Tag Archives: Wichita city government

AirTran subsidy is harmful

(This is a longer version of my opinion piece that appeared in The Wichita Eagle last week.)

From the beginning, we in the Wichita area have been told each year that the AirTran subsidy was intended as a temporary measure, that soon AirTran would be able to stand on its own, and there will be no need to continue the subsidy. Mayor Mayans said as much last year, and so did City Manager Kolb this year.

But State Senator Carolyn McGinn, R-Sedgwick, on a recent television program, may have made a revealing slip when she referred to the AirTran subsidy as a “pilot program.” Now that the subsidy appears to be a permanent requirement, funded locally and perhaps statewide, we should ask ourselves if this subsidy is in our best interests.

The benefits of the subsidy are regularly overstated — and sometimes by huge amounts. In 2004, the Chairman of Fair Fares claimed that the Fair Fares program was worth $4.8 billion in economic benefit to the state. No reasonable analysis could make a conclusion that the benefit is as large as this.

Last year, the present Chairman of Fair Fares spoke before the Wichita City Council and equated what Wichita is doing to pricing in the airline industry with the role that Kansas played in the years before the Civil War. It hardly seems worth noting that one struggle was against the immoral institution of slavery; the other is a taxpayer-funded effort to override the natural workings of free markets.

Yes, it is undeniable. Low airfares are preferred over high airfares, and it is probably true that airfares are lower than what they would be without the subsidy. But the airline industry is changing. As an example, carriers tell us they have eliminated or reduced the very high fares for walkup ticket purchases. We simply do not know what airfares would be in Wichita if there had not been the subsidy, so any estimate of how much has been saved is merely a guess.

The harm the subsidy causes reveals itself in several ways. We may have less air service in Wichita due to the subsidy. Last year Delta canceled seven important daily flights. Was this in retaliation for Wichita’s decision to not subsidize Delta, as some claim? Or was it the law of supply and demand expressing itself: that when the price of something is lowered (lowering prices is the desired effect of the subsidy), less is supplied. There are fewer daily flights supplied to and from Wichita, from 56 last year to 42 today. As the subsidy lowers the price that airlines may charge for tickets but doesn’t do anything to reduce the costs of providing service, we should not be surprised to see more reductions in service.

Backers of the subsidy claim it is necessary to keep businesses from leaving and to attract new businesses to our area. We should consider the converse: have businesses considered Wichita, and seeing a meddlesome local government, one that picks and chooses winners and losers, decided not to locate here?

Local lawmakers abandon their principles to back the subsidy. Last year a Sedgwick County Commissioner assured me that he was a “free market” thinker, but was backing the subsidy nonetheless. Local business leaders, some who consider themselves believers in free markets, back the subsidy and have even formed private fundraising efforts to augment the subsidy.

Consider this: if a subsidy is good for economic development, why shouldn’t we try the subsidy approach with other businesses? If we feel that, say, advertising rates in Wichita are too high, why doesn’t the city select one local television station and subsidize its operations, thereby compelling other stations to match the subsidized price? Or to help people with something that really hits home, why not grant a subsidy to one chain of grocery stores so that other stores have to lower their prices? Or in the case of a monopoly such as a local daily newspaper, why doesn’t the city or county fund a startup to supply competition? I think most Wichitans would consider these measures extreme and contrary to fairness. I find it difficult, though, to differentiate these actions from the AirTran subsidy.

Whether to continue funding the AirTran subsidy is a bright line that we can choose to cross or not. On one side we see low airfares, and those airfares are highly visible. What we may not see as easily is the cost of a permanent expansion of government, government that intrudes increasingly on our lives and liberties. We also may not notice the loss of valuable information that prices in a free market supply, and without those price cues, we will not recognize the misallocation of capital and resources that follows.

On the other side of the line is the harsh realization that Wichita has factors such as low population that work against low airfares. On this side, however, we will find liberty and free markets. You will find me on this side, lonely though it is.

Public Access, or lack there of

Dear Bob’s Blog, I recently moved to wichita from chicago… a while b4 i decided to move I had completed my Comcast public access certification. Comcast is basicaly the equivalence to Cox here. Un / Fortunately I was unable to put it to any good use while in Chicago due to some circumstances…. however I was searchin around the web and came across your blog entry on the lack of public acess for the public here in wichita. I wondered if you had any luck with your letter and/or knew any sources of information on the subject. I would be willing to put forth some effort in helping our voice be heard…

Local economic development in Wichita

Writing from Memphis, Tennessee

Today’s Wichita Eagle (November 5, 2005) tells us of a new economic development package that our local governments have given to induce a call center to locate in Wichita. The deal is described as “one of the biggest the two-year-old economic development coalition [Greater Wichita Economic Development Coalition] has landed.”

There is an interesting academic paper titled “The Failures of Economic Development Incentives,” published in Journal of the American Planning Association, and which can be read here: www.planning.org/japa/pdf/04winterecondev.pdf. A few quotes from the study:

Given the weak effects of incentives on the location choices of businesses at the interstate level, state governments and their local governments in the aggregate probably lose far more revenue, by cutting taxes to firms that would have located in that state anyway than they gain from the few firms induced to change location.

On the three major questions — Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative? — traditional economic development incentives do not fare well. It is possible that incentives do induce significant new growth, that the beneficiaries of that growth are mainly those who have greatest difficulty in the labor market, and that both states and local governments benefit fiscally from that growth. But after decades of policy experimentation and literally hundreds of scholarly studies, none of these claims is clearly substantiated. Indeed, as we have argued in this article, there is a good chance that all of these claims are false.

The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering their expectations about their ability to micromanage economic growth and making the case for a more sensible view of the role of government — providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.

On the surface of things, to the average person, it would seem that spending to attract new businesses makes a lot of sense. It’s a win-win deal, backers say. Everyone benefits. This is why it appeals so to politicians. It lets them trumpet their achievements doing something that no one should reasonably disagree with. After all, who could be against jobs and prosperity? But the evidence that these schemes work is lacking, as this article shows.

