Voice For Liberty

Tag: Wichita Mayor

  • In Wichita, more tax increment financing

    In Wichita, more tax increment financing

    The Wichita city council will consider expanding an existing TIF, or tax increment financing district.

    Tomorrow the Wichita City Council will consider expanding the boundaries of an existing tax increment financing district in downtown Wichita. 1

    According to city documents for this agenda item,

    Expanding the District would allow the Developer to capture the additional increment generated by the increased value of the Ice House building for pay-as-you-go reimbursement of eligible TIF expenses within the TIF district. The Developer would also be reimbursed for the TIF eligible costs related to redevelopment of the Ice House building.

    Further:

    The project includes up to $317,170 in infrastructure improvements that would be TIF eligible. The Developer proposes that tax increment financing be used to pay for eligible redevelopment project costs on a “pay-as-you-go” basis, for site preparation and infrastructure improvements.

    This may be confusing, so here it is in a nutshell: The city will be diverting up to $317,170 in future property tax paid by the developer. Instead of these taxes going to pay for operations of the city, county, and school district, these taxes will be given back to the developer.

    Usually, economic development incentives such as tax increment financing, or TIF, are justified because they create jobs. For this building, according to Wichita Eagle reporting from August, the two tenants that will occupy most of the space are existing companies that are moving from other parts of Wichita.

    In addition, Gary Oborney, Manager of Union Station, LLC and Ice House, LLC, the company that is receiving the benefit of tax increment financing, has made these recent campaign contributions, according to campaign finance reports filed in July:

    On March 18, 2019, $250 to Wichita Mayor Jeff Longwell.

    On July 2, 2019, $250 to Wichita City Council Member Bryan Frye (district 5,west and northwest Wichita).

    On June 22, 2019, $250 to Wichita City Council Member Jeff Blubaugh (district 4, south and southwest Wichita).

    Of note, all three are seeking reelection this year.

    There is nothing illegal regarding these campaign contributions based on Wichita and Kansas law. Some jurisdictions, however, have laws known as pay-to-play. These laws may prohibit political campaign contributions by those who seek government contracts, prohibit officeholders from voting on laws that will benefit their campaign donors, or the laws may impose special disclosure requirements.

    In general, these laws prohibit government officials from enriching their campaign contributors. That seems like a simple concept that makes sense.

    While there is no such law in Wichita, wouldn’t citizens appreciate officials acknowledging the campaign support they have received from people with business before the council?

    For more information on pay-to-play laws, see:

    Craig Holman, Ph.D., Public Citizen; and Kyung rok Wi, Democracy Law Project at Penn Law. Pay-to-Play Restrictions on Campaign Contributions from Government Contractors, 2016. Available at https://www.citizen.org/wp-content/uploads/pay-to-play_state_summary_report.pdf

    Weeks, Bob. Is graft a problem in Wichita? Includes excerpt from and link to History and Constitutionality of Pay-to-Play Campaign Finance Restrictions in America. Available at https://wichitaliberty.org/wichita-government/is-graft-a-problem-in-wichita/.

    Perkins Coie. Summary of State Pay-To-Play Regulations. Available at https://www.perkinscoie.com/images/content/2/1/v2/21769/wp-10-05-pay-to-play.pdf.

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    Notes

    1. City of Wichita City Council Agenda for October 8, 2019. Agenda Item No. V-1, Public Hearings Considering an Expansion of the Union Station Tax Increment Financing District and Considering a Development Agreement for the Union Station Project Area 3 Plan (District I) ↩
  • Contribute to a campaign, get (nearly) free rent

    Contribute to a campaign, get (nearly) free rent

    Citizens may not have noticed that a campaign contributor to Wichita Mayor Jeff Longwell received a large benefit from the city this week.

    This Tuesday the Wichita City Council voted to amend an existing lease. In a nutshell, the city council voted to lease to a tenant 8,600 square feet of retail space for $1.00 per year.

    Not $1.00 per square foot per year, but $1.00 per year for all 8,600 square feet. That’s for the first four years of the lease.

    Computed as rent per square foot, which is the common way to quote rent for commercial space, the rent is $0.00. Essentially free, that is.

    According to the lease, the rent will increase in future years, first to $1.16 per square foot, then to $2.33.

    The Block 1 garage on East William Street in 2014.
    The real estate is at 360 East William in downtown Wichita. It’s on the north side of William between Broadway and Topeka. This is the first floor of the Block 1 parking garage built as part of the Ambassador Hotel project.

    It’s been difficult to rent this space. According to John Philbrick, the city’s real estate administrator, half of the space has been leased to two tenants. One lease is at $4 per square foot; the other at $6. According to the Weigand Commercial Retail Forecast for 2019, for total retail space in the central business district, the quoted rent was $10.65 per square foot. Across the city, class A retail space rents for $19.81, from the same source.

