Voice For Liberty

Tag: Downtown Wichita revitalization

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

  • Good intentions, and planners, can sap a city’s soul

    The following article by Kansas City writer Jack Cashill, courtesy of Ingram’s Magazine, explains some of the problems with city planning of the type Wichita is undertaking at this time.

    There are two connections to Wichita in this article. The first connection is the Power & Light District in downtown Kansas City, a meticulously planned — and heavily subsidized — redevelopment that has been mentioned by Wichita Mayor Carl Brewer as a model for Wichita. It’s also been featured heavily on the city’s television channel.

    The second connection to Wichita is Cashill’s description of Louisville. That city is the hometown of Wichita Downtown Development Corporation President Jeff Fluhr, not that this fact means anything substantive regarding public policy. But Louisville was one of four cities praised in a case study that is part of a Wichita-produced document that makes the case for downtown revitalization. Also, Visioneering Wichita has a trip to Louisville planned for October.

    I recently spent some back-to-back time in two cities, one run by merchants and one run by planners. The difference between the two is that the planners’ city, a veritable clone of Kansas City, does not work. The merchants’ city does.

    Since 1955, my family has been spending a chunk of every summer in and around the wonderfully vulgar New Jersey burg called Seaside Heights.

    “Vulgar” has several basic meanings. In this case, all of them are apt, and none is necessarily bad. One is “deficient in taste, delicacy, or refinement,” and that certainly fits. So too, in spades, does “offensively excessive in self-display.” It is the third and original definition — “associated with the great masses of people” — that makes the other two come to life in so fruitful a way. Yes, at Seaside, great masses of indelicate people wander about in excessive self-display, but, writ large, it is all glorious to behold.

    If the natives are excessive, it is because they can be. An ethnic hotbed since its inception, Seaside Heights educates international visitors in one visual sweep on the difference between their working classes and ours. If theirs shuffle, heads down, ours strut, swagger even, heads up, plumage on full display. Ours believe in themselves and their futures.

    It was not without calculation that MTV chose Seaside Heights as the locale for its improbable hit, “Jersey Shore,” a show that captures the larger gaudiness of the place and distills it to its truly vulgar essence. Vulgar or not, when my brother-in-law and I spotted two cast members on the beach, we were the envy of every female in our 50-member family compound, almost all of whom have college degrees. Vulgarity sells.

    Seaside Heights works in ways that most cities don’t. Each summer evening, its main thoroughfare, the boardwalk, is jammed from end to end with throngs of people of all ages and stripes spending goo-gobs of money at miscellaneous shops, many of which have no parallel in the free world.

    On the mile-long commercial stretch of the boardwalk, there is not a single vacancy. I don’t remember there ever being one. The Seaside chamber boasts, only a little bit grandly, of thrill rides, a water park, fun-filled amusements, action-packed arcades, Ferris wheels, merry-go-rounds, an overhead chair lift, ski-ball, frog bog, squirt-gun games, balloon darts, ring toss, mini golf, go-karts, old-time photo shops, tattoo parlors, trendy boutiques, massage parlors, bars, discos, numerous Italian restaurants, pizza shops, Philly cheesesteak restaurants, a Mexican Cantina, an Irish Pub, frozen custard and soft-serve ice cream shops, saltwater taffy and fudge shops, a new bakery, and, of course, shops that serve “Seaside Heights staples like the Fried Oreo.”

    Of the above services, how many can you find in the Power & Light District? City planners would hock their first-born to create this kind of pedestrian traffic, but they don’t know how. They can no more plan “fun” than they could anticipate a popular demand for a fried Oreo. This hodgepodge of stuff was driven by the consumers as gauged and tweaked by savvy, on-site merchants over decades.

    Seaside represents America’s money culture at work. There is no public transportation anywhere near the town. There is not a single sign on the boardwalk in any language other than English. There is nothing even resembling a dress code. There is no convention center, no hotels, no buildings higher than three or four stories, no parking garages, no subsidies, no strip clubs, no “adult” book stores. Nothing is free, including the beach. And yet each weekend, 100,000 or so people speaking a dozen or so different languages find their way to the boardwalk.