Close to Wichita we have the town of Lawrence, which has recently realized that it as been, well, bamboozled? A September 29, 2005 Lawrence Journal-World article (“Firms must earn tax incentives”) tell us: “Even with these generous standards for compliance, to have 13 out of 17 partnerships fail [to live up to promised economic activity levels] indicates that the city has received poor guidance in its economic development activities.” Further: “The most disconcerting fact is that Lawrence would probably have gained nearly all of the jobs generated by these firms without giving away wasteful tax breaks.”

On November 6, 2005, an article in the Lexington (Kentucky) Herald-Leader said this:

The Herald-Leader’s investigation, based on a review of more than 15,000 pages of documents and interviews with more than 100 people, reveals a pattern of government giveaways that, all too often, ends in lost jobs, abandoned factories and broken promises.

The investigation shows:

Companies that received incentives often did not live up to their promises. In a 10-year period the paper analyzed, at least one in four companies that received assistance from the state’s main cash-grant program did not create the number of jobs projected.

A tax-incentive program specifically for counties with high unemployment has had little effect in many of those areas. One in five manufacturing companies that received the tax break has since closed.

There is spotty oversight of state tax incentives. The state sometimes does not attempt to recover incentives, even when companies don’t create jobs as required.

Unlike some other states, Kentucky makes little information about incentives public. The Cabinet for Economic Development refuses to release much of the information about its dealings with businesses, citing proprietary concerns. The cabinet has never studied its programs’ effectiveness, and it blocked a legislative committee’s effort to do so.

The Herald-Leader’s examination of Kentucky’s business-incentive programs comes when, nationally, questions are mounting about the effectiveness and legality of expensive government job-creation efforts. The U.S. Supreme Court is expected to decide by spring whether trading tax breaks for jobs is legal or whether they amount to discrimination against other companies.

Meanwhile, states continue engaging in costly economic battles for new jobs, even though research strongly suggests that few business subsidies actually influence where a company sets up shop.

We might want to be optimistic and hope that our local Wichita and Sedgwick County leaders are smarter than those in Lawrence and Lexington. Evidence shows us, however, that this probably isn’t the case. Our own local Wichita City Council members have shown that they aren’t familiar with even the most basic facts about our economic development programs. How do we know this? Consider the article titled “Tax break triggers call for reform” published in the Wichita Eagle on August 1, 2004:

Public controversy over the Genesis bond has exposed some glaring flaws in the process used to review industrial revenue bonds and accompanying tax breaks.

For example, on July 13, Mayans and council members Sharon Fearey, Carl Brewer, Bob Martz and Paul Gray voted in favor of granting Genesis $11.8 million in industrial revenue bond financing for its expansion, along with a 50 percent break on property taxes worth $1.7 million.

They all said they didn’t know that, with that vote, they were also approving a sales tax exemption, estimated by Genesis to be worth about $375,000.

It is not like the sales tax exemption that accompanies industrial revenue bonds is a secret. An easily accessible web page on the City of Wichita’s web site explains it.

But perhaps there is hope. The Wichita Business Journal has recently reported this: “The city and county are getting $2 back for every dollar they spent over the past 18 months on economic development incentives, according to an analysis of GWEDC-supplied data. The report was presented at Thursday’s GWEDC investor luncheon at the Hyatt Regency by Janet Harrah, director of the Center for Economic Development and Business Research at Wichita State University.” Personally, I am skeptical. I have asked to see these figures and how they are calculated, but I have not been able to obtain them.

Consider carefully all costs of gambling in Wichita

In a free society dedicated to personal liberty, people should be able to gamble. But that’s not what we have, as in a free society dedicated to personal liberty, people wouldn’t be taxed to pay for the problems that others cause in the pursuit of their happiness.

How does this relate to the issue of casino gambling in or near Wichita?

There is a document titled “Economic & Social Impact Anlaysis [sic] For A Proposed Casino & Hotel” created by GVA Marquette Advisors for the Wichita Downtown Development Corporation and the Greater Wichita Convention and Visitors Bureau, dated April 2004. This document presents a lot of information about the benefits and the costs of gambling in the Wichita area. One of their presentations of data concludes that the average cost per pathological gambler is $13,586 per year. Quoting from the study in the section titled Social Impact VII-9: “Most studies conclude that nationally between 1.0 and 1.5 percent of adults are susceptible to becoming a pathological gambler. Applying this statistic to the 521,000 adults projected to live within 50 miles of Wichita in 2008, the community could eventually have between 5,200 and 7,800 pathological gamblers. At a cost of $13,586 in social costs for each, the annual burden on the community could range between $71 and $106 million.”

If all we had to do was to pay that amount each year in money that would be one thing. But the components of the cost of pathological gamblers include, according to the same study, increased crime and family costs. In other words, people are hurt, physically and emotionally, by pathological gamblers. Often the people who are harmed are those who have no option to leave the gambler, such as children.

Quoting again from the study: “While this community social burden could be significant, its quantified estimate is still surpassed by the positive economic impacts measured in this study.” The largest components of the positive economic impacts are employee wages, additional earnings in the county, and state casino revenue share, along with some minor elements. Together these total $142 million, which is, as the authors point out, larger than the projected costs shown above. But this analysis is flawed. Employee wages don’t go towards paying the costs of pathological gamblers, as employees probably want to spend their wages on other things. And the state casino revenue share is supposed to go towards schools.

The absurdity mounts as we realize that gambling is promoted, by none other than Governor Kathleen Sebelius, as a way to raise money for schools. Often the figure quoted for the amount of money gambling would generate for the state is $150 million per year. But here is a study concluding that the monetary costs to just the Wichita area would be a large fraction of that, and when you add the human misery, it just doesn’t make sense to fund schools with revenue from gambling.

How to decide arts funding

Writing from Miami, Fla.

In an editorial in The Wichita Eagle on August 9, 2005, Randy Schofield wrote, explaining why government should support culture: “Because cultural amenities make Wichita a more desirable place to live, work and visit, and thus help realize Wichita’s quality of life and economic development goals.” We might examine some of the ideas and reasoning behind this statement.

Do cultural amenities make Wichita more desirable? That’s quite a judgment to make. Personally, I enjoy many of the music events held at Wichita State University. I look forward to attending the recitals in the Rie Bloomfield Organ Series, and the piano recitals by Professors Paul Reed, Julie Bees, and Andrew Trechak are the highlights of my cultural season, and, sadly, largely unappreciated by the rest of Wichita. But that’s my taste and preference.

