Today’s Wichita Eagle contains a story about a well-known Wichita real estate developer that, while shocking, shouldn’t really be all that unexpected.
The opening sentence of the article (Developer won tax appeal on city site) tells us most of what we need to know: “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”
Some might say it’s not surprising that Burk represented himself in the way the Eagle article reports. When a person’s been on the receiving end of so much city hall largess, it’s an occupational hazard.
And when you’ve been the beneficiary of so much Wichita taxpayer money, you might even begin to think that you shouldn’t have to pay so much tax anymore.
Burk has certainly laid the groundwork, at least locally. A registered Republican voter, Burk regularly stocks the campaign coffers of Wichita city council members with contributions. These contributions — at least for city council candidates — are apparently made without regard to the political leanings of the candidates. How else can we explain recent contributions made to two city council members who are decidedly left of center: Lavonta Williams and Janet Miller? Burk and his wife made contributions to their campaigns in the maximum amount allowed by law.
This is especially puzzling in light of Burk’s contributions to campaigns at the federal level. There, a search at the Federal Election Commission shows a single contribution of $250 to Todd Tiahrt in 2005.
It’s quite incongruous that someone would contribute to Tiahrt, Williams, and Miller. Except Williams and Miller can — and have — cast votes that directly enrich Burk. Politicians at the federal level don’t have the same ability to do that as do Wichita city council members. Well, at least not considering Wichita city business.
So which is it: is Burk a believer in Republican principles, a believer in good government, or someone who knows where his next taxpayer handout will come from?
Burk’s enablers — these include Wichita’s lobbyist Dale Goter, Wichita Downtown Development Corporation president Jeff Fluhr and chairman Larry Weber, Wichita City Manager Robert Layton, Wichita economic development chief Allen Bell, and most importantly Wichita Mayor Carl Brewer and various city council members — now have to decide if they want to continue in their efforts to enrich Burk. Continuing to do so will harm their reputations. The elected officials, should they run for office again, will have to explain their actions to voters.
At the state level, the bill that will enrich Burk will likely be voted on in the Kansas Senate this week. Then, similar action may take place in the Kansas House of Representatives. Let’s hope they read the Wichita Eagle in Topeka.
At today’s meeting of the Wichita City Council, discussion by council members and their vote may signal a change in the city’s stance toward economic development incentives.
At issue was a request for extension of economic development incentives for a Wichita company. Five years ago the city council approved an economic development package for the company that included a tax abatement. As is the city’s policy, the council revisits the issue in five years to see if the company has meet its goal commitments. In the case of this company, one commitment — the building of a new facility — was met. The other commitment — creation of a certain number of jobs — was met early on during the period of the tax abatement, but employment has been declining in recent years, and employment is currently 100 jobs below the goal.
Recently the city council adopted new guidelines for companies that are not meeting their goals at the time of review. These guidelines make it easier for companies to qualify for the extension of the abatement. If the WSU Current Conditions Index has declined since the awarding of the incentives, the company will qualify for an extension if a majority of the goals are met. A company will also qualify for extension if their peak job creation numbers exceeded the goal, even if the number has fallen, as is the case with the company under consideration today.
Based on the new guidelines, city staff recommended to approve the extension of the incentives.
Council member Lavonta Williams asked if it was possible if, as an company receiving an incentive, could “I hire five people today and fire them by Friday and then meet my criteria?” The answer by city economic development director Allen Bell is that the policy contains no such guideline as to minimum period of employment.
Wichita city manager Bob Layton interjected that staff’s recommendation to approve the extension is a difficult one to make, as this company is in a declining pattern of employment. Additionally, the newly calculated benefit-to-cost ratios are low, and he said he is uncomfortable with that: “We’re actually subsidizing this business, so to speak, or others are subsidizing or bearing their load for debt service.”
Council member Sue Schlapp asked a question not covered by policy: if we deny the extension today, and next year the company improves its situation, could they come back and ask for the extension of the tax abatement then? There is no definitive answer to this question at this time, according to Bell and Layton.
Schlapp added that it seems like we’re “lowering the bar all the time” as to the granting of incentives.
