudent planning and negotiating can improve the chances of minimizing any negative impacts or even of promoting a modest positive impact, the basic experience suggests that a city should not expect that a new arena or stadium by itself will provide a boost to the local economy.

    Instead, the city should think of the non-pecuniary benefits involved with a new facility, whether they entail bringing a professional team to town, keeping one from leaving, improving the conveniences and amenities at the facility, or providing an existing team with greater resources for competition. Sports are central to cultural life in the United States (and in much of the world). They represent one of the most cogent ways for residents to feel part of and enjoy belonging to a community. The rest of our lives are increasingly isolated by modern technological gadgetry. Sport teams help provide identity to a community, and it is this psychosocial benefit that should be weighed against the sizeable public investments that sports team owners demand.”

    Professional Sports as Catalysts for Metropolitan Economic Development

    Robert A. Baade, Journal of Urban Affairs, 1996. Link.
    “To attract or retain a team, cities are offering staggering financial support and rationalize their largesse on economic grounds. Do professional sports increase income and create jobs in amounts that justify the behavior of cities? The evidence detailed in this paper fails to support such a rationale. The primary beneficiaries of subsidies are the owners and players, not the taxpaying public.”

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    Notes

    1. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/. ↩
    2. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/. ↩
    3. Wichita City Council, agenda packet for July 18, 2017. ↩
    4. Weeks, Bob. Downtown Wichita’s Block One, a beneficiary of tax increment financing. Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-block-one-beneficiary-tax-increment-financing/. ↩
    5. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/. ↩
    6. “Ten years ago, Elizabeth Stevenson looked out at the neighborhood where a downtown arena would soon be built and told an Eagle reporter that one day it could be the ‘Paris of the Midwest.’ What she and many others envisioned was a pedestrian and bike-friendly neighborhood of quaint shops, chic eateries and an active arts district, supported by tens of thousands of visitors who would be coming downtown for sporting events and concerts. It hasn’t exactly turned out that way. Today, five years after the opening of the Intrust Bank Arena, most of the immediate neighborhood looks much like it did in 2004 when Stevenson was interviewed in The Eagle. With the exception of a small artists’ colony along Commerce Street, it’s still the same mix of light industrial businesses interspersed with numerous boarded-up buildings and vacant lots, dotted with ‘for sale’ and ‘for lease’ signs.” Lefler, Dion. 5 years after Intrust Bank Arena opens, little surrounding development has followed. Wichita Eagle. December 20, 2014. Available at http://www.kansas.com/news/local/article4743402.html. ↩
    7. Riedl, Matt. Has Commerce Street become too cool for its own good? Wichita Eagle. April 8, 2017. http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article143529404.html. ↩
    8. Weeks, Bob. Wichita WaterWalk contract not followed, again Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-agreement-not-followed/. ↩
  • Wichita WaterWalk agreement not followed

    Wichita WaterWalk agreement not followed

    Does the City of Wichita enforce its public-private partnership agreements? In some cases the city doesn’t even ask for the information that is needed for enforcement.

    A Wichita Eagle article reports on a 2002 public-private partnership that called for the private-sector company to submit an annual report to the city. But the company did not submit the reports, and the city didn’t ask for them. The city did after the Eagle inquired. 1

    The deal involves the city leasing land to a private developer for a project now known as WaterWalk. Part of the deal called for the city to possibly receive annual payments in a form of profit-sharing. Annual reports to the city were to provide figures from which the city’s payment would be calculated.

    There is an important issue here apart from the wisdom of striking the initial deal in 2002. That is, neither the city nor the company followed the terms of the deal. The annual reports were not supplied by the company, and they were not requested by the city, according to Eagle reporting. As it turns out the annual reports purport to show that the city was owed no money under the profit sharing agreement.

    But that’s not the point. The issue is that the city did not enforce a simple aspect of the agreement, and the private-sector company felt it did not need to comply.

    Some of the Eagle article is devoted to explaining that the deal was struck some years ago, and: “No city official who played a major role in the 2002 contract is still actively involved in government.”

    I’m sure we will hear that excuse from current city council members and bureaucrats, that all this happened before our time. Anyone taking cover using that excuse deserves to be terminated immediately.

    We should not accept this or any excuse. This is because in 2012 the city entered into a same or similar agreement in the same WaterWalk development with the same developer, Jack P. Deboer. It also called for the city to potentially earn payments, called “additional annual rent.” It also called for reports to be made, although the exact language used is “provide that calculation.” 2

    I wonder: When city staff drafted the new agreement in 2012, and when the council deliberated the agreement, did anyone wonder how the 2002 agreement worked out? Did anyone wonder if the city earned any payments from that deal? The 2012 agreement was controversial, at least to some. I and others spoke to the council expressing our concerns. 3

    I also wonder: Has the developer filed the annual reports from the 2012 agreement? I’ve asked the city.