    Who is the new tenant that will pay essentially no rent for four years, then steeply discounted rent thereafter? It is Douglas Market Development, LLC. Its manager is Sudha Tokala. According to its annual report, the only person who owns more than five percent of the company is her.

    Tokala is notable for her involvement in the redevelopment of the former state office building, the former Henry’s building (which is next to the 360 East William Street retail space), and other nearby buildings.

    These developments are receiving various forms of government subsidy, which might be justified for fostering economic growth in downtown.

    But free (nearly free) rent? Is that really necessary to promote development in downtown Wichita?

    Then, there’s this. On March 21 of this year, a company named Natman Real Estate International LLC contributed $500 to the campaign of Wichita Mayor Jeff Longwell. That’s the maximum amount allowed by law.

    According to the company’s annual report, the only person who owns more than five percent of the company is Sudha Tokala. That’s the same person who is receiving four years of (almost) free rent, courtesy of the City of Wichita, Jeff Longwell, Mayor.

    It’s good that buildings in downtown Wichita — or anywhere in Wichita, for that matter — are being put to productive use. We should be able to celebrate the initiative and accomplishments of entrepreneurs who do this.

    But when there is such a close linkage between a campaign contribution and the conveyance of a large economic benefit — well, reasonable people will wonder. At least, they should.

    Pay to play

    There is no law in Wichita or Kansas prohibiting what happened here. But wouldn’t you feel better if Mayor Longwell had abstained from voting on this matter? Or if he acknowledged that he received campaign contributions from someone who is asking for a favor from the city?

    Some jurisdictions have laws known as pay-to-play. These laws may prohibit political campaign contributions by those who seek government contracts, prohibit officeholders from voting on laws that will benefit their campaign donors, or the laws may impose special disclosure requirements.

    In general, these laws prohibit officials from enriching their campaign contributors.

    Kansas and Wichita have no such laws. In my experience, there are few elected officials in favor of a pay-to-play law.

    Click images for larger versions.

  • City code on ethical conduct in Wichita

    Wichita has a city code governing ethical conduct by council members, but it seems to have no teeth.

    Here’s an excerpt from the Wichita city code as passed in 2008 (full section below):

    “[Council members] shall refrain from making decisions involving business associates, customers, clients, friends and competitors.”

    When asked about a specific application of this city law relating to former Wichita Mayor Carl Brewer, the Wichita city attorney supplied this interpretation:

    Related to the Mayor’s participation in the item, yes, City Code advises Council members to “refrain from making decisions involving business associates, customers, clients, friends and competitors. … ” but the Code does not provide definitions or limits to these broad categories of constituents. Further, the City Code clearly requires Council members to “vote on all matters coming before the City Council except in those particular cases of conflict of interest. …” The city Code does not define what constitutes a conflict but the Council has historically applied the State law for that definition.

    Applying that State law specific to local municipalities, the Mayor does not have any substantial interest in Douglas Place LLC, and therefore no conflict. Under the State ethics law, there was no requirement that the Mayor recuse himself from voting on the Ambassador Project.

    Former Wichita Mayor Carl Brewer with major campaign donor Dave Wells of Key Construction. Evidently, Wichita city code did not prohibit Brewer from voting to give millions in contracts and subsidy to Key.
    So we have statutory language that reads “shall refrain,” but Gary Rebenstorf, the city attorney at that time, interpreted that to mean “advises.”

    We also have statutory language that reads “business associates, customers, clients, friends and competitors.” But the city attorney felt that these terms are not defined, and therefore the mayor and city council members need not be concerned about compliance with this law.

    I wonder whose interests the city attorney represents. The people of Wichita, who want to be governed in a fair and ethical manner? It doesn’t seem so.

    I wasn’t satisfied with the city attorney’s response, so I and others engaged attorneys to research the law and see if it could be clarified and enforced. We received an opinion that we, as citizens of Wichita, likely did not have standing to bring a lawsuit against either the city or the mayor. We were told that the law would probably find that we suffered no harm. A city council member might have standing, however, because if an ineligible council member voted, that would unlawfully dilute the value of other members’ votes. We attempted to recruit council members to file a suit, but couldn’t find one who was interested.

    I thought that was sad. Today, city hall ethics, at least in the mayor’s chair, have not improved. As we’ve learned this week, the current city attorney says council members “are left to police themselves on that city law,” according to Wichita Eagle reporting. 1

    If the city attorney’s interpretation of this law is controlling, I suggest we strike this section from the city code. Someone who reads this — perhaps a business owner considering Wichita for expansion — might conclude that our city has a code of ethics that is observed by the mayor and council members and enforced by its attorneys.

