Voice For Liberty

Tag: Michael O’Donnell

Wichita City Council Member Michael O’Donnell

  • Wichita taxicab regulations likely to impede progress

    Tomorrow the Wichita City Council will consider new taxicab regulations that, city hall hopes, will improve tax service in Wichita. But the regulations create high barriers to entry that stifle entrepreneurship and market competition, likely dooming the program to fail.

    The problem is that some feel that Wichita’s taxicab companies are not delivering good service. There have been complaints about both the drivers and the conditions of cabs. Wichita Mayor Carl Brewer said he was tired of hearing complaints about the taxicabs. He has tired slowly, however, as it’s taken eleven years of Brewer as either city council member or mayor for a solution to be proposed.

    In some cities, the permit or medallion to operate a cab costs many thousands of dollars, even hundreds of thousands in New York City and other large cities. Wichita’s proposed fees are not exorbitant: Just $200 annually for a taxicab company and $100 annually per taxicab. (In Wichita there are three taxicab companies, but two have the same ownership.)

    Further, Wichita does not restrict the number of taxicab companies, the number of cabs, or prohibit cruising for fares, as do some cities. This sounds like light-handed regulation, which if so, should induce new entrants to the market for providing taxi service. The market competition thereby created would normally be expected to drive down fares and improve service.

    But Wichita’s regulations create substantial barriers to entering the taxicab market. Some of the most restrictive include these: A central office, staffed at least 40 hours per week; a dispatch system operating 24 hours per day, seven days per week; enough cabs to operate city-wide service, which the city has determined is ten cabs; and a supervisor on duty at all times cabs are operating.

    These requirements, in effect, eliminate the small-time entrepreneur and the solo operator from entering the market. Things like dispatch systems, a central office, a fleet of ten taxicabs, and supervisors sound good. But these are costly, and they aren’t all necessary to get started in the business, or even perhaps to thrive. Since some of the complaints are the lack of available cabs at the airport, we need more cabs, not fewer.

    If a person wanted to simply concentrate on picking up fares from the airport or cruising downtown looking for street hails, a dispatch system is not necessary. Neither is a supervisor or an office.

    Yes, a cab without a dispatch system will miss out on fares that other cabs will be able to service. But the decision as to whether to use a dispatch system should be made by taxicab drivers or owners, not the city. Certainly, for some drivers and companies the economic benefit of such systems will become apparent, and they will invest in them. Others won’t.

    The regulations in Wichita make it difficult for new taxicab operators to enter the market, leaving the city’s citizens and visitors served by a near-monopoly of two companies. That hasn’t worked out well, at least according to city officials. A new government regulator with a new set of regulations to enforce isn’t likely to help create a thriving market for taxicabs in Wichita.

    But these market-based considerations and potential solutions, evidently, are not considered by the city. At a workshop on the topic, Council Member Michael O’Donnell (district 4, south and southwest Wichita) noted the near-monopoly of taxicabs companies and asked if the city had looked at ways of creating more competition in the market?

    The presenter of the proposed regulations, a public management fellow in the city manager’s office, said, simply, “we have not, no.” (We’re left to wonder if this proposed regulatory expansion is just an exercise, or make-work, for a recent graduate of the school of public administration at Wichita State University.) City Manager Robert Layton interjected, adding “we are believers in the free market system,” saying that he hoped that the new regulations and fare structure would make it easier to enter the market. I don’t think anyone at the meeting picked up on the irony.

  • Wichita decides to join sustainable communities planning

    At yesterday’s Wichita City Council meeting, the council took up the issue as to whether the city would participate in the REAP sustainable communities planning process. All council members except Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) voted in favor of participation.

    Critics of government planing processes such as this are worried that the planning process would subject us to additional control by the federal government. These are the so-called strings that are thought to accompany federal grants.

    (For those who are interested in what strings look like, here’s an example of one that is relatively innocuous. A HUD document titled Program Policy Guidance OSHC-2012-01 explains “Applicants that reach a certain qualifying score under the Regional Planning Grant Program or the Community Challenge Grant Program will receive PSS designation. PSS designation provides your entity access to bonus points for selected other HUD grant programs, technical assistance, and other capacity building opportunities that will strengthen future efforts to apply to the program.” REAP has been awarded this status, as it complied with this “string.”)

    James Clendenin (district 3, southeast and south Wichita), asked a series of questions of Joe Yager, chief executive officer of REAP, as to whether these concerns were true. Yager said no, there are no strings accompanying the grant. But what about after the planning process is over in three years? Will the plan be forced upon us, Clendenin asked?

    Yager answered no, that local governing bodies would have to vote to implement any of the ideas or programs that resulted from the plan. Nothing will be forced upon us, nothing is mandated, he said. We wold simply have a “toolkit” of things to use.

