Voice For Liberty

Tag: Economic development

  • Wichita vets its baseball partner(s)

    Wichita vets its baseball partner(s)

    The City of Wichita tells us it has thoroughly vetted the majority owner of the new Wichita baseball team.

    It appears that the owners of the New Orleans Baby Cakes baseball team talked with the City of Wichita before the team received permission from Minor League Baseball. The Wichita Eagle reports: “A Minor League Baseball team may have violated league rules by talking to Wichita Mayor Jeff Longwell before seeking approval from the league, according to a letter from the league’s attorney.” 1

    While the letter doesn’t name the New Orleans team, the Eagle reported in the same story, “A city official confirmed Wednesday night that Longwell was communicating with the Baby Cakes.”

    This revelation is relevant for a few reasons.

    First, if we look at the timing of this letter, the city — at least Wichita Mayor Jeff Longwell — knew of this transgression over a year ago. 2

    These rules of minor league baseball were considered so sacred that the mayor used them as a pretext for conducting negotiations in secret, particularly withholding disclosure of a side land development deal. (Although the city did disclose, at least somewhat. 3) Apparently, these rules didn’t mean much to the majority owner of the New Orleans team — someone the city says it has “thoroughly vetted.” Now we know that Schwechheimer is alleged to have these rules regarding moving his team to Wichita.

    By the way, the rules of minor league baseball that the city shared applied to the team, not the city. The letter the mayor received warned the team could be fined, not the city.

    When the city was notified that the team had broken the rules, didn’t this raise a warning flag?

    Second, the city says it vets its partners thoroughly, including baseball team majority owner Lou Schwechheimer. But in this case, we don’t know the identities of all the partners. All we know is that one Lou Schwechheimer is a majority owner. When asked what proportion of the team he owns, the city replied, “Over 50%.” Either the city does not know the number, or is not willing to tell us. 4 There’s a big difference between owning 51 percent of something and, say, 95 percent.

    The team owners are breaking their stadium lease in New Orleans in order to move to Wichita. There is much press coverage of the owners making grand promises to the people there, only to start planning to move the team within two years. 5

    Now the majority owner makes grand promises to Wichita. But the city says he’s been “thoroughly vetted,” and relies on long-term agreements with him.

    Why won’t Schwechheimer reveal the identities of his partners or the percent of the team he owns? Why is the city willing to enter expensive and long-term agreements without knowing this?

    —
    Notes

    1. Swaim, Chance. Baseball team owners may have broken rules by talking to Wichita behind league’s back. Wichita Eagle, March 13, 2019. Available at https://www.kansas.com/news/politics-government/article227674224.html. ↩
    2. Letter and attachments from Minor League Baseball to City of Wichita 2018-01-16.pdf. Available at https://drive.google.com/open?id=1PIrEaj3X3XoqqX9Ekq1u5m6KCGV9hFDH. ↩
    3. “A bond disclosure document anticipated a development agreement for land surrounding the new Wichita ballpark.’ Weeks, Bob. Wichita ballpark STAR bonds, 2018 issue. Available at https://wichitaliberty.org/wichita-government/wichita-ballpark-star-bonds-2018-issue/. ↩
    4. City of Wichita social media town hall on Facebook, March 7, 2019. See https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-2019-03-07-c.png. Also https://wichitaliberty.org/wp-content/uploads/2019/03/City-of-Wichita-Facebook-2019-03-07.png. ↩
    5. Weeks, Bob. Coverage of Wichita baseball owner Lou Schwechheimer. Available at https://wichitaliberty.org/wichita-government/wichita-baseball-owner-lou-schwechheimer/. ↩
  • Wichita baseball team travel agreement not known

    Wichita baseball team travel agreement not known

    Part of the agreement with the new Wichita baseball team is, apparently, unknown.

    In the September 2018 agreement between the City of Wichita and the owners of the new Wichita baseball team, there is this regarding an air travel fund: 1

    Section 10.6 Emergency Air Travel Fund. The City and the Team acknowledge and agree that, as a condition of the Pacific Coast League and Minor League Baseball approving the relocation of the Team to Wichita, the City and the Team must establish a fund (the “Travel Fund”) to be used to address some of the concerns raised about accessibility, frequency and ease of travel into and out of Wichita. Each of the City and the Team will be required to make an initial deposit of $100,000 into the Travel Fund, for a total of $200,000, and each Party will be required to replenish the Travel Fund each year in case of claims made against the Travel Fund during the prior year. The terms and conditions for the payout of funds and other issues related to the Travel Fund will be as set forth in a separate agreement among the City, the Team and the Pacific Coast League.

    In October the city produced a formal agreement (marked “execution copy”) between the city and the baseball team owners. That document references a travel fund in a general way, saying it is attached as exhibit D. 2

    But exhibit D is blank.

    I’ve asked the city for the travel fund agreement. It hasn’t been supplied.

    We can easily see that Pacific Coast League baseball team owners might seek to make maximum use of the air travel fund. And why not? To them, it’s just asking for free money.

    I’m sure the mayor and city officials will tell us to trust them and the team owners. They may cite the term “reasonable.” But this is a mayor that withheld the fact of a side land deal until recently, and now expresses regret for doing so.

    This is one more action by the city that breeds distrust. Until we know more, we need to delay any further decisions.

    And: Wasn’t years of subsidies and a shiny new airport supposed to fix the problems with air travel in Wichita?

