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Wichita’s getting ready to plan

As the City of Wichita develops a grand plan for downtown revitalization, can we have a process that is freedom-friendly and respects property rights? I went to Anaheim to find out.

Leaders in Wichita — both private and public sector — believe that Wichita needs a plan for downtown. To support this, the city is seeking to develop a Downtown Revitalization Master Plan, a “a twenty-year vision for its thriving downtown.” Right away I want to ask: if downtown is thriving, why does it need revitalization?

The document Wichita used to lure planning firms to apply for the planning job is full of ambitious and colorful language: “a community synergy that is contagious,” “casting a grand vision to realize our potential,” “the bold vision the community is seeking.”

The danger we face is that Wichita’s plan will end up like almost all other urban plans — a top-down effort micromanaged by politicians and bureaucrats, people whose incentives are all wrong. We already have the structure in place, with our mayor promoting the plan for downtown as his signature achievement, and a tax-supported downtown development organization headed by a young and energetic planning professional.

There is a different way to go about redevelopment, a way that respects freedom and property rights, while at the same time promising a better chance of success.

Last month I visited Anaheim, California, to learn more about the Platinum Triangle. This is an area of low-rise warehouses and industry that the city thought would be a good place for redevelopment. (Anaheim’s old downtown was redeveloped starting in the 1970s, is fairly nondescript, and has not met expectations.)

What Anaheim decided to do with the Platinum Triangle is to employ “freedom-friendly” principles in the district’s development. Or, as the subtitle to an article written by Anaheim Mayor Curt Pringle states, a “Foundation of Freedom Inspires Urban Growth.”

Here are the important things that Anaheim has done that are out of the ordinary:

No use of eminent domain to take property. The forceful taking of property by government for the purposes of giving it to someone else is one of the worst violations of property rights and liberty that we can imagine. But it’s a prime tool of redevelopment, one that the planning profession says is essential to their efforts to reshape cities.

In Kansas, we have a relatively new eminent domain law that, on its face, should provide strong protection to property owners. It’s unknown whether this protection will be effective when a city such as Wichita asks the legislature to allow the use of eminent domain, which is what the law requires. If a city makes the case that the success of Wichita and thousands of jobs depend on the use of eminent domain, will legislators go along?

Overlay zoning that respects existing land use. Instead of replacing existing zoning, the city added an “overlay zone.” This meant that while the land had new permissible uses and restrictions, existing rights were protected. It’s only if existing property owners wanted to pursue new development that they would have to conform to the new development standards contained in the overlay zoning.

No public subsidies or incentives. In California, they’re called redevelopment districts. In Kansas, we call them tax increment financing or TIF districts. In either case, this mechanism allows property owners to, in effect, retain their own increased property taxes for the benefit of their developments, something that the average taxpayer — or real estate developer not working in a politically-favored area — can’t do.

The City of Wichita views TIF districts as a powerful tool for development. The city has many existing TIF districts, and we can expect that others will be created to support downtown revitalization. While many people recognize and agree that the taking of land through eminent domain for economic development is bad, the taking of tax revenues through TIF is subtle. Most citizens don’t know this is happening.

Anaheim did a few other things: it streamlined the permitting process, reduced parking regulation, developed a broad-based environment impact report, and relaxed requirements for balancing commercial and residential uses.

It also used a “first-come, first served” housing permit allocation process. Instead of allocating housing permits to each parcel, permits were allocated to a much larger district. Developers could claim them through a competitive process and use them flexibly.

What’s been the result in the Platinum Triangle? After the district was formed in 2004, development started at a fast pace. But the housing crisis in California has definitely put a damper on the pace of development. An illustration: In a loft project in the Platinum Triangle, condos originally priced at $400,000 are now offered at $250,000. It’s expected that as the housing crisis eases, developers will go ahead with their plans.

The Platinum Triangle offers a distinctly different model for redevelopment than that practiced in most cities. A few other cities in California have noticed and are adopting Platinum Triangle-style, freedom-friendly, principles.

The question we in Wichita now face is this: Will Wichita adopt a freedom-friendly approach to downtown revitalization?

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15 Comments

  1. Karl Peterjohn August 14, 2009

    Bob,

    This is a very thoughtful and useful report on another downtown redevelopment plan that is much more likely to succeed than the efforts I have seen in the downtown area in Wichita. This proposal protects property rights without adding new tax burdens too.

    I really appreciate your time and attention to this subject and hope that this report will be read and absorbed by other local decision makers in both the public and private sectors here in Sedgwick County.

    Karl Peterjohn,
    3rd district County Commissioner

  2. Pat August 14, 2009

    “…..the taking of tax revenues through TIF is subtle. Most citizens don’t know this is happening.” – SIGH – When will you ever be accurate about TIF districts?

  3. Locke August 14, 2009

    @ Pat

    What is inaccurate about the statement?

    Taxes generated from new property taxes within the district go to the project fund controlled by the TIF district, not to the City, the schools or any other taxing body.