    After a week at Seaside, I flew out of Newark to Louisville, a city I had not yet visited. To round out my New Jersey experience, I sat across from Dominic Chianese, a.k.a. Junior Soprano, on the little express jet. I struck up a conversation, never letting on that I knew who he was. I am sure I had him fooled.

    I arrived on a Sunday evening for a conference at the convention center. Had I not known any better, I would have thought the plane had been diverted to KC’s Power & Light District. Other than the occasional horse statue, there was nothing remotely indigenous about Louisville’s downtown. It had all the stultifying cookie-cutter charm of a place that had been planned and heavily subsidized precisely for the benefit of ungrateful visitors like me.

    My hotel was nice enough, but aren’t all hotels? On Sunday eve, my little group and I wandered up Fourth Street to the city’s entertainment district. I passed a Border’s, a Panera’s, an Einstein Brothers, and a Hard Rock Café. The street was blocked off, and a rock band was playing loudly and badly in the created space. The only problem was that there was little foot traffic and even less audience.

    We ducked into an elaborately fake British pub. To say the least, there was no wait. Our waitress was tarted up to look like Twiggie, but happily, her inner cracker showed through. She was delightful even when botching our order. “Y’all wanted a shepherd’s pie?” My younger comrades wanted to hit the Hard Rock Café next, but I ducked out to watch the season premiere of Mad Men. I had watched not a minute of TV at Seaside.

    There was a time, not that many years ago, when Kansas City competed against the likes of Chicago and Denver and Atlanta. Today, we compete — often unsuccessfully — with Louisville. The reason Louisville can compete with us is because we have become Louisville and Louisville has become us.

    We have taxed our distinctive merchant-driven centers like the Country Club Plaza and Westport — and cannibalized their customer base — to subsidize a soulless, planner-driven Downtown.

    Only four years after its creation, city officials now project that the allegedly self-sustaining Power & Light District will require long-term life support to the tune of $10 million to $15 million in an annual cash subsidy.

    It may be time to scrap all plans, exile all the planners and embrace the fried Oreo.

    The link to the original article is Good Intentions, and Planners, Can Sap a City’s Soul.

  • For downtown Wichita, Mayor Brewer has a vision

    In Sunday’s Wichita Eagle, Wichita Mayor Carl Brewer penned a piece that states his belief in the importance of downtown and prepares the people of Wichita for the start of a prescriptive planning process, with accompanying subsidy to politically-favored developers willing to fulfill the plan.

    The mayor used the word “vibrant” twice. Asking citizens a question like “Would you like to have a vibrant downtown?” is meaningless. Who doesn’t? It’s only when the question is accompanied by context that citizens can start to understand how they should answer.

    For example, in the mayor’s article, he mentions the use of special assessment financing that funded suburban infrastructure, and that this is not sufficient for downtown needs. This statement reveals a misunderstanding by the mayor about the various forms of financing that might be used to help development.

    Special assessment financing means that the city spends money to build something, like the new street to serve a site where someone wants to build a house or a shopping center. The cost of this street, plus interest, is added to the property’s tax bill over a period of years. The property owner doesn’t get anything for free.

    But in the forms of financing that the mayor and city hall planners favor for downtown, developers do get something for free. Under tax increment financing (TIF), developers get to use their property taxes to pay for the same infrastructure that everyone else has to pay for. That’s because in TIF, the increment in property taxes are used to pay off bonds that were issued for the exclusive benefit of a development. Or, as in the case with a new form of TIF called pay-as-you-go, the increment in property taxes are simply given back to the developer. (Which leads to the question: why even pay at all?)

    Some deny that TIF directly enriches the developer. They’ll make arguments such as “it’s only used for infrastructure and eligible expenses” or “it’s not lending, it’s bonding” or “it wouldn’t happen but for TIF” or the biggest lie: TIF doesn’t have any cost. But despite these claims, TIF has a cost, and it does directly enrich the developer. That’s its entire purpose; its reason for being. If TIF didn’t enrich the developer, how does it change something that is claimed to be not economically feasible into something that is?