    —
    Notes

    1. City of Wichita agenda packet for September 11, 2018, item IV-3 ↩
    2. “17.9 Emergency Air Travel Fund. The City and the Team acknowledge and agree that, as a condition of the PCL and MiLB approving the relocation of the Team to Wichita, the City and the Team must establish a fund (the “Travel Fund”) to be used to respond to reasonable claims presented by other teams in the PCL relating to accessibility, frequency and ease of travel into and out of Wichita. The Emergency Air Travel Fund Agreement is attached hereto as Exhibit D.” City of Wichita. BALLPARK FACILITY USE AND MANAGEMENT AGREEMENT BETWEEN THE CITY OF WICHITA, KANSAS AND YES2NO, LLC, A MASSACHUETTS LIMITED LIABILITY COMPANY Authorized to do business in Kansas. October 23, 2018. Available at https://www.wichita.gov/Stadium/Documents/Facility%20Use%20%20Management%20Agreement%20-%20Final.pdf. ↩
  • Did Wichita forget the interest?

    Did Wichita forget the interest?

    In a presentation, Wichita economic development officials ignore the cost of borrowing money.

    In a presentation to the Wichita City Council on March 5, 2019, the council was shown a pro forma cash flow statement regarding the new baseball stadium.

    Presentation to Wichita city council. Click for larger.
    The conclusion reached by city officials was: “The $38M equates to over 50% of the $75M stadium debt repayment.” 1

    $38M, or $38,000,000 refers to the sum of the amounts the city expects to receive from these sources:

    • Incremental sales tax (used to pay STAR bonds)
    • TIF revenue (incremental property tax revenue)
    • CID (the extra sales tax customers will pay)
    • Naming rights
    • Management fee (the rent the new team plays the city)

    The pro forma statement shows these cash flows starting in 2020 and continuing through 2042.

    $75M, or $75,000,000, refers to the cost of the baseball stadium. (In this illustration the city has not included the $6,000,000 the city plans to borrow to pay for the pedestrian bridge and riverfront improvements.)

    What’s missing? Interest on borrowed money.

    If the presentation said, “The $38M equates to over 50% of the $75M stadium debt principal repayment,” that would be correct. But to tell the council that it costs just $75,000,000 to repay the stadium debt ignores the fact that the city is borrowing this money.

    There will be a lot of interest to pay. We don’t know how much, as the bonds have not been sold, except for the STAR bonds. The city has planned to borrow $42,140,000 in STAR bonds. In the disclosure for these bonds, the interest payments alone total $24,647,850. In some years the interest payment alone is $1,828,556. 2

    Citizens should ask the city what will be the total cost of repaying the stadium debt, and not settle for answers that ignore millions of dollars in interest.

    —
    Notes

    1. City of Wichita. Stadium Private Development Agreement. March 5, 2019. Available at https://www.wichita.gov/Council/CC%20Presentations/2019-03-05%20PowerPoint%20Presentations/V-3%20Approve%20the%20Private%20Development%20Agreement%20with%20Wichita%20Riverfront%20LP.pdf. ↩
    2. Municipal Securities Rulemaking Board. CITY OF WICHITA, KANSAS SALES TAX SPECIAL OBLIGATION REVENUE BONDS (RIVER DISTRICT STADIUM STAR BOND PROJECT), SERIES 2018 (KS). Available at https://emma.msrb.org/IssueView/Details/ER387382. ↩
  • In Wichita, respecting the people’s right to know

    In Wichita, respecting the people’s right to know

    The City of Wichita says it values open and transparent government. But the city’s record in providing information and records to citizens is poor, and there hasn’t been much improvement.

    The City of Wichita is proud to be an open and transparent governmental agency, its officials say. Former Mayor Carl Brewer often spoke in favor of government transparency. 1

    When the city received an award for transparency in 2013, Wichita City Manager Robert Layton said the city was honored. 2

    Mayor Jeff Longwell penned a column in which he said, “First off, we want City Hall to be open and transparent to everyone in the community.” And the mayor’s biography on the city’s website says, “Mayor Longwell has championed many issues related to improving the community including government accountability, accessibility and transparency …”

    But the reality is different. It shouldn’t be. Nearly four years ago the city expanded its staff by hiring a Strategic Communications Director. When the city announced the new position, it said: “The Strategic Communications Director is the City’s top communications position, charged with developing, managing, and evaluating innovative, strategic and proactive public communications plans that support the City’s mission, vision and goals.”

    But there has been little, perhaps no, improvement in the data and information made available to citizens. The Wichita Eagle has editorialized on the lack of sharing regarding the details surrounding the new baseball team. 3

    While this is important and a blatant example, there are many things the city could do to improve transparency. Some are very simple.

    For example, it is very common for governmental agencies post their checkbooks on their websites. Sedgwick County does, as does the Wichita school district. But not the City of Wichita.

    Until a few years ago, Wichita could supply data of only limited utility. What was supplied to me was data in pdf form, and as images, not text. It would be difficult and beyond the capability of most citizens to translate the data to a useful format. Even if someone translated the reports to computer-readable format, I don’t think it would be very useful. This was a serious defect in the city’s transparency efforts.

    Now, if you ask the city for this data, you’ll receive data in an Excel spreadsheet. This is an improvement. But: You may be asked to pay for this data. The city says that someday it will make check register data available, but it has been promising that for many years. See Wichita check register for the data and details on the request.

    Another example: For several years, the Kansas city of Lawrence has published an economic development report letting citizens know about the activities of the city in this area. The most recent edition may be viewed here.

