Voice For Liberty

Tag: Wichita Downtown Development Corporation

  • Downtown Wichita population is up

    Downtown Wichita population is up

    New Census Bureau data shows the population growing in downtown Wichita.

    Data released today by the United States Census Bureau shows the estimated population for zip code 67202 in 2018 was 1,671, an increase of 73 from the prior year.

    Zip code 67202 is greater downtown Wichita, from the Arkansas River east to Washington, and Kellogg north to Central, roughly.

    The source of this data is U.S. Census Bureau, 2014-2018 American Community Survey 5-Year Estimates. This means the data is not the Bureau’s estimate of the population in 2018. For areas of population less than 65,000, the Bureau does not provide one-year estimates. Instead, the five-year estimates use data gathered over a longer time period in order to provide greater accuracy. The 90 percent confidence interval for the 2018 estimate is plus or minus 214 persons.

    The Bureau cautions that the five-year estimates should not be used as the population of the year in the midpoint of the five-year period: “Therefore, ACS estimates based on data collected from 2011–2015 should not be labeled ‘2013,’ even though that is the midpoint of the 5-year period.” (See below for more about these data.)

    Further, the Bureau issues this advice: “However, in areas experiencing major changes over a given time period, the multiyear estimates may be quite different from the single-year estimates for any of the individual years.” Downtown Wichita, I believe, qualifies as an area “experiencing major changes.” The five-year estimates must be considered in light of this advice.

    Still, as shown in the nearby table and charts, the ACS numbers are far below the population reported by the downtown Wichita development agency Downtown Wichita. See my article Downtown Wichita population for more about this topic.

    Following, excerpts from the Census Bureau publication Understanding and Using American Community Survey Data: What All Data Users Need to Know.

    Understanding Period Estimates
    Single-year and multiyear estimates from the ACS are all “period” estimates derived from a sample collected over a period of time, as opposed to “point-in-time” estimates such as those from past decennial censuses. For example, the 2000 Census “long form” sampled the resident U.S. population as of April 1, 2000.

    While an ACS 1-year estimate includes information collected over a 12-month period, an ACS 5-year estimateincludes data collected over a 60-month period.

    In the case of ACS 1-year estimates, the period is the calendar year (e.g., the 2015 ACS covers the period from January 2015 through December 2015). In the case of ACS multiyear estimates, the period is 5 calendar years (e.g., the 2011–2015 ACS estimates cover the period from January 2011 through December 2015). Therefore, ACS estimates based on data collected from 2011–2015 should not be labeled “2013,” even though that is the midpoint of the 5-year period.

    Multiyear estimates should be labeled to indicate clearly the full period of time (e.g., “The child poverty rate in 2011–2015 was X percent.”). They do not describe any specific day, month, or year within that time period.

    Multiyear estimates require some considerations that single-year estimates do not. For example, multiyear estimates released in consecutive years consist mostly of overlapping years and shared data.

    The primary advantage of using multiyear estimates is the increased statistical reliability of the data compared with that of single-year estimates, particularly for small geographic areas and small population subgroups. Figure 3.2 shows the improved precision of an ACS 5-year estimate, compared with a 1-year estimate, for child poverty statistics in Rice County, Minnesota—a county with about 65,000 residents in 2015. The lines above and below the point estimates represent the confidence intervals, or ranges of uncertainty, around each estimate. The confidence interval for the 1-year child poverty estimate ranges from 1.4 percent to 9.4 percent (8 percentage points) while the interval for the 5-year estimate is narrower, ranging from 12.8 percent to 19.2 percent (6 percentage points). (Refer to the section on “Understanding Error and Determining Statistical Significance” for a detailed explanation of uncertainty in ACS data.)

    Deciding Which ACS Estimate to Use
    For data users interested in obtaining detailed ACS data for small geographic areas (areas with fewer than 65,000 residents), ACS 5-year estimates are the only option.

    The 5-year estimates for an area have larger samples and smaller margins of error than the 1-year estimates. However, they are less current because the larger samples include data that were collected in earlier years. The main advantage of using multiyear estimates is the increased statistical reliability for smaller geographic areas and small population groups.

    However, in areas experiencing major changes over a given time period, the multiyear estimates may be quite different from the single-year estimates for any of the individual years. The single year and multiyear estimates will not be the same because they are based on data from two different time periods.

  • What the Block 1 amendment says about downtown Wichita

    What the Block 1 amendment says about downtown Wichita

    The amending of a retail lease tells us a lot about the economics of downtown Wichita.