Council member Paul Gray remarked that the council makes itself look bad in these situations, as it always grants extensions even though the city has created policies that should hold companies accountable to their committed goals. The reason for awarding the incentives, he said, was for the increase in employment, and that employment level has not been kept. “We need to start taking a harder stand on this, as we’re going to run out of money if we keep giving it all away.” Vice mayor Jim Skelton agreed.
No one from the public was there to speak on this matter.
Wichita Mayor Carl Brewer was on the losing end of a 6 to 1 vote.
Gray made a motion to deny the staff recommendation of approval of the extension. Mayor Carl Brewer said that this vote, if it proceeds in the direction it appears to be going, will change the direction of many things that affect businesses in Wichita. He said that the intent of the council is to start holding individuals accountable, and there’s not been a track record of that. It’s been worse since the economy entered the recession, he said. He urged council members to make sure they know which way they’re going with this action. “This will be the direction that we’ll be going as we start working on policy, and it will be effective for everyone, whether it be large or whether it be small. … Just making sure that when we press that button and we head down this path, that we know what we’re doing.”
The vote was 6 to 1 in favor of Gray’s motion, with the mayor being the lone “No” vote.
Analysis
This action by the Wichita city council, being nearly unanimous, is very much different from its action just one week ago, when it employed one new method plus several existing methods to heap millions in subsidy on a downtown hotel developer.
Today’s discussion is another illustration of just how difficult it is to pick winners and losers, and how difficult it is to choose which companies the city should invest in. This is why I have recommended that Wichita grant tax abatements on all new capital investment.
Today’s action is especially cruel to the subject company. In the past, city staff has argued that withdrawing tax abatements when a company is struggling is harmful. In December 2008, economic development director Bell said this regarding a company that had not met its performance commitments: “I don’t think it would be productive at this time to further penalize them — as the market has already penalized them — by putting them back on the tax roles at this time.” This is further evidence that taxes are harmful to business and economic growth.
Council member Williams’ question about hiring and then quickly firing employees indicates that she must not be familiar with the costs of hiring and firing. Furthermore, a company’s unemployment insurance premiums are based on its history, and actions like this would certainly raise premiums by a large amount.
Tuesday’s meeting of the Wichita city council featured a lengthy discussion of a proposal that in the past, might have been passed without much public discussion. Instead, some useful information emerged, and the meeting opened the possibility of more citizen input not only on this item, but also on future city initiatives.
As an example of information that was revealed at this meeting, there was concern expressed by council member Sue Schlapp that the proposed hotel might be granted a period in which it would be the only hotel in WaterWalk. Bell replied that we don’t have the answer to this question, and that this has not been addressed. Later, a representative of WaterWalk revealed that the proposed hotel had an agreement that it would be the only hotel in WaterWalk for three years and possibly up to four years.
This is an important piece of new information, as downtown boosters continually speak of the idea of “critical mass.” The idea, I believe, is that multiple hotels may feed off the presence of each other, instead of being in competition with each other. Or it might be that if other hoteliers see this proposed hotel doing well, they’ll be induced to build one on their own. But if there will not be another hotel in WaterWalk for at least three years, that puts a damper on the formation of critical mass. Hotels, of course, could be built in other parts of downtown.
Council member Lavonta Williams asked about the survey the city is conducting to see if the proposed hotel would harm the city-owned Hyatt Hotel: Will it look at nearby hotels that the city doesn’t own? Bell said the consultant may look at those hotels, interview their management, and may be able to offer some information as to that. But Bell said that the present agreement considers only the Hyatt Hotel.
Council member Jell Longwell said we’re sensitive about the burden on our local taxpayers. But the taxes on the proposed hotel would fall on out-of-area taxpayers, he said. His clear implication was that taxing visitors to our city is okay. The problem is that many visitors to a city pay attention to taxes. When a $100 hotel bill blooms to $114.30 with taxes, people notice, even business travelers whose employers may pay the bill.
(The taxes are 6% for the transient guest tax or “bed tax,” 6.3% for our present sales tax, and another 2% for the Community Improvement District tax. Then if the governor has his way, there will another 1% in Kansas sales tax, and if some downtown boosters have their way, there will be yet another 1% city sales tax to provide subsidy for downtown.)