    The Lawrence report contains enough detail and length that an executive summary is provided. This report is the type of information that cities should be providing, but the City of Wichita does not do this.

    Example from the Lawrence report. Click for larger.
    It’s not like the City of Wichita does not realize the desirability of providing citizens with information. In fact, Wichitans have been teased with the promise of more information in order to induce them to vote for higher taxes. During the campaign for the one cent per dollar Wichita city sales tax in 2014, a city document promised this information regarding economic development spending if the tax passed: “The process will be transparent, with reports posted online outlining expenditures and expected outcomes.” (This is what Lawrence has been doing for several years.)

    The city should implement this reporting even though the sales tax did not pass. If it’s good for citizens to have this type of information if the sales tax had passed, it’s good for them to know in any circumstance, because the city (and other overlapping governmental jurisdictions) still spends a lot on economic development.

    Why is this information not available? Is the communications staff overwhelmed, with no time to provide this type of information?

    During the sales tax campaign Wichita city staff had time to prepare news releases with titles like “City to Compete in Chili Cook-off” and “Jerry Seinfeld Returns to Century II.” Now the city produces headlines like “Wichita Transit to Receive Good Apple Award.”

    But if you want to know how the city spends economic development dollars, you won’t find that.

    There are other things:

    Most of all, the city simply needs to change its attitude. Here’s an example.

    Citizen watchdogs need access to records and data. The City of Wichita, however, has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Wichita Downtown Development Corporation, Visit Wichita (the former Go Wichita Convention and Visitors Bureau), and Greater Wichita Economic Development Coalition, now the Greater Wichita Partnership. Each of these agencies refuses to comply with the Kansas Open Records Act, using the reasoning that they are not “public agencies” as defined in the Kansas law that’s designed to provide citizen access to records.

    The city backs this interpretation. When legislation was introduced to bring these agencies under the umbrella of the Kansas Open Records Act, cities — including Wichita — protested vigorously, and the legislation went nowhere.

    Recently the City of Wichita added a new tax to hotel bills that may generate $3 million per year for the convention and visitors bureau to spend. Unless the city changes its attitude towards citizens’ right to know, this money will be spent in secret.

    This attitude has been the policy of the city for a long time. In 2008, Randy Brown, at one time the editorial page editor at the Wichita Eagle wrote this:

    I’m fairly well acquainted with Bob Weeks, our extraconservative government watchdog. It’s fair to say that I agree with Weeks no more than one time in every 20 issues. But that one time is crucial to our democracy.

    Weeks is dead-on target when he says that conducting the public’s business in secret causes citizens to lose respect for government officials and corrupts the process of democracy (“TIF public hearing was bait and switch,” Dec. 5 Opinion). And that’s what happened when significant 11th-hour changes to the already controversial and questionable tax-increment financing plan for the downtown arena neighborhood were sneaked onto the Wichita City Council’s Tuesday agenda, essentially under cover of Monday evening’s darkness.

    This may not have been a technical violation of the Kansas Open Meetings Act, but it was an aggravated assault on its spirit. Among other transgressions, we had a mockery of the public hearing process rather than an open and transparent discussion of a contentious public issue.

    The Wichita officials involved should publicly apologize, and the issue should be reopened. And this time, the public should be properly notified.

    Randy Brown
    Executive director
    Kansas Sunshine Coalition for Open Government

    A few years later, Brown noticed the attitude had not improved. Although he did not mention him by name, Brown addressed a concern expressed by Wichita City Council Member Pete Meitzner (district 2, east Wichita). He accurately summarized Meitzner’s revealed attitude towards government transparency and open records as “democracy is just too much trouble to deal with.”

    I don’t think things have improved.

    —
    Notes

    1. For example, in his State of the City address for 2011, Brewer listed as an important goal for the city this: “And we must provide transparency in all that we do.” See https://drive.google.com/open?id=1xgx96BEXALDEgLBRcQdz2Kg0_W5x3e2J. ↩
    2. “The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.” Wichita City New Release. Available at https://www.wichita.gov/News/Pages/2013-03-18b.aspx. ↩
    3. Wichita Eagle Editorial Board. *Fight for transparency during ‘Sunshine Week’ and year-round.” Available at https://www.kansas.com/article227430494.html. ↩
  • Wichita ballpark STAR bonds, 2018 issue

    Wichita ballpark STAR bonds, 2018 issue

    A bond disclosure document anticipated a development agreement for land surrounding the new Wichita ballpark.

    When offering bonds for sale, issuers file a disclosure document that is often full of interesting detail. In the disclosure for the STAR bonds for the new Wichita ballpark, we learn this:

    The City and the owner of the minor league team are anticipated to enter into a development agreement whereby the owner has the ability to develop approximately 15 acres of property surrounding the stadium. The development agreement is anticipated to require development to commence within 18 months of completion of the stadium and include the development of a hotel, retail spaces, restaurants and bars to complement the stadium and surrounding areas.

    This is from a document dated November 1, 2018 and filed with the Municipal Securities Rulemaking Board on November 16, 2018. This seems to contradict a claim made by Wichita Mayor Jeff Longwell and other city officials that the city was barred from disclosing the fact of land development negotiations until last week. The bond disclosure is silent regarding terms of an agreement.

    Following are some excerpts from the disclosure. The complete document is available at https://emma.msrb.org/IssueView/Details/ER387382.

