Voice For Liberty

Tag: Downtown Wichita revitalization

Articles about the redevelopment of downtown Wichita and its impact on the economic freedom of Wichitans.

  • In Wichita, gap analysis illustrates our problems

    Wichita City Hall.
    Wichita City Hall.
    Following is testimony provided to the Wichita City Council on July 1, 2014. Background on this issue may be found at In Wichita, a public hearing with missing information and Wichita city council schools citizens on civic involvement.

    Thank you for providing the gap analysis that I requested.

    If the gap analysis is credible, if it really is true that projects like this are not financially feasible without taxpayer assistance, what does that tell us about Wichita? Shouldn’t we work on fixing these problems for everyone, rather than parceling out business welfare on a piecemeal basis?

    The agenda packet material for this item says there is a need for incentives “based on the current market.” But not long ago this council was told that downtown Wichita is booming. So why won’t the market support a project like this without a handout from city taxpayers? And if downtown is truly booming but we’re still giving out incentives, will we ever be able to wean ourselves off?

    Based on my reading of the gap analysis document, I see another problem with the facade improvement program. It shifts costs from landlords to commercial tenants. Instead of paying for the facade improvement costs as part of a mortgage or other financing, these costs become additional property taxes that commercial tenants pay in addition to rent.

    This is really a problem, as Kansas and Wichita commercial property taxes are high. Each year The Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence survey property taxes. Considering the largest city in each of the states, Wichita property taxes are ninth highest in the nation for commercial property.

    Wichita taxes are not just a little higher, but a lot higher. For example, for a commercial property valued at $100,000, Wichita property taxes are 38.5 percent higher than the national average.

    Some of the reason why commercial property taxes are so high is due to the difference in assessment rates for various property classes. That’s not set by the City of Wichita. But the overall level of spending, and therefore the level of taxation, is set by this council. Further, the cost of incentives like this raise the cost of government for everyone else. One thing the city could do is to reduce spending somewhere else to offset the cost of this incentive. This would mean that other taxpayers do not have to bear the cost of this incentive.

    If we wonder why the Wichita economy is not growing, commercial property tax rates and this council’s policy of targeted reductions are a large part of the problem.

  • A development plan for downtown Wichita

    Development plan for downtown Wichita as prepared by RTKL Associates, Inc. January, 1989. View below, or click here to open in new window.

  • For Wichita, policies are made to be waived and ignored

    The City of Wichita says it wants policies to be predictable and reliable, but finds it difficult to live up to that goal.

    From 2009, an example of how the City of Wichita makes policy on the fly to suit the current situation. The policy change benefited a building developed by “The Minnesota Guys,” who, since the time of this article, fell into disfavor with pretty much everyone in Wichita, including the city council.

    When the Lofts at St. Francis needed routine repairs, the city waived policies to use special assessment financing.
    When the Lofts at St. Francis needed routine repairs, the city waived policies to use special assessment financing.
    Regarding public policy, this episode illustrated the city broadening the application of special assessment financing. Traditionally special assessment financing has been limited to instances such as the city building streets and sewers in new areas of town, allowing commercial and residential property owners to repay the costs over 15 years. But the item approved by the council at this meeting was for repair of existing buildings, not construction of new infrastructure. Additionally, the work financed by the special assessment taxes will be owned by the private property owners. When the city uses special assessment financing to build streets and sewers in new neighborhoods the city owns this infrastructure, even though it is paid for by nearby property owners.

    To approve this financing, the city had to bend or waive two policies. That’s problematic, as the city tells citizens it wants policies and council behavior to be consistent and predictable. Although this incident is from five years ago, not much has changed since then. See Wichita: No such document for an example from last year. Following is Wichita special assessments for repairs is bad policy. Other articles on this topic are In Wichita, waiving guidelines makes for bad policy and At Wichita city council, special pleading of selfish interests.

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    At Tuesday’s meeting (August 18, 2009) of the Wichita City Council, a privately-owned condominium association is seeking special assessment financing to make repairs to its building. In order for the association to succeed in its request, the council will have to waive two guidelines of Wichita’s facade improvement program.