    This view or attitude — that local elected officials will protect us from the harmful elements that will emerge from the plan — is dangerously naive. First, in his short time in office, Clendenin has regularly voted for expansions of government planning, power, and spending. He doesn’t stand out from most other council members, not even the Republican members (except for one), as they also regularly vote for these things.

    Second, we know that after the plan is complete there will be the argument that since we have the plan, that since we spent three years and $2.2 million on the process, we might as well go ahead and implement it.

    Then, there will be the future grants and undoubtedly increased local spending required to implement the plan.

    It’s also naive of Clendenin to ask a professional planner like Yager questions about the desirability of planning. What answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

    One of the things Wichita has agreed to do is to provide in-kind services to the planning consortium in the form of staff time. Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) asked a series of questions determining whether some work might go unperformed as staff members devote time to the planning process.

    John Schlegel, Wichita director of planning, assured him no, that no work would go undone as a result of staff members taking on new responsibilities as part of the city’s in-kind contribution.

    Two years ago a similar issue arose in Sedgwick County, where staff time was devoted to the oversight of the Intrust Bank Arena. At the time I reported this: “Sedgwick County Commissioner Dave Unruh told the Wichita Eagle that the county did not hire any new staff to perform work that has an estimated value of $2.6 million. My question is this: Is this evidence that there was $2.6 million of slack time in county employee’s schedules? How were they able to get this vast amount of work accomplished? Perhaps after the arena work that has occupied $2.6 million of staff time is complete, we could hire out this staff to earn revenue for the county, as it seems they will have time on their hands.”

  • Kansas and Wichita need pay-to-play laws

    In the wake of scandals some states and cities have passed “pay-to-play” laws. These laws may prohibit political campaign contributions by those who seek government contracts, prohibit officeholders from voting on laws that will benefit their campaign donors, or the laws may impose special disclosure requirements.

    Many people make campaign contributions to candidates whose ideals and goals they share. This is an important part of our political process. But when reading campaign finance reports for members of the Wichita City Council, one sees the same names appearing over and over, often making the maximum allowed contribution to candidates.

    And when one looks at the candidates these people contribute to, you notice that often there’s no common thread linking the political goals and ideals of the candidates. Some people contribute equally to liberal and conservative council members. But then, when these people appear in the news after having received money from the Wichita City Council, it snaps into place: These campaign donors are not donating to those whose political ideals they agree with. Instead, they’re donating so they can line their own pockets. These donors are opportunists.

    As another example, for the 2008 campaign for a bond issue for USD 259, the Wichita public school district, my analysis found that 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms, and others who directly stand to benefit from school construction. Do these companies have an especially keen interest in the education of children? I don’t think so. They are interested in themselves.

    Some states and cities have taken steps to reduce this harmful practice. New Jersey is notable for its Local Unit Pay-To-Play Law. The law affects many local units of government and the awarding of contracts having a value of over $17,500, requiring that these contracts be awarded by a “fair and open process,” which basically means a contract process open to bidding.

    Cities, too, are passing pay-to-pay laws. Notably, a recently-passed law in Dallas was in response to special treatment for real estate developers — the very issue Wichita is facing now as it prepares to pour millions into the pockets of a small group of favored — and highly subsidized — downtown developers who are generous with campaign contributions to almost all council members. Not that this is new to Wichita, as the city has often done this in the past.

    Smaller cities, too, have these laws. A charter provision of the city of Santa Ana, in Orange County, California, states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    But Kansas has no such law. Certainly Wichita does not, where pay-to-play is seen by many citizens as a way of life.

    In Kansas, campaign finance reports are filed by candidates and available to citizens. But many politicians don’t want campaign contributions discussed, at least in public. Recently Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) expressed concern over the potential award of a $6 million construction contract without an open bidding process. The contractor the city wanted to give the contract to was Key Construction, a firm that actively makes political contributions to city council members, both conservative and liberal.

    For expressing his concern, O’Donnell was roundly criticized by many council members, and especially by Wichita Mayor Carl Brewer.

    Here’s what’s interesting: Brewer and city council members say the campaign contributions don’t affect their votes. Those who regularly make contributions say they don’t do it to influence the council. Therefore, it seems that there should be no opposition to a pay-to-play law in Wichita — or the entire state — like the one in Santa Ana.

    But until we get such a law, I can understand how Wichita city council members don’t want to discuss their campaign contributions from those they’re about to vote to give money to. It’s not about supporting political ideologies — liberal, moderate, or conservative. It’s about opportunists seeking money from government.

    The practice stinks. It causes citizens to be cynical of their government and withdraw from participation in civic affairs. It causes government to grow at the expense of taxpayers. Pay-to-play laws can help reverse these trends.