    This week the Wichita City Council amended a lease for some retail space at 360 East William in downtown Wichita. This is the retail space on the ground floor of the Block 1 parking garage at the northwest corner of Topeka and William.

    Block One retail space sits half empty. Click for larger.

    The first lease, passed by the council in 2011, refers to “ground level of the Parking Structure retail space containing approximately 8,400 square feet of surface floor area.” 1 The lease was between the city and a master tenant, which was Douglas Place, LLC. The master tenant, it was thought, would find retail tenants and earn profits based on the difference between the rent it collects from them and the rent it pays to the city.

    Earning profits seemed virtually guaranteed for the master tenant, because the rent it paid to the city for the entire 8,400 square feet was to be according to this schedule (along with my computations of rent per square foot, the common way commercial rents are quoted):

    First five years: $1 per year
    Years 6 through 15: $21,000 per year, or $2.44 per square foot
    Years 16 through 20: $63,000 per year, or $7.33 per square foot

    So for the first five years of the lease, the master tenant faced virtually no cost in obtaining and controlling rentable space. Other commercial landlords must pay to build structures in order to collect rent, but not this master tenant.

    The deal was even better than that for the master tenant, as the city would pay for tenant build-out. This is the cost of making space ready for tenants by building things like walls, floors, ceilings, restrooms, heating, air conditioning, etc.

    According to the lease, at the end of 20 years, the master tenant could either continue to manage the property for the city for a fee, or purchase the property for $1,120,000, or do nothing.

    The amended lease the council passed this week holds these terms for rent: 2

    First four years: $1 per year
    2024 through 2035: $10,000 per year, or $1.16 per square foot
    2036 through 2043: $20,000 per year, or $2.33 per square foot

    At the end of this term, the tenant has the option to purchase the property for $400,000. That’s a reduction of $720,000, or 64 percent, from the option price in the 2011 lease. As part of the amended lease, the city will not pay for tenant build-in.

    City documents now state the amount of retail space as 8,600 square feet, up from 8,400 in 2011.

    City real estate administrator John Philbrick told the council that half of the space was built out. (Video is at the end of this article.) Real estate experts told me that build-out costs for space like this could be around $50 per square foot, although there is a wide variation. With 4,300 square feet remaining, this amounts to something like $215,000 in savings for the city.

    In summary, with the amended lease the period of nearly free rent ($1 per year for the entire space) starts again, this time for four years. The step-ups in rent to the city have been discounted. Instead of some years when the city would collect $2.44 per square foot, it now stands to collect $1.16. For the next step-up, the city will collect $2.33 per square foot instead of $7.33. The step-up schedule in the amended lease doesn’t precisely align with the original lease, but the step-up rates are much lower.

    Besides these aspects, there is a political angle to this matter. See here.

    Block One, the origin point for future growth

    Click for larger.

    Block One, or Block 1, is the downtown Wichita block bounded by Douglas on the north, William on the south, Broadway on the west, and Topeka on the east. The downtown Wichita development agency (formerly the Wichita Downtown Development Corporation, now called simply Downtown Wichita) once billed this block as “the first complete city block of development along the core of Douglas Avenue.”

    In promotional material, the agency promoted the area’s bright future: “Block One is the origin point for future growth.”

    Block One ribbon cutting, March 2013.

    That was in 2013, six years ago. There has been progress. The Ambassador Hotel and its restaurant are still open. The Kansas Leadership Center is complete. But the former Henry’s building languished until this year. Plans call for it to become a culinary school instead of the retail, restaurant, and office center that was originally promoted.

    But the retail space on William Street has not been successful. In this week’s city council meeting administrator Philbrick told the council that about half of the space was leased, with the two existing leases at the rates of $4 and $6 per square foot.

    Block One promotional material. Click for larger.

    How do these rates compare with other downtown retail space? In the Weigand Commercial Retail Forecast for 2012, for total retail space in the central business district, the quoted rent was $9.84 per square foot. For 2015 it was $10.54, with class A space at $14.00. (No quote for class A was given for 2012.) For 2019 it was $10.65, with no quote for class A space, $11.59 for class B, and $5.35 for class C.

    For the entire city, the Weigand forecast reports that class A retail space rents for $19.81.

    Why has this retail space been difficult to lease? Philbrick told the council, “[The] market at the time was not strong and it continued to weaken.”

    With the city proposing to rent the space for $1 per year for four years, then increasing according to the schedule shown above, Council Member Jeff Blubaugh (district 4, south and southwest Wichita) asked Philbrick if this is a market rent, saying if the value of the building is $400,000, the monthly rent should be about one percent of that.

