Tag Archives: Wichita Downtown Development Corporation

Downtown Wichita business trends

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There has been much public and private investment in Downtown Wichita. What has been the trend in business activity during this time?

According to the 2017 report from Wichita Downtown Development Corporation (now known as Downtown Wichita), over the past decade there has been $593,868,858 in private investment, $160,522,002 in public investment, and $171,087,276 investment in Intrust Bank Arena. That’s $925 million of investment in downtown over this period, with more before. 1

What has been the result of this investment? If you expected business growth in downtown Wichita, you may be disappointed. For the past decade business activity in downtown Wichita has been on a downhill trend. The data for 2016 is a bit of good news, with the decline stopping and business activity remaining mostly unchanged. It isn’t the vibrant growth we’ve been told is happening in downtown Wichita, but at least things are not getting worse.

The data

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The United States Census Bureau tracks business data by zip code. 2 The data that is available includes the number of business establishments, the number of employees, and the annual payroll, expressed in thousands of dollars not adjusted for inflation. It includes private-sector workers only, so it does not count all workers.

Nearby are results for zip code 67202, which has nearly the same boundaries as the Self-Supporting Municipal Improvement District (SSMID). This is a district that pays extra property tax for supporting the WDDC. Its boundaries, roughly, are from Kellogg north to Central, and the Arkansas River east to Washington. It is greater Downtown Wichita plus Old Town.

The results since 2007 show fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In nearly all cases for nearly all years, the trend is lower — except for 2016.

For 2016 the numbers are nearly unchanged, with only small changes from the previous year. The number of business establishments is down slightly, while the number of employees and annual payroll rose, also slightly.

Except for 2016, this is movement in the wrong direction, the opposite of progress. And 2016 represents merely a stop in the downhill slide, not growth. There may be good news in that the number of people living downtown may be rising. But in estimating the population of downtown Wichita, economic development officials use a circuitous method. The result of their calculations is a population much higher than Census Bureau estimates, far outside the range of probable results. 3

But business activity has been declining.

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Notes

  1. Downtown Wichita. State of Downtown Report, 2017. https://downtownwichita.org/user/file/2017-state-of-downtown-report-download.pdf.
  2. U.S. Census Bureau. County Business Patterns (CBP). https://www.census.gov/programs-surveys/cbp/data.html.
  3. Weeks, Bob. Living in downtown Wichita. Available at https://wichitaliberty.org/wichita-government/living-downtown-wichita/.

Wichita in ‘Best Cities for Jobs 2018’

Wichita continues to decline in economic vitality, compared to other areas.

NewGeography.com is a joint venture of Joel Kotkin and Praxis Strategy Group. Its annual “Best Cities for Jobs” project ranks metropolitan areas according to growth in employment.

Of 422 metropolitan areas considered, Wichita ranked 383, dropping 28 spots since the previous year.

Among 100 medium size metropolitan areas, Wichita ranked 93, dropping 5 spots from the previous year.

NewGeography.com uses employment data from the United States Bureau of Labor Statistics from November 2006 to January 2018. 1 Last year’s publication contains a more detailed explanation of how the rankings capture current year-growth, mid-term growth, and momentum. 2

In the analysis for 2017, Wichita had also fallen in ranking.

Wichita has momentum, they say

Despite this news, Wichita leaders are in denial. Recently Greater Wichita Partnership president Jeff Fluhr told a group of young people this:

From the innovation campus at Wichita State University and development along the Arkansas River in downtown, including a new baseball stadium, to the conversations happening now about a new convention center and performing arts facility, Fluhr said the momentum is pushing to keep Wichita on par with the development of other communities around the country.

That development, which has in recent years expanded to incorporate the entire region, is a critical component to attracting and retaining talent — the exact kind of talent in the ICT Millennial Summit crowd. 3

In January Wichita Mayor Jeff Longwell said, “It’s hard to find a time when we’ve had more momentum.” 4

In March Sedgwick County Commissioner David Dennis penned a column for the Wichita Eagle praising the county’s efforts in economic development. 5 Dennis is also chair of the commission this year. In his column, the commissioner wrote: “Economic development is a key topic for the Board of County Commissioners and for me in particular. Right now we have a lot of momentum to make our community a more attractive place for people and businesses.”

At the same time, the Wichita Eagle editorialized: “Wichita’s economy struggled to rebound from the last recession, which held the city back. But there have been positive economic signs of late, including a renewed focus on innovation and regional cooperation. … There also is a sense of momentum about Wichita. Yes, challenges remain, but the city seems to have turned a corner, with even greater things ahead.”6

In announcing his candidacy for Sedgwick County Commission, Wichita city council member Wichita City Council Member Pete Meitzner (district 2, east Wichita) said, “We have enjoyed great progress and growth during my two terms as a City Council member and I plan to do my part to assure Sedgwick County is part of this continued success.” 7

Given all this, it ought to be easy to find economic data supporting momentum, progress, and growth. Besides the NewGeography.com report cited above, let’s look at some other indicators.

Personal income. For the Wichita metropolitan statistical area, personal income in 2016 rose slightly from the 2015 level, but is still below the 2014 level. In real (inflation-adjusted) dollars, personal income fell in 2016. 8

Personal Income Summary, Wichita, through 2016. Click for larger.

Population. In 2000 Wichita was the 80th largest metropolitan area. In 2017 its ranking had fallen to 89. See Wichita metropolitan area population in context for more on this topic.

Trends of business activity in downtown Wichita. Click for larger.
Downtown Wichita. There’s been a lot of investment in downtown Wichita, both public and private. But since 2008 the trend is fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. Almost every year these numbers are lower than the year before. This is movement in the wrong direction, the opposite of progress. There may be good news in that the number of people living downtown may be rising, but business activity is declining. 9

Employment. While officials promote the low Wichita-area unemployment rate, there is an alternative interpretation. First, the good news: The unemployment rate for the Wichita metro area declined to 3.9 percent in March 2018, down from 4.2 percent in March 2017. The number of unemployed persons declined by 8.3 percent for the same period. 10

Is Wichita’s declining unemployment rate good news, or a byproduct of something else? The unemployment rate is the ratio of the number of unemployed persons to the labor force. While the number of unemployed persons fell, so too did the labor force. It declined by 3,367 persons over the year, while the number of unemployed persons fell by 1,056. This produces a lower unemployment rate, but a shrinking labor force is not the sign of a healthy economy.

A further indication of the health of the Wichita-area economy is the number of nonfarm jobs. This number declined by 1,200 from March 2017 to March 2018, a decline of 0.4 percent. This follows a decline of 0.7 percent from February 2017 to February 2018.

Of the metropolitan areas in the United States, BLS reports that 308 had over-the-year increases in nonfarm payroll employment, 72 (including Wichita) had decreases, and 8 had no change.

Growth in output. The worst news, however, is that the Wichita-area economy shrank from 2015 to 2016. In real (inflation-adjusted) dollars, the Wichita metropolitan area gross domestic product fell by 1.4 percent. For all metropolitan areas, GDP grew by 1.7 percent. Since 2001, GDP for all metropolitan areas grew by 29.3 percent, while Wichita had 12.3 percent growth. 11

Wichita MSA employment, annual change. Click for larger.
The GDP figures are for 2016, and figures for 2017 won’t be available until September. So what happened in 2017? Could 2017 be the genesis of momentum to drive our economy forward?

While GDP figures aren’t available, jobs numbers are. For the year 2016, total nonfarm employment in the Wichita metropolitan area grew by 0.62 percent. For 2017, the growth rate was 0.56 percent — a slowdown in the rate of job growth. These job growth figures are far below the rate for the nation, which were 1.79 and 1.58 percent respectively.

Annual change in job growth, Wichita and USA through 2017. Click for larger.

Furthermore, Wichita’s job growth rate in 2016 was lower than 2015’s rate of 1.07 percent. This is momentum in the wrong direction. Nearby charts illustrate. 12

What to do?

The failure of the Wichita-area economy to thrive is a tragedy. This is compounded by Wichita leaders failing to acknowledge this, at least publicly. While we expect people like the mayor, council members, and the chamber of commerce to be cheerleaders for our city, we must wonder: Do these people know the economic statistics, or do they choose to ignore or disbelieve them?