    You may download a printable copy of this article at Kansas Needs Pay-to-Play Laws.

  • Kansas needs pay-to-play laws

    In the wake of scandals some states and cities have passed “pay-to-play” laws. These laws may prohibit political campaign contributions by those who seek government contracts, prohibit officeholders from voting on laws that will benefit their campaign donors, or the laws may impose special disclosure requirements.

    Many people make campaign contributions to candidates whose ideals and goals they share. This is an important part of our political process. But when reading campaign finance reports for members of the Wichita City Council, one sees the same names appearing over and over, often making the maximum allowed contribution to candidates.

    And when one looks at the candidates these people contribute to, you notice that often there’s no common thread linking the political goals and ideals of the candidates. Some people contribute equally to liberal and conservative council members. But then, when these people appear in the news after having received money from the Wichita City Council, it snaps into place: These campaign donors are not donating to those whose political ideals they agree with. Instead, they’re donating so they can line their own pockets. These donors are opportunists.

    As another example, for the 2008 campaign for a bond issue for USD 259 (Wichita public school district), my analysis found that 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms, and others who directly stand to benefit from school construction. Do these companies have an especially keen interest in the education of children? I don’t think so. They are interested in themselves.

    Some states and cities have taken steps to reduce this harmful practice. New Jersey is notable for its Local Unit Pay-To-Play Law. The law affects many local units of government and the awarding of contracts having a value of over $17,500, requiring that these contracts be awarded by a “fair and open process,” which basically means a contract process open to bidding.

    Cities, too, are passing pay-to-pay laws. Notably, a recently-passed law in Dallas was in response to special treatment for real estate developers — the very issue Wichita is facing now as it prepares to pour millions into the pockets of a small group of favored — and highly subsidized — downtown developers who are generous with campaign contributions to almost all council members. Not that this is new to Wichita, as the city has often done this in the past.

    Smaller cities, too, have these laws. A charter provision of the city of Santa Ana, in Orange County, California, states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    But Kansas has no such law. Certainly Wichita does not, where pay-to-play is seen by many citizens as a way of life.

    In Kansas, campaign finance reports are filed by candidates and available to citizens. But many politicians don’t want campaign contributions discussed, at least in public. Recently Wichita Council Member Michael O’Donnell expressed concern over the potential award of a $6 million construction contract without an open bidding process. The contractor the city wanted to give the contract to was Key Construction, a firm that actively makes political contributions to city council members, both conservative and liberal.

    For expressing his concern, O’Donnell was roundly criticized by many council members, and especially by Mayor Carl Brewer.

    Here’s what’s interesting: Brewer and city council members say the campaign contributions don’t affect their votes. Those who regularly make contributions say they don’t do it to influence the council. Therefore, it seems that there should be no opposition to a pay-to-play law in Wichita — or the entire state — like the one in Santa Ana.

    But until we get such a law, I can understand how Wichita city council members don’t want to discuss their campaign contributions from those they’re about to vote to give money to. It’s not about supporting political ideologies — liberal, moderate, or conservative. It’s about opportunists seeking money from government.

    The practice stinks. It causes citizens to be cynical of their government and withdraw from participation in civic affairs. It causes government to grow at the expense of taxpayers. Pay-to-play laws can help reverse these trends.

    You may download a printable copy of this article at Kansas Needs Pay-to-Play Laws.

  • Market solutions best for Wichita

    As appearing in the Sunday Wichita Eagle.

    Market solutions best for Wichita

    By Bob Weeks

    In his “State of the City” address for 2012, Wichita Mayor Carl Brewer spoke on several topics that deserve discussion. As an example, several times he criticized those who act on “partisan agendas.” Partisan refers to following a party line, usually with a negative connotation.

    But the city council, even though it has four Republican members, almost always votes uniformly with Brewer (a Democrat). The only exception is Republican Michael O’Donnell (district 4, south and southwest Wichita). The other Republican members routinely vote in concert with the Democrats and liberals on the council.

    Also, consider the many members of the business community who appeal to the city for subsidies and increased government intervention: Many of these are Republicans — conservative Republicans, many have personally told me.

    This describes a lack of partisanship. Those such as myself who frequently oppose the mayor and his policies are more accurately characterized not as acting along party lines, but as acting on their belief in economic freedom, free markets, and limited government.

    The mayor said that the city’s efforts had created “almost 1000 jobs.” That’s just over one-half of one percent of Wichita’s labor force, a miniscule number that is dwarfed by the normal ebb and flow of other economic activity.

    Still, the mayor’s plan, in his words, is “We will incentivize new jobs.” But this active investor policy has produced only a small number of jobs, year after year. While the mayor repeatedly said that the city has been “courageous,” in reality, Wichita does about the same as other cities.