    While city leaders say that public participation in the revitalization of downtown is to be limited, we should be cautious and skeptical. Goody Clancy planners have said that public participation will be limited to TIF. This is bad in its own right and should be opposed on its merits.

    We need to be skeptical of the mayor and downtown planners because there isn’t enough TIF money available to do what they want to do. I fully expect a citywide sales tax, probably in the amount of one cent per dollar, to be proposed for the benefit of downtown subsidized developers. City leaders speak fondly of such a tax that Oklahoma City has used for many years.

    City leaders have already shown themselves to be not averse to imposing additional sales taxes in Wichitans and our visitors, having granted several Community Improvement Districts the ability to charge up to an additional two cents per dollar sales tax. This means that when visitors check out of the Fairfield Inn in downtown Wichita, they’ll be faced with a sales tax rate of 9.3 percent. That’s in addition to the six percent guest tax, which in the case of this hotel is collected for the exclusive benefit of itself, rather than funding general government and tourism activities.

    More community improvement districts are in the works. Wichita may soon be peppered with them.

    No faith in free markets means no faith in people

    The unwillingness of Wichita city leaders to let Wichitans freely decide where they live, and Wichita businesses freely decide where to locate, is a sign of lack of confidence in free markets and the people of Wichita. Because Wichitans do not choose to live and locate their business firms where politicians like Carl Brewer and Janet Miller — to name just two — and city hall bureaucrats like Wichita city manager Bob Layton and Wichita economic development director Allen Bell want them to, they deliver a slap in the face. It appears in the form of a vision backed up by planning, regulation, and the power to dish out favorable tax treatment, as outlined above.

    Once formed, a vision is a powerful force. Randal O’Toole, author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future has written about visionaries and government planning:

    The worst thing about having a vision is that it confers upon the visionary a moral absolutism: only highly prescriptive regulation can ensure that the vision overcomes an uncaring populace responding to a free market that planners do not really trust. But the more prescriptive the plan, the more likely it is that the plan will be wrong, and such errors will prove extremely costly for the city or region that tries to implement the plan.

    An example of planning that many see as having gone wrong is the government planning that led to growth on the city’s fringes. An example that helped make this possible is the government’s decision to build the northeast expressway also known as K-96. Acts of government like this are claimed to have caused the demise of downtown, the very situation that planners now want to correct.

    With government making “mistakes” (their claim, not mine) like this on a grand scale, why are we willing to trust that politicians and bureaucrats are making correct decisions now? Especially when you look at the campaign finance reports of most city council members and see the same names giving repeatedly to all council members, with these same names appearing repeatedly before the council asking for their subsidy. This is not a decision making process that gives citizens confidence.

    It bears repeating: the existence of the downtown planning process tells Wichitans they’ve made a mistake in where they chose to buy a home or build a business. Not only will Wichitans have to pay for what they freely chose, they’re going to be asked to pay again so that those with purportedly superior vision can have their way.

  • Wichita downtown boom could be over before it starts

    As Wichita moves towards the release of the plan for the revitalization of its downtown, urban planners — both local and out-of-town — tell us that there’s a big demand for downtown living. People are tired of suburban living, they say. The recent draft presentation by the city’s planning firm Goody Clancy contained bullet points like “who favor living and working in vibrant downtowns” and “and they are part of broad demographic trends that are much more ‘downtown friendly’ …e.g., almost two-thirds of Wichita’s households include just one or two people.”

    Or, as “uber-geographer” Joel Kotkin wrote in the Wall Street Journal this week: “Pundits, planners and urban visionaries — citing everything from changing demographics, soaring energy prices, the rise of the so-called ‘creative class,’ and the need to battle global warming — have been predicting for years that America’s love affair with the suburbs will soon be over.”

    But as Kotkin later writes: “But the great migration back to the city hasn’t occurred.”

    Kotkin cites some figures showing the decline in the market for downtown condos in a few cities, and concludes “Behind the condo bust is a simple error: people’s stated preferences.” He shows some figures that support his contention that “Demographic trends, including an oft-predicted tsunami of Baby Boom ’empty nesters’ to urban cores, have been misread.”

