Voice For Liberty

Tag: TIF districts

  • Being Open and Transparent: A Sedgwick County Commissioner’s View

    Yesterday (August 27, 2008) I testified briefly at a meeting of the Sedgwick County Commission opposing the formation of a tax increment financing (TIF) district that will benefit a Wichita political insider. My concern that I wanted the commissioners to be aware of is was that the applicant, Wichita school board member Reverend Kevass Harding, has not acted in an open, transparent, and ethical manner.

    Commissioner Dave Unruh said that he had thought that Harding was being open and transparent. I suppose if you’re a full-time county commissioner who, presumably, thinks about these matters on a full-time basis, and you have a staff of well-paid professionals to prepare reports and other documents for you, and you have an applicant who is seeking $2.5 million in taxpayer subsidy and would do just about anything to secure that sum, you probably don’t have any problems finding out what you want to know.

    But for average citizens who don’t watch county commission meetings on television, who don’t pour over the minutes of the meetings, and who may not read the sketchy coverage of this matter in newspapers, they won’t be aware of what’s going on.

    This is another example of how many members of the Wichita City Council and the Sedgwick County Commission are out of touch with the citizens they govern. Three of the last three county commissioners to face the voters for re-election have been defeated. A fourth faces an opponent this November.

    My remarks from yesterday:

    The concern I have with the formation of this TIF district is that the applicant may be using his political connections for profit, and he has not been forthright with his constituents and the community.

    The Wichita school board, of which Reverend Kevass Harding is a member, is required, as is this commission, to consent to the formation of this TIF district. The problem is that since no vote is required by the school board, how can we ask him to declare his conflict of interest and recuse himself from discussion and a vote?

    He told the Wichita City Council that he had told city staff and his colleagues on the school board of what he was doing, but it’s not to them that he has en ethical obligation. Instead, his obligation is to the residents of Sedgwick County, the City of Wichita, and USD 259. It is to them that he has the ethical obligation to make sure that this matter is handled with openness and transparency. To my knowledge, he has not done that.

    This smacks of a political insider using his connections for personal profit.

    Furthermore, the applicant has not been responsive to community concerns over this TIF district. I am Reverend Harding’s constituent, as he is the at-large school board member for USD 259, and I am a resident of that school district. He has not returned my several telephone calls and email messages regarding this matter.

    For these reasons, I urge this commission to veto the formation of this TIF district. Let the applicant apply again, this time being open and forthright with the citizens of Sedgwick County, and perhaps this matter can be viewed differently.

  • Wichita Mayor and City Council Prefer to Work Out of Media Spotlight

    In a statement read at the August 26, 2008 meeting of the Wichita City Council (see City Council Acts on Arena Area Redevelopment), Wichita Mayor Carl Brewer expressed his concern that “The naysayers have gotten too much media attention while those who are engaged and do the hard work are too often ignored and criticized.”

    I think the mayor’s assessment is a little overblown. Can a tiny group of citizen volunteers — a ragtag group, some might say — manage to outmaneuver the vast resources of the City of Wichita and its allied quasi-governmental organizations such as Visioneering Wichita, Wichita Metro Chamber of Commerce, Greater Wichita Economic Development Coalition, Wichita Downtown Development Corporation, and the Greater Wichita Convention and Visitors Bureau?

    It doesn’t seem likely.

    The mayor has the editorial board of the Wichita Eagle, the state’s largest newspaper, squarely behind almost all of his initiatives. Except for the fiasco surrounding the hiring of would-be city manager Pat Salerno, I can’t recall criticism of the mayor on the Eagle’s editorial page, except from citizens who write letters.

    I can’t imagine any news reporter in town who, upon receiving an invitation from the mayor to come to his office, would not hurry over to City Hall and report on whatever the mayor said. At length.

    The city has a Community Relations Team, consisting of three people (and perhaps other staff) with experience in media. The city’s website fares well in Internet searches, with its pages placing high in the search results pages of Google and other search sites.

    We must also remember that the people doing the “hard work” the mayor mentioned are often city staff working at a job just like anyone else. Or, they might work for quasi-governmental groups like those mentioned above.

    Importantly, remember that many of these people working for passage of the mayor’s economic initiatives stand to profit handsomely from them. These people — Wichita’s class of political entrepreneurs — prefer to earn their profits mining the halls of government power and the pockets of taxpayers rather than by pleasing customers in free markets. It’s a lot easier to please the mayor and a majority of the city council rather than working hard in the marketplace. These people get their share of media attention. They richly deserve criticism.