    Professor Art Hall of Kansas University School of Business makes a convincing case that Kansas needs to abandon its active investor approach to economic development, where government decides which companies will receive special treatment through various forms of subsidy. This is the approach of Wichita, and according to the mayor’s vision, this plan is to be stepped up.

    Hall cites research indicating that local officials believe they can influence local economies far more than evidence indicates. He also believes that we can break out of the bidding wars for large employers by employing a strategy of economic dynamism. Government would concentrate on the basics, building a platform where all businesses have a chance to thrive, instead of betting on just a few anointed winners as we presently do. This would truly distinguish Kansas and Wichita.

    The mayor criticized those who “provide simplistic answers to very complicated challenges.” He may be referring to those like myself who, like Hall, advocate for free market solutions. We are criticized for not having a plan for government to implement, but that’s precisely the point. Relying on economic freedom, free markets, and limited government for jobs and prosperity means trusting in free people, the energy of decentralized innovation, and spontaneous order. A government plan for economic development is the opposite of these principles.

    We need business and political leaders in Wichita and Kansas who can see beyond the simplistic imagery of a groundbreaking ceremony and who can assess the effect of our failing economic development policies. Unfortunately, we don’t have many of these — and Mayor Brewer leads in the wrong direction, preferring crony capitalism and corporate welfare instead.

  • Carl Brewer: State of the City for Wichita, 2012

    Last night Wichita Mayor Carl Brewer delivered his annual State of the City Address. The text of the address may be read at State of the City Address.

    In his speech, Brewer several times criticized those who act on “partisan agendas.” This is quite a remarkable statement for the mayor to make. Partisan usually refers to following a party line or platform. The mayor didn’t mention who he was criticizing, but it’s likely he was referring to myself and others like John Todd, Susan Estes, and Clinton Coen, as we appear regularly before the city council, usually in disagreement with the mayor and his policies.

    What’s remarkable is that the council, even though it has four Republican members, almost always votes uniformly with Democrat Brewer and the other two politically liberal members of the council. The only exception is Michael O’Donnell (district 4, south and southwest Wichita), who is often in a minority of one voting in opposition to the other six. The other Republican members — Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, southeast and south Wichita), and Jeff Longwell (district 5, west and northwest Wichita) — routinely vote in concert with the Democrats and liberals on the council.

    Remarkable also are the many members of the business community who appeal to the council for subsidies, increased government intervention, and more central planning from city hall: many of these are Republicans. Conservative Republicans, many have personally told me.

    This describes a lack of partisanship. Most of the mayor’s critics, such as myself, are more accurately characterized not as acting along party lines, but as acting on their belief in economic freedom, free markets, and limited government.

    Economic development

    The mayor said that the city’s efforts in economic development had created “almost 1000 jobs.” While that sounds like a lot of jobs, that number deserves context.

    According to estimates from the Kansas Department of Labor, the civilian labor force in the City of Wichita for December 2011 was 192,876, with 178,156 people at work. This means that the 1,000 jobs created accounted for from 0.52 percent to 0.56 percent of our city’s workforce, depending on the denominator used. This miniscule number is dwarfed by the normal ebb and flow of other economic activity.

    The mayor did not mention the costs of creating these jobs. These costs have a negative economic impact on those who pay these costs. This means that economic activity — and jobs — are lost somewhere else in order to pay for the incentives.

    The mayor’s plan going forward, in his words, is “We will incentivize new jobs.” But under the mayor’s leadership, this “active investor” policy has produced a very small number of jobs, year after year. Doubling down on the present course is not likely to do much better.

    But there are those who disagree, despite all evidence to the contrary. Sedgwick County Commissioner Dave Unruh — a conservative Republican, for those keeping track of partisanship — recently called for a “deal-closing” fund of $100 million. A funding source of this magnitude would undoubtedly require a new tax. There are many who feel there should be a new sales tax devoted to economic development and downtown Wichita development. We should not be surprised to see such a proposal emerge, and not be surprised that civic and business institutions will support it.

    The mayor repeatedly said that the city has been “courageous.” In reality, Wichita does about the same as everyone else. But there is a way Wichita could distinguish itself among cities.

    Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business has made a convincing case that Kansas needs to move away from the “active investor” approach to economic development. This is where government decides which companies will receive special treatment, be it in the form of tax abatements, tax credits, grants, tax increment financing, community improvement district special taxes, and other forms of subsidy. Being an “active investor” has been the approach of the City of Wichita, and according to the mayor’s vision, this plan is to be stepped up in the future.