From private conversations with some of these leaders and others, I think it’s a mix of both. Some are simply uninformed, while others are deliberately distorting the truth about the Wichita economy for political or personal gain. The people who are uninformed or misinformed can be educated, but the liars are beyond rehabilitation and should be replaced.


Notes

  1. “The methodology for our 2018 ranking largely corresponds to that used in previous years. We seek to measure the robustness of metro areas’ growth both recently and over time, with some minor corrections to mitigate the volatility that the Great Recession has introduced into the earlier parts of the time series. The ranking is based on three-month rolling averages of the U.S. Bureau of Labor Statistics’ ‘state and area’ unadjusted employment data reported from November 2006 to January 2018.” 2018 How We Pick The Best Cities For Job Growth. Available at http://www.newgeography.com/content/005973-2018-how-we-pick-best-cities-job-growth.
  2. 2017 How We Pick The Best Cities For Job Growth. Available at http://www.newgeography.com/content/005618-2017-how-we-pick-best-cities-job-growth.
  3. Daniel McCoy. ICT Millennial Summit: Wichita is having a moment. Wichita Business Journal, November 30, 3017. Available at https://www.bizjournals.com/wichita/news/2017/11/30/ict-millennial-summit-wichita-is-having-a-moment.html.
  4. Heck, Josh. Emerging Leaders panel offers insight into eco-devo strategies. Available at https://www.bizjournals.com/wichita/news/2018/01/11/emerging-leaders-panel-offers-insight-into-eco.html.
  5. David Dennis. Sedgwick County part of drive to strengthen area workforce. Wichita Eagle, March 5, 2018. Available at http://www.kansas.com/opinion/opn-columns-blogs/article203559734.html.
  6. Wichita is moving forward. March 1, 2018. Available at http://www.kansas.com/opinion/editorials/article135573253.html.
  7. Bill Wilson. Wichita council member unveils bid for county commission. Wichita Business Journal, November 30, 3017. Available at https://www.bizjournals.com/wichita/news/2018/02/13/wichita-council-member-unveils-bid-for-county.html.
  8. Weeks, Bob. Wichita personal income up, a little. Available at https://wichitaliberty.org/wichita-government/wichita-personal-income-up-2016/.
  9. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.
  10. Weeks, Bob. Wichita unemployment rate falls. Available at https://wichitaliberty.org/economics/wichita-unemployment-rate-falls-2018-03/.
  11. Weeks, Bob. Wichita economy shrinks. Available at https://wichitaliberty.org/economics/wichita-economy-shrinks/.
  12. In some presentations these figures may differ slightly due to data revisions and methods of aggregation. These differences are small and not material.

Project Wichita right to look ahead at city’s future

We can understand self-serving politicians and bureaucrats. It’s what they do. But a city’s newspaper editorial board ought to be concerned with the truth.

In February the Wichita Eagle editorialized about Project Wichita, a ramping-up effort to do something about the future of Wichita. 1 It’s worthwhile to take a look at the op-ed, if only to learn something about the quality of Wichita Eagle editorial writing.

I understand civic boosterism; the desire to paint a positive image of the future. But this rosy outlook has to be based, at least loosely, on facts. Following, a look at a few claims made in the editorial.

“Our downtown is becoming more of a destination and place to live.”
The problem is this: Wichita economic development officials use a circuitous method of estimating the population of downtown Wichita, producing a number much higher than Census Bureau estimates. Downtown Wichita, the city’s economic development agency responsible for downtown, says the population of downtown is 2,138, which is far — really far — outside the range the Census Bureau gives. For more about this, see Living in downtown Wichita.

As far as a destination for business, the U.S. Census Bureau tracks business trends by zip code. For zip code 67202, which is downtown Wichita, results since 2007 show fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In all cases, the trend is lower. For more about this, see Downtown Wichita business trends.

Further, Wichita leaders have exaggerated the number of people working in downtown. For years our leaders told us there were 26,000 daytime workers in downtown Wichita. But this claim is based on misuse of data so blatant it can be described only as malpractice. In fact, this figure is now omitted from the state of downtown reports. No one will accept responsibility for this mistake. See Downtown Wichita jobs, sort of and Downtown Wichita report omits formerly prominent data.

“But Wichita feels pretty good about itself, which suggests the community is at the perfect time to think about its future.”
I have to say, we’ve been hoodwinked, and by our top leaders. Recently both the mayor of Wichita and chair of the county commission penned upbeat editorials praising our economy. See Mayor Longwell’s pep talk and Sedgwick County’s David Dennis on economic development.

But the reality is quite different. See:

Given this, why do the mayor, county commission chair, and our newspaper’s editorial board say what they do? The first two are politicians, but we ought to ask that our newspaper seek the truth, not personal political gain.

“It will get more serious in March, when students and volunteers from Wichita State University’s Public Policy and Management Center …”
This is the same organization on which the city relies for many services, including the gathering of public input in past campaigns like the 2014 sales tax election. The city seemed sure that tax would pass, but voters rejected it by a wide margin. 2

“Public Policy director Misty Bruckner and her group will deliver feedback and conclusions to Project Wichita’s four co-chairs.”
A few years ago Bruckner co-authored a paper titled “Citizen Attachment: Building Sustainable Communities.” 3 My reporting on it was titled Wichita needs more, and willing, taxpayers. An excerpt: “Increasingly, citizens are retreating from their responsibilities to community and demanding more from government than they are willing to pay for. But changes in local government behavior can be instrumental in reversing this trend, by strengthening citizens’ commitment to the well-being of their communities. Citizens who are committed to community are more willing to accept responsibility for the well-being of their fellow citizens and are also more likely to join with government and other parties to improve their communities. Citizens who are committed to community are also more willing taxpayers — that is, when government demonstrates that it can be trusted to invest public resources in ways that strengthen the community. The central thrust of this model is getting citizens and governments to work together, but realistically, many communities will require new revenue — including additional tax dollars — if they are to assemble the critical mass of resources necessary for meaningful change. Accordingly, citizens who are willing to pay increased taxes are an important component of building sustainable communities.” (emphasis added)

Please don’t fault me for being cynical when I suspect that this entire operation is designed to prepare Wichitans (or the region) for a tax increase.

“Community input will be as wide as the city limits.”
Wait a moment. I thought we were supposed to think regionally.

“Project Wichita seems similar to Visioneering Wichita …”
I wonder if anyone remembers anything positive that resulted from Visioneering Wichita. After a few years, the organization’s website went stale, and staff discontinued making presentation to the city council and county commission See Visioneering asks for money. Let’s ask these questions.

“Unlike Visioneering, Project Wichita isn’t headed by city or county government.”
Visioneering Wichita was led by the Chamber of Commerce, not government. Local governments made financial contributions to Visioneering, just as they are also contributing to Project Wichita. 4


Notes

  1. Wichita Eagle Editorial Board. Project Wichita right to look ahead at city’s future. Available at http://www.kansas.com/opinion/editorials/article198178899.html.
  2. Ryan, Kelsey. Voters soundly defeat Wichita sales tax proposal. Available at http://www.kansas.com/news/politics-government/election/article3567045.html.
  3. See http://www.gfoa.org/sites/default/files/GFR_OCT_10_24.pdf.
  4. Wichita Business Journal. Sedgwick County Commission approves Visioneering Wichita funding. Available at https://www.bizjournals.com/wichita/blog/2012/12/sedgwick-county-commission-approves.html.

Naftzger Park private use plans unsettled

An important detail regarding Naftzger Park in downtown Wichita is unsettled, and Wichitans have reason to be wary.

In the developer agreement regarding Naftzger Park passed on December 19, 2017, there was this: “The City and the Board will cooperate with Developers, upon Developers’ request, to create an Annual Master Calendar of private and public events for the Park, with the expectation that the Developers will have the use of the Park for certain private events.” 1 (In this agreement, “Board” refers to the Board of Park Commissioners of the City of Wichita, Kansas.)

Recently I asked the city if this master calendar had been created, or if there was a framework for determining how many private events can be held. According to the city, decisions are ongoing, and “According to Park & Recreation officials, what can be shared now is that the City will create and maintain a master calendar of events and programming. The developer will share in the programming responsibility and host several events throughout the year. Collaborating will ensure that the park is programmed well and active.”

Wichitans should not take comfort in learning this. We can easily imagine where the developer will want to have private events often, especially if homeless people continue using the park as a gathering spot, as is their right. “TGIF kickoff, tonight at Naftzger Park! Drinks and hot hors d’oeuvre! $15 to enter, free to residents of Lofts at Spaghetti Works and partners at Martin Pringle.”