    These demographic trends are behind the analysis that Goody Clancy uses to promote its vision for downtown Wichita. Kotkin’s research ought to give us concern that downtown visionaries are leading Wichita down a path that really isn’t there.

    Kotkin issues a note of caution for urban planners: “The condo bust should provide a cautionary tale for developers, planners and the urban political class, particularly those political ‘progressives’ who favor using regulatory and fiscal tools to promote urban densification. It is simply delusional to try forcing a market beyond proven demand.”

    What does this mean for Wichita? Wichita’s planners and leaders are promoting a light-handed approach to downtown development, saying, for example, that public financing will be only for public purposes. But Wichita has a history of heavy-handed interventionism in markets, using economic development tools of all types. And as the mayor recently said at a council meeting, he’s recently learned of new types of incentive programs that other cities are using.

    So I think Wichita’s leaders definitely will use the “regulatory and fiscal tools” that Kotkin warns of. It’s only without government intervention that we’ll know whether Wichitans really prefer suburban, downtown, or other forms of living. Urban planners and city hall bureaucrats can’t tell us that.

    The Myth of the Back-to-the-City Migration

    The condo bust should lay to rest the notion that the American love affair with suburbia is over.

    Pundits, planners and urban visionaries—citing everything from changing demographics, soaring energy prices, the rise of the so-called “creative class,” and the need to battle global warming—have been predicting for years that America’s love affair with the suburbs will soon be over. Their voices have grown louder since the onset of the housing crisis. Suburban neighborhoods, as the Atlantic magazine put it in March 2008, would morph into “the new slums” as people trek back to dense urban spaces.

    But the great migration back to the city hasn’t occurred. Over the past decade the percentage of Americans living in suburbs and single-family homes has increased. Meanwhile, demographer Wendell Cox’s analysis of census figures show that a much-celebrated rise in the percentage of multifamily housing peaked at 40% of all new housing permits in 2008, and it has since fallen to below 20% of the total, slightly lower than in 2000.

    Continue reading at the Wall Street Journal (subscription required) or at Kotkin’s website.

  • Wichita downtown master plan meetings scheduled

    Recently planning firm Goody Clancy presented the master plan for the revitalization of downtown Wichita. This plan is in “draft” form, meaning that input is being solicited, with revisions appearing in the final version expected to be ready in September.

    In order that citizens may become familiar with the draft plan, the Wichita Downtown Development Corporation, the City of Wichita, and Visioneering Wichita will present the plan at a series of community meetings. The schedule is:

    July 7: Atwater Neighborhood City Hall (2755 E. 19th St. N.)
    July 8: Evergreen Library (2601 N. Arkansas)
    July 12: Haysville Public Library (210 S. Hays)
    July 13: Bel Aire City Hall (7651 E. Central Park Ave.)
    July 14: Derby City Hall (611 Mulberry)
    July 19: 1st United Methodist Church (330 N. Broadway) Meredith Room
    July 20: WSU Metroplex (5015 E. 29th St. N.) Entrance C
    July 21: Sedgwick County Extension (7001 W. 21st St.)

    All meetings begin at 7:00 pm.

  • Wichita, other city elections on horizon

    Next spring Wichita and other cities in Kansas will hold elections for city council members, school board members, and perhaps mayor.

    The filing deadline for candidates is January 25, 2011 at noon. The primary election is on March 1, and the general election is April 5.

    These elections are non-partisan, meaning that candidates don’t run as members of a political party. Instead, the top two vote-getters in the primary advance to the general election.

    The election calendar is a problem. Kansans presently have their political attention focused on our August primary, in which there are many hotly-contested battles. After that comes the November general election, which is likely to feature several races that generate intense interest and participation. Then comes the Thanksgiving and Christmas holiday season, when few want to think about politics.

    Right after that is the filing deadline for city elections, and then quickly, the primary and general elections. It’s a schedule designed for incumbents.