    In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

    Later, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Wichita and Kansas rely on for economic development: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

    We need business and political leaders in Wichita and Kansas who can see beyond the simplistic imagery of a groundbreaking ceremony and can assess the effect of our failing economic development policies on the entire community. Unfortunately, we don’t have many of these — and Mayor Brewer leads in the opposite direction.

    Critical of misinformation campaigns

    In his speech, Brewer was critical of those who “spread misinformation.” He was not specific as to who he’s criticizing, and I wouldn’t expect him to name specific people in a speech like this.

    But when the mayor criticizes people for being uninformed or misinformed, he needs to look first at himself. He and city staff also need to engage their critics and be responsive to requests for information.

    As an example of misinformation, the mayor cited this evidence that city policies are working: “The proposed Ambassador Hotel with a 3-to-1 private to public investment ratio.”

    The city arrived at this ratio by employing a very narrow definition of public investment. When tax credits from the State of Kansas and federal government as well as other sources of public subsidy are accounted for, the ratio drops to less than two to one.

    It’s true that considering only the city’s artificially narrow definition of public funding, the ratio does reach three to one. But Wichitans also have to pay part of the costs of the tax credits and other subsidies.

    The city has also been less than honest in its promotion of the cost-benefit ratio for the Ambassador Hotel project. The city officially cites a cost-benefit study produced by Wichita State University Center for Economic Development and Business Research. Part of that study produced a cost-benefit ratio of 2.63 to one, and that’s what the city uses as justification for its participation in the project.

    But the full story of the costs and benefits of this project are contained in these numbers from the WSU analysis:

                                        ROI   Cost-benefit ratio
City Fiscal Impacts General Fund  163.2%        2.63
City Fiscal Impacts Debt Service  -17.2%        0.83
City Fiscal Impacts                -9.8%        0.90

    WSU evaluated the impact of the Ambassador Hotel on the City of Wichita’s finances in two areas: The impact on the city’s General Fund, and separately on the city’s Debt Service Fund. The two were combined to produce the total fiscal impact, which is the bottom line in this table.

    The City of Wichita cites only the positive impact to the General Fund figure. But the impact on the Debt Service fund is negative, and the impact in total is negative.

    It’s true that the ROI and cost-benefit ratio for the General Fund indicate a positive investment return. But the cost of the Ambassador Hotel subsidy program to the General Fund is $290,895, while the cost to the Debt Service Fund is $7,077,831 — a cost factor 23 times as large.

    Citizens ought to ask: Who is spreading misinformation?

    It is difficult to get a response from city hall regarding questions like these. So far city economic development director Allen Bell has not agreed to meet with representatives of Tax Fairness for All Wichitans, a group opposed to the subsidies for the Ambassador Hotel. (I am part of that group.) The city and its allied economic development groups will not send representatives to participate in a public forum on this matter.

    Simplistic answers

    The mayor criticized those who “provide simplistic answers to very complicated challenges.” He may be — we don’t really know — referring to those like myself who advocate for free market solutions to problems rather than reliance on government. Certainly the mayor believes that government must act — “courageously” he said — to confront our problems.

    A problem with the mayor’s plan for increased economic interventionism by government is the very nature of knowledge. In a recent issue of Cato Policy Report, Arnold King wrote:

    As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.

    When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.

    Relying on free market solutions for economic growth and prosperity means trusting in the concept of spontaneous order. That takes courage. It requires faith in the values of human freedom and ingenuity rather than government control. It requires that government officials let go rather than grabbing tighter the reins of power.

    Mayor Brewer, five of six city council members, and the city hall bureaucracy do not believe in these values. Wichita’s mayor is openly dismissive of economic freedom, free markets, and limited government, calling these principles of freedom and liberty “simplistic.” Instead, his government prefers crony capitalism and corporate welfare. This is the troubling message that emerges from Brewer’s State of the City address.

  • Wichita TIF: Taxpayer-funded benefits to political players

    It is now confirmed: In Wichita, tax increment financing (TIF) leads to taxpayer-funded waste that benefits those with political connections at city hall.

    The latest evidence we have is the construction of a downtown parking garage that benefits Douglas Place, especially the Ambassador Hotel, a renovation of a historic building now underway.

    The flow of tax dollars Wichita city leaders had planned for Douglas Place called for taxpayer funds to be routed to a politically-connected construction firm. And unlike the real world, where developers have an incentive to build economically, the city created incentives for Douglas Place developers to spend lavishly in a parking garage, at no cost to themselves. In fact, the wasteful spending would result in profit for them.

    The original plan for Douglas Place as specified in a letter of intent that the city council voted to support, called for a parking garage and urban park to cost $6,800,000. Details provided at the August 9th meeting of the Wichita City Council gave the cost for the garage alone as $6,000,000. The garage would be paid for by capital improvement program (CIP) funds and tax increment financing (TIF). The CIP is Wichita’s long-term plan for building public infrastructure. TIF is different, as we’ll see in a moment.