    Special assessment financing means that the cost of the repairs, up to $112,620 in this case, will be added to the building’s property taxes. Actually, in this case, to each of the condominium owners’ taxes. They’ll pay it off over the course of 15 years. (A conversation with the president of the homeowners association brought out the possibility that the actual assessment may be in the neighborhood of $75,000.)

    So the city is not giving this money to the building’s owners. They’ll have to pay it back. The city is, however, setting new precedent in this action.

    Special assessment financing has traditionally been used to fund infrastructure such as streets and sewers, and new infrastructure at that. The city, under its facade improvement program, now allows this type of financing to be used to make repairs and renovations to existing buildings. That’s if the building is located in one of the politically-favored areas of town.

    By using special assessment financing in this way, the city seeks to direct investment towards parts of town that it feels doesn’t have enough investment. This form of centralized government planning is bad public policy. The city should stop doing this, and let people freely choose where to invest.

    Besides this, two guidelines in the city’s facade improvement program must be waived for this project to obtain special assessment financing.

    The first is the private investment match. This is designed to ensure that the property owners have “skin in the game” and that the taxes will be paid back.

    Here, the city is proposing that since the building’s owners have made a past investment in this property, there’s no need to require a concurrent investment. It hardly needs to be noted that anyone who has purchased property has made a past investment in that property.

    Second, facade improvement projects are required to undergo a gap analysis to “prove” the need for public financing. According to the city’s report: “This project does not lend itself to this type of gap analysis; however, staff believes that conventional financing would be difficult to obtain for exterior repairs to a residential condominium property like this.”

    So the city proposes to waive this requirement as well.

    There seems to me to be a defect in the manner of ownership of this building. While the homeowners association and the condominium owners might not have anticipated that repairs would be needed so soon after the building’s opening, they must have contemplated that repairs and maintenance — to either exterior or interior common areas — would be needed at some time. How does the association plan to pay for these?

    So what will happen if the city council doesn’t approve the special assessment financing? The agenda report states “Each individual condo owner would be required to fund a share of the cost.”

    Isn’t that what private property owners do: fund the cost of repairs to their property?

    According to the Sedgwick County Treasurer’s office, the appraised values of these condos range from $103,000 to $310,200, with an average value of $201,943. The maximum amount being added to each condo’s assessment is $4,022, although the actual amount may be closer to $3,000.

    That’s along the lines of what it might cost to perform a few repairs and paint a house that’s worth what these condos are worth.

    Let’s ask that these owners do just what thousands of homeowners in Wichita do every year: take responsibility for the maintenance of their own property without looking to city hall for help.

    Lofts at St. Francis Agenda Report 2009-08-18 by Bob Weeks

  • In Wichita, a public hearing with missing information

    In Wichita, a public hearing with missing information

    The Wichita City Council is holding a public hearing, but citizens don’t have information that would be useful if they’re interested in conducting oversight.

    Wichita City Library, 1965Wichita’s facade improvement program provides for the financing of the exterior faces of buildings in certain areas of the city. The money that is advanced to the developers, along with interest charges, are added to the property tax bills for the property, spread over 15 years. In this respect the program is similar to when the city builds streets and sewers in new areas of town and allows homeowners to pay these costs over 15 years. Except, the facade improvement program is for repair of existing buildings, not construction of new infrastructure. Additionally, the work financed by the facade improvement program is owned by the private property owner. When the city constructs streets and sewers in new neighborhoods, the city owns them.

    There’s another difference. In the item to be considered today, there is a grant of $20,000. This is a gift of cash with few strings attached, except that it be spent on something the owner must spend anyway.

    City documents indicate this is a project with a cost of $2,500.000.

    Here’s the public policy angle. City documents state, regarding this item:

    In 2009, the Facade Improvement Program was revised to require that private funding for overall project costs be at least equal to public funding and that applicants show a financial need for public assistance in order to complete the project, based on the owner’s ability to finance the project and assuming a market-based return on investment.

    Later on, the same document states

    The Office of Urban Development has reviewed the economic (“gap”) analysis of the project and determined a financial need for incentives based on the current market.