    In Wichita, there are three city council positions and the mayorship that are up for election. In district two, (click here for a map of districts), which is primarily the east side of Wichita, incumbent council member Sue Schlapp can’t run again because of the law limiting council members and the mayor to two four-year terms.

    In district four — south and southwest Wichita — Paul Gray has also served two terms and can’t run again.

    In district five — west and northwest Wichita — incumbent council member and Vice Mayor Jeff Longwell is in his first term and can run again if he chooses. He hasn’t revealed his plans publicly.

    Mayor Carl Brewer is also in his first term and can run again. I’ve not heard him reveal his plans.

    So far three candidates have publicly declared their intent to run. Former Executive Director of the Sedgwick County Democratic Party Jason Dilts has been actively running for the fourth district position for several months.

    In April securities broker and tea party activist Lynda Tyler announced her intent to run in district five against Longwell.

    Last week Galichia Heart Hospital CEO Steve Harris threw his hat in the ring for city council district two.

    There are others — well-known and not — that are considering running.

    Expect these issues to dominate the campaigns: First, downtown development — especially how to pay for it — is likely to be a dominant topic, as the Goody Clancy final plan is scheduled to be completed this fall. We can expect tremendous amounts of campaign funds to be directed to those candidates who favor taxpayer support and subsidy for politically-favored developers.

    As many Wichita political and civic leaders speak admiringly of the city sales tax that has funded downtown redevelopment in Oklahoma City, we might even see a sales tax question on the primary or general election ballot.

    The issue of taxpayer-funded economic development — whether downtown or elsewhere — may receive discussion too. Both Longwell and Brewer believe that Wichita doesn’t have enough “tools in the toolbox” for dishing out subsidy and tax breaks.

    Water is likely to be an issue too, as Wichita’s water rates are going up.

  • Goody Clancy: public subsidy required for Wichita downtown plan

    The recent presentation of the draft master plan for the revitalization of downtown Wichita gave Wichitans a preview of the forms of public assistance that Goody Clancy recommends the city use. The plan may be viewed at the Wichita Downtown Development Corporation website.

    It is a given, according to Goody Clancy, that downtown development will require public subsidy. Here’s an example as to why it is necessary: One of the issues with downtown development, especially in Wichita according to Goody Clancy, is “land acquisition & land lease issues.” It is contended that land ownership is fragmented, and assembling parcels for development is difficult. Therefore, public assistance is required.

    The shakiness of this argument can be seen by examining recent events in Wichita. Earlier this year, a developer wanted to build a hotel in the downtown WaterWalk area. There are no land acquisition issues there. The city assembled that property — using eminent domain as a tool — some years ago. There is one owner. Yet, the hotel still required massive subsidy to make it economically feasible, according to the developer and Wichita city staff.

    In a Wednesday morning workshop on the issue of public funding, a Goody Clancy consultant hinted at a legislative solution to the land acquisition problem. No more details were given, but solutions to problems like this usually involve the use of eminent domain.

    Public assistance is proposed to be used only for those items that have a public purpose. The primary use is likely to be public parking. According to the logic of Goody Clancy consultants, if public funds pay for a parking garage located between an apartment building and an office building, that really doesn’t benefit just those two properties. Instead, it benefits everyone. It’s a public amenity. It’s infrastructure.

    Nevermind that anywhere but downtown, people have to pay for their own parking. Homeowners build garages and driveways at their own expense. Developers build parking lots on their own.

    While “structured parking” — that’s planner-speak for multi-story parking garages — is more expensive to build per parking spot than surface lots, that’s no reason for the public to pay.

    The forms of public assistance mentioned as available for use include, at the state and national level: historic preservation tax credits, low income housing tax credits, new market tax credits, STAR bonds, brownfield grants, livable city grants, and transportation funds.

    At the local level, programs mentioned include capital investment, tax increment financing (TIF), community improvement districts (CID), facade loans/grants, low interest loan pools, and land.

    The last item refers to the fact that Goody Clancy considers it an advantage that the City of Wichita owns a lot of land downtown, as it can control the timing and features of development.