There is a common tendency to judge “highbrow” culture — art museums, the symphony, opera, etc. — as somehow being more valued than other culture. But what people actually do indicates something different. When people spend their own money we find that not many go to the piano recital, the symphony, or the art museum. Instead, they attend pop, rock, or country music concerts, attend sporting events, go to movies, eat at restaurants, rent DVDs, and watch cable or satellite television. I’m not prepared to make a value judgment as to which activities are more desirable. In a free society dedicated to personal liberty, that’s a decision for each person to make individually.

Because there is the tendency to judge highbrow culture as highly valued, governments, as is the case in Wichita, often subsidize it or pay for it outright. Generally, governments don’t subsidize the “lowbrow” culture events that I listed above. So why does highbrow culture require a subsidy? There can be only one reason why: the public, as a whole, does not place as much value on this culture as it costs to produce it. There is simply no way to conclude otherwise.

Consider the movie industry. It, to my knowledge, does not receive government subsidies. Yet, it is able to make a profit most of the time, even though it faces fierce competition from many other ways people can spend their leisure dollars. The movie industry has also faced many challenges arising from new technologies: television, videocassette recorders, and cable television come to mind. How has this industry survived? By focusing on the customer, by determining what people are willing to spend their money on, and by producing products that people value enough to buy. Since the movie industry does not receive government subsidies, it has to do this. It has to meet customer needs and desires and do so efficiently. Otherwise, it starts to lose money. These losses are a signal to management that they aren’t satisfying customers, or not running their business efficiently. They have to change something, or they cease to exist.

When an organization receives government funding, however, it is isolated from the marketplace and its customers. If the organization doesn’t generate enough revenue to cover its costs, it simply asks the taxpayer to pay the difference and it goes on to the next year. The vital imperative to change, to improve, to serve the customer, it doesn’t exist. That’s exactly what is happening with Exploration Place. It has operated at a loss for four years. By accounts, the museum’s exhibits are tired. In the face of mounting losses, they weren’t able to change in ways that the public valued. Yet, the Sedgwick County Commission has given it funding to stay open for a little while longer, and the museum is asking for $2.8 million per year.

Some might say that it doesn’t really matter much if a government gives a little money to a highbrow cultural program. But consider from where the government gets the money. It has to tax people, and that leaves people — not by their own choice — with less money to do the things they really want to do. That makes our city, as a whole, poorer than it would be otherwise, as people aren’t able to spend their money on the things they value most. The government, instead, tells us that we have made the wrong choices, and they are going to correct our poor judgment.

The way to determine what the people of Wichita truly value is to price things at their true cost. People, by freely choosing how they spend their money, will tell us what they value.

In his editorial, Mr. Schofield also said: “The city needs a fair, objective way to evaluate cultural programs and award funding.” I submit that it is not fair to ask one group of people to pay for the leisure activities of another group, no matter how much we value those activities. This is what happens when the city spends tax money on culture. For the evaluation as to which programs are worthy, a free market will tell us that. People will vote, using the votes they really value — their own personal dollars — and decide which programs are valued. When governments or commissions spend taxpayer money, they don’t have to consider value.

“It’s a good first step to bringing some discipline to the arts funding process.” The free marketplace of ideas where true costs are charged provides all the discipline required. How can we expect politicians and arts commission members to exhibit discipline when they aren’t spending their own money?

“No, government can’t support every cultural arts organization.” Finally, a statement from Mr. Schofield that I can agree with!

“But it can help protect Wichita’s cultural investment by providing a dependable source of funds for proven programs and clear oversight and accountability for taxpayers.” There are no “proven” programs as long as they accept government funds, especially when they know the source of funds is dependable. That dependable source of funds allows them to ignore the market and their customers. The way to prove a program’s worth is to price it so that it pays for its entire cost of production. Then, see if people are willing to buy.

Would there be any arts and culture in Wichita if government stopped funding cultural programs? I don’t know, but I imagine there will be. It might turn out that the culture we would have would be better than what we have now, because the operators of cultural programs would have to produce what people want badly enough to pay full freight for. We don’t really know. But we do know that the alternative is worse. It’s more government and more commissions making decisions for us, deciding what we should do with our own money and time.

The misplaced morality of public officials

In Wichita some public officials, particularly mayor Carlos Mayans, are seeking to eliminate adult businesses and stores selling pornography. This focus on private morality lies in sharp contrast with government’s large-scale acts of public immorality.

If government allows people to gamble, look at nude dancers, or buy pornography and sex toys, it is not government that is “sinning” or acting immorally. Government is not requiring that we do these things. Government is merely allowing those who wish to do so to engage in these activities.

But when government — say the Wichita City Council — takes the property of one person and gives it to another person to whom it does not belong, government is actively and purposefully committing an immoral act.

How do we know that it is immoral when government takes money from one person and gives it to someone else? We can learn from the insight of Frederic Bastiat (1801 – 1850), writing in his short book The Law:

But how is this legal plunder [theft] to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

It doesn’t matter to whom the money is given: poor people, homeless people, airlines, farmers, banks, artists, downtown developers, problem gamblers, nonprofit organizations, students, schools, civic groups, museums, sick people, children, public amenities, or businesses under the guise of economic development. It doesn’t matter how much they need it, or how deserving they may be. It’s simply wrong for a private person or government to take money from one person and give it to another. The economist Walter E. Williams also makes this case succinctly:

Can a moral case be made for taking the rightful property of one American and giving it to another to whom it does not belong? I think not. That’s why socialism is evil. It uses evil means (coercion) to achieve what are seen as good ends (helping people). We might also note that an act that is inherently evil does not become moral simply because there’s a majority consensus.

This is not to say that we should not support some of the people or groups mentioned earlier. We should do so voluntarily, however. To help someone through an act of charity is noble. There is nothing good or moral happening when governments tax one person and give the proceeds to someone else.

So when government officials want to control private morality, remember government’s large-scale acts of public immorality.

Privatization is good for Century II and Wichita

Opponents of privatization of Century II, including the website www.savecenturyii.org, seem to think that the operating procedure of a profit-making business is to place so many restrictions on the use of their product, and to raise the price so high, that no one uses it anymore. The reality is quite the opposite. For a business to make a profit and survive, it must provide a product or service that people want to pay for, and provide it with costs less than its price. What could be wrong with that?