    $42,140,000
    City of Wichita, Kansas
    Sales Tax Special Obligation Revenue Bonds
    (River District Stadium Star Bond Project)
    Series 2018

    Official Statement dated November 1, 2018

    STAR Bonds Overview

    (page 1)

    “Sales tax and revenue” bonds (“STAR Bonds”) are authorized to be issued by the City pursuant to K.S.A. 12-17,160. et seq., as amended (the “STAR Bond Act”), The STAR Bond Act provides a form of tax increment financing that enables the issuance of bonds payable from certain State and local sales and compensating use tax revenues generated from STAR Bond projects constructed within a STAR Bond district.

    To implement STAR Bond financing, a local government must adopt a resolution that specifies a proposed STAR Bond project district’s boundaries and describes the overall district plan, hold a public hearing on the district and the plan, and pass an ordinance that establishes the STAR Bond project district.

    There may be one or more proposed STAR Bond projects within a STAR Bond project district. As with the STAR Bond project district, the local government must adopt a resolution, hold a hearing, and pass an ordinance that establishes each such STAR Bond project. Each project also must have a project plan that includes a description and map of the project area, a plan for relocating current residents and property owners, a detailed description of the proposed buildings and facilities and a feasibility study showing that the project will have a significant economic impact, generate enough tax revenues to pay off STAR Bonds proposed to be issued to finance the project, and not adversely affect existing businesses or other STAR Bonds that have already been issued. STAR Bonds can be used to pay for certain costs of a STAR Bond project, including property acquisition, site preparation, infrastructure improvements, certain hard construction costs, bond issuance costs, bond financing costs, loan financing costs, and related soft costs.

    The District and the Project

    (page 2)

    In 2007, the City adopted the River District STAR Bond Project Plan (the “Original Project Plan”) for an approximately 210 acre tract known as the East Bank Redevelopment District (the “Original District” or the “Phase I Project Area”). The Original Project Plan anticipated a $155.8 million redevelopment project along the banks of the Arkansas River (the “River”) through the City’s Central Business District.

    In December 2016, the City adopted an ordinance to expand the boundaries of the Original District by adding approximately 64 acres located on the west bank of the River north from Kellogg Avenue to approximately 1st Street (the “Additional Property.” the “West Bank Project Area” or the “Phase II Project Area”). The West Bank Project Area includes commercial properties, the City’s Lawrence-Dumont Baseball Stadium, the Wichita Ice Center and the Wichita Public Library’s Advanced Learning Library. The Original District, as expanded by the Additional Property, is referred to herein as the “STAR Bond District” or the “District.”

    The West Bank Project Area was added to the Original District to fund additional riverbank improvements between Douglas Avenue and the Kellogg Avenue Bridge, to install a pedestrian bridge to connect the performing arts area on the East Bank with the sports and entertainment area on the West Bank, to construct a multi-sport athletic facility that will replace the existing Lawrence-Dumont Baseball Stadium on the same site and to construct a baseball-themed spoils museum in conjunction with the multi-sport athletic facility. On December 20, 2016. the Secretary of Commerce of the State of Kansas (the “Secretary”) determined that the District, as expanded by the Additional Property, is an “eligible area” within the meaning of the STAR Bond Act.

    On January 3, 2017, the City adopted an ordinance to approve the Project Plan Amendment to the STAR Project Plan, dated as of December 2016 (the “STAR Bond Project Plan Amendment”). The STAR Bond Project Plan Amendment included a pedestrian bridge across the River, a baseball/sports museum, riverbank improvements and design and site work related to the baseball stadium. Major components of the STAR Bond Project Plan Amendment and the Phase II Project Plan (the “2018 Projects”) include the following:

    (i) the replacement of the City’s existing Lawrence-Dumont Baseball Stadium expected to be the home a Triple-A minor league affiliate of the Miami Marlins;
    (ii) a museum and home of the National Baseball Congress; and
    (iii) a pedestrian bridge across the River.

    (page 5)

    The proceeds of the Series 2018 Bonds, along with other available fluids, will be used to (i) pay a portion of the costs of the 2018 Projects; (ii) fond a deposit to the Capitalized Interest Fund established under the Indenture for the Series 2018 Bonds to be used to pay interest on the Series 2018 Bonds through September 1, 2020; and (iii) pay certain costs related to the issuance of the Series 2018 Bonds.

    (Page 8)

    THE DISTRICT AND THE 2018 PROJECTS

    The Original STAR Bond District and the Original Project

    In 2007, the City adopted the Original Project Plan for the Original District. The Original Project Plan anticipated a $155.8 million redevelopment project along the banks of the River through the City’s Central Business District. The first phase of the project plan extended from the First/Second Street Bridge to the Central Avenue (Little Arkansas) and Seneca Street (Big Arkansas) bridges. It included upgrades to the area surrounding the Keeper of the Plains statue at the confluence of the rivers. Additional construction included a portion of the South Riverbank to the west of Exploration Place, two cable-stayed pedestrian bridges linking the Keeper of the Plains monument to the outer banks of each river, and work along the East Riverbank from Central to First Street. The first phase also included construction of the Fountains at WaterWalk, a fountain attraction incorporating programmed water jets linked to lights and music.

    The East Riverbank Project was completed in 2011 as part of the Drury Plaza Hotel Broadview redevelopment. The $2,500,000 STAR revenue financed project involved extensive East Riverbank improvements north of Douglas Avenue. This project phase supported the $29 million Drury Plaza Hotel redevelopment project. Improvements included a venue space, pedestrian access from Waco Street and river overlook areas.