    Missing from this list is any mention of a direct tax to fund downtown redevelopment. But downtown leaders admire the city sales tax used to fund development in downtown Oklahoma City, and some have privately told me that a sales tax would be good for downtown Wichita. I expect to see a sales tax proposed in Wichita, as I don’t believe there is enough funding available through the sources mentioned above to do all that downtown boosters will want to do.

    Supporters of a sales tax for downtown subsidies will use the Intrust Bank Arena as an example of a successful project funded through a sales tax. They’ll say, as did Kansas Governor Mark Parkinson this year, that people didn’t even notice the one cent per dollar sales tax. It’s harmless, they will contend, despite evidence to the contrary. Not to mention that pronouncement of the arena as a sustainable success story is premature.

    Goody Clancy proposes that projects qualify for public assistance through a point system, which is reported on in a Wichita Business Journal article. By meeting established criteria, developers would earn — or not earn — points. Earning a certain level of points would be necessary for the city to consider the application for public assistance, and the number of points earned would help the city justify pouring public assistance into a project. Presumably the point system could help the city rank and prioritize projects that are competing for limited funds.

    Further considerations the city would use in deciding which projects to subsidize include, according to the presentation: team experience, financial qualifications, references, project economics, and public/private leverage ratio.

    The problem is that any point system the city would use would be a system that meets political criteria, not market criteria. We must realize that the incentives and motivations of politicians and city hall bureaucrats are very different from the incentives and constraints that control behavior in markets. As Gene Callahan explains:

    The Public Choice School has pointed out another force … Strong incentives exist for politicians to favor special-interest groups at the expense of the general public. Those upon whom benefits are concentrated are motivated to campaign hard for those benefits.

    Specifically, for downtown redevelopment to be successful, we need to have development that is profitable for the private sector, considering all costs. By subsidizing certain developers according to political criteria the city ignores and distorts the dictates of markets, and capital is misapplied. People make decisions for wrong reasons using incorrect information.

    While some city council members openly speak of the “free market” with disdain and other members pay it lip service only, we must remember that the free market consists of, in Wichita’s case, hundreds of thousands of consumers making decisions every day about where they want to live, work, and play. These decisions are made based on the individual preferences of each person, supplemented by the information the price system supplies.

    The price system is the best way we have to communicate the relative value of things. Hayek explains its importance:

    Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coordinate the separate actions of different people in the same way as subjective values help the individual to coordinate the parts of his plan.

    The price system is a wonderful, almost miraculous system that, as Hayek writes, coordinates the actions of millions. It allows for the process of economic calculation which is at the heart of capitalism. The lack of economic calculation based on a price system is the reason why socialism fails everywhere it is tried. Callahan summarizes what Mises showed the world:

    Mises showed that socialism is incapable of achieving an efficient use of society’s resources, because its economic planners have no means by which to perform economic calculation.

    The point system that Goody Clancy proposes to dish out subsidy is a bypass of the price system and economic calculation. It substitutes the judgment of central planners for free people coordinating activities through the price system. Wichitans should reject this idea.

  • Downtown Wichita planning events scheduled

    Last October the City of Wichita selected the Boston firm Goody Clancy to develop a plan for the revitalization of downtown Wichita. Now the draft master plan is ready, and will be presented to Wichitans on Monday June 14.

    The Wichita Downtown Development Corporation wrote in a message: “The Downtown Master Plan Team has been researching, analyzing the market, listening to the community and incorporating public feedback since November. Goody Clancy will present strategies for achieving the vision, identifying resources and the type of activity and development for Downtown Wichita. Following the presentation there will be a question and answer session with the planning team. People may RSVP for the meeting at info@downtownwichita.org or to (316) 264-6005.”

    The event will be on Monday, June 14, at the Scottish Rite Temple at 332 E. 1st Street (northwest corner First and Topeka). The event starts at 5:30 pm with a reception and light refreshments. The actual presentation is from 6:00 pm to 8:00 pm.

    The WDDC also announced three planning workshops to be held on Wednesday June 16. The schedule for these are

    8:00 am to 9:30 am: Enabling Downtown Development
    3:30 am to 5:00 pm: Creating Transportation Choices
    5:30 am to 7:00 pm: Creating Unique Places

    These events will be held in the Bank of America Theatre at 100 North Broadway, basement level.