A few examples from www.savecenturyii.org illustrate common misperceptions: “These private management companies charge rental and service rates so they can make a profit.” This is true. But underlying this sentence I sense two unspoken assumptions: First, that the rates the private management companies would be higher than the present rates. Might it not be possible that the new rates would be lower, if new management is more efficient or achieves greater volume? Second, the sentence implies that profit is evil. Compare that “evil” with the evil of supporting Century II users with taxpayer subsidies.

Profit is the motivating factor that businesses have that governments don’t have. Consider again how companies earn a profit. It’s by pleasing the customer, not driving them away. If they do this job well, they get to have a reward.

“In addition to paying rent, users are required to purchase services from the management company such as for box office systems and staffing, front of house personnel, security, etc., whether or not the user can provide them or does not need them at all.” This implies that the management company can set whatever policies they want, and that customers are forced to “take it or leave it.” But this is the way governments operate. Businesses sell to customers who have a choice. They have other sources to buy from, or they can refuse to buy at all. This applies, I think, in almost all cases to the customers of Century II, too.

“There are many examples throughout the country where privatization has created hardships for local users and ill will throughout communities.” Paying taxes to subsidize Century II events, so that people can attend events for less than their true costs, also creates hardship and ill will.

Privatization might lead to other benefits. I have heard complaints that it is impossible to schedule some types of events simultaneously because of lack of soundproofing. A private company might find it in their interest to invest in soundproofing so that there can be more events. Wouldn’t that be good?

What supporters of the status quo seem to forget is that when Century II requires a subsidy, it means that the public has to pay taxes so that the people using Century II can use it for less than the its full cost. Or, perhaps the users know this, but think it is good government policy. It is quite ridiculous for everyone to pay taxes so that symphony and music theater tickets can be cheaper than they might otherwise be. (On the other hand, the relatively well-to-do patrons of these events are used to paying taxes to support others, so maybe this is a way for them to get back a little.)

Here’s a quote from a Wichita Eagle story: “‘Typically, private companies, when they come in… make their money off the backs of local users,’ said Mitch Berman, executive director of the Wichita Symphony.” Remember that those who wish to use Century II presumably do so voluntarily, and even if Century II was private, using it would be voluntary. Currently, however, we all pay taxes, taxes we have little choice but to pay, to subsidize the rent Mr. Berman’s organization pays. This is taking money “off the backs” of local taxpayers, and it is absurdly hypocritical for Mr. Berman to compare voluntarily transactions with the power of government to tax.

Tax Abatements For All

Recently I wrote about the Mississippi Beef Plant (The Mississippi Beef Plant Has a Lesson For Us) and its spectacular costs to the taxpayers of Mississippi. I wondered if there were less spectacular failures that we didn’t know about because they weren’t reported in the news media. Failures in this context could mean a situation where the taxpayers have to make good on a bond or debt that the benefiting company didn’t pay, or it could mean a situation where the company doesn’t default, but fails to deliver on the promised economic development activity.

In an article in the June 15, 2005 Wichita Eagle titled Stalled Firms Keep Tax Breaks we learn of two failures of the second type. The two companies in question, The Coleman Company and McCormick-Armstrong, failed to deliver on their promises to add jobs in exchange for property tax abatements. Coleman, in fact, employs 114 fewer people than at the time the bonds were issued.

Why do governments grant companies tax abatements? It’s simple. When companies pay less tax, they have the opportunity to invest more. Tax abatements are tacit recognition that the cost of government is onerous and serves to decrease private economic activity and investment.

Shouldn’t we lower taxes for everyone, instead of only for the chosen few companies that are in a position to receive political favors from local governments?

Where Is Our Public Access Cable Television?

This is a letter I am sending to Cox Communications, plus government officials who I think can help.

Recently I was in Portland, Ore. I happened to notice that there was true public access cable television. I watched several talk shows covering a variety of topics. There were locally-produced music shows, featuring local bands.

This experience caused me to wonder why Wichita doesn’t have this type of community cable television access. I seem to remember that when cable television was new, that local governments were granted public access channels as part of the franchise agreement. In Wichita we have a few channels that are used by the City of Wichita and the local school district. It seems to me, however, that these entities use the channels for very little useful programming. Most of the time these channels are rolling the same stale and useless public service announcements, or the same photographs of downtown Wichita statuary for the past few years.

Can you tell me where I can learn about the history of public access cable television in Wichita? Better yet, how can we have a truly public — and therefore truly useful — channel in Wichita?

Because Government Should Have Accountability

Because Government Should Have Accountability
Paul M. Weyrich, Chairman and CEO of the Free Congress Foundation (Click here to read the article.)

In an article from The Wichita Eagle published on May 3, 2005 titled “Ice rink figures don’t add up, records show” we find this quote: “Ice Sports Wichita has been on a downward slide longer than the city staff admits in a report the City Council is scheduled to act on today, records show.” These records were obtained through a request filed under the Kansas Open Records act. My understanding of this news story is that City of Wichita staff has been misleading everyone — including the mayor and city council — about the true state of the ice rink’s financial affairs. If not for the reporters who obtained the records, this deception might be continuing.

The commentary by Paul M. Weyrich referenced above contains examples of where the Federal Freedom of information Act has been used to uncover governmental misdeeds. The article also mentions a bill titled the OPEN Government Act, designed to “ensure that government acts promptly and efficiently in responding to FOIA requests.”

Revolving Door Between Press and Government Turns Again

Mr. Van Williams, Wichita Eagle city hall reporter for the past three years, will become Wichita’s public information coordinator.

I believe there needs to be a tension between the press and the government officials it covers. The press needs to hold officials accountable. It needs to dig deep to uncover facts officials don’t voluntarily concede. It needs to ask them tough questions. It needs to make them angry from time to time.

Would the City of Wichita hire someone who had been doing that?

Wichita City Council Meeting, April 19, 2005

Some quotes and my remarks from the April 19, 2005 meeting of the Wichita City Council, where the AirTran subsidy was considered. Representatives from Delta attended and spoke.

