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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.


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)
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