    The recently completed West Bank Apartments Project, located within the boundaries of the Original District, included a West Riverbank promenade between Second Street and Douglas Avenue and the Chisholm Trail McLean Memorial Fountain area, riverbank improvements with landscaping, fountains and walking/bike paths along the River. These improvements are associated with a tax increment financing and community improvement district development that includes an apartment complex, parking garage and a boat and bike rental facility. STAR Bonds financed $4,750,000 of West Riverbank improvements associated with the West Bank Apartments Project.

    The Expanded STAR Bond District

    In December 2016, the City adopted an ordinance to expanded the boundaries of the Original District by adding approximately 64 acres located on the west bank of the River north from Kellogg Avenue to approximately 1st Street (the “Additional Property,” the “West Bank Project Area” or the “Phase II Project Area”). The West Bank Project Area includes commercial properties, the City’s Lawrence-Dumont Baseball Stadium the Wichita Ice Center and the Wichita Public Library’s Advanced Learning Library. The Original District, as expanded by the Additional Property, is referred to herein as the “STAR Bond District” or the “District.” A map depicting the boundaries of the District, is set forth above.

    The West Bank Project Area was added to the Original District to fund additional riverbank improvements between Douglas Avenue and the Kellogg Avenue Bridge, to install a pedestrian bridge to connect the performing arts area on the East Bank with the sports and entertainment area on the West Bank, and to construct a baseball-themed sports museum on the site of the Lawrence-Dumont Baseball Stadium. On December 20, 2016, the Secretary of Commerce of the State of Kansas (the “Secretary”) determined that the District, as expanded by the Additional Properly, is an “eligible area” within the meaning the of the STAR Bond Act.

    The 2018 Projects

    On January 3, 2017, the City adopted an ordinance adopting the STAR Bond Project Plan Amendment which provided for additional development within the District. On March 20, 2017, the Secretary took the following actions with respect to the District and the STAR Bond Project Plan Amendment:

    (1) found and determined that the District, as expanded, is a major commercial entertainment and tourism area and an “eligible area” within the meaning of the STAR Bond Act;
    (2) approved and designated improvements to the West Bank of the Arkansas River and enhanced public improvements within the District as part of a “STAR bond project” within the meaning of the STAR Bond Act; and
    (3) approved the issuance of up to $19,500,000 (exclusive of approved financing costs) in STAR Bond financing for the improvements and amenities related to the STAR Bond Project Plan Amendment.

    On May 2, 2017, the City adopted an ordinance adopting the River District Phase II STAR Bond Project Plan (the “Phase II Project Plan”) which provides for the redevelopment of the West Bank Project Area. On April 30, 2018, the Secretary took the following actions with respect to the District and the Phase II Project Plan:

    (1) found and determined that the District, as expanded, includes a “major multi-sport athletic facilities” and museum components and is an “eligible area” within the meaning of the STAR Bond Act;
    (2) approved and designated improvements to the East Bank of the Arkansas River and enhanced public improvements within the District as part of a “STAR bond project” within the meaning of the STAR Bond Act; and
    (3) approved the issuance of up to $20,500,000 (exclusive of approved financing costs) in STAR Bond financing for the improvements and amenities related to the Phase II Project Plan.

    Major components of the Phase II Project Plan (also known as the “2018 Project”) include the following:

    (i) the replacement of the City’s existing Lawrence-Dumont Baseball Stadium which is expected to be the home a Triple-A minor league affiliate of the Miami Marlins;
    (ii) a museum and home of the National Baseball Congress; and
    (iii) a pedestrian bridge across the River.

    The estimated overall plan of finance for the 2018 Projects includes the use of fluids provided from other available City fluids or borrowings, including proceeds of general obligation bonds and revenues from tax increment financing districts and community improvement districts, which proceeds are expected to be available in the first half of 2019. The following table provides a summary of the sources and uses of such funds:

    Sources of Funds
    STAR Bonds: 40,000,000.00
    Available City Funds & Financing: 43,000,000.00
    Total Sources: 83,000,000.00

    Uses of Funds
    Stadium & Museum: 75,000,000.00
    Pedestrian Bridge: 3,000,000.00
    Riverbank Improvements: 3,000,000.00
    Parking & Infrastructure: 2,000,000.00
    Total Uses: 83,000,000.00

    The existing Lawrence-Dumont Baseball Stadium was constructed in 1934 as part of the Works Progress Administration during the Great Depression. The stadium previously served as the home to the Wichita Wranglers (Class AA Texas League) through the 2007 baseball season. As part of the plans to continue to redevelop the City’s downtown area, the City has estimated the demolition of the current stadium by year end 2018 and completion of the new stadium by March 2020. The new facility is estimated to include 6,500 to 7,000 fixed seats, with group areas and other spaces bringing total capacity to around 10,000. The stadium will serve as the home for a to-be-named Triple A minor league affiliate of the Miami Marlins and be used to hold concerts and various high school and collegiate sporting events.

    The City and the owner of the minor league team are anticipated to enter into a development agreement whereby the owner has the ability to develop approximately 15 acres of property surrounding the stadium. The development agreement is anticipated to require development to commence within 18 months of completion of the stadium and include the development of a hotel, retail spaces, restaurants and bars to complement the stadium and surrounding areas.