Could this happen? How often could this happen? These are open questions, and we’re being asked to trust that city bureaucrats will negotiate a good deal for the entire city.

A panoramic view of Naftzger Park at winter’s end. Click for larger.

We shouldn’t trust the city to get a good deal for the average Wichitan. Even if the city strikes a deal that looks good, we should not trust the city to enforce the deal. Here’s an example to illustrate why.

In 2012 the city negotiated a deal with a private developer regarding an apartment development. As part of the deal, the city negotiated a provision that requires the apartment developer to pay “Additional Annual Rent” if certain conditions were met. To the casual observer, that might seem like a magnanimous gesture by the apartment developer. It made it look like the city was been a tough negotiator, hammering out a good deal for the city, letting citizens profit along with the apartment developer.

But the list of costs the developer could deduct before determining “additional annual rent” was broad, including the ability to contribute to reserve funds that would be owned by the developer. At the time, I observed, “We can be sure that if this project was ever in the position where it looked like it might have to remit ‘Additional Annual Rent’ to the city, contributions to these reserve funds would rise. Then, no funds paid to the city.” 2

As it turns out, the city did not enforce this agreement. It didn’t even ask for the information needed. Last year I became aware that the city did not ask for, and the developers did not produce, annual reports. 3

So might it happen that the private developments adjacent to Naftzger Park treat the park as their own? Recall that these developers have taken advantage of nearly every available program to fund their private developments. 4 Included in the list of benefits is a new benefit the city has offered only once before, to my knowledge: The city is paying the developer for parking spaces, on the theory they will be available to the public when the development does not need them.

Many of these benefits to the developer appeared only after the Wichita city manager said the development would not proceed, as the Wichita Eagle reported: “Plans to tear up and rebuild Naftzger Park downtown have been shelved indefinitely, after developers who own neighboring property pulled out of working with the city, Wichita City Manager Robert Layton said Friday [November 17, 2017].” 5 Somehow the deal was quickly revived, with even more taxpayer-funded benefits to the developer.

Should Wichitans trust the city to negotiate a good deal, and if it does, to enforce it? In my experience, the answer is no.


Notes

  1. DEVELOPMENT AGREEMENT between the CITY OF WICHITA, KANSAS, BOARD OF PARK COMMISSIONERS OF THE CITY OF WICHITA, KANSAS, SENECA PROPERTY, LLC, and SUNFLOWER WICHITA, LLC Dated as of January 19, 2018. Section 3.12. In the agenda packet for the December 19, 2017 Wichita city council meeting.
  2. Weeks, Bob. Wichita WaterWalk apartment deal not good for citizens. Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-apartment-deal-not-good-for-citizens/.
  3. Weeks, Bob. Wichita WaterWalk contract not followed, again. Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-contract-not-followed/.
  4. Weeks, Bob. Naftzger Park project details. Available at https://wichitaliberty.org/wichita-government/naftzger-park-project-details/.
  5. Lefler, Dion. Naftzger Park won’t be torn down, rebuilt after Spaghetti Works developer pulls out. Wichita Eagle, november 17, 2017. Available at http://www.kansas.com/news/politics-government/article185304103.html.

Living in downtown Wichita

Wichita economic development officials use a circuitous method of estimating the population of downtown Wichita, producing a number much higher than Census Bureau estimates.

Recently the Wichita Business Journal reported:

Getting more people to live in the core was clearly one of the most important tasks for the city. Back in 2010, the report said downtown Wichita was ripe for an additional 1,000 housing units.

That goal seems to have been met. According to a recent report from the group Downtown Wichita, 835 residential units have been completed since 2010. An additional 742 units are in development downtown, where about 2,100 people live today. 1

The report referred to is the 2017 State of Downtown Report. 2 While this report highlights the number of people living in downtown Wichita, it no longer reports the number of people working in downtown. 3

How does Downtown Wichita arrive at the number of residents in downtown? An endnote from the report gives the details:

The 2010 U.S. Census states the population in the 67202 area code is 1,393. Per Downtown Wichita records, 702 units rental units have opened in the Downtown SSMID district since 2010 when the Census was taken. Per data provided directly from the Downtown residential rental properties, the absorption rates of the market rate units has an average of 85%. Per the U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates, the average size of renter-occupied units is 1.25 persons. Therefore, an estimate for the current population is 2,138. 4

What DW has done is to take a reliable figure (the 2010 decennial census) and extrapolate forward to 2016. (Presumably 2016, as the report doesn’t say.)

But there are a few issues, as follows:

First, the calculation includes 702 rental units that have opened since 2010. Have any rental units closed since then? That would be good to know. Curious is that the report prominently mentions “835 units completed since 2010.” There have been condominiums that have opened since 2010. Why would DW use only rental units in its calculation?

Second, the DW calculation makes use of two estimates, absorption rate 5 and size of renter-occupied units. (What about size of owner-occupied units?) Each of these is an estimate that has its own error probabilities, and those errors compound when multiplied.

Third, there is no need to go through this roundabout calculation, as the Census Bureau has provided an estimate for the population of downtown in 2015. Data from the American Community Survey 6 estimates that the population in downtown Wichita for 2015 was 1,438, with a 90 percent confidence interval of plus or minus 242. 7 This means the Census Bureau is confident the population of downtown Wichita in 2015 was in the range of 1,196 to 1,680, that confidence factor being 90 percent.

But DW says the population of downtown is 2,138, which is far — really far — outside the range the Census Bureau gives for the 2015 population. While DW’s population estimate is probably for 2016, it still lies far outside the range of probability, based on Census Bureau estimates.

It’s really curious that DW doesn’t use the Census Bureau estimate of population. That population estimate comes directly from the Bureau’s American Community Survey 5-Year Estimates for 2011 to 2015. DW didn’t use that number, but it relied on the same body of data to get “average size of renter-occupied units” for 2015.

Why would DW use the Census Bureau for one datum but not another, especially when the Census Bureau data reports the statistic DW is trying on its own to estimate in a roundabout manner?

It’s simple. DW’s calculations produce 2,138 people living in downtown. The Census Bureau estimate is a much smaller number: 1,438.

By the way, DW’s calculations start with the 2010 Census Bureau population for downtown. Of the downtown population of 1,393 that year, 253 were men living in institutions like the Kansas Department of Corrections Wichita Work Release facility at Emporia and Waterman Streets. It has a capacity of 250. 8


Notes

  1. Horwath, Brian. Wichita making good on downtown master plan. Wichita Business Journal, October 26, 2017. Available at https://www.bizjournals.com/wichita/news/2017/10/26/wichita-making-good-on-downtown-master-plan.html.
  2. Downtown Wichita. 2017 State of Downtown Report. Available at https://downtownwichita.org/user/file/2017-state-of-downtown-report-download.pdf.
  3. Weeks, Bob. Downtown Wichita report omits formerly prominent data. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-report-omits-formerly-prominent-data/.
  4. 2017 State of Downtown Report, page 42.
  5. “Absorption is the amount of space or units leased within a market or submarket over a given period of time (usually one year). Absorption considers both construction of new space and demolition or removal from the market of existing space.” Institute of Real Estate Management. Calculating Absorption. Available at https://www.irem.org/education/learning-toolbox/calculating-absorption.
  6. U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates
  7. U.S. Census Bureau. American Community Survey Accuracy of the Data (2015). Available at https://www2.census.gov/programs-surveys/acs/tech_docs/accuracy/ACS_Accuracy_of_Data_2015.pdf.
  8. See https://www.doc.ks.gov/facilities/wwrf.

Downtown Wichita report omits formerly prominent data

The new State of Downtown Wichita report for 2017 is missing something. What is it, and why is it missing?

Recently the Wichita Business Journal reported:

When you’re Jeff Fluhr, you don’t spend much time in park — it’s usually full speed ahead.

It was no different when a couple of members of the Wichita Business Journal’s newsroom visited with the president of Downtown Wichita and the Greater Wichita Partnership in early October.

On this day, Fluhr was excited to pass out copies of the 42-page 2017 “State of Downtown” report, which had just been released. 1

The new report is something better than before. 2 Actually, it’s what is left out that marks a step forward for Downtown Wichita, which is the new name for the Wichita Downtown Development Corporation.