Council member Paul Gray answered his own question with: “why would you?” The question was why would anyone build a hotel downtown privately when there are several subsidized hotels already operating? The unlevel playing field was created long ago, he said, and it’s unlikely that anyone will develop a hotel without receiving similar benefits from the city. He also said that we’re on the hook for the bonds sold for the WaterWalk TIF district. He made reference to the “giant hole that we’ve already created with the financial obligations we’ve placed on that.”
After citizen John Todd spoke, Longwell asked how much lead time the council should give citizens for matters like this. He said that the Wichita Eagle reported the story, adding “I thought everybody read the Eagle.” (I wonder if Longwell has noticed the layoffs at the Wichita Eagle and the poor financial performance of most newspapers as fewer people read them.)
A search of the Eagle for stories on this topic shows a blog column from Wednesday January 6, just six days before the city council meeting where the item was to be considered. The Eagle printed stories on Friday and Sunday. These stories, however, don’t report the detailed information that some people would like to have. There’s simply not room in a newspaper, as the agenda report for this item contained ten pages of small print. Not many people are interested in such detail, either.
(The city’s agenda packet for this meeting, which is the important source of detailed information, became available on the city’s website probably late Thursday. The pdf file indicates that it was created at 4:51 pm that day.)
Longwell pressed Todd: “How much lead time do we need?” I have an answer for him. After I read the agenda packet Friday afternoon, I emailed Wichita public information officer Van Williams with a few questions. By Monday afternoon I hadn’t received a response. I’m not criticizing Williams, as he might have had any number of valid reasons for not replying to my questions right away. But even if he had replied Monday afternoon, that’s just a few business hours away from the meeting. That is definitely not enough time to digest a project of this scope.
Gray then asked Todd how much vetting does the public do on a project like this? The answer to this is: not enough, as the city has a recent history of problems with its development partners. In December 2008 the city was about to enter into an agreement with a developer when Dion Lefler of the Eagle uncovered very troubling facts about the developer’s past dealings. See Wichita city hall: more evidence of lax procedures for a summary.
Since then Wichita has a new city manager, and the city has said it has new procedures in place for investigation of the backgrounds of potential business partners. Other problems remain, however. Last month Wichita Eagle editorial writer Rhonda Holman wrote about missing or incorrect information provided to the city council:
Worse, when the council approved the Big Dog deal on a 5-2 vote, its members reportedly were unaware that the company had hired an investment banker to explore a possible sale or merger. Plus, city documents about Big Dog listed its employment at 115 when the number actually has dwindled to 30 to 40 (from a 2005 high of 336).
A policy meant to guide the use of tax abatements and other tools doesn’t work well if decisions are based on faulty information.
Going back to 2004, we have evidence that city council members were not familiar with even the most basic facts about our economic development programs. The article “Tax break triggers call for reform” published in the Wichita Eagle on August 1, 2004 reported this:
Public controversy over the Genesis bond has exposed some glaring flaws in the process used to review industrial revenue bonds and accompanying tax breaks.
For example, on July 13, Mayans and council members Sharon Fearey, Carl Brewer, Bob Martz and Paul Gray voted in favor of granting Genesis $11.8 million in industrial revenue bond financing for its expansion, along with a 50 percent break on property taxes worth $1.7 million.
They all said they didn’t know that, with that vote, they were also approving a sales tax exemption, estimated by Genesis to be worth about $375,000.
It’s not like the sales tax exemption that accompanies industrial revenue bonds was a secret at the time. An easily accessible web page on the City of Wichita’s web site explains it.
Regarding the present case, Schlapp said she would have liked to have known about the exclusivity period earlier. That’s just one example of something not contained in the agenda packet that is important for citizens and council members to know, and we didn’t know that before this meeting.
Gray also noted the history of some of the people at the council meeting who opposed the project, adding that he didn’t see them changing their minds. That attitude represents a simplistic view of the way public policy ought to be formed.
An issue like this has many facets. Some could possibly have merit, and some certainly are harmful. A discussion like what took place at this meeting can provide a forum for exploring these issues, and perhaps eliminating the bad in favor of the good. The fact that some might still be opposed to the project doesn’t negate this.
In the end, the council voted unanimously to defer this matter until its February 2 meeting.
