In Wichita, two large community improvement districts proposed

On Tuesday (January 11) the Wichita City Council will decide whether to accept petitions calling for the formation of two Community Improvement Districts (CIDs) in Wichita. In both cases, city staff recommends that the council accept the petitions and set February first as the date for the public hearing. It is on that date that the council will accept public input and vote whether to form each of the CIDs.

CIDs are a creation of the Kansas Legislature from the 2009 session. They allow merchants in a district to collect additional sales tax of up to two cents per dollar. The extra sales tax is used for the exclusive benefit of the CID.

The districts proposed are two well-established Wichita shopping centers. Westway Shopping Center is at the southwest corner of West Pawnee Avenue and South Seneca Street. Eastgate Center is at the southeast corner of Kellogg and Rock Road.

In the case of Westway, city documents indicate that the funds from the CID proceeds are to be used for “public and private improvements and the payment of certain ongoing operating costs.” At Eastgate, funds will be used for “renovation and modernization.”

Both projects ask for one cent per dollar to be added to shoppers’ sales tax. Both ask to be implemented using the “pay-as-you-go” method, meaning that the city will not issue bonds. Instead, the city will send to the applicants the proceeds from the extra sales tax as it is collected.

Both applicants are represented by Polsinelli Shughart, an Overland Park law firm that has represented other clients that have received approval for community improvement districts from the Wichita City Council.

Signage discussion at city council

At the December 7, 2010 meeting of the Wichita City Council, the council considered whether stores in CIDs should be required to post signs warning shoppers of the amount of extra tax being charged. Some, including myself, feel that shoppers should have this information before deciding to shop in such a store.

At the meeting Korb Maxwell, a representative of Polsinelli Shughart, spoke to the city council in support of the CID legislation. While Maxwell spoke as though he was advocating for the public interest, he in fact works for a law firm that is representing the narrow interests of its clients.

Speaking to the council, Maxwell denied that developers “have any interest in hiding something from the public, or keeping citizens from having full knowledge about these community improvement districts.”

But he said — rather obliquely — that the retailers they are trying to bring to Wichita would be discouraged by full disclosure of the extra sales tax that citizens would pay in their stores. “We want to make sure that anything that we do, or anything that we implement within a policy is appropriate and will not counteract the very tool we’re creating here.”

He provided a suggested sign design that states that community improvement district financing was used, but not that customers will pay a higher sales tax in CID stores. Retailers would accept this, he said.

In discussion from the bench, Vice Mayor Jeff Longwell said it is important that we disclose these “types of collections” as they are taxing the public. But in a convoluted stretch of reasoning, he made a case that posting a sign with a specific sales tax would be confusing to citizens:

“I was leaning to putting a percentage on there, but again if we have a website that spells out the percentage, I think that’s important. And number two, I guess I would be a little bit concerned how we would work through it — if you put a percentage on a development over here in downtown that’s only collecting one percent and someone walks in and sees a CID tax collected of one percent and just assumes every CID tax is one percent it would be confusing when they go to the next one, and it may scare them off if they see one that’s two percent, they’ll never go to one that’s maybe only one percent. So I think that proves an additional concern for some confusion. So having something on the front door that says we are financing this with a CID tax, where they’re made well aware that it’s collected there, I think to try and include a percentage might even add some confusion as we collect different CID taxes around the city.”

I think this means that Longwell’s okay with telling people as they enter a store that they’re being taxed, but not how much tax they’re being asked to pay. We can summarize his attitude as this: Giving citizens too much information will confuse them.

Council Member Sue Schlapp said she supported transparency in government:

“Every tool we can have is necessary … This is very simple: If you vote to have the tool, and then you vote to put something in it that makes the tool useless, it’s not even any point in having the vote, in my opinion. Either we do it, and we do it in a way that it’s going to be useful and accomplish its purpose. … I understand totally the discussion of letting the public know. I think transparency is absolutely vital to everything we do in government. So I think we’re doing that very thing.”

Schlapp understands and said what everyone knows: that if you arm citizens with knowledge of high taxes, they’re likely to go somewhere else.

Mayor Brewer said he agreed with Schlapp and the other council members.

In the end, the council unanimously voted for requiring signage that reads, according to minutes from the meeting: “This project made possible by Community Improvement District Financing and includes the website.”

This sign doesn’t mention anything about extra sales tax that customers of CID merchants will pay. Contrary to Schlapp’s assertions, this is not anything like government transparency.

This episode is a startling example of the council and staff being totally captured by special interests.