Downtown Wichita brochure.
Previous versions of the report prominently mentioned the number of daytime workers in downtown Wichita. 3The number most often given was 26,000. But that number is missing from this year’s report. Unless I overlooked it, there is no mention of the number of workers in downtown Wichita.

Why was this number omitted from this year’s report? Earlier this year I found out that the U.S. Census Bureau data series which was the source of this statistic is not a valid measure of the number of people working downtown. That’s because the series counts all the employees of the Wichita public school district as downtown workers solely because the district’s headquarters building is downtown. 4 This means the statistic is not valid and meaningful, because most school workers don’t work at the downtown building. Instead, they’re working in schools and other facilities dispersed throughout the district. A similar anomaly exists for Wichita city workers: All are counted as though they work in the city hall building. 5

When I asked Jeff Fluhr, the president of Downtown Wichita, about this he referred my question to Jeremy Hill, the Director of Center for Economic Development and Business Research at Wichita State University. This was — seemingly — reasonable as CEDBR supplied the number to Fluhr’s organization. Hill’s response was unsatisfactory in resolving the issue. In conclusion, Hill wrote to me: “Although the center systematically questions all data sources (federal, state, private, and nonprofit) for reasonableness, limited resources (e.g. time and costs) prevent us from validating and/or cross checking every statistic. In this situation, the center used the appropriate source for the research question and the total number of people estimated to work downtown was within reason.”

The Census Bureau OnTheMap application for downtown Wichita, zip code 67202. Click for larger.
LODES data for census block 201730043001036, showing 7,740 workers.
Here’s what concerns me. This data comes from a Census Bureau application called “OnTheMap.” When using the OnTheMap application for downtown Wichita, which is zip code 67202, there are two large bright blue dots that stand out from all others. These represent the two highest concentrations of workers in downtown Wichita. One is Census block 201730043001036, which has 7,740 employees. This is a one square block area from First to Second Streets, and Wichita to Water Streets. That block, for the year of this data, held the Wichita school district headquarters building.

7,740 employees is a lot. It’s about one-fourth of the total downtown employee count claimed by Downtown Wichita and CEDBR. It’s more employees than McConnell Air Force Base has, and about twice as many that work at Koch Industries in Wichita.

Importantly, this number is eleven times the number that work at Cargill, a company which Wichita is granting many millions of dollars in incentives just to retain the company in Wichita.

Promotional material on the former Henry’s building. Click for larger.
We just have to wonder: Didn’t anyone look at this data in a serious and critical manner? A quick glance at the data by CEDBR, much less “systematically” checking for “reasonableness” should have led to questions. A quick look by Downtown Wichita staff should have spurred these inquiries: Who do all these people work for in that one block? This is a wonderful success story! How can we replicate this great accomplishment in other blocks in downtown Wichita?

And didn’t anyone at the City of Wichita — council members and bureaucrats alike — wonder about these numbers?

That didn’t happen. Or maybe it did, and someone in authority nonetheless decided to proceed to use a statistic that doesn’t mean what city leaders say it means.

That’s why I wrote it was seemingly reasonable for Fluhr to refer me to CEDBR with my questions about the data. In retrospect, it is clear this is a multi-year episode of incompetence, ineptitude, or dishonesty.

But at least this statistic is no longer used.

I asked Cindy Claycomb, who is Chair of the Executive Committee of Downtown Wichita, about this. She replied that all data sources are listed in the report, and that the board relies on the expertise of the Wichita Downtown Development Corporation staff to decide what is presented in each year’s report. She said Jeff Fluhr was the best person to address my concerns. He, as we saw, demurred to CEDBR at WSU.

(By the way, Claycomb is nearly certain to be elected to the Wichita City Council in November. Jeff Fluhr is now, besides president of Downtown Wichita, also president of Greater Wichita Partnership, the new organization regional governments rely on for economic development.)

Trends of business activity in downtown Wichita. Click for larger.
So: How many jobs are in downtown Wichita? There is another series of census data that is better, but not perfect, as it counts private-sector employees only. That data shows 13,581 workers in downtown Wichita for 2015. 6 But what’s remarkable — and disappointing — about this data series is its trend: It’s going down. The recent peak was 16,658 workers in 2008. By 2015 that number was down by 18 percent. (Again, these are private sector workers only.)


Notes

  1. Horwath, Brian. Downtown positioned for growth, despite area’s labor issues. Wichita Business Journal, October 12, 2017. Available at https://www.bizjournals.com/wichita/news/2017/10/12/downtown-positioned-for-growth-despite-areas-labor.html.
  2. Downtown Wichita. 2017 State of Downtown Report. Available at https://downtownwichita.org/user/file/2017-state-of-downtown-report-download.pdf.
  3. See, for example, the second page of the 2016 report at https://downtownwichita.org/user/file/2016_State_of_Downtown_Report_2.pdf.
  4. In summer 2017 the district moved its headquarters away from downtown to the former Southeast High School. It will be a few years before this is reflected in Census Bureau data.
  5. Weeks, Bob. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.
  6. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.

WichitaLiberty:TV: Wichita economy, Kansas schools

In this episode of WichitaLiberty.TV: Karl Peterjohn and Bob Weeks discuss some statistics regarding downtown Wichita and then the Kansas school finance court decision. View below, or click here to view at YouTube. Episode 169, broadcast October 14, 2017.

Now, WichitaLiberty.TV has new broadcast times. The regular Sunday broadcasts on KGPT TV channel 26.1 (AT&T U-Verse 49) at 8:30 am, repeated at 4:30 pm, are unchanged. Here is the full broadcast schedule:

Saturdays on KGPT channel 26.9 (Newsmax TV)
10:00 am: The new episode
10:30 am: Repeat of last week’s episode
5:00 pm: Repeat of new episode
5:30 pm: Repeat of last week’s episode

Sundays on KGPT channel 26.1/AT&T channel 49 (Cozi TV)
8:30 am: Repeat of the new episode
4:00 pm: Repeat of the new episode
4:30 pm: Repeat of last week’s episode

Shownotes

  • Downtown Wichita jobs, sort of. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice.
  • The Kansas Supreme Court decision in Gannon v. State.
  • Wichita Eagle coverage of USD 259 internet contract: Wichita district pays more in hopes of preventing internet service disruptions, Wichita school district leaving out the details, and Spending was response to cyber attacks, Wichita board president says.
  • The Rose Standards for Kansas students, as codified in K.S.A. 2016 Supp. 72-1127:
    (1) Sufficient oral and written communication skills to enable students to function in a complex and rapidly changing civilization;
    (2) sufficient knowledge of economic, social, and political systems to enable the student to make informed choices;
    (3) sufficient understanding of governmental processes to enable the student to understand the issues that affect his or her community, state, and nation;
    (4) sufficient self-knowledge and knowledge of his or her mental and physical wellness;
    (5) sufficient grounding in the arts to enable each student to appreciate his or her cultural and historical heritage;
    (6) sufficient training or preparation for advanced training in either academic or vocational fields so as to enable each child to choose and pursue life work intelligently; and
    (7) sufficient levels of academic or vocational skills to enable public school students to compete favorably with their counterparts in surrounding states, in academics or in the job market.

Downtown Wichita jobs decline

By the measure of jobs used by the City of Wichita, downtown jobs declined in 2015.

Jobs in downtown Wichita, according to LEHD Origin-Destination Employment Statistics. Click for larger.
Annual change in jobs, according to LEHD Origin-Destination Employment Statistics. Click for larger.
According to a series of data from the United States Census Bureau, the number of jobs in downtown Wichita declined by 1.6 percent from 2014 to 2015.

The data, known as LEHD Origin-Destination Employment Statistics, or LODES, was updated in September to include data from 2015. 1. Washington, DC: U.S. Census Bureau, Longitudinal-Employer Household Dynamics Program Available at https://lehd.ces.census.gov/data/#lodes.] Downtown Wichita is defined in this case as zip code 67202, which is the same definition used by the city of Wichita, Wichita Downtown Development Corporation, and Center for Economic Growth and Business Research at Wichita State University.

As can be seen in the nearby charts, the number of jobs has been on a mostly downhill trend.

There is, however a serious problem with this data series, as it includes workers whose “administrative home” is downtown, even though they work somewhere else. The Census Bureau makes this caveat clear to users of this data. 2 Because all Wichita school district employees have an “address” of 201 N. Water in downtown Wichita, they appear in the LODES data series as employees with that address.