Allen Bell, Economic Development Director for the City of Wichita:

Previous contracts had a dollar amount cap on them. The new contact, we refer to it as a no-cap contract. There is not, in the terms of the agreement, a specific dollar amount that is the not-to-exceed amount. In place of that there is a termination clause that allows the City to terminate its contract with 75 days notice for whatever reason. And the reason, of course, the major reason, would be that we know that within that 75 days, we will deplete the funds that the City believes is appropriate to spend on this.

I was startled to hear this information, that the new contract has no dollar cap, as this has not been, in my memory, reported. It has been reported that AirTran sought a no-cap contract, but that Wichita would not agree to that. But it turns out that the city has agreed to what, in effect, is a no-cap contract. Yes, I believe Mr. Bell when he says that Wichita can cancel the contract, with notice, if the city believes it will spend more than the $2.5 million it has committed to. I would submit, however, that if the City spends the $2.5 million and realizes it needs to spend more to keep AirTran in town, the City Council would vote to do so. Therefore, the no-cap contract is in effect.

Councilmember Schlapp extracted an admission from the Delta representative that Delta is not profitable on the Wichita route now, but they believe they will be soon. Ms. Schlapp concluded that there is no need, then, for a subsidy to Delta.

Mayor Mayans said we have been discriminated against, rate-wise.

Mayor Mayans: “Many of us, actually, are opposed philosophically to government interventions, because we feel that sometimes tilts the playing field.” The Mayor says one thing, but acts in a different way. What good is it to have a philosophical belief if it doesn’t guide your actions?

Mayor Mayans and the Delta representative disagreed on who made telephone calls to whom and at what time. (Mayor Mayans: “So you didn’t call me back!” “Communications is a two way street!” Delta: “My recollection of it differs slightly from yours.” “I don’t recall it was my responsibility to get back to you.”) It is disheartening to realize that major public policy decisions may be made based on incomplete information, because someone didn’t get a telephone message.

Councilmember Martz:

“I guess to me, when I look at competition, if you’re losing money, then you ought to raise your rates enough so that you’re not losing money.”

“I’m a firm believer in competition.”

“I would prefer not having any financial help from the city, but rather through pure competition, all carriers reduce their rates to a level that they number one, can make a profit, at the same time make it economical for the citizens of the whole state of Kansas to be able to fly in and out of Wichita …”

Like the mayor, Mr. Martz says one thing but acts in a different manner. His advice to airlines on how to set their fares is misplaced. We have to assume that businesses act in their best interests, and let it go at that.

Sam Williams, Chairman of Fair Fares, who evidently is so well-known to Council members that he doesn’t introduce himself when he started to speak:

“You know, Kansas in 1861 became a very important state in the history of this country, just before we went into the great dark area of the civil war. You know, we were a key state. What we did at that time had a lot to do with what happened and where we went from there. I would submit that little old Wichita, Kansas is doing that to the airline industry right now. Because of your vision, you are looking at different ways to bring fair pricing in an industry that is kind of broken, in getting them to look at themselves, us to look at ourselves, and how can we partner together to do this. Kansas again is a key, integral part of a change in this country.”

First, to equate our state’s role in the civil war with subsidizing an airline is ludicrous. Second, I feel very sad that Kansas may become the leader in subsidies, and that business leaders applaud this. Mr. Williams, I would ask you if you would welcome a governmental body deciding whether the rates that your business charges are fair, and if not fair, subsidizing your competitor?

AirTran Subsidy Remarks

Following are remarks I am delivering to several groups, including the Wichita City Council, in April 2005.

AirTran Subsidy is Moving in Wrong Direction

We were persuaded to accept the AirTran subsidy in 2002 as a temporary measure, to allow AirTran to build a presence here, and that the subsidy would no longer be needed at some time. But now we see that the situation is moving in the opposite direction, as AirTran asks for even a larger subsidy.

Economic Impact Overstated

The argument that many Fair Fares supporters make is flawed. They are grossly — I would say even speciously — overstating the importance of the airport to our local economy.

As an example, Mr. Troy Carlson, then Chairman of Fair Fares, wrote a letter that was published on September 16, 2004 in the Wichita Eagle. In that letter he claimed $2.4 billion economic benefit from the Fair Fares program ($4.8 billion for the entire state). I was curious about how these figures were derived. Through correspondence With Mr. Steve Flesher, air service development director for the city of Wichita, I learned that the basis for them is a study by the Center for Economic Development and Business Research at Wichita State University that estimates the economic impact of the airport at $1.6 billion annually. In this study, the salaries of the employees of Cessna and Bombardier, because these companies use the airport’s facilities, are counted as economic impact dollars that the airport is responsible for generating.

To me, this accounting doesn’t make sense on several levels. For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport.

Or suppose that Cessna tires of being on the west side of town, so it moves east and starts using Jabara Airport. Would Cessna’s economic impact on Sedgwick County be any different? I think it wouldn’t. But its impact on the Wichita airport would now be zero. Similar reasoning would apply if Cessna built its own runway.

Or it may be that someday Cessna or Bombardier will ask Sedgwick County for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been used, as they were attributed to the airport.

It is a convenient circumstance that these two manufacturers happen to be located near the airport. To credit the airport with the economic impact of these companies — as though the airport was involved in the actual manufacture of airplanes instead of providing an incidental (but important) service — is to grossly overstate the airport’s role and its economic importance.

To its credit, the WSU CEDBR study does provide some figures with the manufacturing employees excluded. The impact without the manufacturing employees included is estimated at $183 million, or about 11 percent of the $1.6 billion claimed earlier.

Structural Changes in Airfares

In the past few months, most American airlines have simplified their fare structures. Notably they have dramatically cut last-minute walk-up fares, which are the type of high fares that AirTran was supposed to provide an alternative to. In light of these structural changes in airfares, we do not know what would happen to airfares in Wichita if AirTran left.

Fares to the West May Hold Clue

Since AirTran doesn’t fly to the west, it may be that looking at westbound fares could give us a clue as to what eastbound fares would be in AirTran’s absence. I took three eastern cities (all served by AirTran) and three western cities and compared airfares for a Tuesday through Thursday trip booked two days in advance. The westbound tickets averaged $74 higher than eastbound — an increase, but not anywhere near the magnitude that subsidy supporters claim fares would rise by if AirTran leaves. I would welcome someone with more experience than me researching this.

