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Author: Bob Weeks
Wichita Center City South Redevelopment TIF District Testimony
From John Todd.
Update: Watch John’s testimony on YouTube here.
Testimony delivered by John Todd before the Wichita City Council on December 2, 2008 in opposition to the proposed Tax Increment Financing (TIF) plan for the Center city South Redevelopment District located generally around the new Intrust Bank Arena.
In 2004, proponents of the new Intrust Arena were assuring voters that their approval of the new arena would provide the “economic boost” and the “synergy” needed for effective downtown redevelopment without the need for increased property taxes. No mention was made at that time of the need for additional taxpayer subsidies for downtown development.
In recent testimony before the City Council, I heard a staff member advise the Mayor and this City Council that county property appraisals in the area adjacent to the new Intrust Area had increased more than 10% in the prior year. Does this proposed TIF District sound like a blighted and declining area headed for economic stagnation? Or is it time for private developers to seize this development opportunity our Mayor envisions, and of course without the need for risking the taxpayer’s wallet that is a common element in private/public partnerships?
Since the parcels of land around the new Intrust Arena appear to be owned by dozens of small private property and business owners, private developers will need to assemble the parcel(s) they need for development through voluntary exchange rather than through government’s involuntary and coercive taking of property by either the threat of eminent domain or the actual use of eminent domain. Street improvements, if needed for the project(s), should be paid for by the private developers or through the use of special assessment financing. Can anyone believe that city and/or county planners failed to plan for the street improvements needed for the new arena and a method of paying for them prior to beginning construction of the arena? (Note: In addition to the nearly $12 million TIF proposal for streets, a last minute change added an additional $10 million the TIF for a parking garage.) Also, I believe the original Arena project the voters approved in 2004 included $14 million dollars for a parking garage.
One doesn’t have to look very far around our city to see and appreciate the success of our many risk-taking private developers who through their knowledge of the market and their problem solving abilities, plus most importantly the investment of their own money, continue to expand our tax base, create jobs, and enhance our quality of life. Perhaps these are the people you need to call on to bid on downtown development work without the need for a massive public subsidy?
Late Changes Don’t Inspire Confidence in Wichita Government
At today’s Wichita City Council meeting, Councilmember Jim Skelton revealed that the plan for the downtown Wichita arena TIF district had changed. A provision for up to $10 million in parking was added.
I had looked at the agenda report less than 24 hours before the start of the meeting. The plan for parking spending was not mentioned. I looked right now, and yes, it’s there.
There’s a problem when things change so quickly. Citizens can’t prepare themselves on such short notice. That’s a problem for openness and transparency in government.
This problem is in addition to the apparent uncertainty as to what’s needed for this TIF district to succeed.
The TIF district passed, with all city council members voting in favor.
Downtown Wichita Arena TIF District Still a Bad Idea
Say no to expansion of the Center City South Redevelopment tax increment financing (TIF) District.
Remarks to be delivered at the December 2, 2008 meeting of the Wichita City Council. Watch the video here.
Mr. Mayor, Members of the Council:
It is the case the the City of Wichita is proposing to limit this TIF district spending to things like streets, intersections, landscaping, and lighting. But these are still things that developers working outside of TIF districts generally have to pay for themselves.
This is the real function of TIF districts: TIF developers get to use their own property taxes to pay for things that non-TIF developers have to pay for out-of-pocket, or through special tax assessments on top of their regular property taxes. This is accomplished through a confusing arrangement that hides the reality and size of the subsidy given to TIF developers. I’ve come to realize that this confusion serves a useful purpose to this council, because if the people of Wichita knew what was really happening, they’d be outraged.
The proposed TIF district, while smaller than previously proposed, is still large. Very large. Has anyone calculated what share of the retail and restaurant trade in Wichita would have to be captured by this district in order for it to be successful?
Has anyone performed a market study to see if obtaining this market share would be feasible? And if feasible, what effect would this have on existing business and development in Wichita? Specifically, what effect would this have on other development in downtown, such as Old Town and Waterwalk? We’ve seen that when city-subsidized business is in financial trouble, this council is willing to fund a bailout.
We’re at a point, Mr. Mayor, where entrepreneurs may not be willing to work in Wichita without a taxpayer subsidy, or at least not in competition with subsidized development. I am aware of a commercial development in Wichita that has been canceled because of Wichita’s tax environment. Some developers have told me that they are reconsidering whether to do any more business in Wichita simply because of our property tax environment. This situation has recently worsened, as we voted ourselves a large tax increase last month. At the state level, spending cuts or tax increases loom as the state’s budget situation deteriorates.
Then, consider reporting in the Wichita Eagle this summer, which found this: “City and county tax records show that nearly $159 million in public money has been spent on Wichita’s tax increment financing districts, to get roughly $150 million worth of new development.” That’s not a good deal for city taxpayers.