    Other Anticipated Development in the District

    Anticipated future phases of development expected to occur within the West Bank Project Area include: (i) completion of the west bank corridor improvements from Douglas Avenue south to Kellogg with an estimated $5 million in STAR Bond funded improvements for a plaza and riverbank amenities designed to complement the stadium and surrounding Delano neighborhood; (2) an East Bank Catalyst Site north of the Broadview Hotel redevelopment site and across the River from the West Bank Apartments Project (as described above), with an anticipated $40 million mixed-use development along the river that complements both the River corridor and adjacent Broadview Hotel and includes an estimated $4 million in STAR Bond financed plaza and River bank amenities; and (3) development of the area referred to as the Upper Reach, extending from the Seneca Street Bridge to Sim Park on the opposite side of the River.

    The City and EPC Real Estate Group. LLC (the “Delano Catalyst Site Developer”) have entered into a Development Agreement relating to certain property within the West Bank Project Area, consisting to the property south and east of the Wichita Public Library’s Advanced Learning Library. Pursuant to the Development Agreement, the Delano Catalyst Site Developer has agreed to develop the property to include the following:

    • a public greenway/gathering area on the property;
    • an apartment complex consisting of a minimum of 180 apartment units;
    • a hotel consisting of a minimum of 90 guest rooms;
    • a minimum of 114 parking spaces available to the public; and
    • a minimum of 5,000 square feet of Class A commercial space.

    The Delano Catalyst Site Developer has agreed to meet certain project milestones in connection with the development of the property, including full project completion by October 1, 2020.

    Projected Incremental Tax Revenues

    (page 14)

    Click here to view Wichita ballpark STAR bonds series 2018 projected incremental tax revenues.pdf

    (page 15)

    SOURCES AND USES OF FUNDS

    The following sets forth the estimated sources and uses of fluids relating to the proceeds of the Series 2018 Bonds:

    Sources of Funds
    Series 2018 Bond Principal: 42,140,000.00
    Net Original Issue Premium: 1,733,967.20
    Total Sources: 43,873,967.20

    Uses of Funds
    Deposit to Project Fund: 40,000,000.00
    Deposit to Capitalized Interest Fund: 3,276,163.30
    Costs of Issuance(1): 597,803.90
    Total Uses: 43,873,967.20

    (1) Includes underwriters’ discount (see “UNDERWRITING” herein) and other costs of issuance related to the Series 2018 Bonds.

    Debt Service Requirements

    (page 16)

    Click here to view Wichita ballpark STAR bonds series 2018 debt service requirements.pdf

  • Update: Wichita city sales tax not passed

    Update: Wichita city sales tax not passed

    There was no successful Wichita city sales tax election. City documents were mistaken, which raises more issues.

    The agenda packet for this week’s meeting of the Wichita City Council held a surprise: The city had passed a one cent per dollar sales tax.

    In the agenda for March 5, 2019, as part of item V-3, titled “Private Development Agreement with Wichita Riverfront LP (District IV),” there is a development agreement between the city and a group wanting to develop city-owned land near the new baseball stadium. Section 6.03 of the development agreement holds this surprise:

    “The 1% City sales tax has been approved at an election, and the City agrees that the City sales tax revenues generated within the STAR Bond District will be committed to pay the principal and interest of the STAR Bonds.” (emphasis added)

    It turns out this is a mistake. The city’s chief economic development official told me, “When we draft new agreements, we often cut and paste language from previous agreements to help build a base document.”

    This language has been removed from the agreement, he also said, as it has “no purpose in this agreement.”

    This still leaves a few questions:

    First, from which previous agreement was this copied? Which agreement (or potential agreement) contained a statement that city voters approved a city sales tax? Which election?

    Second, what if the council had passed this agreement with this language included?

    Third, this is evidence of extreme carelessness. We’ve been told that this development agreement has been in negotiations for several months. Yet, this mistake somehow survived and almost became part of a binding document.

    For more on this matter, see:

  • In Wichita, no tenant poaching, unless waived

    In Wichita, no tenant poaching, unless waived

    The city of Wichita has included anti-poaching clauses in development agreements to protect non-subsidized landlords, but the agreements are without teeth.

    The Wichita City Council is considering a development agreement between the city and a group wanting to develop city-owned land near the new baseball stadium. In the agenda for March 5, 2019, as part of item V-3, titled “Private Development Agreement with Wichita Riverfront LP (District IV),” there is this in the city’s “analysis” section:

    For and in consideration of the Purchase Rights granted Developer herein, from the Effective Date of this Agreement for a period of ten (10) years after the Completion of Construction for the Phase One Development, Developer and each of its members hereby agrees and consents that it shall not, directly or indirectly, market, solicit, promote or attempt to lease commercial space in the Private Development to then-current tenants of properties located within a distance of two (2) miles extending from the outside boundary of the Private Development Site. (emphasis added)

    While the city doesn’t provide a reason for this provision of the agreement, we might call it the “anti-poaching” clause. Since the city is giving land to the ballpark developers at (essentially) zero cost, that gives them an advantage over other developers who have not received such subsidy. The ballpark developers could use that cost advantage to lure (poach) tenants from nearby locations. Those landlords who lose tenants might feel they have been discriminated against. They’d be correct.

    While this anti-poaching policy seems reasonable, the city gives itself an escape hatch. In the actual agreement between the city and the ballpark developer we find that the developer shall not poach without “the City’s providing written consent waiving this restriction with respect to such Potential Tenant.” 1

    In other words, the city can waive the anti-poaching clause. There is no need for anyone to give a reason why a waiver is necessary. The document is silent as to whether a waiver requires city council approval.