    In other words, without the benefit of the facade improvement loan and grant, the project would not be economically feasible. Which, to me, seems curious. A $20,000 grant for a $2,500,000 Economists use a decimal pointproject is 0.8 percent of the project. The lower interest rate for the $156,034 being financed under the program provides some small additional benefit. These values are small compared to the scope of the project. It is not possible to forecast future revenues and expenses with the precision necessary to conclude that the facade improvement program boosts this project over the bar of economic feasibility, whatever that is.

    We’ll probably not know what that bar is. I asked for the “gap” analysis. It doesn’t appear that it will be available before today’s meeting. I asked for it Thursday evening, and the city’s public information officer has followed up with me to see if I received the document, but I do not have it. The public doesn’t have it. I doubt if city council members have it.

    The item today is a public hearing. The law requires it to be held so that the council can receive input from the public. Whether the public is informed — that’s a different matter.

    Who reads the agenda

    The agenda packet for the previous week contained a mistake. It was a mistake that is easy to make and not of any serious consequence. The wrong pages appeared for an item, and the correct pages were not in the packet. When I inquired about this late Monday afternoon — not long before the Tuesday meeting — the city’s public information office thanked me for bringing this to the city’s attention. A correction was promptly published.

    Which leads me to wonder: Had anyone else read the agenda with sufficient attention to notice that mistake?

  • Would you rent space from this landlord?

    Would you rent space from this landlord?

    Located across the street from the Transit Center, the city-owned garage on William Street suffers from maintenance issues that diminish its value for its intended use: retail space.
    Located across the street from the Transit Center, the city-owned garage on William Street suffers from maintenance issues that diminish its value for its intended use: retail space.

    Commercial retail space owned by the City of Wichita in a desirable downtown location was built to be rented. But most is vacant, and maintenance issues go unresolved.

    At one time it was thought that the Wichita city-owned parking structure in the 400 block of East William Street would house retail shops along the street. But the present state of the property should cause us to be wary of government economic development efforts.

    As reported by the Wichita Eagle twenty years ago on Wednesday, October 20, 1993:

    The council also approved a plan to spend about $76 a square foot to construct roughly 6,000 square feet of retail space on the first floor of the parking garage. The space would lease for an estimated $8.70 a square foot.

    Council member Sheldon Kamen questioned that part of the plan. ”I just can’t visualize spending $76 a square foot,” he said. “If I was a developer I wouldn’t spend $76 a square foot for retail space on William street.”

    Council member Joan Cole disagreed with Kamen, calling $8.70 a “very good price” that would attract tenants. ”It is my feeling there are small operations that would find this kind of small space very attractive,” she said.

    (Adjusted for inflation, these prices would be $122 and $14 today)

    What has been the results of the city’s venture into commercial real estate? As can be seen in this video from September, a Wichita city government office occupied some of the space, but the office had moved to another location. Now, Wichita Festivals occupies some of the space, but much is still empty.

    Rusted awnings near retail space in the city-owned garage on William Street in Wichita,
    Rusted awnings near retail space in the city-owned garage on William Street in Wichita.

    Inspecting the building last September, I found that this city-owned property had maintenance issues that might, in some circumstances, be considered as contributing to blight. Based on a recent walk-by, maintenance hasn’t improved in the ten months since then. Maybe that’s why there’s apparently little demand to rent this space.

    At the city-owned garage on William Street in Wichita, a duct tape repair is still in use after ten months.
    At the city-owned garage on William Street in Wichita, a duct tape repair is still in use after ten months.

    It’s not as though the building has many of advantages that city planners tell us are needed for a vital downtown Wichita. It’s adjacent to the block with the Eaton Hotel and the Wichita Downtown Development Corporation, the agency charged with promoting downtown. This retail space is right across the street from the city’s bus transit center. It’s also one block away from the Intrust Bank Arena, which was promoted as a driver of commerce and activity for the surrounding area. Its Walk Score — a measure promoted by city planners — is 71, which is deemed “Very Walkable. Most errands can be accomplished on foot.”

    Considering all the advantages this government-owned property has, it’s failing. It’s becoming blighted. The best thing the city could do is sell this property so that the benefits of markets and the profit-and-loss system can replace management by Wichita city hall bureaucrats.