Trends of business activity in downtown Wichita. Click for larger.
It is a serious mistake to count all Wichita school district employees as downtown workers. Most school employees work in schools and other sites scattered throughout the city, not in downtown. Further, this year the school district moved its administrative offices to the former Southeast High School building at Lincoln and Edgemoor. That’s in zip code 67218, not 67202. The effect of this on the LODES statistics (it will appear that some 7,000 workers have moved out of downtown Wichita) probably won’t appear for two or three years.

Click for larger.
Even if we use the data series promoted by the Wichita Downtown Development Corporation, the trend in jobs is in the wrong direction. WDDC promotes the large investment in downtown Wichita, by both private and public sources. 3 But employment is trending in the opposite direction. 4

But this data series is not useful as a measure of the number of people working in downtown Wichita, as it overstates the true number. The LODES data is widely cited by the City of Wichita and affiliated agencies such as WDDC and the Wichita Chamber of Commerce. 5 It appears prominently in the State of Downtown report produced by WDDC, generally released on May of each year. So far, there is no report for this year.


Notes

  1. U.S. Census Bureau. LEHD Origin-Destination Employment Statistics Data (2002-2015) [computer file
  2. Weeks, Bob. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.
  3. Weeks, Bob. Growth in Downtown Wichita Jobs. Available at https://wichitaliberty.org/wichita-government/growth-downtown-wichita-jobs/.
  4. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.
  5. Weeks, Bob. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.

WichitaLiberty.TV: Wichita and Kansas economies

In this episode of WichitaLiberty.TV: Bob Weeks and Karl Peterjohn discuss issues regarding the Wichita and Kansas economies. View below, or click here to view at YouTube. Episode 163, broadcast September 3, 2017.

Shownotes

  • Wichita employment trends. While the unemployment rate in the Wichita metropolitan area has been declining, the numbers behind the decline are not encouraging.
  • Downtown Wichita business trends. There has been much investment in Downtown Wichita, both public and private. What has been the trend in business activity during this time?
  • Wichita downtown plan focused on elite values, incorrect assumptions. One of the themes of those planning the future of downtown Wichita is that the suburban areas of Wichita are bad. The people living there are not cultured and sophisticated, the planners say. Suburbanites live wasteful lifestyles. Planners say they use too much energy, emit too much carbon, and gobble up too much land, all for things they’ve been duped into believing they want.
  • Charts shown in the show: (Click charts for larger versions.)

In Wichita, not your tax dollars

At a Wichita City Council meeting, citizens are told, “These tax dollars are not your tax dollars.”

At the meeting of the Wichita City Council this week, Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) lectured the audience, saying: “These tax dollars are not your tax dollars.”

The matter under consideration was a redevelopment plan for Naftzger Park in downtown Wichita. Approval was necessary if tax increment financing (TIF) funds could be spent on the park. 1 TIF is a mechanism whereby future tax revenues are redirected towards a specific purpose, usually to the benefit of a private property owner. 2

The “plan” under consideration was solely the financing plan. No actual design for a future Naftzger Park was considered or selected.

At the council meeting — and at many other meetings and online discussions — people have noted that the city is planning to spend money on the redesign of Naftzger Park while at the same time there are, according to them, unmet needs throughout the city: Closing swimming pools, assistance for homeless, inadequate staffing of the police department, etc. Why, they ask, can’t the Naftzger Park money be used to solve these problems?

The admonishment of Williams — “These tax dollars are not your tax dollars” — was directed at this criticism. She is correct: The mechanism of TIF allows for these dollars to be spent on just one thing, and that is the redesign of Naftzger Park. 3

So in one way, they aren’t our tax dollars. They are being spent in the way that TGC Development Group, the owner of adjacent property, wants them spent. 4

But this upends the rationale and justification for taxation.

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

Within a TIF district, however, the new property tax dollars — the increment — do not go to the city, county, and school district to pay for services. Instead, these dollars are used in ways that benefit private parties.

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

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

In the case of Naftzger Park, the situation is murkier. Usually TIF funds are spent on things that directly benefit the private development, things like property acquisition, site preparation, utilities, and drainage. In this case, the TIF funds are being spent to redesign a public park — and a park that many people like.

But it’s clear that the present state of Naftzger Park is a problem for TGC. A newly redesigned park will effectively serve as the “front yard” for TGC’s projects, and will greatly benefit that company. Now that the park redesign will be financed with TIF, this new park comes at no cost to TGC.

Contrary to Council Member Williams and the others who voted in favor of the TIF redevelopment plan: These are our tax dollars. Redirecting them for private benefit has a cost. A real cost that others must pay. If we don’t recognize that, then we must reconsider the foundation of local tax policy.


Notes

  1. Weeks, Bob. Naftzger Park tax increment financing (TIF). Available at https://wichitaliberty.org/wichita-government/naftzger-park-tax-increment-financing-tif/.
  2. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.
  3. The Center City South TIF district is an unusual case in that only 70 percent of the incremental taxes are redirected.
  4. Weeks, Bob. Naftzger Park contract: Who is in control? Available at https://wichitaliberty.org/wichita-government/naftzger-park-wichita-contract-who-controls/.

Redesigned Naftzger Park likely not only subsidy

The developers of property near Naftzger Park in downtown Wichita will possibly receive millions in other subsidy.

The powerful impetus to redevelop Naftzger Park in downtown Wichita is attributed to two sources: The NCAA basketball games in March and the desire of TGC Development Group to develop property it owns near the park.

How much motivation comes from which source depends on who you ask. But it’s clear that the present state of the park is a problem for TGC. A newly redesigned park will effectively serve as the “front yard” for TGC’s projects, and will greatly benefit that company. If the park redesign is paid for with tax increment financing, or TIF, this new park comes at no cost to TGC.

But this is likely not the only benefit TGC will receive from taxpayers. The building TGC owns near Naftzger Park is commonly known as the “Spaghetti Works” building. Before that it was known as the Wichita Wholesale Grocery Company. Under that name, the property was listed on the National Register of Historic Places in 1983. 1 Then, in 2016 conditional approval was given for federal historic preservation tax credits. 2

These federal tax credits are worth 20 percent of the cost of rehabilitating historic structures. 3 These credits may be used dollar-for-dollar when paying federal income taxes, or they may be sold for cash, usually at a discount, and someone else uses them — instead of cash — to pay taxes they owe.

Wichita Wholesale Grocery Company faded sign. Click for larger.
So when TGC spends, say, $1,000,000 on the building, it will receive — conceptually — a slip of paper valued at $200,000. It may use this instead of cash to pay its taxes, or it may sell it to someone else.

That’s not all. Although there is no application at this time, it’s likely that TGC will also apply for Kansas tax credits. These are like the federal credits, except they are for 25 percent of the rehabilitation costs. 4

Together these tax credits can pay up to 45 percent of the costs of rehabbing this building.

These tax credits have a real cost. As long as state or federal government does not reduce spending by the amount of these credits, and specifically because of these credits, other taxpayers have to pay.

Additionally, these tax credits are inefficient. When Kansas Legislative Post Audit looked at Kansas tax credits, it found that when sold, the state receives 85 cents of project value for each dollar foregone. 5

There are many reasons why historic preservation tax credits should be eliminated. 6 7 But for now, it’s important to know that a redesigned Naftzger Park is not the only economic subsidy the nearby private property owners are likely to receive.


Notes

  1. National Park Service, National Register Digital Assets. Available at https://npgallery.nps.gov/AssetDetail/NRIS/83000440.
  2. Wichita Wholesale Grocery Company search at National Park Service, Technical Preservation Services. Captured August 14, 2017. Available at https://drive.google.com/file/d/0B97azj3TSm9MN292dHVZZ2NLcWs/.
  3. National Park Service, Technical Preservation Services. Tax Incentives for Preserving Historic Properties. Available at https://www.nps.gov/tps/tax-incentives.htm.
  4. Kansas Historical Society. State Historic Rehabilitation Tax Credit. available at http://www.kshs.org/p/state-historic-rehabilitation-tax-credit/14666.
  5. “The Historic Preservation Tax Credit isn’t cost-effective. That credit works differently than the other three because the amount of money a historic preservation project receives from the credit is dependent upon the amount of money it’s sold for. Our review showed that, on average, when Historic Preservation Credits were transferred to generate money for a project, they only generated 85 cents for the project for every dollar of potential tax revenue the State gave up.” Kansas Legislative Post Audit. Kansas Tax Revenues, Part I: Reviewing Tax Credits. Available at http://www.kslpa.org/assets/files/reports/10pa03-1a.pdf.
  6. Weeks, Bob. Kansas historic preservation tax credits should be eliminated. Available at https://wichitaliberty.org/kansas-government/kansas-historic-preservation-tax-credits-should-be-eliminated/.
  7. Weeks, Bob. Kansas historic preservation tax credits should not be expanded. https://wichitaliberty.org/kansas-government/kansas-historic-preservation-tax-credits-should-not-be-expanded/.