    Blubaugh’s valuation of $400,000 may be reasonable. (Or maybe not, as it is the option price to purchase the property after the lease expires in 2043. Currently, Sedgwick County appraises the property at $620,600.) If it is, a landlord should be able to collect $4,000 rent per month, or $48,000 per year. With 8,600 square feet of available space, that implies rent of $5.58 per square foot.

    Philbrick replied: “The two current leases are at very low rates. I mean, the two current leases are at, I think, four dollars per square foot triple net and six dollars per square foot.”

    Blubaugh followed up: “So there’s just not … it’s just not competitive down there, then?”

    Philbrick: “There’s very, very little demand.”

    That is the most sobering realization, that after years of subsidy, investment, and promotion, downtown Wichita is not doing well. That’s about the only conclusion we can make when we see the city renting nice retail space for nearly zero rent, and doing this not just once, but twice.

    Other indicators

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

    On jobs, we find that employment in downtown continues to decline. On the plus side, Wichita officials no longer blatantly misapply Census Bureau statistics regarding downtown jobs. See Downtown Wichita jobs, sort of and Downtown Wichita report omits formerly prominent data.

    The assessed value of property in downtown is not growing very rapidly. According to data compiled by Downtown Wichita, assessed value hit a recent low of $78,573,959 in 2012 – 2013. 3 For 2018 – 2019 the value is reported as $85,766,869, an increase of 9.15 percent in six years, barely more than one percent per year. Assessed value is the property tax base, the building of which officials tell us is an important goal. It’s how the city pays for services, they say.

    But assessed value has barely grown in downtown Wichita despite hundreds of millions in investment, both public and private. And some of the assessed value is captured by tax increment financing districts and diverted away from paying for the cost of government services.

    View video of the council meeting with added commentary below, or click here to view at YouTube.

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    Notes

    1. Wichita City Council Agenda Packet for September 13, 2011. Exhibit 1, Parking Structure Retail Lease, page 205. ↩
    2. Wichita City Council Agenda Packet for October 1, 2019. Agenda Item No. V-4, Assignment and Amendment of Lease of Retail Space at Block 1 Garage, 360 East William (District I). ↩
    3. Downtown Wichita. 2019 State of Downtown Report. Available at https://downtownwichita.org/development/state-of-downtown. ↩
  • Downtown Wichita population

    Downtown Wichita population

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

    How many people live in downtown Wichita? The answer, according to Downtown Wichita, is 2,749.

    This value comes from the 2019 State of Downtown Report, published by Downtown Wichita. 1 It is for zip code 67202, which is commonly recognized as greater downtown Wichita. While this report highlights the number of people living in downtown Wichita, it no longer reports the number of people working in downtown. 2

    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 [sic] is 1,393. Per Downtown Wichita records, 1,228 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, 2013-2017 American Community Survey 5-Year Estimates, the average size of renter-occupied units is 1.3 persons. Therefore, an estimate for the current population is 2,749. 3

    What Downtown Wichita has done is to take a reliable figure (the 2010 decennial census) and extrapolate forward to 2018. (Presumably 2018, as the report doesn’t say.)

    There is a problem with this approach. The DW calculation makes use of two estimates, absorption rate 4 and size of renter-occupied units. Each of these is an estimate that has its own error probabilities, and those errors compound when multiplied.

    There is no need to go through this roundabout calculation, as the Census Bureau has provided an estimate for the population of downtown in 2017. Data from the American Community Survey 5 estimates that the population in downtown Wichita for 2017 was 1,587, with a 90 percent confidence interval of plus or minus 221. 6 This means the Census Bureau is confident the population of downtown Wichita in 2017 was in the range of 1,366 to 1,808, that confidence factor being 90 percent. (2018 values should be available soon.)

    But Downtown Wichita says the population of downtown is 2,319, which is far — really far — outside the range the Census Bureau gives for the 2017 population. While Downtown Wichita’s population estimate is probably for 2018, it still lies far outside the range of probability, based on Census Bureau estimates.

    A nearby chart plots the Census Bureau’s population estimates (labeled ACS, for American Community Survey) with the lower and upper bounds of 90 percent confidence levels. This is compared with Downtown Wichita’s population estimate. From 2015 to 2017, Downtown Wichita’s population estimates are far above the Census Bureau’s estimates. The probability that Downtown Wichita’s figures are correct is vanishingly small.