    I believe that the mayor and the city council thought that passage of the expansion of the TIF district surrounding the downtown arena would be business as usual. But thanks to council member Paul Gray and a few snippets of coverage here and there in the newspaper, things didn’t proceed as usual.

  • Wichita School District Dodges TIF District Issue

    At the August 25, 2008 meeting of the board of USD 259, the Wichita public school district, John Todd and I addressed the board members, asking that they exercise their veto power over the formation of a tax increment financing (TIF) district recently created by the City of Wichita. My remarks may be read in the post Wichita School District: Don’t Give Up Your Tax and Revenue Base.

    At issue is the Wichita school district giving up its claim to tax revenue from possible future development surrounding the downtown Wichita arena. As is usually the case with TIF districts, confusion reigns. That works to the benefit of politicians, bureaucrats, and political entrepreneurs (those are the taxpayer-subsidized downtown developers), but against the interests of citizens.

    At its core, the arithmetic of property taxation is simple. There’s the assessed value of all the property within the boundaries of USD 259. Then there’s a mill levy, or tax rate. Multiply the two, and that’s how much tax revenue the district is entitled to receive. (Collecting that is a different matter. According to USD 259’s comprehensive annual financial report, the district does quite well, usually collecting over 97% of the tax it imposes.)

    But there are some restrictions imposed by the state of Kansas, and evidently these restrictions are difficult to understand. I say this because Linda Jones, chief financial officer for USD 259, postponed a presentation until she could “receive clarifications from the state,” as reported in the Wichita Eagle story School district to leave TIF debate up to city, county.

    This postponement uncovers a problem. If the Kansas school finance system is so complex that the chief financial officer of the state’s largest school district — someone paid $116,055 per year with a staff to assist — doesn’t have command of the mechanism, the system is not serving us well. It means that ordinary citizens can’t understand how things work without devoting extensive study to the issue. It also means that legislators and journalists probably don’t understand the full workings of the system. School finance, then, is understood by only a handful of politicians and bureaucrats in Topeka. And, you can be sure, by a handful of taxpayer-funded lobbyists for school districts that work the system to their advantage.

    The Wichita school board had another reason for postponing action. By its next meeting, the window of time for the board to take action vetoing the formation of the TIF district will have closed. Board president Lynn Rogers told John Todd that there will be a presentation about TIFs at the board’s next meeting. But by then, it will — conveniently — be too late for the board to take action on the downtown arena TIF district. Does Rogers understand this, I wonder?

    There is another TIF district that the city of Wichita approved that can be considered for veto at the school board’s next meeting. I’m going to ask that this matter be placed on the board’s agenda for discussion and a vote. I have no idea if I will be successful. But this will be a good test as to whether the Wichita school district is willing to address issues squarely and transparently, or dodge them as it did last night.

  • Wichita School District: Don’t Give Up Your Tax and Revenue Base

    Remarks to be delivered to the Wichita school board on August 25, 2008.

    On August 5, 2008, the Wichita City Council greatly expanded an existing tax increment financing district. This board has 30 days from then to veto the city’s action. I want to explain why this board should do just that.

    The arithmetic behind TIF districts is simple. The city borrows money and spends it on things that the developers need to make their project work financially. Then, as property values in the district rise, the new additional property tax revenue is used to pay back the city.

    Often it is said that what the city spends the TIF money on is infrastructure, the types of things that cities do routinely. But when developers working outside of TIF districts need things like streets, turn lanes, sewers, water supply lines, street lights, landscaping, and new traffic lights, the developers either pay for these things themselves, or the city builds them and assesses special taxes against the property to pay for these items.

    So while a TIF district doesn’t let developers escape paying increased property taxes, it lets them keep these increased taxes within the TIF district for their own benefit. In non-TIF developments, the new taxes are available for the funding of general government, including USD 259. John Todd will talk about the magnitude of these numbers, but in the case of the expansion of the Center City South Redevelopment District, the numbers are large. Very large.

    It is often said that taxing districts like USD 259 aren’t really giving up anything when they agree to the formation of a TIF district. We’re told by developers and politicians that without the benefit of the TIF district there won’t be any new development. But the reality is usually different. As recently reported in the Wichita Eagle, rarely is the choice between all or nothing. The choice between development in a TIF district or nothing is usually false.