    This isn’t the first time the city has included an anti-poaching clause with a waiver provision. On December 19, 2017 the city council considered a development agreement for the Spaghetti Works development near Naftzger Park in downtown. The city’s analysis described an anti-poaching clause, but the actual development agreement lets the city waive the clause. In this case, all the city must do is fail to object to a poached tenant, and the clause is waived. 2

    —
    Notes

    1. Development agreement, section 3.10: “Business Restriction Radius. For and in consideration of the Purchase Rights granted Developer herein, from the Effective Date of this Agreement for a period of ten (10) years after the Completion of Construction for the Phase One Development, Developer and each of its members hereby agrees and consents that it shall not, directly or indirectly, market, solicit, promote or attempt to lease commercial space in the Private Development to then-current tenants of properties located within a distance of two (2) miles extending from the outside boundary of the Private Development Site (“Business Restriction Radius”) as shown on Exhibit L, to avoid and/or minimize material economic impact to the established businesses within the Business Restriction Radius without: (i) the Developer’s providing to the City and the then-current landlord of such potential tenant (“Potential Tenant”) sixty (60) days’ prior written notice of the intent to enter into lease negotiations with such Potential Tenant within the Business Restriction Radius, and (ii) the City’s providing written consent waiving this restriction with respect to such Potential Tenant. This restriction shall not apply to a Potential Tenant if such Potential Tenant (i) has multiple locations within the City of Wichita at the time of such solicitation, or (ii) such Potential Tenant is considering opening up a second location within the Private Development Site in addition to maintaining its current location within the Business Restriction Radius.” ↩
    2. City of Wichita, agenda packet for December 19, 2017, agenda item IV-6, “Petition to Approve a Community Improvement District and approval of a Development Agreement for Spaghetti Works (District I).” From the city’s analysis” “The agreement includes a retail relocation restriction for the first three years following the Certificate of Completion for Phases 1 and 2. The boundaries for the relocation restriction are 1st Street on the north, Waterman Street on the south, Broadway Avenue on the west and Washington Avenue on the east.”

      From the development agreement: “Section 4.14. Relocation Restrictions. For a period of three years following the City’s acceptance of a Certificate of Full Completion of Phases 1 and 2 of the SW Project, the Developer or approved assignee shall present to the City a written description of potential retailer or restaurant tenants to be located within Phases 1 and 2 of the SW Project which are relocating from a site within the area bounded by 1st Street on the North, Waterman Street on the South, Broadway Street on the West, and Washington Avenue on the East (the “Restricted Area”). Such description shall be presented to the City within thirty (30) days prior to the date when the Developer or approved assignee expect to enter into any legal obligation for the lease of such retail or restaurant tenant space. The City shall have the absolute right to refuse any such prospective tenant presented by the Developer. If the City Representative does not provide a written objection to Developer within ten (10) business days of presentment, such non-response shall constitute a waiver of any objection to Developer’s proposed sale or lease. The Developers further agree to obtain a covenant from any assignee or purchaser of an ownership interest in the SW Project to abide by the terms of this Section 4.14.” (emphasis added) ↩

  • Slow down on Wichita ballpark land deal

    Slow down on Wichita ballpark land deal

    A surprise deal that has been withheld from citizens will be considered by the Wichita City Council this week.

    Wichitans were probably surprised to learn Sunday that the city plans to sell land near the new baseball stadium to the owners of the new baseball Wichita team.

    Surprised for several reasons: First, while the city completed an agreement with the new team last year, the land sale was not disclosed to the public. There appears to be no prior public mention of this.

    Second, the city plans to sell land for $1 per acre.

    Third: While the Wichita Eagle reported this story Sunday 1 We might have known as early as Friday, except that city council agendas were not available due to a website problem. The website was fixed Monday afternoon.

    Here’s what the agenda packet holds for item V-3, titled “Private Development Agreement with Wichita Riverfront LP (District IV).”

    “As part of the City’s effort to attract affiliated baseball to Wichita and secure development activity to help pay for the stadium STAR and TIF bonds, the City extended the invitation for interested team ownerships to have development opportunities surrounding the stadium. The New Orleans’s team ownership did express that as a requirement for their interest in Wichita they required development rights around the stadium.”

    This is the first time the city has revealed that development opportunities surrounding the stadium were a requirement of the baseball team deal.

    From the agenda: “City grants the Developer exclusive right to purchase the Private Development Site for the development of the hospitality, commercial, retail, office and residential uses, as contemplated herein, for $1.00 an acre.”

    How much land at one dollar per acre? Earlier, the agenda holds this: “The City owns approximately 24 acres at the former Lawrence Dumont Stadium site. After securing the final footprint of the stadium site, adjacent streets, infrastructure and riverfront enhancements, it is estimated that the remaining property available for private development will be 4.25 acres.” (The Eagle article reported the sale would be 24 acres, but the agenda contradicts that.)

    It is troubling that the city has not been forthright in sharing this with us before now. Besides the agenda, the Eagle reported this:

    “It goes back to the partnership that we have worked out with the team,” said Scot Rigby, assistant city manager and director of development services, whose department came up with the agreement.

    “That’s where we struck that agreement on the value of the ground. For the city, we’ve already owned that property,” he said. “If we didn’t do anything with it, it would be undeveloped property. So the value for us is to get it in development as quickly as possible.”