“It’s very important that we have a downtown that is very clear and very concise on where it wants to go,” he said. He likened the development of downtown to the planning of an automobile trip, so that we don’t make major investments that we later regret.
The potential of increased private investment is an important goal for downtown. Predictability will help the private sector invest, he said.
As to the importance of downtown, he said that is where the distinctive quality of a city is found — its history, cultural arts, and other institutions that represent the community. Tourism is another goal of a revitalized downtown Wichita, along with an improved perception in the global market as a great place to do business.
Old Town is an example of success in Wichita, he said, an example of what can be done when people are creative and purposeful. He said that Wichita’s transit center, being located near the new Intrust Bank Arena, provides the potential to use mass transit.
As to the economics of downtown Wichita redevelopment, he showed a chart, nearly a year old, that compares public and private investment in downtown over the past ten years. The two amounts are nearly equal to each other. Fluhr said that Goody Clancy, the firm hired to to plan the revitalization of downtown Wichita, has offered the opinion that the way Wichita has measured investment in downtown — using capital investment only — is not an accurate picture. We should also take into account companies that may have moved into the downtown area because of the improvements that have been made. What types of jobs have been created, and what is the spin-off from them?
Addressing the WaterWalk project, he said that an important event took place last November, when people started moving in to the residential building. Now we see human activity in the development. The landscaping is being installed at this time.
Along Douglas, Fluhr said that gaps in the buildings are a problem. We need to bring storefronts back to downtown. This creates an atmosphere of walkability, which helps to bring residential back to downtown, an important thing he said we must continue to work on.
Mentioning the Q-Line, the free trolley bus service, Fluhr said that “we’ll literally have a couple thousand people that can be on this thing in a given night.”
Besides downtown, Fluhr said that they’re also looking at “first-ring” neighborhoods, the areas that surround downtown. In response to a question, he said we need a healthy city throughout. The first-ring neighborhoods may provide housing that is more affordable than in downtown proper.
Analysis
In comparing the planning of downtown Wichita to a car trip, Fluhr made the same presumption that Wichita city council member Lavonta Williams made when she compared downtown planning to planning her lessons as a schoolteacher. The planning of even a small portion of a city is an immensely more complicated task. That these two figures make such comparisons leads me to believe that we don’t understand the monumental scope of the task we’ve decided to undertake.
Regarding predictability being important to private sector investors: the planning process right now has created huge uncertainty as to the future of downtown. Who is likely to invest in downtown at this time, when so much is up in the air?
Further, the potential use of eminent domain to take property creates uncertainty, too. This is why it is important for the city to swear off the use of eminent domain, and even the threat of its use.
There’s also this concern I have about the predictability Fluhr said is needed for private investment to flourish: For the future to be certain, someone has to enforce the plans that have been made. All the methods that government has to enforce or encourage human behavior lead to loss of economic freedom: incentives, grants, tax abatements, subsidies, regulation, zoning, eminent domain, preferred treatment. All are contrary to economic freedom.
It’s also troubling that now we’re going to be measuring the economic impact of public investment in a new way, using — if I can read between the lines a bit — things like “multipliers” and other economic development jargon and devices to exaggerate the impact of public investment. It’s important to remember that when left to their own devices, Wichitans have made investments that have produced tremendous economic impact with their own multiplier effects. These investments, however, have not always been made in the politically-favored downtown area. Instead, they’re been made where people wanted them to be made, so their economic impact, in terms of creating wealth and things that people really want, has been greater than if directed by government planners.
As to the Q-Line claim of thousands of riders in a night, I hope Fluhr meant the potential capacity of the Q-Line system, as its actual ridership is much less and very expensive on a per-rider basis. See Wichita’s Q-Line an expensive ride for ridership numbers, which have been less than 1,500 per month.
It’s impossible not to appreciate Mr. Fluhr’s enthusiasm for his work and his genuine concern and vision for the future of downtown Wichita. I’m concerned, however, that Fluhr and the downtown Wichita revitalization boosters — let’s call them the “planners” — have fallen victim to what Randal O’Toole and others call the design fallacy.
These planners are guilty of believing the design fallacy, the notion that architectural design is a major determinant in shaping human behavior. While design does play a role at the margins of certain things — for example, certain patterns can make housing more vulnerable to crime — the effects that planners project are often highly exaggerated.