    It’s curious that Downtown Wichita, if it wants to know how many people live in downtown, doesn’t simply use the Census Bureau estimate of population. That estimate is available annually in the Bureau’s American Community Survey. Downtown Wichita didn’t use that number, but it relied on the same body of data to get “average size of renter-occupied units.”

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

    It’s simple. DW’s calculations produce 2,319 people living in downtown. The Census Bureau estimate is a much smaller number: 1,587.

    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. 7

    Click for larger.

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    Notes

    1. Downtown Wichita. 2019 State of Downtown Report. Available at https://downtownwichita.org/development/state-of-downtown. ↩
    2. Weeks, Bob. Downtown Wichita report omits formerly prominent data. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-report-omits-formerly-prominent-data/. ↩
    3. 2019 State of Downtown Report, page 51. ↩
    4. “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. ↩
    5. U.S. Census Bureau, 2013-2017 American Community Survey 5-Year Estimates ↩
    6. U.S. Census Bureau. American Community Survey Multiyear Accuracy of the Data (5-year 2013-2017). Available at https://www2.census.gov/programs-surveys/acs/tech_docs/accuracy/MultiyearACSAccuracyofData2017.pdf. ↩
    7. See https://www.doc.ks.gov/facilities/wwrf. ↩
  • More Wichita planning on tap

    More Wichita planning on tap

    We should be wary of government planning in general. But when those who have been managing and planning the foundering Wichita-area economy want to step up their management of resources, we risk compounding our problems.

    As announced by the City of Wichita, “In response to recent recommendations from Project Wichita and the Century II Citizens Advisory Committee, community organizations and their leadership are stepping forward to take the next step to create a comprehensive master plan and vision that connects projects and both banks of the Arkansas River.”

    The city says these organizations will be involved:

    We should note that these organizations have been responsible for developing the Wichita-area economy for many years. Despite recent developments like Cargill and Spirit Aerosystems, the Wichita economy has performed below the nation. While improving, our economic growth is perhaps half the national rate, and just two years ago Wichita lost jobs and population, and economic output fell.

    Thus, the question is this: Why these organizations?

    Then, recent behavior by the city, specifically surrounding the new ballpark, has resulted in a loss of credibility. Few seem happy with the city’s conduct. To this day, we still do not know the identities of the partners except for one.

    In the future, can we trust the city and its partners are telling us the truth, and the whole truth?

    Then, there are the problems with government planning. Randal O’Toole is an expert on the problems with government planning. His book The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future

    Planning seems like a good thing. But O’Toole tells us the problem with government plans: “Everybody plans. But private plans are flexible, and we happily change them when new information arises. In contrast, special interest groups ensure that the government plans benefiting them do not change — no matter how costly.”

    He continues: “Like any other organization, government agencies need to plan their budgets and short-term projects. But they fail when they write comprehensive plans (which try to account for all side effects), long-range plans (two to 50 years or more), or plans that attempt to control other people’s land and resources. Many plans try to do all three.”

    Other problems with government planning as identified by O’Toole (and many others):

    • Planners have no better insight into the future than anyone else
    • Planners will not pay the costs they impose on other people
    • Unlike planners, markets can cope with complexity

    Some will argue that the organizations listed above are not government entities and shouldn’t exhibit the problems inherent with government planning. But their plans will undoubtedly need to be approved by, and enforced by, government.

    Further, some of these organizations are funded substantially or nearly entirely by government, are in favor of more government (such as higher taxation and regulation), and campaign vigorously for candidates who support more taxes and planning.

    Following, from Randal O’Toole as published in 2007.

    Government Plans Don’t Work

    By Randal O’Toole

    Unlike planners, markets can cope with complexity and change.

    After more than 30 years of reviewing government plans, including forest plans, park plans, watershed plans, wildlife plans, energy plans, urban plans, and transportation plans, I’ve concluded that government planning almost always does more harm than good.

    Most government plans are so full of fabrications and unsupportable assumptions that they aren’t worth the paper they are printed on, much less the millions of dollars taxpayers spend to have them written. Federal, state, and local governments should repeal planning laws and shut down planning offices.

    Everybody plans. But private plans are flexible, and we happily change them when new information arises. In contrast, special interest groups ensure that the government plans benefiting them do not change — no matter how costly.

    Like any other organization, government agencies need to plan their budgets and short-term projects. But they fail when they write comprehensive plans (which try to account for all side effects), long-range plans (two to 50 years or more), or plans that attempt to control other people’s land and resources. Many plans try to do all three.

    Comprehensive plans fail because forests, watersheds, and cities are simply too complicated for anyone to understand. Chaos science reveals that very tiny differences in initial conditions can lead to huge differences in outcomes — that’s why megaprojects such as Boston’s Big Dig go so far over budget.