    The WDDC says: “Following the public meetings on June 14th and 16th, the Downtown Wichita Development Corporation, Visioneering Wichita and the City of Wichita will make presentations to groups throughout the regional community for additional public input. The Downtown Master Plan Team will incorporate the feedback gathered at the June and July presentations. The final plan will be presented in September. To request a presentation, please contact Nancy Moore at 316-264-6005. ”

  • Wichita mayor speaks on economic development

    At last week’s Wichita City Council meeting, Mayor Carl Brewer spoke in favor of the city’s economic development policy, specifically as it related to a downtown Wichita development partly financed with tax increment financing, or TIF.

    The mayor disagreed with those who have appeared at city council meetings to testify against the use of TIF. He told of how the city called mayors’ associations and the National League of Cities, and they said that most large cities use incentives. He learned that cities use some incentives that that Wichita has not yet heard of, which undoubtedly will give city staff some additional tools in the toolbox in the future.

    He said “Incentives are available, and we’re on the right track.”

    The mayor mentioned that Harvard and Yale experts said that Wichita had too much parking downtown. This is in agreement with the Goody Clancy proposal presented to the city last October. Wichita selected that firm to lead the planning process for the revitalization or redevelopment of downtown Wichita.

    He said that in a recent meeting of mayors he attended, he learned that the mayors of other cities are trying to figure out how to use incentives and recruit business. They’re not turning their backs on incentives, he said, adding that “What we’re doing is nothing new.”

    He told the audience that “We as a city are going to have to endure change, and we as a city are going to have to understand any time there’s change, there is going to be some pain.”

    He added that he appreciated input from those who oppose the various subsidies and incentives the city gives to developers, and the city did check to see if the information they provided to the city was correct.

    Commentary

    The National League of Cities, one of the organizations the mayor consulted with regarding the use of incentives for the purpose of economic development, promotes an expansion of the powers of cities to engage in taxpayer-funded economic development subsidies. Its mission statement sounds noble: “Its mission is to strengthen and promote cities as centers of opportunity, leadership, and governance.” But citizens should not be deceived. It promotes interventionist practices rather than economic freedom. An example is its celebration of the U.S. Supreme Court decision in Kelo v. City of New London, which the Wall Street Journal described as “one of the worst in recent years, handing local governments carte blanche to seize private property in the name of economic development.”

    The mayor’s refusal to embrace economic freedom — which he has described as a “philosophy” that is not viable in the real world — means that Wichita is likely to continue to engage in the same competitive practices as do almost all other cities. It means that deals like the subsidy granted to Real Development is a template for other taxpayers-funded giveaways. As Council Member Paul Gray has warned, the plans for the redevelopment of downtown Wichita are likely to require many millions — perhaps hundreds of millions of dollars — of public assistance or investment. Since there isn’t enough tax increment financing available to pay for this, we can expect to see proposals for tax increases, such as a new city sales tax of perhaps one cent on the dollar, to pay for downtown redevelopment.

    A sales tax is the model for economic development in Oklahoma City. This has been promoted to Wichita and Sedgwick County leaders as a good idea for Wichita to pursue.

    What Wichita is missing out on is a way to truly distinguish itself from all the other cities and counties that are all using the same economic development tools. Presently about all we can do is offer subsidies that are larger than what other cities offer. But if we decided to forgo the use of the usual economic development subsidies and incentives, that would be something very unusual. It could really put Wichita on the map as a place to locate to.

    Since these economic development incentives and subsidies require other taxpayers, both individuals and businesses, to pay for their cost, Wichita could reduce the cost of doing business in Wichita for everyone. A company considering locating to Wichita could be confident that it would be operating in a low-tax environment. It wouldn’t have to hope that it fits into the city’s economic development policy guidelines. It wouldn’t have to hope that politicians and bureaucrats view its application favorably.

    Further, once a company locates here, it wouldn’t have to worry that other companies will receive incentives and subsidies that it will have to pay for. It would not need to worry about the other costs that subsidies impose, such as subsidized companies having lower overhead and are therefore better able to compete for employees.