Later O’Toole writes:
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. … Problems such as these stem from the design fallacy that is shared by so many planners and the architects who inspire them.
Do the Wichita planners suffer from the design fallacy? Fluhr mentioned “engagement of the river” as he has in past talks. Referring to a conversion of an old school building into residential use, he used language like “a dynamic living space in a renovated school,” “each of the units is unique,” and “taking distinctive architecture to us and bringing it to new use.”
Referring to our Carnegie Library, he said that its architecture is unique to Wichita, and wouldn’t be found in other cities. Projects like this, along with the Broadview Hotel and Union Station, should “remain in our fabric” as part of the “distinctive qualities that make us who we are.”
This focus on the architecture of buildings in a city is characteristic of past talks by Fluhr. So yes, I believe that he and the planners are influenced by the design fallacy. It’s something we’ll have to watch out for as we proceed with the planning process.
At today’s meeting of the Wichita City Council, an item no longer on the agenda still caused some controversy.
The Lord’s Diner, a charitable organization, had proposed buying a city-owned building at 21st and Grove and making a second site for their effort to feed Wichita’s poor.
Opposition from community groups, however, drove the Lord’s Diner to withdraw its plans.
In today’s meeting, council members Sue Schlapp and Paul Gray spoke in favor of the Lord’s Diner’s plans on the basis of its charitable and humanitarian activity.
Council member Lavonta Williams, who represents the district where the proposed site exists, responded without mentioning the community’s real objection to the plan: they don’t want the type of people the Lord’s Diner serves congregating in the vicinity of the proposed location.
Mayor Carl Brewer spoke of how this has been a complicated issue. Council members must do the right thing, he said, which may not be the same as what the community wants. He said he recognizes the need to feed everyone, and there are people all over town that need help: “These are people who cannot help themselves.”
He said that people in key leadership positions said things that were “very bitter, very venomous,” and that citizens should “charge it to the mind and not the heart,” adding that “some people take desperate measures to be able to get what they want.” He asked that citizens not judge an entire community by the actions of a few.
The mayor said he sees an opportunity, and he urged everyone to work together.
What hasn’t been mentioned in the debate over this matter is that the proposal by the Lord’s Diner is a lawful use of the property. If we want to have a system that respects private property rights, that’s the only thing that matters.
At the meeting of the WichitaCity Council last week, several city council members gave their reasons for supporting the planning for the revitalization of downtown Wichita. It’s worthwhile to take a look at two members and their remarks.
“We’ve given the free market a chance in downtown,” Miller said. There’s a few things we can disagree with in this statement. First, the market downtown is not very “free.” There are TIF districts overlaying much of downtown, for example. These TIF districts are an example of government interventionism in the extreme, something quite different from free markets.
Besides this, Miller frames the decision incorrectly. To her, downtown redevelopment is something that must happen, and since people haven’t responded to this decree very well, that’s a failure of the market. But the correct decision point is when people and business decide to be downtown or somewhere else. That’s where we see free markets in action and the decisions people make. Because they make decisions other than what Miller wants them to make, that doesn’t mean that free markets have failed. Instead, people have simply made a decision other than what she believes is the correct decision.
She also said this: “Without incentives, the free market just doesn’t work.” To which I say: “Where there are incentives, markets are not free.” That’s government interventionism. It’s axiomatic.
Then, there’s this quote from Miller: “Just like the human body cannot succeed with rot at its core, neither can a city be healthy with rot at its core.” Variations on this nostrum are constantly repeated by government-subsidized downtown revitalization supporters. This analogy is meaningless. I’ve asked the city to supply evidence of this — something more authoritative than the mayor’s vision and dreams — and so far none has been supplied.
Regarding public and private investment in downtown Wichita: A document published earlier this year showed that public and private investment in downtown Wichita over the past decade is nearly even, or about a one to one ratio. Now Miller says: “I’ve heard the city manager talk about moving us toward a return more in the neighborhood of 15 to one, private contribution to public.”
So has something new been discovered in the last ten years that allows public-private partnerships to reap such fabulous rewards? It doesn’t seem likely.