    The reality is TIF districts do transfer taxpayer dollars to politically-connected private developers at the expense of entrepreneurs and taxpayers. More often than not, actual urban revitalization is slowed or destroyed by eminent domain usage and malinvestment arising from the government planning.

    I doubt many citizens could even define what TIF stands for and certainly don’t understand the details.

  4. Joe Williams August 14, 2009

    I’m working on a project for Downtown, but I’m largely ignored by the people behind the Downtown Revitalization Development Plan. But that doesn’t stop me. So I don’t sweat it.

    It’s a project that isn’t going to be funded by tax dollars, so I don’t expect them to have a far reaching interest in it anyways.

    But I’m sure they’ll be interested once it really gets going. They’ll have no choice but to accept it. :)

    I love this town. The private sector and citizens can still make things happen without government. :)

  5. Pat August 14, 2009

    @ Locke

    What is inaccurate about the statement? Here’s what the statement says, “the taking of tax revenues through TIF is subtle.”

    The premise of a TIF district is that: but for the investment, there is no additional, new, incremental or increasing property tax. There is no “taking of tax revenues” because without the investment there are no tax revenues to take. The statement is prima facie inaccurate.

    Furthermore, a couple of things that you alluded to are somewhat misleading. I am not aware that imminent domain has been used to acquire any property for any TIF district that has been used in the city. Statutes allow it, but the city has not approved the use as part of a TIF district. Also, TIF districts do not transfer taxpayer dollars to the politically connected. For the most part, the very tax dollars that are generated by the TIF district (that opponents are claiming are being siphoned off) are being paid by the developer who benefits. Adjacent property owners within the TIF district who may pay incremental taxes are also benefiting because the new investment dollars in a particular area help to maintain or raise their property values.

    I’d concede that TIF districts that have been approved in the past were not well-conceived on the part of the city, however, most of the criticism is just demagoguery.

  6. craig gabel August 15, 2009

    Pat you are incorrect in your statement about no tax increases.
    I spoke to several small business owners that showed up for the Center City TIF expansion. All said they saw a 200 to 300% increase in property evaluations i.e. tax increase, created by inflated property values. These increased values were the direct result of anticipated use of TIF dollars for purchase and renovations. A prime example would be the Sutton Place, Michigan building, and Exchange Place. I was personally offered the Sutton Place for $300,000 a few years ago. I didn’t feel I could afford the repairs and pump the occupancy to make it pay. Now the City gives the Minn. Boys
    $9,000,000 in TIF $ it totally changes there value, along with every other property in the area, i.e. Tax increase.

  7. craig gabel August 15, 2009

    Also pat if TIF’s are doing so well where is the proof. Two years ago you couldn’t find a parking spot near 2nd an douglas before 5 p.m., now you can’t find a single car in 3 separate parking lots. But the City gave Dave Burke almost a $1,000,000 to bring people into the area with apartments in the old WATC school building.

  8. Pat August 15, 2009

    @ Craig – Read what I said. “but for the investment, there is no additional, new, incremental or increasing property tax.”-
    BUT FOR THE INVESTMENT.

    Secondly, since Real Development hit town, downtown property values reversed their downward spiral and have increased. Increased property values mean increased taxes. The fact that the values have increased is all the “proof” that you need.

  9. Oldphart August 27, 2009

    @ Pat Tell that to the businesses paying double their taxes. Increased property value? Are you one asking, “Now that the Arena is in place, lets ask the public how they want to create and pay for parking”. We need more billboards along Kellogg so people won’t have to view this blunder when they drive by.

  10. Pat August 27, 2009

    @ Oldphart – Sorry, I don’t have any sympathy for them. It’s just human nature that when paying taxes we want our property valued as low as possible; however, when it comes time to sell, everyone thinks they’re sitting on a gold mine.

    Fact of the matter is when RD started buying up properties in downtown, the only real deals were the first couple of properties that they acquired. After that, the asking price started going up.

    And no, I’m not asking the public jack for parking. I think parking is plentiful and people should quit whining. If someone who has a private lot wants to charge for event parking, more power to them. That’s the free market at work.

  11. […] districts and other forms of public subsidy. These are the things that I learned are important from my trip to Anaheim’s Platinum Triangle, if a city wants to plan in a freedom-friendly […]

  12. Mike September 11, 2009

    Hi, I’m totally against TIF districts for the following reason:
    “Taxes generated from new property taxes within the district go to the project fund controlled by the TIF district, not to the City, the schools or any other taxing body.”
    In my hometown (out of state), a city used a TIF district to build a new subdivision of roughly 50 homes. The school district gets no tax $ from these new residents, but has to provide for their education for the next 15 hears. Everyone should be paying an equal amount for equal services.

    Mike

  13. […] that we’ll want to get answers to. These are the important things I learned about during my trip to Anaheim’s Platinum Triangle development. Will Wichita pursue a freedom-friendly planning process as used […]

  14. Wildhorse February 5, 2010

    With all due respect, my friends, I place TIF up there with heroin and meth. Once you start, it’s nearly impossible to stop.

    Well done, Bob.

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