  • Is Wichita chasing class politics to its detriment?

    From The Daily Beast, Richard Florida Concedes the Limits of the Creative Class:

    Urbanists, journalists, and academics — not to mention big-city developers — were easily persuaded that shelling out to court “the hip and cool” would benefit everyone else, too. … Florida himself, in his role as an editor at The Atlantic, admitted last month what his critics, including myself, have said for a decade: that the benefits of appealing to the creative class accrue largely to its members — and do little to make anyone else any better off. The rewards of the “creative class” strategy, he notes, “flow disproportionately to more highly-skilled knowledge, professional and creative workers,” since the wage increases that blue-collar and lower-skilled workers see “disappear when their higher housing costs are taken into account.” His reasonable and fairly brave, if belated, takeaway: “On close inspection, talent clustering provides little in the way of trickle-down benefits.”

    Post by Voice For Liberty.
  • WichitaLiberty.TV: Examining surveys about the future of Wichita

    WichitaLiberty.TV: Examining surveys about the future of Wichita

    In this episode of WichitaLiberty.TV: What do Wichitans want for their city’s future? Surveys from the City of Wichita and Kansas Policy Institute are examined. Episode 42, broadcast May 11, 2014. View below, or click here to view at YouTube.

  • Wichitans willing to fund basics

    Wichitans willing to fund basics

    Wichita City Hall SignIn Wichita, voters are willing to pay a higher sales tax for fundamentals like infrastructure and water supply, and less willing for business incentives, downtown development, and convention centers.

    In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase.

    In a series of questions asking if Wichita voters would be willing to pay a higher sales tax to provide certain services, a pattern appeared: Voters are willing to pay for things that are fundamental in nature, and less willing to pay for others.

    As can be seen in the nearby chart, voters are willing to pay for infrastructure, and more willing to pay for maintenance of existing infrastructure than for new infrastructure. Voters are most willing to pay for securing a long-term water source.

    kansas-policy-institute-2014-04-willing-to-fund

    For business incentives, downtown development, and convention centers, Wichita voters express less willingness to pay higher sales tax to fund these items.

    For the first three items, the average was 68 percent of voters willing to pay a higher sales tax. For the last three, the average is 30 percent.

    Following is the complete text of the questions:

    Would you personally be willing to pay a higher sales tax in the city of Wichita to fund incentives to businesses expanding in Wichita or moving here from other states?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to fund maintenance work on existing infrastructure, such as sewers and roads?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to fund new infrastructure, such as new highways and passenger rail connections?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to continue developing downtown Wichita with apartments, businesses, and entertainment destinations?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to expand or renovate convention spaces, such as the Hyatt Hotel and Century II?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to secure a long-term water source?

  • In Wichita, if you don’t like it, just don’t go there

    In Wichita, if you don’t like it, just don’t go there

    As Wichita city officials prepare a campaign to raise the sales tax in Wichita, let’s recall some council members’ attitude towards citizens.

    At a Wichita City Council meeting in August 2012, Council Member Lavonta Williams (district 1, northeast Wichita) advised taxpayers on what to do if they disagree with action taken by the council: Just don’t go there.

    If you don't like this statue, just don't go there, says Wichita City Council member Lavonta Williams. But, you must pay for it.
    If you don’t like this statue, just don’t go there, says Wichita City Council member Lavonta Williams. But, you must pay for it.
    The topic that day was whether the council should decide to add fluoride to the city’s water, or should it let citizens vote on the matter. Williams expressed concern that if the council were to decide to fluoridate Wichita’s water, citizens would not be able to avoid ingesting the added fluoride. They wouldn’t have a choice.

    By way of analogy, Williams counseled the concerned citizens: “Did you like the art that went down to WaterWalk? Maybe you didn’t. But you don’t have to go there.”

    She also said we don’t have to go to the apartments that were built at WaterWalk, and we don’t have to stay at the Ambassador Hotel.

    True, we can avoid these government-sponsored and subsidized places if we want to. But what Williams may have forgotten is that we can’t avoid being forced to pay for them.

    Besides that, what does it say about a government where if we disagree with its actions, we’re told “you don’t have to go there”?