Furthermore, if it is possible to achieve such impressive results from public investment, why is this our goal only now? Shouldn’t we have had this goal earlier? Is this an example of the incompetence of previous city councils, of which Mayor Brewer has been a member for many years?
“Without a plan, there is chaos,” she said, noting that some people think that the things we’ve done downtown may be chaotic. “Hopefully this bond will bring us all together. … Downtown is everybody’s community, but it’s not going to be if you don’t have everybody buying in to what’s going on.”
She urged citizens to attend meetings so that their comments are validated.
William’s analogy — downtown planning and running her classroom — is not meaningful. There’s simply no comparison between the two. One is a highly structured situation, while the other is a problem of immense complexity with very little structure. My post Planning downtown Wichita revitalization: an impossible task? summarizes some of the characteristics that make planning such a difficult task. Deluding ourselves that the task is as simple as Williams posits is a sure path to failure.
Then, I have some news for Williams: not everyone is going to buy in to these plans and the huge public subsidies that will accompany them. We’re not all going to come together on this. As council member Miller recognized in her remarks: “There’s a great variety of opinions on this subject.”
This past Tuesday and Wednesday, the four planning firms that were selected as finalists for the master plan for the revitalization of downtown Wichita made their public presentations. I was able to attend three of the presentations.
In his opening remarks to the Tuesday session, Wichita Mayor Carl Brewer said that tonight is an important night for our community. He said that the revitalization effort is about more than just downtown, but about all of us. “Downtown is our front porch.” We must come together as a community in this effort.
Studies of other cities, he said, show that downtown revitalization leads to more jobs, tourism, increased property values, and increased satisfaction and pride in our city.
“Feet on the street,” the mayor said, means that everything people want can be provided in a walkable area.
The planning firms and their representatives are all immensely confident in their capabilities and proud of their past achievements. Most use grand language — “dynamic,” “bold plan, “innovative,” “forward-looking.”
Community engagement is important, all firms said. So is the public-private partnership. Leveraging public investment with private investment was always mentioned.
Transit — including public transit — was emphasized by the firms. One firm promoted “bicycle-oriented development.” In a nod to the green revolution — whether that’s a good idea or not — “sustainability” was often mentioned, with one firm having an expert in just that on its panel of presenters.
There was actually some distinction between the presenting forms. One makes use of a charrette, which is a period of intense design activity. Another firm said it doesn’t use this practice.
For one firm, the presenter said that the firm had been in Wichita for three months gathering information and meeting with Wichitans.
The presentations and the printed proposals are full of grand and attractive images of the firms’ projects in other cities. One firm, in its presentation, showed several images of parts of downtown Wichita where there was a vacant lot or other empty space. Then, said the presenter, imagine if it looked like this! And the empty space would be filled in with attractive buildings of immense size and scale.
Sometimes the presenters said things that made me wonder about their actual knowledge of Wichita. One said that because Wichita has such a stable economy, it is attractive to outside investors. While it’s true that our housing market has been relatively stable — we never had the huge run-up in prices and then a crash — it a common compliant that Wichita is too dependent on aviation, and that we need to diversify our local economy.
Another presenter, and I am not kidding, praised the WaterWalk development as an example of a Wichita success. I also learned that we must prepare — at least according to one firm — for the return of passenger rail service to Wichita.
I was surprised that most of the planning firms used a variety of experts in different fields — economics and economic development, transit, planning, architecture, sustainability, civil engineering, traffic, and transit are some of the examples. One firm had partnered with local experts.
Each firm presented for about an hour, with time for just a few questions from the selection committee.
Going forward, the selection committee will select one firm to recommend to the Wichita city council. The target date for this is tomorrow. Then, it’s thought that on October 13 the city council will make the selection — or maybe choose none of the firms.
Since the city council has the final say, I was surprised that only council member Lavonta Williams attended, besides, of course, Mayor Brewer.
After the steering committee makes its recommendation, I plan to examine that firm’s proposal more closely. We also need to take a look at the results of their previous projects. For example, were they financed through tax increment financing (TIF) districts, and how are those districts performing? What other type of public subsidy was necessary to make the projects work (or not)? Was eminent domain used to transfer property from one person to another, just because the new owner would pay more in taxes? If there was rezoning, was it done with overlays that respected existing property use rights?