Subsidies Distort Markets

The subsidy distorts the market process through which individuals and businesses decide how to most productively allocate capital.

Subsidies Create Dependence on Government

When government pays a subsidy to one company or industry, it creates an environment where others expect a subsidy, too. For example, we shouldn’t expect any other airline to start service to Wichita unless they receive a subsidy like AirTran does.

Companies in other industries see local government as a source of subsidy, so they ask for subsidies to locate to Wichita. Even local established companies threaten to leave Wichita unless they receive subsidies. This creates an environment where, year after year, local governments make investment decisions for us instead of relying on the collective judgment of free market allocation of resources. This corporate welfare — which is what the AirTran subsidy is, plain and simple — is very harmful.

Other Articles

“The Downside of Being the Air Cap” by Harry R. Clements at wichitaliberty.org/wichita-government/the-downside-of-being-the-air-cap/. Mr. Clements’s article makes a striking conclusion as to why airfares in Wichita were so high.
“Stretching Figures Strains Credibility” at wichitaliberty.org/wichita-news-media/stretching-figures-strains-credibility/. This article contains a link to the WSU CEDBR study.
“Letter to County Commissioners Regarding AirTran Subsidy” at wichitaliberty.org/sedgwick-county-government/letter-to-county-commissioners-regarding-airtran-subsidy/
“End Corporate Welfare, Starting with Industrial Revenue Bonds” at wichitaliberty.org/role-of-government/end-corporate-welfare-starting-with-industrial-revenue-bonds/

Poetry: Welcome New Council Members

Contributed by Kenneth Kindler


WELCOME NEW COUNCIL MEMBERS

I AM OLD AND SICK AND GETTING GRAY
I DON’T KNOW WHERE I WILL GET THE MONEY THAT THE CITY WANTS ME TO PAY.

I WONDER ABOUT THIS TOWN THAT WE LIVE IN.
WHERE THE MAYOR SPENDS HIS TIME DOWN IN OLD TOWN FIGHTING SIN.

WE SUBSUDIZE A AIRLINE THAT MANY OF US CANNOT AFFORD TO FLY.
WE HAVE SPENT MILLIONS DOWNTOWN, I WONDER WHY.

HOW MANY OF US CAN AFFORD TO PAY
FOR PLACES THAT ONLY A FEW CAN PLAY.

DO WE NEED A DOWNTOWN ARENA?
A WATER WALK.
NOW WE ARE GOING TO SELL CENTURY II OR IS THAT JUST TALK.

OUR LEADERS HAVE HAD MANY MONEY LOSING SCEMES IN THE PAST.
EXPLORATION PLACE AND THE ICE RINK WERE A COUPLE
BUT THEY WERN’T THE LAST.

WHEN WILL IT STOP THIS INSANE PLAN
TO EMPTY OUR POCKETS AS FAST AS THEY CAN.

WE HAVE BEEN BULLYED, LIED TO AND RAN INTO THE GROUND.
NOW IS THE TIME FOR US TO REBOUND.

SO COUNCIL MEMBERS WE WANT YOU TO KNOW
IF THIS KEEPS UP YOU ARE GOING TO GO.

SO NEW MEMBERS WE HOPE THAT YOU WILL TAKE HEED
AND PUT YOUR COMMUNITY AHEAD OF YOUR GREED.

Kenneth Kindler

The downside of Being the Air Cap

Harry R. Clements of Wichita contributed this article, which is a summary of a larger study he performed. Click here to read the full study in pdf format.

Mr. Clements’s article makes a striking conclusion as to why airfares in Wichita were so high. I would be curious as to whether any of our government leaders have read the study. We should also ask why our government leaders are not performing research like this when they propose to spend large sums of taxpayer money.


Wichita State’s Center for Economic Development and Business Research recently placed a guest article of mine on their website. It concerns a statistical study based on the level of air travel generated at Wichita’s Mid-Continent Airport compared to five other cities in the region, in which the data shows Wichita is ranked dead last, and an attempt to figure out why we do so poorly in this type of “competition.” It further questions whether our city’s substantial airline subsidy is worth the money spent. Since the article was written for consumption by professionals and is based on what might be considered obscure econometric techniques, it isn’t very suitable for reading by the lay readers of this paper. But I think the results are important enough that they should be seen by our town’s citizens, the decision making politicians that represent them, and the local media that should air such issues.

The cities compared are Des Moines, Oklahoma City, Kansas City, Omaha, Tulsa and our own, over a recent six year period. The important factors affecting airline traffic generation were determined by slimming down a list obtained from the airline industry’s primary trade organization, the Airline Transport Association, with a couple of additions that together with theirs explain the greatest part of the differences in passenger results among these cities. These most important factors are population and per capita income (the more the better for these two) and a novel one, the number of pilots in the city’s population (in this case the lower the better). Wichita not only ranks next to last in population and income among the six — not favorable — but has an astounding more than twice the number of pilots, per capita, than the other cities’ which is really unfavorable. If Wichita were, so to speak, more like these other cities we could expect our airline passenger traffic to double. This is certainly a reason why other cities in our region do not have to rely on subsidies to generate their traffic.

Wichita’s effort to maintain its aircraft industry and attract other high income new businesses — for instance bio-technology, but not call centers and specialty retailers — will tend to increase per capita income, and population, but is it possible for an airline subsidy to overcome that which comes with being the Air Capital of the World — a high concentration of pilots, with charter and corporate fleets available, able to fly people wherever they need to go? Should we, if we could figure out how, have a policy to decrease the number of pilots? That problem is the downside of being the Air Cap.

Let free markets determine downtown Wichita’s viability

“Wichita’s been an east/west town for as long as I can remember. Obviously, we’re trying to change that,” says Tom Johnson, president of the upcoming downtown project, WaterWalk. (Wichita Business Journal, March 4, 2005)

A healthy community needs a healthy downtown. … In Downtown, public investment has a proven track record of generating new, private investment. Since 1990, the government’s investment of $165 million has stimulated $248 million in private investment. (Voteyea.com website.)

“Anything downtown seems to be off-limits for criticism or analysis. I don’t know why it is,” Lambke said. (Council member Phil Lambke, Wichita Eagle, November 14, 2004)

If you listen to local Wichita news media, our local politicians, and various community advocates, the desirability of downtown development over other development is accepted as a given. But what people actually do with their own money is different.