Naftzger Park land ownership

One of the issues surrounding Naftzger Park in downtown Wichita is land ownership.

Naftzger Park land ownership from Sedgwick County Online Map Portal. Click for larger.
Information from the Sedgwick County Online Map Portal shows land parcels and ownership. The nearby illustration shows Naftzger Park and its environs. (I don’t think it’s possible for me to save a link that brings you directly to the map as I’ve shown it.) On this map, the two parcels owned by private owners are outlined in orange. The City of Wichita or the Board of Park Commissioners own the other parcels north of William Street.

We can see that the park is built partially on land owned by private owners. City officials have said that a narrow strip of land on the east side of the park is involved. From this map we can see that the situation is more complex.

It would be interesting to learn how this mistake — if that’s what it is — occurred. At one time the city owned the entire block after it acquired land to reform what was skid row.

Naftzger Park public hearing

On Tuesday August 15 the Wichita City Council will hold a public hearing to consider authorizing spending TIF funds on Naftzger Park.

This week the Wichita City Council is scheduled to hold a public hearing on a new redevelopment project plan for a tax increment financing (TIF) district in downtown Wichita. The redevelopment project plan contemplates transforming Naftzger Park. The hearing is part of the regular council meeting at 9:00 am Tuesday August 15 at city hall.

While the city has held four public meetings on the topic of Naftzger Park redesign, these meetings were not legally required. But the Tuesday public hearing is required, as city documents explain: “In order to establish the legal authority to use tax increment financing the City Council must adopt a redevelopment project plan for a project area, within the district, which provides more detailed information on the proposed project, how tax increment financing would be used and demonstrates how the projected increase in property tax revenue will amortize the costs financed with tax increment financing.” 1

As for providing “more detailed information on the proposed project,” the redevelopment project plan supplied by the city is quite generic. This week the project architect presented four plans at public meetings. But these drawings cannot be found online — not on the city’s website, its Facebook page, or the Wichita Downtown Development Corporation — except for unclear photographs.

The redevelopment project plan describes how to pay for the redesign of Naftzger Park: “Improvements on the adjacent site are anticipated to generate the revenue necessary to fund the improvements to Naftzger.” This is the mechanism of tax increment financing: Future property taxes are redirected from their normal course and funneled back to benefit the development. The city correctly notes that the TIF funds are being used to develop a public park, not a private development. But the private property owner obviously considers the present park a problem. A new park will effectively serve as the “front yard” for new development and will be of great benefit to the owner. And, many people are opposed to changing the park.

From the redevelopment project plan: “The City will provide public funding, including tax increment financing and general obligation bond financing to finance the project costs.” 2 That is, there is additional spending contemplated.

“Tax increment funds may also be used to pay for eligible improvements financed through general obligation bonds and to reimburse additional eligible project costs when additional tax increment revenues are available.” 3 Here, the redevelopment project plan hints at more property tax being redirected to the development.

“It is assumed that Project construction will begin in 2018 and be completed before the end of 2023, and therefore achieve full valuation by January 1, 2024. It is estimated that in 2024 the property tax increment will be $163,970.” 4 These projections are highly speculative. The city’s record in projecting future development in current TIF districts is spotty. See WaterWalk, Ken-Mar, etc.

“Park improvements are projected to costs approximately $3,000,000, with $1,500,000 of such costs to be financed from proceeds of the City’s full faith and credit tax increment bonds (the “Bonds”).” 5 Here the redevelopment project plan reminds readers that if future property taxes are insufficient to pay the bonds, the city itself is liable. The city exacts an agreement from TIF developers that if TIF revenue is insufficient that the developers will pay the difference, but the city’s record in enforcing these agreements is spotty. 6

“Incremental tax revenue available after the payment of such Bonds may be used to pay for additional TIF-eligible Project costs related to Park improvements on a pay-as-you-go basis or reimburse the debt service on City general obligation bonds issued to finance a portion of the cost of the Park improvements, if any.” 4 Again, the redevelopment project plan hints that future park spending may be paid for with TIF.

The table titled “Projected Tax Increment Report” is subtitled with the name of a different project. This is probably an error without much consequence, as someone in the city probably reused a spreadsheet from a similar project and forgot to revise the title. The same error appears in a second table of figures titled “Projected Bond Cash Flow Report.” Except: The city made this same error in previous versions of this document, as I reported earlier. 8 We’re left to wonder whether anyone — at city hall, the Wichita Downtown Development Corporation, or the private developers who will benefit from this spending — care to correct errors like this.

The first table projects the assessed value — and by implication, also the appraised or market value — of property through the year 2036. These projections are highly speculative.

Excerpt from city documents. Click for larger.

In a section titled “Description of Naftzger Park Project” we see an item titled “TIF Pay-as-you-go Costs” with the amount given as $1,500,000. This spending was mentioned in earlier city documents, but hasn’t received much public discussion. The $1.5 million figure that is in the news is from “regular” TIF financing. In that case, the city borrows money, and the debt is repaid from future property taxes. With the pay-as-you-go TIF, the city simply spends future property taxes in the project. 9 The difference is that in regular TIF, the city is liable for the debt if future incremental taxes are insufficient to cover bond payments. In pay-as-you-go TIF, there is no debt, only redirection of property taxes from their normal distribution.

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


Notes

  1. Wichita City Council Agenda Packet for August 15, 2017. Item IV-2. Available at http://www.wichita.gov/Council/Agendas/08-15-2017%20City%20Council%20Agenda%20Packet.pdf.
  2. City of Wichita. Comprehensive Financing Feasibility Study for the Naftzger Park Project within the Center City South Redevelopment District City of Wichita, Kansas. Available in the August 15 agenda packet.
  3. Ibid.
  4. Ibid.
  5. Ibid.
  6. See, for example, Weeks, Bob. Ken-Mar TIF district, the bailouts. Available at https://wichitaliberty.org/wichita-government/ken-mar-tif-district-the-bailouts/. Also
  7. Ibid.
  8. Weeks, Bob. Naftzger Park public hearing to be considered. Available at https://wichitaliberty.org/wichita-government/naftzger-park-public-hearing-to-be-considered/.
  9. Weeks, Bob. Wichita TIF projects: some background. Available at https://wichitaliberty.org/wichita-government/wichita-tif-projects-background/.

WichitaLiberty.TV: Naftzger Park

In this episode of WichitaLiberty.TV: Wichita Assistant City Manager and Director of Development Scot Rigby joins hosts Bob Weeks and Karl Peterjohn to discuss the plans for Naftzger Park. Then, Bob and Karl continue the discussion. View below, or click here to view at YouTube. Episode 161, broadcast August 13, 2017.

Shownotes

Naftzger Park construction manager

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

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

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

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

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

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

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

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

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

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

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


Notes

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

Naftzger Park contract: Who is in control?

The City of Wichita says it retains final approval on the redesign of Naftzger Park, but a contract says otherwise.

As part of the proposed redesign of Naftzger Park in downtown Wichita, an architectural firm has been engaged, and a contract agreed to. I’ve made the document available through Google Drive here.

In responding to my request for the contract, the city included this information:

The Naftzger Park design contract you requested is between SWA Balsley and TGC Development Group. SWA has provided a copy of the draft agreement. The City has coordinated with TGC in this effort to ensure that the selection process followed City procedures. The City Council has taken action to select SWA as the design team and did accept the design funding proposal of SWA Balsley, but is not a party to the design contract. The City is utilizing this collaborative approach to take advantage of the experience and expertise in project management of TGC Development in this unique project. Any final Naftzger Park design approval is retained by the Parks Board and the City of Wichita. 1 (emphasis added)]

As stated, and according to the language of the contract, the parties to the contract are SWA/Balsley Landscape Architects, P.C. (“SWA/Balsley”) and TGC Development Group, which is referred to as the “Client.” The City of Wichita is not the Client; that party is a private business firm. And not just any private firm, but one that owns property abutting Naftzger Park and is clearly looking to rebuild the park according to its needs and profitability, not what is good for the city at large.