In addition, we need to decide whether we want to plan at all, at least in the comprehensive way that the planning firms are promoting. A book I recently read, The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future, presents evidence of the harm that centralized government planning causes. Listening to the presentations, I recognized the firms were planning to use many of the dangerous practices and beliefs mentioned in this book.
At tomorrow’s meeting of the Wichita City Council, approval of more travel is on the agenda.
Tomorrow’s agenda item is this: “Approval of travel expenses for Mayor Brewer, Council Member Schlapp, Council Member Gray, and Council Member Williams to attend the NLC Congress of Cities in San Antonio, Texas, November 10-15, 2009.” This is all the information that is available.
The reaction of citizens to council member Janet Miller’s junketeering to France has been overwhelmingly against this type of wasteful travel. Now we have four members of the council traveling for five days to a National League of Cities event.
What is the value of this conference? Citizens might be excused for assuming that an organization with such a lofty name acts only in the interest of citizens. In reality, the NLC is a special interest group, and its interests are not always in line with citizen concerns. For example, this position paper outlines its stance on the use of eminent domain for economic development. It’s a position, as you can imagine, in favor of cities’ rights to take property for economic development.
At yesterday’s meeting of the the Wichita City Council, a matter was presented to the council that provided an illustration of basic economic principles that are foreign to the council.
David M. Bryan, a Wichita attorney and resident of the building, represented the the homeowners association that is asking for the special assessment financing. He spoke after I did. His wife accompanied him to the podium.
Bryan’s case for help was based on factors that — besides being irrelevant — show just what a fiasco this matter is. It also illustrates just how selfish these condominium owners are in expecting the city to bail them out of their problem.
First, he says that he and the other condo owners represent one of the goals of downtown redevelopment. “We all took that leap of faith and bought the lofts” when the building was still under construction.
He didn’t know what tuckpointing was when he moved in to this building, and he and the other residents didn’t know that this [the need for repair] was going to happen.
He said that he thinks the building represents a sound and good investment in downtown redevelopment, and that the building is part of what the city council wants to accomplish.
Conventional financing for these repairs would, Bryan said, require personal guarantees by all residents, and that would prevent the individual units from being sold unless the entire loan was paid off.
(In my testimony, I made the point that the amount that each condominium owner needs to pay to fix the building is on the order of what it would cost to paint a conventional house of the same value as these units. There’s also a defect in the ownership structure of this building if there is no way to pay for repairs like the present situation, as things like this are foreseeable.)
Council member Paul Gray, speaking from the bench, expressed concern that approval of this request sets a precedent for other condominium buildings in Wichita to make the same request that this building has made.
In the end, council member Lavonta Williams made the motion to approve the financing. All members except Gray voted for it. Vice-Mayor Jim Skelton was not present.
After the council voted, Mrs. Bryan gave Wichita economic development director Allen Bell a pat on the back, and Bell and Mr. Bryan shared a congratulatory handshake. You can see these things by attending the meetings in person.
It appears that the city’s desire for downtown redevelopment is an unsustainable goal that can’t be maintained without continued subsidy. The message is this: When a downtown development gets in financial trouble, make a beeline to city hall. This was the case last year when the Warren Theater received a no- and low-interest loan from the city, propping up the city’s ill-conceived investment in a TIF district benefiting that theater.
Recently we learned that rehabilitation of a downtown hotel is on hold because historic tax credits — that is, outright gifts to developers — are on hold because the state can’t afford to grant them.
Now, buildings that need small repairs that can be deemed to be part of the city’s plan for downtown redevelopment are eligible for special assessment financing.
I don’t think the council is aware of the corrosive effect of these special favors. No news media reported this story. It is a small amount of money that is involved in this case. This matter is emblematic, however, of an activist city council and city staff who believe they can direct economic investment in Wichita better than its citizens can on their own.
While listening to Bryan make his case, I thought this is an illustration of the lessons Henry Hazlitt taught us in his classic work Economics in One Lesson. The first chapter may be read at One Lesson, which I excerpt here:
Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics, or medicine — the special pleading of selfish interests.
While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. …
In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups.
Wichita Mayor Carl Brewer was on the losing end of a 6 to 1 vote.