    Long-range plans fail because planners have no better insight into the future than anyone else, so their plans will be as wrong as their predictions are.

    Planning of other people’s land and resources fails because planners will not pay the costs they impose on other people, so they have no incentive to find the best answers.

    Most of the nation’s 32,000 professional planners graduated from schools that are closely affiliated with colleges of architecture, giving them an undue faith in design. This means many plans put enormous efforts into trying to control urban design while they neglect other tools that could solve social problems at a much lower cost.

    For example, planners propose to reduce automotive air pollution by increasing population densities to reduce driving. Yet the nation’s densest urban area, Los Angeles, which is seven times as dense as the least dense areas, has only 8 percent less commuting by auto. In contrast, technological improvements over the past 40 years, which planners often ignore, have reduced the pollution caused by some cars by 99 percent.

    Some of the worst plans today are so-called growth-management plans prepared by states and metropolitan areas. They try to control who gets to develop their land and exactly what those developments should look like, including their population densities and mixtures of residential, retail, commercial, and other uses. “The most effective plans are drawn with such precision that only the architectural detail is left to future designers,” says a popular planning book.

    About a dozen states require or encourage urban areas to write such plans. Those states have some of the nation’s least affordable housing, while most states and regions that haven’t written such plans mostly have very affordable housing. The reason is simple: planning limits the supply of new housing, which drives up the price of all housing and leads to housing bubbles.

    In states with growth-management laws, median housing prices in 2006 were typically 4 to 8 times median family incomes. In most states without such laws, median home prices are only 2 to 3 times median family incomes.

    Few people realize that the recent housing bubble, which affected mainly regions with growth-management planning, was caused by planners trying to socially engineer cities. Yet it has done little to protect open space, reduce driving, or do any of the other things promised.

    Politicians use government planning to allocate scarce resources on a large scale. Instead, they should make sure that markets — based on prices, incentives, and property rights — work.

    Private ownership of wildlife could save endangered species such as the black-footed ferret, North America’s most-endangered mammal. Variably priced toll roads have helped reduce congestion. Pollution markets do far more to clean the air than exhortations to drive less. Giving people freedom to use their property, and ensuring only that their use does not harm others, will keep housing affordable.

    Unlike planners, markets can cope with complexity. Futures markets cushion the results of unexpected changes. Markets do not preclude government ownership, but the best-managed government programs are funded out of user fees that effectively make government managers act like private owners. Rather than passing the buck by turning sticky problems over to government planners, policymakers should make sure markets give people what they want.

  • Wichita considers a new stadium

    Wichita considers a new stadium

    The City of Wichita plans subsidized development of a sports facility as an economic driver. Originally published in July 2017.

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

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

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

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

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

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

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

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

    The Economics of Subsidizing Sports Stadiums

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

    What economists think about public financing for sports stadiums

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

    Publicly Financed Sports Stadiums Are a Game That Taxpayers Lose

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

    Sports Facilities and Economic Development

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

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

    Professional Sports as Catalysts for Metropolitan Economic Development

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

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    Notes

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

    In Wichita, respecting the people’s right to know

    The City of Wichita says it values open and transparent government. But the city’s record in providing information and records to citizens is poor, and there hasn’t been much improvement.

    The City of Wichita is proud to be an open and transparent governmental agency, its officials say. Former Mayor Carl Brewer often spoke in favor of government transparency. 1

    When the city received an award for transparency in 2013, Wichita City Manager Robert Layton said the city was honored. 2

    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.” And the mayor’s biography on the city’s website says, “Mayor Longwell has championed many issues related to improving the community including government accountability, accessibility and transparency …”

    But the reality is different. It shouldn’t be. Nearly four 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.”

    But there has been little, perhaps no, improvement in the data and information made available to citizens. The Wichita Eagle has editorialized on the lack of sharing regarding the details surrounding the new baseball team. 3

    While this is important and a blatant example, there are many things the city could do to improve transparency. Some are very simple.

    For example, it is very common for governmental agencies post their checkbooks on their websites. Sedgwick County does, as does the Wichita school district. But not the City of Wichita.

    Until a few years ago, Wichita could supply data of only limited utility. What was supplied to me was data in pdf form, and as images, not text. It would be difficult and beyond the capability of most citizens to translate the data to a useful format. Even if someone translated the reports to computer-readable format, I don’t think it would be very useful. This was a serious defect in the city’s transparency efforts.