As to the city’s contention that final approval is retained by it alone, the contract holds language like this:

“Upon the Client’s authorization to commence design development …”

“Upon the Client’s approval of the design development plans and preliminary cost estimate …”

“SWA/Balsley shall prepare and process change orders only with prior approval of the Client.”

Example from the contract. Click for larger.
(The document is covered with a large watermark that obscures parts of its text. As the document is encrypted, there is no way to remove the watermark without the password, as far as I know.)

Remember, the city is not the Client. TGC Development is the Client.

Here is a paragraph near the end of the contract:

“As material inducement to SWA/Balsley to enter into this agreement, Client represents it warrants that it has full authority to bind the City to the terms of this Agreement, and that the City will assume full responsibility for payment.” (emphasis added)

There’s a discrepancy here. The city says final approval rests with it alone, but TGC Development has agreed to a contract which states it can bind the city to an agreement.

By the way, if you thought the Naftzger Park redesign was a $1.5 million project, think again, as this language from the contract shows:

“Based upon our understanding of the project, the park design should encompass the vision as described in the RFQ and be planned with phased implementation. Conceptual and Schematic Design phases were based on a complete vision of an estimated $3,000,000 budget. Design Development, Construction Documentation, and Construction Observation, which are to be completed under Phase One, are established at $1,500,000. The fee quoted in this proposal is based upon this present understanding and these budgetary figures.”


Notes

  1. Correspondence from Lauragail Locke of the Wichita City Manager’s Office, August 3, 2017.

Downtown Wichita gathering spaces that don’t destroy a park

Wichita doesn’t need to ruin a park for economic development, as there are other areas that would work and need development.

One of the reasons for the redesign of Naftzger Park in downtown Wichita is to increase economic development. A city council agenda held, “These recommendations include opening up the park to provide for increased walking and public activity as well as to encourage development adjacent to the park.” 1

Other city documents say the redesign of the small downtown Wichita park is to, “create a continuous flex space for multi-use; i.e. Tai Chai, as well as other passive use activities including but not limited to weddings, concerts, performances, films, special celebrations and parties as well as quiet contemplation.” 2

In other documents city officials have promoted the need for gathering space before and after events at Intrust Bank Arena.

All this is fine. But current plans call for the destruction of an existing park and its transformation into this new design.

But there’s no need to destroy an existing park in order to meet the goals of the city. There is a lot of vacant and underutilized land immediately south and west of the arena. Any of this could be transformed to what the city wants. Development of these areas would possibly help fulfill the promise of the arena as a driver for economic development and growth.

Today, 12 years after the identification of the arena’s site and seven years after its opening, there is little activity around the arena to its west and south. Five years ago the Wichita Eagle noted the lack of growth in the area.

“Ten years ago, Elizabeth Stevenson looked out at the neighborhood where a downtown arena would soon be built and told an Eagle reporter that one day it could be the ‘Paris of the Midwest.’ What she and many others envisioned was a pedestrian and bike-friendly neighborhood of quaint shops, chic eateries and an active arts district, supported by tens of thousands of visitors who would be coming downtown for sporting events and concerts. It hasn’t exactly turned out that way. Today, five years after the opening of the Intrust Bank Arena, most of the immediate neighborhood looks much like it did in 2004 when Stevenson was interviewed in The Eagle. With the exception of a small artists’ colony along Commerce Street, it’s still the same mix of light industrial businesses interspersed with numerous boarded-up buildings and vacant lots, dotted with ‘for sale’ and ‘for lease’ signs.” 3

Since then, not much has changed. The area surrounding the arena is largely vacant. Except for Commerce Street, that is, and the businesses located there don’t want to pay their share of property taxes.4

On the other hand, the area around Naftzger Park is developing. The city points to Old Town as a success, and now promotes the “Douglas Corridor” as an area where city policies have produced growth, with more yet to come as Cargill and a call center move to a location near Naftzger Park.

But the areas on the other side of the arena are not growing. Doing something to jump-start development in that stagnant area could help downtown growth. Paying attention to that area would fulfill past promises and projections, and increase the credibility of Wichita’s leaders.

Nearby are photographs of the area surrounding the arena to the east and west. Click photos for larger versions.

Intrust Bank Arena and environs, with areas for development outlined and numbered. Image courtesy Google.
In area 1, across Emporia Street from the arena, a former used car lot is unused. A vacant lot is to its immediate west.
Area 3 is the block diagonally south and west from the arena. It is vacant land except for parking and a work-release facility.
More of area 3.
Area 4 is directly across Waterman Street to the south of the arena. It holds a parking lot along with abandoned and underutilized buildings.
Abandoned buildings on St. Francis Street, within pitching distance of the arena. Could this area be used for gatherings?

What was said

Following, a few quotes from civic leaders in 2005.

“On the brink of spending $55 million to renovate the Kansas Coliseum, the community saw the wisdom of investing that kind of money instead in downtown Wichita, where it could spur development, lure conventions and enhance Old Town and the planned WaterWalk development. The action on behalf of an arena has offered the strongest signal in years that Wichita, booming fringes and all, still wants a vibrant, functional downtown. 5

Imagine sports fans and concertgoers flocking to restaurants and shops in a lively, distinctive district surrounding Wichita’s new downtown entertainment arena. Can the 15,000-seat venue be the Pied Piper of economic development? City officials hope so.

“It will have a profound change,” Wichita Mayor Carlos Mayans said. He envisions a modern, sophisticated district, home to a four-star hotel, apartment buildings, high-end retailers, a Cajun restaurant – maybe a Hard Rock Cafe. “The things happening downtown are going to change downtown Wichita for the 21st century,” he said.

Officials view the arena as another opportunity to coax more life into downtown. The city is hunting for a consultant to help it cash in on development opportunities surrounding the arena. 6

While Sedgwick County lays the groundwork for its 15,000-seat downtown arena, the city of Wichita is busy trying to plan for everything that will go around it. The city wants the advice and expertise of a consultant to help it develop a lively, distinctive district to jump-start — and cash in on — downtown redevelopment. 7

The arena will cause spillover development, but the city must carefully set the conditions to foster economic development, said Dave Knopick, an urban planner with Gould Evans Associates, the consultants hired to study the arena area. This includes attractive streets and public features, adequate parking, good traffic flow, zoning to bring in wanted businesses, and even deals with developers to bring in new projects. “These are once-in-a-lifetime events that have a huge impact, so you have to make the right decision to maximize the benefits,” Knopick said. …

The arena is a key part of the downtown revival, but it’s just one piece. “It’s a redeveloping area, but those changes may take place over 10 or 15 years,” Knopick said. “It won’t all just happen because the arena was built.” 8

The most exciting development: a new downtown arena. Whatever the final site selection (we vote for the east site), the reality is sinking in that this major community project will have a heavyweight impact on the core area. The naysayers said none of this could happen — in fact, they said the same thing about Old Town. It’s happening.

Things change — and sometimes change is disruptive and hard to accept. But Wichitans should be excited by what’s happening downtown.

It’s experiencing a rebirth. 9

I would like to congratulate the city leaders and the public for their insight and willingness to see the impact that the development of downtown will have for the citizens of Wichita and all of south-central Kansas. We only stand to benefit from this much-needed injection into the economy.

It is about re-energizing this community, spurring economic development, creating jobs, quality of life, encouraging tourism from around the region, and bringing money into our community.

The WaterWalk development and the downtown arena are only the beginning of the potential for downtown to flourish and continue to fuel other economic development. Wichita has an opportunity to become a viable destination stop. And these projects can help support many of the other amenities already available in the city, such as the museums along the river, the ice center, Old Town and so many other businesses and attractions. 10 Richard L. Taylor of Wichita is business manager for the Building and Construction Trades Council of Central and Western Kansas.