    At the August 9th meeting it was also revealed that Key Construction of Wichita would be the contractor for the garage. The city’s plan was that Key would not have to bid for the contract, even though the garage is being paid for with taxpayer funds. Council Member Michael O’Donnell (district 4, south and southwest Wichita) expressed concern about the no-bid contract. As a result, the contract was put out for competitive bid.

    Now a winning bid has been determined, according to sources in city hall, and the amount is nearly $1.3 million less than the council was willing to spend on the garage. This is money that otherwise would have gone into the pockets of Key Construction. Because of the way the garage is being paid for, that money would not have been a cost to Douglas Place’s developers. Instead, it would have been a giant ripoff of Wichita taxpayers. This scheme was approved by Mayor Carl Brewer and all city council members except O’Donnell.

    Even worse, the Douglas Place developers have no incentive to economize on the cost of the garage. In fact, they have incentives to make it cost even more.

    Two paths for developer taxes

    Recall that the garage is being paid for through two means. One is CIP, which is a cost to Wichita taxpayers. It doesn’t cost the Douglas Place developers anything except for their small quotal share of Wichita’s overall tax burden. In exchange for that, they get part of a parking garage paid for.

    But the tax increment financing, or TIF, is different. Under TIF, the increased property taxes that Douglas Place will pay as the project is completed won’t go to fund the general operations of government. Instead, these taxes will go to pay back bonds that the city will issue to pay for part of the garage — a garage that benefits Douglas Place, and one that would not be built but for the Douglas Place plans.

    Under TIF, the more the parking garage costs, the more Douglas Place property taxes are funneled back to it — taxes, remember, it has to pay anyway. (Since Douglas Place won’t own the garage, it doesn’t have to pay taxes on the value of the garage, so it’s not concerned about the taxable value of the garage increasing its tax bill.)

    Most people and businesses have their property taxes go towards paying for public services like police protection, firemen, and schools. But TIF allows these property taxes to be used for a developer’s exclusive benefit. That leads to distortions.

    Why would Douglas Place be interested in an expensive parking garage? Here are two reasons:

    First, the more the garage costs, the more the hotel benefits from a fancier and nicer garage for its guests to park in. Remember, since the garage is paid for by property taxes on the hotel — taxes Douglas Place must pay in any case — there’s an incentive for the hotel to see these taxes used for its own benefit rather than used to pay for firemen, police officers, and schools.

    Second, consider Key Construction, the planned builder of the garage under a no-bid contract. The more expensive the garage, the higher the profit for Key.

    Now add in the fact that one of the partners in the Douglas Place project is a business entity known as Summit Holdings LLC, which is composed of David Wells, Kenneth Wells, Richard McCafferty, John Walker Jr., and Larry Gourley. All of these people are either owners of Key Construction or its executives. The more the garage costs, the higher the profit for these people. Remember, they’re not paying for the garage. City taxpayers are.

    The sum of all this is a mechanism to funnel taxpayer funds, via tax increment financing, to Key Construction. The more the garage costs, the better for Douglas Place and Key Construction — and the worse for Wichita taxpayers.

    Fueled by campaign contributions?

    It’s no wonder Key Construction principals contributed $16,500 to Wichita Mayor Carl Brewer and five city council members during their most recent campaigns. Council Member Jeff Longwell (district 5, west and northwest Wichita) alone received $4,000 of that sum, and he also accepted another $2,000 from managing member David Burk and his wife.

    This scheme — of which few people must be aware as it has not been reported anywhere but here — is a reason why Wichita and Kansas need pay-to-play laws. These laws impose restrictions on the activities of elected officials and the awarding of contracts.

    An example is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    This project also shows why complicated financing schemes like tax increment financing need to be eliminated. Government intervention schemes like this turn the usual economic incentives upside down, and at taxpayer expense.

  • Wichita City Council sets hotel tax election date

    In response to a successful petition effort aimed at overturning a Wichita charter ordinance, the Wichita City Council last week considered an agenda item that gave the council two choices: Rescind the ordinance, or set a date for an election. The charter ordinance concerns rebating a portion of the Ambassador Hotel’s guest tax collections back to the hotel for its own use.

    The most important issue to the council seemed to be holding the election on a date convenient to the hotel developers. The recommendation from Sedgwick County Election Commissioner Tabitha Lehman was that the election, if the council decides to hold it, should be on February 28, 2012.

    During discussion, Council Member Pete Meitzner (district 2, east Wichita) wanted to move the election to an earlier date so as to “avoid community discourse and debate.”