    Now, if you ask the city for this data, you’ll receive data in an Excel spreadsheet. This is an improvement. But: You may be asked to pay for this data. The city says that someday it will make check register data available, but it has been promising that for many years. See Wichita check register for the data and details on the request.

    Another example: For several years, the Kansas city of Lawrence has published an economic development report letting citizens know about the activities of the city in this area. The most recent edition may be viewed here.

    The Lawrence report contains enough detail and length that an executive summary is provided. This report is the type of information that cities should be providing, but the City of Wichita does not do this.

    Example from the Lawrence report. Click for larger.
    It’s not like the City of Wichita does not realize the desirability of providing citizens with information. In fact, Wichitans have been teased with the promise of more information in order to induce them to vote for higher taxes. During the campaign for the one cent per dollar Wichita city sales tax in 2014, a city document promised this information regarding economic development spending if the tax passed: “The process will be transparent, with reports posted online outlining expenditures and expected outcomes.” (This is what Lawrence has been doing for several years.)

    The city should implement this reporting even though the sales tax did not pass. If it’s good for citizens to have this type of information if the sales tax had passed, it’s good for them to know in any circumstance, because the city (and other overlapping governmental jurisdictions) still spends a lot on economic development.

    Why is this information not available? Is the communications staff overwhelmed, with no time to provide this type of information?

    During the sales tax campaign Wichita city staff had time to prepare news releases with titles like “City to Compete in Chili Cook-off” and “Jerry Seinfeld Returns to Century II.” Now the city produces headlines like “Wichita Transit to Receive Good Apple Award.”

    But if you want to know how the city spends economic development dollars, you won’t find that.

    There are other things:

    Most of all, the city simply needs to change its attitude. Here’s an example.

    Citizen watchdogs need access to records and data. The City of Wichita, however, has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Wichita Downtown Development Corporation, Visit Wichita (the former Go Wichita Convention and Visitors Bureau), and Greater Wichita Economic Development Coalition, now the Greater Wichita Partnership. Each of these agencies refuses to comply with the Kansas Open Records Act, using the reasoning that they are not “public agencies” as defined in the Kansas law that’s designed to provide citizen access to records.

    The city backs this interpretation. When legislation was introduced to bring these agencies under the umbrella of the Kansas Open Records Act, cities — including Wichita — protested vigorously, and the legislation went nowhere.

    Recently the City of Wichita added a new tax to hotel bills that may generate $3 million per year for the convention and visitors bureau to spend. Unless the city changes its attitude towards citizens’ right to know, this money will be spent in secret.

    This attitude has been the policy of the city for a long time. In 2008, Randy Brown, at one time the editorial page editor at the Wichita Eagle wrote this:

    I’m fairly well acquainted with Bob Weeks, our extraconservative government watchdog. It’s fair to say that I agree with Weeks no more than one time in every 20 issues. But that one time is crucial to our democracy.

    Weeks is dead-on target when he says that conducting the public’s business in secret causes citizens to lose respect for government officials and corrupts the process of democracy (“TIF public hearing was bait and switch,” Dec. 5 Opinion). And that’s what happened when significant 11th-hour changes to the already controversial and questionable tax-increment financing plan for the downtown arena neighborhood were sneaked onto the Wichita City Council’s Tuesday agenda, essentially under cover of Monday evening’s darkness.

    This may not have been a technical violation of the Kansas Open Meetings Act, but it was an aggravated assault on its spirit. Among other transgressions, we had a mockery of the public hearing process rather than an open and transparent discussion of a contentious public issue.

    The Wichita officials involved should publicly apologize, and the issue should be reopened. And this time, the public should be properly notified.

    Randy Brown
    Executive director
    Kansas Sunshine Coalition for Open Government

    A few years later, Brown noticed the attitude had not improved. Although he did not mention him by name, Brown addressed a concern expressed by Wichita City Council Member Pete Meitzner (district 2, east Wichita). He accurately summarized Meitzner’s revealed attitude towards government transparency and open records as “democracy is just too much trouble to deal with.”

    I don’t think things have improved.

    —
    Notes

    1. For example, in his State of the City address for 2011, Brewer listed as an important goal for the city this: “And we must provide transparency in all that we do.” See https://drive.google.com/open?id=1xgx96BEXALDEgLBRcQdz2Kg0_W5x3e2J. ↩
    2. “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.” Wichita City New Release. Available at https://www.wichita.gov/News/Pages/2013-03-18b.aspx. ↩
    3. Wichita Eagle Editorial Board. *Fight for transparency during ‘Sunshine Week’ and year-round.” Available at https://www.kansas.com/article227430494.html. ↩
  • Business improvement district proposed in Wichita

    Business improvement district proposed in Wichita

    The Douglas Design District proposes to transform from a voluntary business organization to a tax-funded branch of government (but doesn’t say so).