    Eliminating interventionist policies from city hall could have other benefits. Is there a “good ‘ol boy” network of insiders that use Wichita city hall as their personal piggy bank? By eliminating the practice of granting incentives and subsidies, we could reduce or eliminate the cynical attitude of many citizens towards city government.

    We wouldn’t have to worry whether the campaign contributions made by those seeking favor from city hall were made in the interest of good government, or made in the hopes of getting a TIF district or other subsidy passed through the council.

    These ideas, however, are not seriously considered by the mayor or any city council members, at least to my knowledge. Instead, we in Wichita are doomed to finance an escalating economic development arms race. The economic freedom of Wichitans will decline.

    This is noteworthy in light of the mayor’s curious assertion in his remarks that we will have to “endure pain” caused by change. We’ve changed nothing.

  • On Wichita’s Exchange Place TIF, Janet Miller speaks

    Last week’s meeting of the Wichita City Council featured a message from Council Member Janet Miller that illustrated her firm belief in centralized government planning for the purposes of economic development. It also contained a material mistake in the understanding of the facts of the project.

    In her remarks from the bench, Miller disagreed with those who testify at council meetings against tax increment financing (TIF). She said there is much information that says this type of economic development incentive is effective.

    She said “Sometimes I wonder what city folks are living in when they talk about the negative, or the lack of results from TIFs.” She then named several Wichita TIF districts that she said performed well.

    If her remarks were aimed at me and some of the other people who have testified at city council meetings against the formation of TIF districts, council member Miller may not have been listening very carefully. We do not deny that TIF districts produce results — within the district itself. Things get built, buildings get renovated. It is the effect of TIF on the city as a whole that we are concerned with.

    It’s the observed effects of TIF, as economists Dye and Merriman have found and I have mentioned to the city council, including Miller, several times: “We find evidence that the non-TIF areas of municipalities that use TIF grow no more rapidly, and perhaps more slowly, than similar municipalities that do not use TIF.”

    It’s also the unobserved effects — the things that don’t happen because Wichita props up developers in politically-favored areas such as downtown. This form of centralized planning from Wichita city hall overrides the decisions that the citizens of Wichita make with their own pocketbooks, and concentrates power in the hands of bureaucrats and politicians.

    As Randal O’Toole has written: “TIF today is often part of a social engineering agenda that Americans should reject.”

    Miller praised the amount of office space Real Development has brought online in downtown Wichita. To the extent that this has been done without government assistance, this should be praised.

    She agreed with Vice Mayor Longwell’s assessment of this project, saying “This is not a tax abatement project.” She is just as wrong as is Longwell and other council members who believe this.

    In discussing the risk involved in this project, Miller told of how the disbursements from a HUD-guaranteed loan that will finance much of this project will made directly to contractors, not to Real Development. City of Wichita documents indicate that the City’s payments will be made in the same way. This is a quite peculiar arrangement: we are placing a huge bet of the success of downtown Wichita redevelopment in the hands of the principals behind Real Development, but evidently we don’t trust them enough to write them a check and be confident they will pay their bills.

    Miller also spoke of the jobs that will be created by this project. Implicit in her argument is that this project, or something similar, would not occur without the city’s subsidy. Her argument also ignores what economists tell us — that TIF districts simply transfer development from one part of town to another.

    What Wichitans should be most concerned about, however, is a misstatement by Miller that other council members may have relied on in making their decision on how to vote. Miller said: “The property tax increases, the increment that’s being calculated in this project, includes only the buildings in this project.”

    This statement directly contradicts the facts. In the Longhofer study, other properties owned by Real Development — the Petroleum Building, Sutton Place, 105 S. Broadway, and others — are used to support the TIF loan for the Exchange Place project. In response to my question, Wichita’s urban development director Allen Bell confirmed the same.

    In her message from the bench, Miller said that city staff and council members have had enough time to go over this proposal. Her mistaken remarks indicate, however, that the project is still not understood very well by the council, neither its mechanics or its economic effect.