    Council Member Janet Miller (district 6, north central Wichita) asked a series of questions designed to produced a response that if the election were held earlier, and if that would make it more expensive, would the developer have to pay these extra costs? (The agreement with the city states hotel developers are responsible for the cost of the election, which has been estimated at $50,000.)

    She also expressed concern over “dragging this out,” and said she wants to “get it over with as soon as we can so that we can move on.” She assumed that the developer would like to have the issue resolved as soon as possible.

    Vice Mayor Lavonta Williams (district 1, northeast Wichita) asked the hotel developers if they would agree to pay extra to hold the election sooner. David Burk appeared on behalf of the hotel development team, and said he would like to see the election held as soon as possible, and would pay additional for that. He said it is “hard on our community,” and that “each day that goes by we’re casting a bad sign on future development in downtown, and in Wichita in general.”

    Council Member Jeff Longwell (district 5, west and northwest Wichita) framed the issue as the election commissioner needing more time “beyond what is required by law.” He suggested that the item be delayed until later in the meeting and that the election commissioner be summoned to appear before the council. A motion was made to that effect, and it passed.

    When the election item was continued later in the meeting, Longwell engaged Commissioner Lehman in a series of questions attempting to manage the election calender for her. Lehman explained the various reasons as to why February 28 is a reasonable date for the election. The Kansas Secretary of State’s office has agreed with this assessment, she added.

    In his remarks, Mayor Carl Brewer said: “This is an issue that really — there’s a lot of things that are going on in the dynamics of this entire thing. And when we have a special election, I believe that this council and the community deserve the right to be able to have it — have an election as quickly as possible. By doing that, it eliminates a lot of turmoil inside the community, unrest. But trying to be fair and giving individuals a fair — coming and going — with a fair process, so that every citizen can be heard. And so the sooner you can actually do it, the better off that we are.”

    The mayor made a motion to set the election date as February 28, and it passed with all members except Williams voting in favor.

    Discussion

    This episode provided another example reinforcing the realization that Wichita has a city council — with the exception of one member, Michael O’Donnell (district 4, south and southwest Wichita) — that is entirely captured by special interests. In this case the special interests are a hotel development team consisting of partners who have made significant campaign contributions to many members of the Wichita city council.

    An example: While city attorney Gary Rebenstorf explained to the council that one option was to rescind the ordinance, there was no discussion of that among council members.

    Another example was the measures the council went through to try and get an early election date, something that many observers feel favors the hotel developers. In particular, it was disconcerting to see Longwell attempt to micromanage the Sedgwick County Election Commissioner. He has no business doing that, especially when his motive is so transparent.

    And why would the council be so eager to please the hotel developers and their desired election date? Don’t the desires and concerns of the other side have any relevance? To this council, the answer is no.

    Perhaps the worst impression to come out of this meeting is that many Wichita city council members simply don’t care much for what citizens think. It’s hard to pick the most telling example, but Meitzner’s concern that we need to “avoid community discourse and debate” ranks right at the top. To Meitzner, it seems that things like discussing and debating issues are harmful, if they would get in the way of satisfying his campaign contributors, or his vision for molding the future of Wichita from the top down.

    The rest of the council members, with the exception of O’Donnell, deserve scorn as well.

    Then there are the mayor’s remarks. He spoke of giving individuals a “fair process” so that they may be heard, but also that the election needs to be held quickly. These two goals contradict each other.

    Mayor Brewer also repeated his practice of making vague criticisms of his opponents without being specific, this time referring to “lot of things that are going on in the dynamics of this entire thing.” Brewer — perhaps in an effort to maintain a sense of decorum or apparent integrity — usually does not mention the names of those he criticizes or specifics of the issues involved. This allows him to appear noble, but without being accountable to actual people — and on the specifics of actual issues — for the things he says.

  • Open records, rights of Kansans disrespected at Wichita City Council

    Yesterday the Wichita City Council decided to issue another contract to Go Wichita Convention and Visitors Bureau. I appeared to recommend that the council not issue this contract until an issue regarding the Kansas Open Records Act is resolved. Explanation of why Go Wichita should be considered a “public agency” and comply with records requests is found in Wichita open records issue buried.

    A few notes from the meeting (video may be viewed here or at the end of this article):

    Discussion of this matter at the meeting reveals that city staff believes that the annual reports filed by Go Wichita along with periodic checks by city staff are sufficient oversight.

    City Attorney Gary Rebenstorf cited the law regarding enforcement of the Kansas Open Records Act, stating that the Kansas Attorney General or the courts is the next step to seek enforcement of KORA. While Rebenstorf is correct on the law, the policy of the Kansas Attorney General is to refer all cases to the local district attorney. The Kansas AG will not intervene in this matter.