    Also, TIF districts are harmful to the overall community and tax base. Economists tell us that cities that use TIF grow slower than cities that don’t, and that there is no evidence of broad economic or social benefits in light of the costs.

    Just a year ago this board raised the property tax rate. Presently the community is being asked to increase tax rates further by investing in a bond issue. When the City of Wichita allows property to escape the tax rolls and this board agrees with that action, it places an even higher burden on those residents and businesses that can’t take advantage of TIF districts. Plus, it gives up a stream of tax revenue. That’s why this board should veto the creation of this, and other, TIF districts.

  • Wichita’s Naysayers Shortchanged in Council’s Record

    On August 12, 2008, the Wichita City Council considered the establishment of a TIF district that would benefit Reverend Kevass Harding and his real estate development team. At the council meeting Reverend Harding spoke, and then John Todd spoke, and then myself. We all spoke for, I would guess, roughly the same amount of time.

    On Monday August 18 I looked at the city’s website to read the minutes from that meeting. I printed the part of the minutes that covered this item. My printout may be seen in this image. But you don’t need to look at the printout to see what concerns me:

    Reverend Harding’s remarks are covered using about 227 words in the minutes.

    John’s remarks are covered using 24 words.

    Mine are covered using 11 words.

    Why the discrepancy? The mayor calls John and I “naysayers.” It is as simple, and as blatant, as that?

    (John’s testimony may be read in the post Testimony Opposing Tax Increment Financing for the Ken Mar Redevelopment Project, and mine may be read in Reverend Kevass Harding’s Wichita TIF District: A Bad Deal in Several Ways. I make these remarks available on this website before I deliver my testimony, and I email notice of its posting to all council members plus a few other people at city hall.)

    Even more curious, after we three testified, Mayor Carl Brewer delivered his “covered wagon” speech. You can read my transcription of it in Wichita Mayor Carl Brewer, August 12, 2008, and some commentary in Wichita Mayor Carl Brewer Saves Us From Covered Wagons.

    But nowhere in the minutes is it recorded that the mayor spoke, much less what he spoke about.

    Then, even more curious, the minutes of this meeting are not available on the city council’s website today (Wednesday August 20, 2008). The minutes of the August 5 meeting are missing, too. A short while ago I wrote and asked for an explanation.

    August 21, 2008 update: The missing city council minutes have been located. I forgot that they’ve been moved. The page Council Meetings Video On Demand is where minutes may be found.

  • Wichita’s Naysayers Are Saying Yes to Liberty

    Wichita politicians, newspaper editorial writers, and sometimes just plain folks are fond of bashing those they call the “naysayers,” sometimes known as CAVE people. An example is from a recent Opinion Line Extra in the Wichita Eagle:

    An acquaintance in another city refers to the anti-everything people as “CAVE” people (Citizens Against Virtually Everything). I fear the GOP voters of western Sedgwick County have selected the ultimate CAVE person in Karl Peterjohn.

    Naysayers, too, can’t be happy, according to a recent statement by Wichita Mayor Carl Brewer: “And I know that there’s always going to be people who are naysayers, that they’re just not going to be happy.”

    If you read all of Mayor Brewer’s remarks at Wichita Mayor Carl Brewer, August 12, 2008, you’ll learn that without government management of economic development in Wichita, we’d be back to the days of covered wagons. (I’m not kidding. He really said that, and I think he really believes it.)

    Wichita’s news media, led by the Wichita Eagle, continually expresses a bias in favor of government. Even in news reporting this bias can be seen, as shown in the post The Wichita Eagle’s Preference For Government. On the Eagle’s editorial page, we rarely see an expansion of government interventionism opposed by the editorial writers. I can’t think of a single case.

    But saying no to government doesn’t mean saying no to progress. It does mean saying “no” to the self-serving plans of politicians and bureaucrats. It means saying “no” to the dangers of collectivist thinking, as expressed in The Collectivism of Kansas Governor Kathleen Sebelius.

    It means saying “no” to Wichita’s political entrepreneurs, who seek to earn profits through government coercion rather than meeting the needs of customers in the marketplace. It means saying “no” to the public-private partnership, where all too often it is the risk that is public and the profit that is private. It means saying “no” to a monopoly on the use of public money in the education of children, and “no” to an expansion of that monopoly through a new bond issue.

    So yes, I guess I and Wichita’s other naysayers are saying “no” to a lot of things.