Also, evidence of the effectiveness of TIF districts for cities as a whole is not good. A study from the Institute of Government and Public Affairs at the University of Illinois finds that “cities, towns, and villages that had TIF districts actually grew more slowly than municipalities that did not use TIF.”
Finally, Mr. Mayor, you’ve referred to some people as the “naysayers.” I don’t know if you were talking about me. It would be presumptuous of me to think so. But I don’t say “nay” to development, even to downtown development. What I say “no” to is taxpayer-subsidized development, planned and managed by government.
Saying “no” to that, in turn, lets us say “yes” to the rich diversity of human individuality instead of a collectivist vision driven by government bureaucracy. It means saying “yes” to free people cooperating voluntarily through free markets. That is what is disappearing as more and more of our city’s development is subsidized and managed by government.
Ron Paul says “The Austrians were right”
In a statement Ron Paul delivered to the United States House of Representatives on November 20, 2008, he made these points:
- Our government is “totally influenced by Keynesian economics.”
- “At least 90% of the cause for the financial crisis can be laid at the doorstep of the Federal Reserve. It is the manipulation of credit, the money supply, and interest rates that caused the various bubbles to form. ”
- The Federal Reserve created this problem. Why do we rely on it to fix the mess it created?
- “… the stage is now set for massive nationalization of the financial system and quite likely the means of production.”
- “Raising taxes would reveal the true cost of big government, and the people would revolt.”
- So the government creates money from thin air to pay for all this.
Read the entire statement at The Austrians Were Right.
New Deal Shouldn’t Be Our Template for Recovery
Can huge government spending programs rescue our economy? Amity Shlaes doesn’t think so:
The New Deal is Mr. Obama’s context for the giant infrastructure plan his new team is developing. If he proposes FDR-style recovery programs, then it is useful to establish whether those original programs actually brought recovery. The answer is, they didn’t. New Deal spending provided jobs but did not get the country back to where it was before.
(The Krugman Recipe for Depression , November 29, 2008 Wall Street Journal.)
The present danger is that influential economists like Paul Krugman of the New York Times argue that during the New Deal, government spending wasn’t high enough, and that’s why the Great Depression lasted so long.
Kansas highways influence, for better or worse
Kansas Department of Transportation Secretary Deb Miller wrote a Wichita Eagle editorial in which she states:
One of the studies examines the K-96 northeast Wichita bypass. The study found that since it was finished in 1993, the bypass has dramatically influenced the region’s development patterns. Much of Wichita’s job growth between 1994 and 2006 has occurred along the K-96 corridor.
No doubt this is true. But what are the consequences? Highways like K-96 enable and encourage growth in the outer fringes of Wichita and in suburban towns like Andover. Then, there’s a reaction.
Officials of USD 259 complain that there’s a “doughnut” and that urban schools are being underfunded. Much taxpayer money will be needed to fix this, they say.
Politicians like Wichita Mayor Carl Brewer still want to have a vibrant downtown, even though people have moved away. To achieve this, they’ll propose spending hundreds of millions of taxpayer funds to lure people back downtown. At tomorrow’s meeting of the Wichita City Council, more of this will be proposed.
The corker, though, is the global warming alarmists who don’t want people driving carbon-emitting automobiles on these roads. But since we’re doing that, they want us to undertake expensive and job-killing measures to mitigate these carbon emissions.
Walter Block on Economics in One Lesson
Walter Block talks about Economics in One Lesson, perhaps the most approachable book about economics. And, it’s a free-market, liberty-friendly, Austrian approach. What could be better?
In this video, Professor Block is interviewed by Jeffrey Tucker at the Ludwig von Mises Institute.
Susan Wagle for Kansas Senate President
Tomorrow, the Kansas Senate meets to select its leadership. Senate Republicans could do Kansans a favor by electing Susan Wagle of Wichita to be senate president.
Part of the reason why a Wagle victory would be good for Kansas is her opponent, current senate president Stephen Morris of Hugoton. His political leanings are not right for Kansas as our state enters a tough budgetary period. His lifetime rating from the Kansas Taxpayers Network is 32.5%. There are many Democrats with better ratings. In a New York Times article from earlier this year (One Hand on Her Job, the Other Across the Aisle ), he was quoted as saying “But that’s the only major disagreement we’ve had since she took office,” referring to the expansion of the Holcomb Station coal-fired power plant. Someone who rarely disagrees with Kansas Governor Kathleen Sebelius is certainly someone who shouldn’t be in charge of leading the Kansas Senate.
Susan Wagle, on the other hand, disagrees with the governor on many things. She’d be a great leader of the Kansas Senate.