    Here is the article I filed in 2012: Wichita WaterWalk apartment deal not good for citizens.

    —
    Notes

    1. Lefler, Dion. WaterWalk profit-sharing: 15 years, zero dollars for Wichita. Wichita Eagle, July 8, 2017. Available at http://www.kansas.com/news/politics-government/article160147944.html. ↩
    2. “As Additional Annual Rent Tenant shall pay a sum equal to twenty-five percent (25%) of the Adjusted Net Cash Flow commencing with the first day the Tenant Improvements open for business. The Tenant shall calculate Adjusted Net Cash Flow for each Current Year within forty-five (45) days after the end of the Current Year (or portion thereof) and provide that calculation, and pay to the Landlord the Additional Annual Rent, within sixty (60) days after the end of the Current Year. Additional Annual Rent shall continue until this Lease expires. Adjusted Net Cash Flow is Gross Revenues less Total Expenses, less the total amount of capital expenses for furniture, fixtures, and equipment for the Tenant Improvements in excess of the aggregate amount expended from any reserve during such year.” Amendments to WaterWalk Developer Agreements. August 21, 2012. Available at https://drive.google.com/file/d/0B97azj3TSm9Mdm1tWjlQbVAzemM/view?usp=sharing. ↩
    3. Wichita City Council. Minutes of August 21, 2012 meeting. Available at http://wichitaks.granicus.com/MinutesViewer.php?view_id=2&clip_id=1843. ↩
  • Downtown Wichita’s Block One, a beneficiary of tax increment financing

    Downtown Wichita’s Block One, a beneficiary of tax increment financing

    Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts.

    Windows in the former Henry’s building promote Block One. They’re fading from exposure to the sun. Click for larger.
    I’ll not bore you with the mechanism of tax increment financing (TIF). But if you’re curious, please read Wichita TIF projects: some background and Tax increment financing district (TIF) resources.

    Whatever the mechanism, tax increment financing is meant to spur economic growth. But in one of Wichita’s largest TIF districts, economic activity, much less growth, is difficult to find.

    In particular, “Block One” — a square block bounded by Douglas and William, Broadway and Topeka — has benefited from TIF money, but has stumbled. There is the Ambassador Hotel, which received many millions in taxpayer subsidy in addition to TIF benefits. There is also the Kansas Leadership Center, a handsome new building.

    Block One retail space sits mostly empty, despite the benefit of tax increment financing. Click for larger.
    But on William Street, progress is harder to find.

    The former Henry’s building remains empty. Promotional materials in its display windows have been fading in the sun for four years. Across the alley to the east is 8,400 square feet of retail space, all empty for four years except for a used book store. It’s not for lack of parking that this space is empty, as it lies underneath a taxpayer-funded parking garage. There’s plenty of on-street parking too, as little happens on this block.

    Some of the surrounding property is not doing well, either. The Broadway Plaza building features a large ground floor office or retail space that has been empty for years. South of that, the former State Office Building — directly across Broadway from the former Henry’s building — faces possible demolition.

    Block One ribbon cutting, March 2013.
    Has there been lack of promotion for Block One? No. The downtown development agency uses it as an example of the success of its efforts in downtown Wichita. It has called it “the first complete city block of development along the core of Douglas Avenue.”

    But the legacy of this, at least along William Street, is empty storefronts and a hulking vacant building.

    Now the City of Wichita has approved the formation of yet another tax increment financing district. Sedgwick County and the Wichita School District have an opportunity to veto its formation. Before approving any new tax increment financing districts, we might want to ask for some progress in what we have.

    Block One promotional material. Click for larger.
  • Tax increment financing in Kansas

    Tax increment financing in Kansas

    In this excerpt from WichitaLiberty.TV: How does Tax Increment Financing (TIF) work in Kansas? Is is a good thing, or not? View below, or click here to view at YouTube. Originally broadcast June 7, 2015.

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  • WichitaLiberty.TV: Arts funding, property taxes, uninformed officials, tax increment financing, and social security

    WichitaLiberty.TV: Arts funding, property taxes, uninformed officials, tax increment financing, and social security

    In this episode of WichitaLiberty.TV: Is Wichita risking a Soviet-style future? A look at Wichita property taxes, uninformed and misinformed elected officials, tax increment financing, and social security. View below, or click here to view on YouTube. Episode 86, broadcast June 7, 2015.

  • WichitaLiberty.TV: A downtown Wichita deal shows some of the problems with the Wichita economy

    WichitaLiberty.TV: A downtown Wichita deal shows some of the problems with the Wichita economy

    In this episode of WichitaLiberty.TV: We’ll examine the city council’s action regarding a downtown Wichita development project and how it is harmful to Wichita taxpayers and the economy. View below, or click here to view at YouTube. Episode 77, broadcast March 8, 2015.