    But what we’re saying “yes” to is liberty and freedom. We’re saying “yes” to the rich diversity of human individuality instead of government bureaucracy. We’re saying “yes” to free people cooperating voluntarily through free markets rather than forced government transfers from taxpayers to favored individuals and programs.

    We’re saying “yes” to consumers choosing which businesses in Wichita thrive, rather than politicians on the city council choosing. We’re saying “yes” to people making their own choices, rather than government “incentivizing” the behavior it desires through TIF districts and tax abatements, those incentives being paid for by taxpayers.

    So let me ask you: what do you say “yes” to?

  • Tiff over Wichita TIFs

    A post titled Keeping TIFs from a public tiff by Wichita Eagle business reporter Bill Wilson on the Eagle’s Business Casual blog reveals his bias in favor of government over individual action and preference.

    My post The Wichita Eagle’s Preference For Government documents one such example from the past. In this blog post Mr. Wilson reveals more of this preference and the faulty assumptions that go along with it.

    For example, he speaks of the need to “incentivize development.” Incentives are designed to get people to do something they wouldn’t do on their own. That pretty much describes downtown development. I’m sure that Mr. Wilson is aware that there’s lots of development going on in Wichita. It’s just not where politicians such as Wichita mayor Carl Brewer and council member Sharon Fearey want it to be. Add journalists like Mr. Wilson to this list, apparently. The Wichita Eagle editorial board has been on this list for a long time.

    There’s nothing magic about downtown. The fact that people, when spending and investing their own funds, overwhelmingly choose to take action somewhere other than downtown is direct evidence of that. How arrogant is it for politicians and bureaucrats to overrule these decisions made freely by people acting in their own best interest?

    In a comment, Mr. Wilson states “I have a hard time equating TIF money with a direct government handout …” I would encourage him to read the post Wichita City Council’s Misunderstanding of Tax Increment Financing, in which the author explains how TIF financing is, in fact, a direct subsidy to developers. I would be interested to see if Mr. Wilson can develop a refutation to this argument.

    Mr. Wilson also writes of the need for “proper analysis and monitoring” of TIF district proposals. But government is ill-suited for either task. Politicians and government bureaucrats face a different set of incentives from private developers. Politicians seek to please their campaign contributers so they can be re-elected. Bureaucrats seek to preserve their own jobs and increase their domain of influence and power.

    Market entrepreneurs, however, are directly accountable to their customers through the profit and loss system. If they do a good job anticipating what customers want, and if they are able to efficiently deliver what customers want, they’ll earn a profit. If not, they either change or go out of business.

    Politicians and bureaucrats do not face such a stern taskmaster. When their decisions turn out to be faulty, the usual response is to pour more money into something that should be allowed to die. An example is the Old Town Warren Theater.

  • Wichita School District: Where Do They Think the Funds Come From?

    In a Wichita Eagle article City leaders cut short trip to talk about TIF, reporter Deb Gruver writes: “Susan Arensman, a spokeswoman for the school district, said the project would not affect schools.”

    The context is that the City of Wichita is considering the creation of a large tax increment financing (TIF) district in downtown Wichita. The main feature of the TIF district is that as property values rise, the extra property taxes will be used to pay off bonds the city issued to benefit the TIF district. In non-TIF developments, the rising property taxes would go to the general city fund, as well as the county, school district, and state of Kansas, as well as other bodies that somehow get a share of Wichita property taxes. But with TIF districts, these districts don’t benefit from the rise in property values and the rising tax revenue that should accompany that.

    Ms. Arensman’s statement, therefore, is quite confusing. What, funding doesn’t affect schools? We’re told over and over from many sources that schools don’t have enough money.

    In Wichita, for 2007, the mill levy was 118.050, with 53.238 mills going to USD 259, the Wichita public schools. That’s 45 percent of the property tax paid in Wichita going to the Wichita schools.

    But it’s not quite that simple. Through a complicated mechanism, Kansas allocates tax money to school districts across the state, so there’s not necessarily a direct correlation between the property tax paid by residents of USD 259 and what the Wichita school district actually receives. See K-12 Education Finance: A guide to understanding the school finance formula.

    But some of the property tax generated locally absolutely stays right here to fund Wichita public schools. The “local option budget” does. That’s the tax that the district raised in August 2007. And, I believe the 7 mill capital budget stays right here in Wichita, too.