    Update: On August 21, the council approved the formation of the planning committee.

    This week the Wichita City Council will consider taking the first step in forming a business improvement district (BID) in east-central Wichita. Some explanation from the agenda packet for the meeting: 1

    First, there already exists a voluntary organization: “The Douglas Design District (DDD) is a voluntary organization of over 300 local businesses located near Douglas Avenue between Washington Avenue and Oliver Avenue. In 2017, the DDD established a five-year strategic plan to become a financially self-sustaining organization that is not reliant on elective membership.”

    The purpose of a business improvement district: “A BID provides for the administration and financing of additional and extended services to businesses within the district and is funded by the City levying a mandatory service fee on the businesses within the district.”

    Who will collect, and who will spend? “While the City levies the service fee, it can contract with a third-party organization such as the DDD to operate the BID. The approach is similar to that used by the City to contract with the Wichita Downtown Development Corporation in downtown.”

    The action on the agenda this week is to establish a planning committee to develop things like district boundaries, services to be provided, and a budget. Although city documents aren’t specific, it’s likely this “service fee” will be levied as a property tax.

    Are BIDs a good idea? Most information about them is provided by their boosters, that is, those who directly benefit from the service fee, which is really a tax. But there are some doubters. The New Republic, by no means a conservative publication, printed a piece arguing against BIDs, stating: “But too often BIDs have turned against the businesses they were meant to serve, making the cost of entry into a new area even higher for local merchants, or lacking the transparency needed to instill trust from the community.” 2

    A larger and more balanced look at BIDs comes from Washington Monthly this summer:

    The privatized structure of BIDs may raise liberals’ hackles, but it’s clear that BIDs can be a useful tool to remake neighborhoods into places where people actually want to spend their time. Many big-city mayors — who are overwhelmingly Democratic — have thrown their weight behind them. D.C. Mayor Muriel Bowser recently doled out grants totaling $300,000 to five neighborhoods thinking about forming their own BIDs. (One of the grantees, Dupont Circle, with the decaying park, will start collecting taxes from business owners in the fall.)

    Still, there are real downsides to BIDs for renters and small business owners, who will not benefit from rising property values and may ultimately be pushed out of the area. Luckily, this isn’t a hugely difficult problem to remedy. The best, and easiest, way to revamp how BIDs are run is through city halls; they’re the ones who legislate what BIDs can and can’t do, while holding them accountable to the public. But too often, they renege on that responsibility. 3

    From Canada, harsh criticism:

    In this paper, we propose and develop the concept of “socio-economic hygiene” to denote the ways in which neoliberal Western urban space is spatially regulated and re-oriented towards consumption in a way that reinforces social exclusion. … We conclude by tracking how sociological strategies of “hygiene” have moved from racial and biological features to features of place and socioeconomic status, and how BIDs, resembling genocidal states in certain ways, use these strategies to continually justify their own existence. 4

    Civil society, or government?

    What should trouble everyone is the replacement of civil society with political society. Edward H. Crane explains: “There are basically only two ways to organize society: Coercively, through government mandates, or voluntarily, through the private interaction of individuals and associations. … In a civil society, you make the choices about your life. In a political society, someone else makes those choices.”

    Right now DDD is a voluntary organization. Civil society, in other words. But now it is proposed to replace it with political society.

    Why trade voluntary cooperation for the force of government? The annual report of the DDD (included in the city council agenda packet) explains: “Approximately 1/3 of businesses in DDD’s project area are DDD members yet ALL businesses benefit from DDD’s efforts. A BID eliminates this ‘free rider’ problem and, if implemented, would allow DDD to have a singular focus on implementing the BID business plan rather than always chasing membership.” For emphasis, the report notes: “THE PAYMENT OF THE BID ASSESSMENT WILL REPLACE MEMBERSHIP DUES.”

    Another term for chasing membership is selling your product by showing how it creates value. If the formation of the BID is successful, the Douglas Design District will be relieved of this necessity. Will having a guaranteed source of revenue make DDD more or less responsive to its members?

    Also, the DDD annual report states: “A BID assessment is not a tax.” I wonder what will happen to anyone who decides to skip paying this tax. After a few years, they will experience the blunt power of government tax collection.