    Giving that impression, though, would be false — and unethical.

    Wichita city code

    Sec. 2.04.050. — Code of ethics for council members.

    Council members occupy positions of public trust. All business transactions of such elected officials dealing in any manner with public funds, either directly or indirectly, must be subject to the scrutiny of public opinion both as to the legality and to the propriety of such transactions. In addition to the matters of pecuniary interest, council members shall refrain from making use of special knowledge or information before it is made available to the general public; shall refrain from making decisions involving business associates, customers, clients, friends and competitors; shall refrain from repeated and continued violation of city council rules; shall refrain from appointing immediate family members, business associates, clients or employees to municipal boards and commissions; shall refrain from influencing the employment of municipal employees; shall refrain from requesting the fixing of traffic tickets and all other municipal code citations; shall refrain from seeking the employment of immediate family members in any municipal operation; shall refrain from using their influence as members of the governing body in attempts to secure contracts, zoning or other favorable municipal action for friends, customers, clients, immediate family members or business associates; and shall comply with all lawful actions, directives and orders of duly constituted municipal officials as such may be issued in the normal and lawful discharge of the duties of these municipal officials.

    Council members shall conduct themselves so as to bring credit upon the city as a whole and so as to set an example of good ethical conduct for all citizens of the community. Council members shall bear in mind at all times their responsibility to the entire electorate, and shall refrain from actions benefiting special groups at the expense of the city as a whole and shall do everything in their power to ensure equal and impartial law enforcement throughout the city at large without respect to race, creed, color or the economic or the social position of individual citizens.

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    Notes

    1. Swaim, Chance. Wichita’s mayor steered multi-million-dollar water plant contract to friends. Wichita Eagle, September 29, 2019. Available at https://www.kansas.com/news/politics-government/article234701932.html. ↩
  • The power and influence of the Wichita mayor

    The power and influence of the Wichita mayor

    When pursuing a large Wichita city contract, did the winning company lobby all council members, or primarily Mayor Jeff Longwell?

    The role of Wichita Mayor Jeff Longwell in the awarding of the contract for the new Wichita water plant has been in the news. A recent Wichita Eagle article showed how the mayor steered the award to a company other than the company recommended by the city’s selection committee. 1

    Central to the story is the relationship between the mayor and the company he favored. There was, according to Eagle reporting, a close relationship including a cash gift that was not disclosed 2 and some eerily chummy emails. 3

    The mayor, however, downplayed his role. In a response from Longwell posted on the city’s Facebook page, he said he is part of a team: “A team that deliberately keeps each other in check. We question and challenge each step, and that is an intentional process designed to ensure we have the best deal for our city.” 4

    Some council members agree. In the Eagle article, two council members were interviewed, Brandon Johnson (district 1, northeast Wichita) and James Clendenin (district 3, southeast and south Wichita):

    Johnson and Clendenin both downplayed Longwell’s role in awarding the contract, saying the mayor is just one vote.

    “You give the mayor too much credit,” Johnson said.

    “Yeah, this idea that the mayor of the city of Wichita has enough power to make any decision he would like is something that I think is a misconception,” Clendenin said.

    What, then, is the power of the mayor to lead or steer the council in his preferred direction?

    The answer to this question holds the answer: Did the winning company (Wichita Water Partners) lobby, flatter, or gift any Wichita City Council members with anything approaching the consideration directed to Mayor Jeff Longwell?

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    Notes

    1. Swaim, Chance. Wichita’s mayor steered multi-million-dollar water plant contract to friends. Wichita Eagle, September 29, 2019. Available at https://www.kansas.com/news/politics-government/article234701932.html. ↩
    2. “Before Longwell cast the deciding vote, the president of one of the Water Partners’ companies paid for Longwell to enter a $1,000-per-person charity golf tournament. … Nor did Longwell disclose the $1,000 entry fee on a state ethics form for local officials that he filed in February.” ↩
    3. “They frequently referred to each other in emails by nicknames — Your Eminence, His Highness, Homecoming Queen, Eye Candy, Jethro and Wine Delivery Guy, after Young, the president of PEC, offered to drop off to Longwell leftover wine from a previous dinner party.” ↩
    4. Longwell, Jeff. City of Wichita Facebook page. Available at https://www.facebook.com/cityofwichita/posts/2535037446542240. ↩
  • From Pachyderm: Wichita mayoral candidates

    From Pachyderm: Wichita mayoral candidates

    From the Wichita Pachyderm Club this week: Wichita mayoral candidates Jeff Longwell and Brandon Whipple. This audio presentation or podcast was recorded on September 27, 2019. Todd Johnson is the moderator.

    Shownotes

    From left: Brandon Whipple, Jeff Longwell, and moderator Todd Johnson.