    So when the City of Wichita grants tax favors and excuses property from the tax rolls through the creation of TIF districts, it absolutely affects the Wichita school district. As the district always feels that it doesn’t have enough money to do its job, here’s a way it could stop the loss of the tax dollars that feed it: don’t agree to the formation of TIF districts in Wichita.

  • Wichita Mayor Carl Brewer, August 12, 2008

    Wichita Mayor Carl Brewer delivered these remarks after John Todd and I testified against the creation of a tax increment financing (TIF) district benefiting Wichita minister Kevass Harding. My remarks can be read here: Reverend Kevass Harding’s Wichita TIF District: A Bad Deal in Several Ways. John’s remarks are here: Testimony Opposing Tax Increment Financing for the Ken Mar Redevelopment Project.

    I took the time to transcribe the mayor’s remarks not only because I think Wichitans need to know more about his philosophy of the way government should work, but also because they reveal a few of the mayor’s beliefs that I found astonishing. The mayor appeared to be speaking informally, without prepared remarks.

    Commentary on the mayor’s remarks is here: Wichita Mayor Carl Brewer Saves Us From Covered Wagons. Video is at Wichita Mayor Carl Brewer on role of government and free enterprise.

    Wichita Mayor Carl Brewer: You know, I think that a lot of individuals have a lot of views and opinions about philosophy as to, whether or not, what role the city government should play inside of a community or city. But it’s always interesting to hear various different individuals’ philosophy or their view as to what that role is, and whether or not government or policy makers should have any type of input whatsoever.

    I would be afraid, because I’ve had an opportunity to hear some of the views, and under the models of what individuals’ logic and thinking is, if government had not played some kind of role in guiding and identifying how the city was going to grow, how any city was going to grow, I’d be afraid of what that would be. Because we would still be in covered wagons and horses. There would be no change.

    Because the stance is let’s not do anything. Just don’t do anything. Hands off. Just let it happen. So if society, if technology, and everything just goes off and leaves you behind, that’s okay. Just don’t do anything. I just thank God we have individuals that have enough gumption to step forward and say I’m willing to make a change, I’m willing to make a difference, I’m willing to improve the community. Because they don’t want to acknowledge the fact that improving the quality of life, improving the various different things, improving bringing in businesses, cleaning up street, cleaning up neighborhoods, doing those things, helping individuals feel good about themselves: they don’t want to acknowledge that those types of things are important, and those types of things, there’s no way you can assess or put a a dollar amount to it.

    Not everyone has the luxury to live around a lake, or be able to walk out in their backyard or have someone come over and manicure their yard for them, not everyone has that opportunity. Most have to do that themselves.

    But they want an environment, sometimes you have to have individuals to come in and to help you, and I think that this is one of those things that going to provide that.

    This community was a healthy thriving community when I was a kid in high school. I used to go in and eat pizza after football games, and all the high school students would go and celebrate.

    But, just like anything else, things become old, individuals move on, they’re forgotten in time, maybe the city didn’t make the investments that they should have back then, and they walk off and leave it.

    But new we have someone whose interested in trying to revive it. In trying to do something a little different. In trying to instill pride in the neighborhood, trying to create an environment where it’s enticing for individuals to want to come back there, or enticing for individuals to want to live there.

    So I must commend those individuals for doing that. But if we say we start today and say that we don’t want to start taking care of communities, then tomorrow we’ll be saying we don’t want more technology, and then the following day we’ll be saying we don’t want public safety, and it won’t take us very long to get back to where we were at back when the city first settled.

    So I think this is something that’s a good venture, it’s a good thing for the community, we’ve heard from the community, we’ve seen the actions of the community, we saw it on the news what these communities are doing because they know there’s that light at the end of the tunnel. We’ve seen it on the news. They’ve been reporting it in the media, what this particular community has been doing, and what others around it.

    And you know what? The city partnered with them, to help them generate this kind of energy and this type of excitement and this type of pride.

    So I think this is something that’s good. And I know that there’s always going to be people who are naysayers, that they’re just not going to be happy. And I don’t want you to let let this to discourage you, and I don’t want the comments that have been heard today to discourage the citizens of those neighborhoods. And to continue to doing the great work that they’re doing, and to continue to have faith, and to continue that there is light at the end of the tunnel, and that there is a value that just can’t be measured of having pride in your community and pride in your neighborhood, and yes we do have a role to be able to help those individuals trying to help themselves.