Free markets, since they represent people voluntarily entering into transactions that they believe will benefit them, lead to the most equitable and efficient allocation of scarce resources. When left to their own free will, most people and businesses in Wichita have decided to purchase property somewhere other than downtown. I don’t know why people have made this choice, and that’s really not important to me. What is important to me is that people and businesses make the choice of where to invest voluntarily. By investing in parts of town other than downtown, they are assigning a higher value to non-downtown property. As far as I know, no one is forcing this decision. People and businesses make it of their own free will.

As it happens, some people don’t agree with the choices that most people and businesses have made. They believe that people and businesses should have purchased property downtown. They are, in effect, telling us that we have made a poor decision. They propose, and are in the process of doing just this, to trump the decisions of individuals and businesses with their own. They do this through the political process and the tax system. They take tax money and give it to businesses to induce them to locate downtown.

Why don’t businesses voluntarily locate downtown, using their own money? There can only be one answer to this question: When spending their own money, most businesses have decided that the most productive use of it is to invest it somewhere other than downtown Wichita.

It is adding insult to injury when we realize that the tax money given away comes largely from people who have voted — with their own dollars — not to do what these tax dollars are used to promote. It is a further blow when we realize that the money given to downtown businesses in the form of incentives makes our town poorer as a whole. Why is that? It’s because that most people and businesses, when exercising their own best judgment, have decided that investing in downtown Wichita is not the most productive use of their resources. When the government, using its power to tax, makes a different decision for us, resources are not allocated as efficiently and productively. Therefore, we are poorer.

The result of all this is that we have the spectacle of the people of Wichita, voting with their own dollars, making one choice. Then the politicians and various quasi-public organizations say, “No, citizens of Wichita, you are wrong,” and impose their will on the people of Wichita through their power to tax. How arrogant is that?

Open letter to Wichita City Council regarding AirTran subsidy

January 24, 2005

Dear Councilmember:

I am writing to express my concern about the upcoming renewal of the subsidy being paid to AirTran Airways. You may recall that I appeared before the Council last May and spoke in opposition to the subsidy. Since then I have learned more about the Fair Fares program.

As an example, Mr. Troy Carlson, then Chairman of Fair Fares, wrote a letter that was published on September 16, 2004 in the Wichita Eagle. In that letter he claimed $2.4 billion economic benefit from the Fair Fares program ($4.8 billion for the entire state). I was curious about how these figures were derived. I learned that the basis for them is a study by the Center for Economic Development and Business Research at Wichita State University that estimates the economic impact of the airport at $1.6 billion annually. In this study, the salaries of the employees of Cessna and Bombardier, because these companies use the airport’s facilities, are counted as economic impact dollars that the airport is responsible for generating.

To me, this accounting doesn’t make sense on several levels. For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport.

Or it may be that someday Cessna or Bombardier will ask the City of Wichita for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been used, as they were attributed to the airport.

My primary opposition to the AirTran subsidy is based on the superiority of free markets to government subsidies. But I believe that if the Council should consider a subsidy, it should have sensible information at its disposal. The arguments the Fair Fares supporters make seem to be based on an overextended assessment of the airport’s economic impact.

I have written more about this in on my website “Voice for Liberty in Wichita” at wichitaliberty.org.

Sincerely,

Bob Weeks

The motivations of politicians

Presently Mr. Bob Knight of Wichita, a private citizen, is promoting the building of a casino in Park City, Kansas. These articles from The Wichita Eagle have reported Mr. Knight’s position on casino gambling in Kansas when he was the mayor of Wichita:

GOP governor hopefuls stake their positions (July 3, 2002) “Knight and Kerr said they oppose gambling but would consider voter approval.”

Trump has no plans for local casino (May 9, 2003) “Last year, Ruffin said, he approached former Mayor Bob Knight about the possibility of relocating the track to downtown and adding a casino if lawmakers approved. Knight was not interested, he said.”

Gambling on the slots (May 22, 2002) “Wichita Mayor Bob Knight, seeking the Republican nomination, said gambling is an unreliable source of revenue. ‘I don’t think it fits my sense of how you build and sustain a strong state,’ he said.”

The cynic in me imagines Executive Assistant District Attorney Jack McCoy of the television show Law and Order with Mr. Knight on the witness stand asking — justifiably indignant — “Were you lying then, or are you lying now?”

But I do not know Mr. Knight, and there may be other explanations. It may be that as mayor of Wichita, he wasn’t being very careful or thorough in forming his opinions. A Wichita Eagle editorial Plan requires serious look states in part: “He [Knight] acknowledged that as mayor he had opposed an earlier casino plan for Wichita. But after studying this project, he said, he became convinced that a true destination casino could pay off handsomely for the Wichita area and region.” Mr. Knight has been out of the mayor’s office for less than two years. What about the Wichita area has changed in that time that makes a casino a good bet (so to speak) now?

Or, has a casino always been a good idea, but Mr. Knight either didn’t know that when he was mayor, or he just didn’t want the citizens of Wichita gambling on his watch?

I do not know the answer to these questions, and given our collective experience with politicians, I probably wouldn’t believe Mr. Knight if he answered them. Such is the credibility of the motivations of politicians.

Links referred to:
GOP governor hopefuls stake their positions http://www.kansas.com/mld/kansas/news/politics/3590300.htm
Trump has no plans for local casino http://www.kansas.com/mld/kansas/5820055.htm
Gambling on the slots http://www.kansas.com/mld/eagle/3310716.htm
Plan requires serious look http://www.kansas.com/mld/eagle/news/editorial/10648925.htm

Stretching figures strains credibility

I recently read that the Wichita Airport’s economic impact was estimated at $1.6 billion per year. I thought this seemed high, so I investigated further.

I became aware of this study prepared by the Center for Economic Development and Business Research at Wichita State University, available here: Wichita Mid-Continent Airport Economic Impact.

By reading this study I learned that the employees of Cessna and Bombardier — 12,134 in total — are counted in determining the economic impact of the airport. Why? To quote the study: “While it might appear that manufacturing businesses could be based anywhere in the area, both Cessna and Bombardier require a location with runways and instrumentation structures that allow for flights and flight testing of business jet airplanes.” This is true, but it is quite a stretch to attribute the economic impact of these employees to the airport.