    Taxation without transparency

    The agenda packet states this about the relationship between the city and the district: “While the City levies the service fee, it can contract with a third-party organization such as the DDD to operate the BID.”

    Wichita has similar organizations. One is the Wichita Downtown Development Corporation, now known as Downtown Wichita. This organization is funded nearly entirely by tax revenue from an improvement district. Yet, it refuses to make its spending records public, and the city supports that decision. 5

    Another similar taxpayer-funded organization is the city’s convention and tourism bureau, which has gone by several names over the years. Regarding it, in 2012 I wrote:

    We’ve learned that city council members rely on — as Randy Brown told the council last year — facile legal reasoning to avoid oversight: “It may not be the obligation of the City of Wichita to enforce the Kansas Open Records Act legally, but certainly morally you guys have that obligation. To keep something cloudy when it should be transparent I think is foolishness on the part of any public body, and a slap in the face of the citizens of Kansas. By every definition that we’ve discovered, organizations such as Go Wichita are subject to the Kansas Open Records Act.” 6

    Of interest is a segment from the KAKE Television public affairs program “This Week in Kansas” where the failure of the Wichita City Council, especially council member Pete Meitzner (district 2, east Wichita), to recognize the value of open records and open government is discussed. Video is here.

    Since this time, the city has formed a business improvement district known as a TBID. It covers all hotels in the city and imposes an additional 2.75 percent tax to hotel bills, although the city and hotels call it a “City Tourism Fee.” 7 I’ve not asked for records of this spending, but I am sure the request would be rejected.

    Will the Douglas Design District follow the standard set by Wichita’s other improvement districts and evade accountability and transparency?

    Results from current improvement districts

    The Washington Monthly piece mentions that city halls can hold BIDs accountable. But lack of transparency works against oversight and accountability.

    Then, if anyone wonders what about the results of Wichita’s improvement districts, here are a few findings:

    • For the past decade business activity in downtown Wichita has been on a downhill trend. The data for 2016 (the most recent year for data) 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. 8
    • Truthfulness is in short supply. The Downtown Wichita organization has been caught in either a huge lie or gross incompetence regarding its claim of the number of people working in downtown Wichita. After brought to its attention, the number is no longer used. 9
    • Wichita economic development officials use a circuitous method of estimating the population of downtown Wichita, producing a number much higher than Census Bureau estimates. 10
    • Looking at hotel guest tax receipts, which are a surrogate for total hotel room revenue, we observe that of the largest markets in Kansas, Wichita has experienced the least growth in hotel guest tax collections since 2010. 11

    Despite this record, Wichita City Hall seems satisfied with these results.

    —
    Notes

    1. City of Wichita. Agenda for August 21, 2018, Item IV-1. Available at http://www.wichita.gov/Council/Agendas/08-21-2018%20City%20Council%20Agenda%20Packet.pdf. ↩
    2. Max Rivlin-Nadler. Business Improvement Districts Ruin Neighborhoods. The New Republic, February 19, 2016. Available at https://newrepublic.com/article/130188/business-improvement-districts-ruin-neighborhoods. ↩
    3. Saahil Desai. One Landlord, One Vote. Available at https://washingtonmonthly.com/magazine/july-august-2018/one-landlord-one-vote/. ↩
    4. Sanscartier, Matthew D.; Gacek, James. Out, Damned Spot: Socio-economic Hygienic Practices of Business Improvement Districts. Canadian Journal of Urban Research. Winter 2016, Vol. 25 Issue 2, p73-85. ↩
    5. Weeks, Bob. Wichita’s open records policy is contrary to the interests of citizens. Available at https://wichitaliberty.org/wichita-government/wichita-open-records-policy-contrary-interests-citizens/. ↩
    6. Weeks, Bob. Wichita, again, fails at open government. Available at https://wichitaliberty.org/open-records/wichita-again-fails-at-open-government/. ↩
    7. Weeks, Bob. Wichita seeks to add more tax to hotel bills. Available at https://wichitaliberty.org/wichita-government/wichita-seeks-add-tax-hotel-bills/. ↩
    8. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends-2016/. ↩
    9. Weeks, Bob. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/. ↩
    10. Weeks, Bob. Living in downtown Wichita. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends-2016/. ↩
    11. Weeks, Bob. Kansas hotel tax collections. Available at https://wichitaliberty.org/kansas-government/kansas-hotel-tax-collections/. ↩
  • Downtown Wichita business trends

    Downtown Wichita business trends

    Click for larger.
    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

    Click for larger.
    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.

    Click for larger.

    —
    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 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. ↩