    Also, from the Eagle:

    Having the baseball team expand its operations from baseball to real estate along the river has been part of the plan since talks started between the team owners and city officials about three years ago, and it played a major role in attracting the team to Wichita, officials with the city and the team said.

    “We needed a team that played the level of baseball that was attractive for the community and important in terms of affiliated baseball at the Triple-A level. But we also wanted a team that could deliver on the development,” Layton said.

    Why didn’t the city feel it could share that with us at the time the deal was struck for the team to move to Wichita?

    There’s also this. We don’t know much about the ownership team, led by Schwechheimer. At least some in New Orleans weren’t happy with his plans to move the team from there to Wichita: “Relocating the Baby Cakes to Wichita, a city with one-third the market of New Orleans would be in many ways the final act of betrayal by owner Lou Schwechheimer. First, Schwechheirmer changed the team name from the Zephyrs, which New Orleans embraced, to the Baby Cakes. The name is loathed by most in the New Orleans area.” 2

    More troubling is this: Schwechheimer bought the New Orleans team in 2016. At the time, local media reported this: “Schwechheimer, announced Monday as manager and controller of a company that has bought 50 percent of the New Orleans Zephyrs, said that type of diligence, dedication and now experience will be used to turn around this city’s Triple-A team.” 3

    The Eagle reports this: “Having the baseball team expand its operations from baseball to real estate along the river has been part of the plan since talks started between the team owners and city officials about three years ago, and it played a major role in attracting the team to Wichita, officials with the city and the team said.”

    If all this reporting is true, talks about moving the team from New Orleans started in 2016, the same year Schwechheimer purchased the team and said he would use “diligence” and “dedication” to turn around the New Orleans team.

    That’s something to think about. Is this a reliable person?

    Also: The $1 per acre reminds us of other $1 dollar deals the city has crafted. In 2012, the city leased land it owned in Waterwalk for $1 per year for 93 years. There were apartments built, but the city did not follow through on an important part of the deal. 4 Other developments in Waterwalk were leased for $1 per year. 5

    In these instances, apartments and a hotel were built. But in general, Waterwalk has been a dismal failure, and in recent years its fortunes have declined farther.

    In 2011 the city decided to build a parking garage downtown with retail space. It leased 8,500 square feet of that space to Dave Burk for $1 per year. Much of that space has remained vacant since it was built.

    Can’t we see some progress on these projects before the city does it again?

    Then, these developers are from out-of-town, like — dare I say — the Minnesota Guys. At one time the toast of the town, their multi-count criminal indictment for securities fraud is on appeal to the Kansas Supreme Court on a jurisdictional matter. Other than that, they left a trail of broken promises and bad debts in downtown Wichita.

    For these reasons — a surprise announcement that has been withheld from citizens, a broken website, repeating a pattern that hasn’t been successful — we need to take at least a few weeks to mull over this deal.

    Then, there’s this: In the agenda packet, section 6.03 of the development agreement holds this surprise: “The 1% City sales tax has been approved at an election, and the City agrees that the City sales tax revenues generated within the STAR Bond District will be committed to pay the principal and interest of the STAR Bonds.”

    I have no idea what this means. But how did this appear in an official city document and an agreement with a developer?

    —
    Notes

    1. Swaim, Chance. Wichita plans to sell riverfront property near new ball park for $1 an acre. Wichita Eagle, March 3, 2019. Available at https://www.kansas.com/news/politics-government/article226994834.html. ↩
    2. Boyd, Kevin. BREAKING: New Orleans Baby Cakes Are Heading To Wichita After 2019. Available at https://thehayride.com/2018/09/breaking-new-orleans-baby-cakes-are-heading-to-wichita-after-2019/. ↩
    3. Williams, Darrell. New owner Lou Schwechheimer tasked with turning New Orleans Zephyrs around. The New Orleans Advocate, April 22, 2016. Available at https://www.theadvocate.com/new_orleans/sports/zephyrs/article_0119ed0a-4d00-5a7e-be97-00d430c0f819.html. ↩
    4. Weeks, Bob. Wichita WaterWalk apartment deal not good for citizens. Available at https://wichitaliberty.org/wichita-government/wichita-waterwalk-apartment-deal-not-good-for-citizens/. ↩
    5. Weeks, Bob. Waterwalk hotel deal breaks new ground for Wichita subsidies. Available at https://wichitaliberty.org/wichita-government/waterwalk-hotel-deal-breaks-new-ground-for-wichita-subsidies/. ↩
  • Sedgwick County job growth exceeds national rate

    Sedgwick County job growth exceeds national rate

    In the third quarter of 2018, Sedgwick County quarterly job growth exceeded the national rate for the first time in nearly ten years.

    Data released today by the Bureau of Labor Statistics, part of the United States Department of Labor, show an improving jobs picture for Sedgwick County.

    Data from the Bureau’s Quarterly Census of Employment and Wages (QCEW) program show that from September 2017 to September 2018, Sedgwick County gained 5,200 jobs, which is a rate of 1.9 percent, as calculated by BLS. For the nation, growth was 1.6 percent.

    While the rate in Sedgwick County for the third quarter of 2018 exceeded the national rate, for the most recent four quarters the average rate for Sedgwick County was 0.85 percent, and 1.55 percent for the nation. This was the first quarter since 2009 in which Sedgwick County job growth outpaced the nation.

    Average weekly wages in Sedgwick County increased by 3.8 percent over the year to $880. For the nation, wages rose by 3.3 percent to $1,055.

    Click charts for larger versions.