For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport. This is, of course, assuming that we count the impact of these employees only once.

Or suppose that Cessna tires of being on the west side of town, so it moves east and starts using Jabara Airport. Would Cessna’s economic impact on Sedgwick County be any different? I think it wouldn’t. But its impact on the Wichita airport would now be zero. Similar reasoning would apply if Cessna built its own runway.

Or it may be that someday Cessna or Bombardier will ask Sedgwick County for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been used, as they were attributed to the airport.

To its credit, the WSU study does provide some figures with the manufacturing employees excluded. The impact without the manufacturing employees included is estimated at $183 million, or about 11 percent of the $1.6 billion claimed earlier.

It is a convenient circumstance that these two manufacturers happen to be located near the airport. To credit the airport with the economic impact of these companies — as though the airport was involved in the actual manufacture of airplanes instead of providing an incidental (but important) service — is to grossly overstate the airport’s role and its economic importance.

Of course the airport is important to Wichita. We should seek to measure its impact sensibly instead of stretching to attribute every dollar possible to it. When advocates of any cause manufacture figures like the $1.6 billion economic impact, it casts doubt on other arguments they advance.

Links referred to: Wichita Mid-Continent Airport Economic Impact

The Real Scandal at City Hall

In 2003, local Wichita news media devoted extensive news coverage to two officials in the City of Wichita’s finance department. They were accused of improperly spending between $52,000 and $73,800 on travel. While I don’t condone this waste and I’m glad that our local news media uncovered it, the amount involved is relatively small. Furthermore, the people who wasted this money are no longer in a position to repeat.

The real scandal, however, is the ongoing lack of care exercised when spending our money. Time and time again we read in the newspaper how the mayor or city council members are surprised by facts and circumstances arising after a decision has been made.

For example, in an article titled “Kolb goal: full facts in future city deals” (Wichita Eagle, September 26, 2004) we read this:

“Due diligence should have been done,” Mayor Carlos Mayans said when he learned of the losses: “We expect the staff to provide us with information that helps us make sound decisions.”

In the same article, council member Paul Gray, upon hearing of bad financial news at the city-owned ice rink, is quoted as saying “Why is it just now coming to us?”

Continuing in the same article, council members were described as being surprised upon learning that the industrial revenue bonds and property tax abatement awarded to a local business also included a sales tax break. How could they be surprised? The City of Wichita website contains a nicely-done page titled “Industrial Revenue Bonds” (located at http://www.wichitagov.org/Business/EconomicDevelopment/IRB) (This is the first result that appears when you use the wildly popular Google search engine and search for “Wichita IRB.”) The first link on this page is titled “IRB Overview: Industrial Revenue Bond Issuance in the State of Kansas,” and you don’t have to read very far before you come to the sentence reading “Generally, property and services acquired with the proceeds of IRBs are eligible for sales tax exemption.”

Is it asking too much that someone at City Hall read the City’s own website? Or, is it possible that they knew this, but decided to overlook inconvenient facts?

Recently, in an article titled “Plaza falls short” (Wichita Eagle, November 14, 2004), we read this:

The cinema plaza is the latest in a series of public and public-private projects that have underperformed compared with projections. Others include the Hyatt Regency Wichita, Ice Sports Wichita and Auburn Hills Golf Course.

Mayans said he’s getting tired of such surprises and is working with City Manager George Kolb to make changes.

“We need to find out why we have so many projects (from) previous years that are having financial difficulties,” he said. “From now on, we have to make sure that we are not using anyone else’s numbers and we are doing our own due diligence.”

In fairness to Mayor Mayans, I emphasize that these decisions were made before he took office.

Now as we undertake spending even more money on projects such as the Waterwalk and the downtown Wichita arena, how can we restore confidence in our local government officials?

The best thing to do would be to stop spending on projects that are better handled by the private sector. It seems like the City of Wichita, when partnering with private developers, often assumes most of the risk but is not in position to received the rewards the private developers earn (and rightly deserve to earn) if the project succeeds.

A recent editorial by Phillip Brownlee in the November 21, 2004 Wichita Eagle illustrates the risk involved in these dealings. The editorial, when recommending how to avoid future mistakes like the Old Town Square tax shortfall, states there should be “Better communication between the developers and the city, especially if the project changes.” The key idea in this sentence is change. Things always seem to change. Private developers, being close to the ground and having their own money at risk, sense the need for change earliest. If they are spending their own money, they have the perfect right to change as they see fit. But if they have agreed with the government on a course of action, and now that course needs correction, they have to go back to the government and ask permission to change. That can take a long time — maybe too long to respond adequately to the changing markets.

The editorial also recommends “Clearer expectations (and in writing) about what the developers will build and what occupancy rates likely will be.” First, this sentence illustrates the element of risk again, what the rates likely will be. No one knows. There is risk in developing a business of any type. It seems like the City assumes the risk, however. Also, I am wondering why Mr. Brownlee seems to imply that expectations have not been given in writing. Furthermore, what recourse does the City have if expectations are not met?

Finally, the editorial reads “Closer City Council scrutiny before projects are approved (members at the time now say they didn’t know who all the Old Town development partners were, and they seemed to accept on faith the assurances by city staff that the project would exceed revenue projections).” I first note that it seems like city staff are acting as cheerleaders for these projects, when they should provide a sober assessment. Furthermore, if the project would exceed revenue projections, why not adjust the projections so that they accurately reflect what we believe the future will hold?

The City of Wichita can do a better job. At one time it seemed like our mayor would be better. From an article titled “Mayans takes on WaterWalk” (May 30, 2003 Wichita Business Journal):

One area Mayans says he’s concerned about is a “leasehold mortgage” referred to in the agreement. That means the city is allowing the developer to place a first lien on the ground owned by the city and leased to the developers for the project, Mayans says. Later, the agreement specifies that the city agrees that their ownership of the ground is to be “subordinated” to a loan obtained by the developer to build the improvements.

“If the project is unsuccessful, the lender then has the right to take not only the improvements, but also the city’s land,” Mayans says.

This is the type of thorough analysis and due diligence needed before the City enters into agreements of any type. Why is the city staff not providing this, and why are the Mayor and City Council members not demanding it?