Notes

  1. Wichita city council agenda packet, July 18, 2017. Item IV-3.
  2. Request for Qualifications No. — FP740043. Available at https://drive.google.com/file/d/0B97azj3TSm9MQ1ZVcXVsNVQ2dkE/view.
  3. Lefler, Dion. 5 years after Intrust Bank Arena opens, little surrounding development has followed. Wichita Eagle. December 20, 2014. Available at http://www.kansas.com/news/local/article4743402.html.
  4. Riedl, Matt. Has Commerce Street become too cool for its own good? Wichita Eagle. April 8, 2017. http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article143529404.html.
  5. Holman, Rhonda. AT LAST – ARENA COMING SOON TO DOWNTOWN WICHITA. Wichita Eagle, March 23, 2005.
  6. Buselt, Lori O’Toole. GROUNDS FOR CHANGE — WILL ARENA RENEW FALLOW DOWNTOWN? Wichita Eagle, May 1, 2005.
  7. Buselt, Lori O’Toole. CITY TRIES TO PLAN ARENA’S DISTRICT – — OFFICIALS ARE CONSIDERING HIRING A CONSULTANT TO HELP DEVELOP THE AREA AROUND THE NEW DOWNTOWN ARENA. Wichita Eagle, June 20, 2005.
  8. Voorhis, Dan. TUG-OF-WAR FOR ARENA — PLACEMENT WILL FAVOR OLD TOWN OR WATERWALK. Wichita Eagle, September 18, 2005.
  9. Scholfield, Randy. REBIRTH — DOWNTOWN IS PLACE TO BE. Wichita Eagle, November 7, 2005.
  10. Taylor, Richard L. DOWNTOWN DEVELOPMENT BENEFITS ALL. Wichita Eagle, November 15, 2005.

Naftzger Park concerts and parties?

In Wichita, a space for outdoor concerts may be created across the street from where amplified concerts are banned.

Amplified music is banned in Gallery Alley, but concerts and parties are proposed in Naftzger Park.
One of the City of Wichita’s stated purposes for the redesign of Naftzger Park in downtown Wichita is to, “create a continuous flex space for multi-use; i.e. Tai Chai, as well as other passive use activities including but not limited to weddings, concerts, performances, films, special celebrations and parties as well as quiet contemplation.” 1

There may be a problem, however. Directly across the street from Naftzger Park lies Gallery Alley. This is a new development whereby an alley was converted to a space for events, like concerts. Not long after the alley’s first events, the Wichita Eagle reported this:

But it was too much for the neighbors, according to Jason Gregory, executive vice president of Downtown Wichita.

“It’s just the amplified sound — we’re just trying to be respectful to those buildings there, that have a mix of uses,” Gregory said. “There’s residences there, and obviously when you get high-bass subwoofers, you’re basically hearing that through the building.” 2

Now, right across the street from Gallery Alley, directly across St. Francis from residences at the former Eaton Hotel, directly across Douglas from the Zelman Lofts, and catty-corner from the Lofts at St. Francis, the city proposes creating an outdoor space for — get ready: Concerts and parties.

By the way, the proposed use of the parking lot that abuts Naftzger Park is a “high-end mixed-use development” possibly including a hotel. I don’t know if this use is consistent with parties and concerts in its front yard.


Notes

  1. Request for Qualifications No. — FP740043. Available at https://drive.google.com/file/d/0B97azj3TSm9MQ1ZVcXVsNVQ2dkE/view.
  2. Riedl, Matt. Bummer, no more crowd-surfing in downtown Wichita alley. Wichita Eagle, June 20, 2017. Available at http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article157094874.html.

A Wichita social media town hall

A City of Wichita town hall meeting ends in less than nine minutes, with a question pending and unanswered.

As part of its engagement with citizens, the City of Wichita holds social media town hall meetings. On June 20, 2107, there was a Facebook town hall on the topic of economic development featuring Assistant City Manager Scot Rigby. His charge is “developing and implementing a coordinated and comprehensive development services program and for developing, implementing and overseeing economic development, redevelopment and real estate programs and projects.” He’s worked for the city for two years. 1

Promoting the town hall. Click for larger.
There is not a customary duration for events like this, although other social media town halls have been promoted by the city as lasting 90 minutes. Surely citizens might expect any meeting like this to last at least 30 minutes, if not 60 or more.

But Wichita Assistant City Manager Scot Rigby’s town hall meeting on June 20 lasted eight minutes and 22 seconds.

(A screen capture of the event is available here, and the entire event as recorded on Facebook is here.)

It wasn’t for lack of questions that the meeting ended so quickly. One question I asked had to do with the city’s reporting on its economic development efforts. The City of Lawrence annually produces a comprehensive report, but Wichita does not. 2 Rigby answered this question online, which is the way these things are supposed to work.

An excerpt from the town hall. Click for larger.
Then I asked this question: “There has been a lot of investment, public and private, in downtown Wichita. What has been the trend in the number of business firms, employees, and payroll during that time?” That was six minutes and 50 seconds after the start of the meeting, according to Facebook. The meeting ended 92 seconds later with no answer to this question.

But I wanted the city to answer my question. After five weeks of multiple requests through both Facebook and email, I received a response from the city:

from: Bob Weeks
to: Scot Rigby

Hi, I’m still wondering why the social media town hall from June 20 was ended after less than nine minutes. There is still a pending question.

For your convenience, here is the link to the Facebook video:
“https://www.facebook.com/cityofwichita/videos/1450322791680383/”

Thank you,
Bob Weeks

Dear Mr. Weeks-

Scot Rigby asked that I follow up with your question since I was involved with coordination of the Social Media Town Hall events.

During the Social Media Town Hall events on June 15 and June 20 we presented content in a variety of formats on Facebook and Twitter. We used the Facebook Live format for one topic, but 30 second videos for 14 other topics (seven on each day). We publicized the Facebook Live topic the day before, and our intent was to respond to questions from that topic as well as during the event. We ended the Facebook Live event after responding to comments and feedback from June 15 and focused efforts on responding to other posts as well as Nextdoor, which we used for the first time during the Social Media Town Hall this year. Because of changes in technology, each year the Social Media Town Hall is a little different.

Sincerely-

Elizabeth

Elizabeth Goltry Wadle
Principal Budget Analyst
City of Wichita

I think I’ll characterize this as nonresponsive.

Besides this answer, the city also responded on Facebook on July 18, nearly a month after I posed the question. That response referred me to the 2016 State of Downtown Report from the Wichita Downtown Development Corporation. That is also (mostly) nonresponsive to my question.

Trends of business activity in downtown Wichita. Click for larger.
In a way, I can sympathize with Rigby not wanting to answer my question. Perhaps he doesn’t know the answer. But he might know — he should know — the answer, which is that since 2007 there are fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In all cases, the trend is lower. 3

Regarding the 2016 State of Downtown Report from the Wichita Downtown Development Corporation: That document claims there are 26,000 workers in downtown Wichita. That is a large mistake and greatly overstates the number of workers. 4

It’s curious that the city did not refer me to a 2017 edition of the State of Downtown Report. But that document does not exist. It’s common for these reports to be released in May, but this year’s report is not yet available.

The city takes pride in being responsive to citizens. Former Mayor Carl Brewer often spoke in favor of government transparency. For example, in his State of the City address for 2011, he listed as an important goal for the city this: “And we must provide transparency in all that we do.”

When the city received an award for transparency in 2013, a city news release quoted Wichita City Manager Robert Layton:

“The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

Shortly after his election, current Mayor Jeff Longwell penned a column in which he said, “First off, we want City Hall to be open and transparent to everyone in the community.”

Is a lack of staff at city hall the reason why I can’t get an answer to a question? I don’t think so. Two years ago the city expanded its staff by hiring a Strategic Communications Director. When the city announced the new position, it said: “The Strategic Communications Director is the City’s top communications position, charged with developing, managing, and evaluating innovative, strategic and proactive public communications plans that support the City’s mission, vision and goals.”

My experience with this social media town hall runs contrary to the city’s proclaimed goals, and this is not the only time I’ve had problems with the city regarding requests for information. 5


Notes

  1. City of Wichita. Assistant City Manager, Development Director Hired. Available at http://www.wichita.gov/News/Pages/2015-07-15a.aspx.
  2. Weeks, Bob. Wichita doesn’t have this. Available at https://wichitaliberty.org/wichita-government/wichita-does-not-have-this/.
  3. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.
  4. Weeks, Bob. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.
  5. Weeks, Bob. During Sunshine Week, here are a few things Wichita could do. Available at https://wichitaliberty.org/open-records/sunshine-week-wichita/.