    Randy Brown, who is chair of the Kansas Sunshine Coalition for Open Government and former opinion page editor of the Wichita Eagle was at the meeting and spoke on this matter. In his remarks, Brown said “It may not be the obligation of the City of Wichita to enforce the Kansas Open Records Act legally, but certainly morally you guys have that obligation. To keep something cloudy when it should be transparent I think is foolishness on the part of any public body, and a slap in the face of the citizens of Kansas. By every definition that we’ve discovered, organizations such as Go Wichita are subject to the Kansas Open Records Act.”

    Brown said that he’s amazed when public officials don’t realize that transparency helps build trust in government, thereby helping public officials themselves. He added “Open government is essential to a democracy. It’s the only way citizens know what’s going on. … But the Kansas Open Records Act is clear: Public records are to be made public, and that law is to be construed liberally, not by some facile legal arguments that keep these records secret.”

    He recommended to the council, as I did, that the contract be contingent on Go Wichita following the Kansas Open Records Act.

    John Rolfe, president of Go Wichita, told the council that he has offered to provide me “any information that is relevant” regarding Go Wichita. He mentioned the various financial reports his organization provides. He said he is unclear on the transparency question, and what isn’t transparent.

    Michael O’Donnell (district 4, south and southwest Wichita) asked Rolfe if he had ever denied a KORA request. Rolfe replied no, perhaps not remembering that Go Wichita denied my request.

    Misunderstanding the scope of KORA

    In remarks from the bench James Clendenin (district 3, south and southeast Wichita) asked the city manager a series of questions aimed at determining whether the city was satisfied with the level of service that Go Wichita has provided. He then extended that argument, wondering if any company the city contracts with that is providing satisfactory products or service would be subject to “government intrusion” through records requests. Would this discourage companies from wanting to be contractors?

    First, the Kansas Open Records Act does not say anything about whether a company is providing satisfactory service to government. That simply isn’t a factor, and is not a basis for my records request to Go Wichita. Additionally, the Kansas Open Records Act contains a large exception, which excepts: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.” So companies that sell to government in the ordinary course of business are not subject to the open records law. Go Wichita is distinguished, since it is almost entirely funded by taxes and has, I believe, just a single client: the City of Wichita.

    Finally, we should note that the open records law does not represent government intrusion, as Clendenin claimed. Open records laws offer citizens the ability to get an inside look at the working of government. That’s oversight, not intrusion.

    Is the city overwhelmed with records requests?

    Council Member Pete Meitzner (district 2, east Wichita) asked that there might be a workshop to develop a policy on records requests. He expressed concern that departments might be overwhelmed with requests from me that they have to respond to in a timely fashion, accusing me of “attempt to bury any of our departments in freedom of information acts [sic].”

    In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I have made no requests this year to the city citing the open records act. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.

    As to his concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is troubling. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent.

    As for a workshop for city council on the topic of open records: This would probably be presented by Rebenstorf, and his attitude towards the open records law is known, and is not on the side of citizens.

    O’Donnell made a motion that the contract be approved, but amended that Go Wichita will comply with the Kansas Open Records Act. That motion didn’t receive a second.

    Wichita’s attitude towards citizens

    Randy Brown’s remarks are an excellent summation of the morality and politics of the city’s action and attitude regarding this matter.

    The council ought to be wary of taking legal advice from city attorney Gary Rebenstorf. He has been wrong several times before when issuing guidance to this council regarding the Kansas Open Meetings Act, which is similar to the Open Records Act. He’s taken the blame and apologized for these violations. He was quoted in the Wichita Eagle as saying “I will make every effort to further a culture of openness and ensure that like mistakes are avoided in the future.”

    But Rebenstorf’s attitude, as gauged accurately by Randy Brown, is to rely on facile legal arguments to avoid complying with the clear meaning and intent of the law.

    Why city council members — except for Michael O’Donnell — would be opposed to what I have asked is unknown. Perhaps they know that among the public, issues relating to open records generally aren’t that important. Citizens ought to note the actions of Mayor Carl Brewer. The mayor could easily put this matter to an end. He speaks of wanting to have open and transparent government, but when it comes time to make a tough call, his leadership is missing.

    It’s becoming evident that Kansans need a better way to enforce compliance with the Kansas Open Records Act. It seems quite strange that local district attorneys are placed in a quasi-judicial role of deciding whether citizen complains are justified. If citizens disagree — and nearly everyone I’ve talked to thinks that the opinion issued by the Sedgwick County District Attorney is this matter is nonsensical and contrary to the letter and spirit of the law — they find themselves in the position of suing their government.

    Suing your government is costly. Citizens will realize their own taxpayer dollars are used against them.