Sales tax increase spreading across Wichita

These two CIDs break new ground in that these shopping centers are not tourist destinations or trendy shops. Some council members like Longwell have justified past CIDs on the basis that since they are tourist destinations, much of the tax will be paid by visitors to Wichita. This is not a wise policy, but even it it was, it does not apply to these two shopping centers.

Instead, these two applications are more indications that soon Wichita — its major retail centers and destinations, at least — is likely to be blanketed with community improvement districts charging up to an extra two cents per dollar sales tax. Currently, merchants in a CID are running the very real risk that once their customers become aware of the extra sales tax, they will shop somewhere else. But as CIDs become more prevalent in Wichita, this competitive disadvantage will disappear.

Step by step, a sales tax increase is engulfing Wichita, and our city council and mayor are fine with that happening. This is on top of the statewide sales tax increase from last year, which, despite claims of its supporters and opposition by conservatives, is likely a permanent fixture.

10 thoughts on “In Wichita, two large community improvement districts proposed”

  1. The action by the City Council has the outcome of increasing taxes for the citizens of our City and County. The City Council doesn’t have the guts to increase the sales tax across the board so they use this law to delegate to developers (with the elected officials blessing) the increase in taxes. This is a huge campaign issue for those incumbents running again. Mr. Longwell is confused and votes with the Democrat Mayor Brewer 99% of the time. Schlapp likes government transparency, as long as, is not applicable to her or her friends (Remember the Magdalen property sale to her buddy). Mayor Brewer is not going to say anything that will affect his re-election.

  2. I am remined of the Danny Kayemovie from the 50s,”Pennies from Heaven.”and the song…”and the music goes round and round…”
    IN this case our illustrious City council goes round and round with more CIDS> when will they get it???????????? Approval is a slap in the face to Wichita consumers. IN Eastgate I shop at TJMaxx to save money. Whatever happened to tenants paying for improvements..it’s part of being a tenant at a particular location and I belive is called a net lease. Tenants pay a psf amount and based on their square footage,pay an additional % of upkeep and/or improvements. Yhis is called a year end reconciliation!

  3. So, when is the city council and especially our esteemed mayor up for reelection? I hope A$$hole that has the [email protected] to vote to kill this crap runs and is electable. I’m glad that these people want to start a new business, but I ain’t payin’ for it.

    May Be Mike
    Wichita KS

  4. Oh pleeeeeze. You folks (including Bob) need to get real. You march in stride to the beat of the Weeks drum without understanding anything about anything, epousing your Libertarian rhetoric and ideology mindlessly without question.

    How many of you know how many taxing districts there are in Sedgwick County without spending a couple of hours researching it? Even the Great Editor can’t say. When’s the last time the Great Editor ever created $$$ in the community fabric?

    I can tell you what I understand, Bob should run for Mayor instead of cowering behind his Blog. You want the community to move in another direction? Then have some courage and see whether the rest of Wichita agrees with your ideology and intellect.

    Bob Weeks for Mayor. Let’s see it.

  5. Hi

    I don’t really care how many taxing districts there are, there should only be ONE (1) tax structure for the city, really for the county. Why does Brewer get to decide who gets extra money to run their business and who doesn’t? Fortunately, I have a job so I don’t need to fun for mayor. Maybe when I retire…

    Anon.

  6. At work yesterday, someone told me they are not going to shop in Butler county anymore; they will drive to stores in Sedgwick. They said “the sales tax in Butler is 2 cents more now!” Even people not normally aware of politics see this. Their feet are doing the talking/voting!

  7. “Their feet are doing the talking/voting!” Ahh, the way it should be. Ain’t America great!

  8. Your last comments about the state sales tax passed by the 2010 Legislature likely being permanent is very misleading. The bill, HB 2360, removes the sales tax after three years. Yes, it will stay higher at 5.7 percent, which will go into the State Highway Fund. However, you did not make that distinction in your orginial comments. Further, you failed go mention that the Legislature would have to pass another bill to extend the tax beyond three years and the governor would have to sign it.

    Many of my friends in 2004 never thought the arena sales tax would go away, yet it did because that was the way the bill was written. If anyone believes the current sales tax will stay in effect then I encourage you to read HB 2360.

  9. Kudos to the poster above who had this brilliant idea. Bob, I don’t know what your resume reads, but if you have any executive experience, I’d say throw your hat in the ring and put your philosophies to the test. I for one would support you and believe Wichita would be better off to get rid of the namby-pamby moderates who have been at the helm for too long. If you have the grit, the gumption, the fortitude and the ability to lead with more than words, please consider it.

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