Voice For Liberty

Tag: Robert Layton

Wichita City Manager Robert Layton

  • Wichita Mayor Carl Brewer to critics: stop grandstanding

    Last week’s meeting of the Wichita City Council provided a window into the attitude of Wichita elected officials, particularly Mayor Carl Brewer. Through their actions, and by their words, we see a government that cares little for the rule of law and good government, and one that is disrespectful to citizens who call attention to this.

    At issue was the circumvention of a statutorily required public hearing. In order to grant subsidies to a development team lead by David Burk of Marketplace Properties, the city is required to hold a public hearing, which it scheduled for September 13th. That schedule wasn’t fast enough for Burk, so at its August 9th meeting the council approved a letter of intent which formalizes the city’s desire to do the things that were to be the subject of the public hearing.

    I, along with others, contend that this action — issuing the letter of intent — reduces the September 13th public hearing to a meaningless exercise. It’s true that several times city bureaucrats and elected officials assured citizens that the letter is non-binding and doesn’t mean the city will go through with the desires expressed in the letter. But I don’t think they believe that themselves, and the language of City Manager Bob Layton reveals so. In the end, the public hearing is reduced to — as the Wichita Eagle’s Rhonda Holman aptly noted — “a pointless afterthought.” See Wichita City Council bows to special interests.

    This action is not good government, and it’s not open and transparent government, despite the claims of Mayor Brewer. It goes against our country’s principle of the rule of law, which holds that our laws and orderly procedures are more important than any single person.

    Almost as troubling is the attitude of Mayor Brewer and others in city hall towards citizens who oppose their plans. Brewer — perhaps in an effort to maintain a sense of decorum or apparent integrity — does not mention the names of those he criticizes. This allows him to appear noble, but without being accountable to actual people, and the public, for the things he says.

    John Todd, an activist and ally of mine who speaks at council meetings frequently — which means, in his case, about once or maybe twice a month — told me of his concerns: “It appears disingenuous to me for the mayor to unilaterally dress down citizens who address the council, with no opportunity for citizen rebuttal. The veiled message that comes through this process is this: ‘If you don’t agree with the mayor and council’s position on any issue, please shut up.’”

    Todd is referring to the common practice of the mayor and some council members, notably Janet Miller (district 6, north central Wichita), to criticize opponents after they’ve completed their testimony and returned to the audience, when there is no opportunity for citizens to respond.

    At the August 9th meeting, the mayor criticized his political opponents for making use of the opportunity to address the council, and by extension, the people who may be watching on television or the internet: “I hope that today, all of this grandstanding that I saw coming from some of the public and I saw from some of the council members, and questioning council members, elected officials’ integrity — unless you have proof, just because you have a camera here, that there is something you shouldn’t be doing. … This whole thing that I saw going on here today remind me so much of a previous administration where individuals were standing up and thank God we have the cameras here. The media’s here every single meeting.”

    What’s particularly deplorable about the mayor’s remarks is that he’s criticizing people for speaking at a public hearing. Yes, city officials say the agenda item was only to consider a letter of intent that does not bind the city council. But that legalistic interpretation ignores the practical political reality that this meeting was, de facto, the public hearing for this project.

    This is not the first time the mayor has complained about his critics. In the past, the mayor has said: “We need every person’s ideas, recommendations, and their opinion. … Being quiet and then complaining about it later isn’t going to be good for you or the community.”

    But when citizens take the mayor’s advice — showing initiative, not being quiet, and stating opinions beforehand — now the mayor calls that grandstanding.

    The mayor has also called his critics “naysayers” and complained that they have received too much media attention.

    The mayor should take notice, however, that most people who care about public affairs and policy are severely disappointed with news media coverage of city hall events. The resources of news gathering agencies, especially newspapers, are severely depleted as compared to the past. In my coverage of a talk given by former Wichita Eagle editor Davis Merritt, I wrote this: “A question that I asked is whether the declining resources of the Wichita Eagle might create the danger that local government officials feel they can act under less scrutiny, or is this already happening? Merritt replied that this has been going on for some time. ‘The watchdog job of journalism is incredibly important and is terribly threatened.’ When all resources go to cover what must be covered — police, accidents, etc. — there isn’t anything left over to cover what should be covered. There are many important stories that aren’t being covered because the ‘boots aren’t on the street anymore,’ he said.” See Former Wichita Eagle editor addresses journalism, democracy, May 11, 2009.

    In his remarks to me, John Todd wrote: “Diversity of opinion and the open discussion of divergent opinions are important parts of good government.” But citizens who observe the actions of the Wichita City Council — the issuance of this letter of intent being only the most recent example — and who sense the attitude of the mayor and some council members towards those who express opinions outside the orthodoxy — are likely to conclude, as many do, that it’s just not worth the effort to get involved.

  • Wichita City Council bows to special interests

    Yesterday’s meeting of the Wichita City Council revealed a council — except for one member — totally captured by special interests, to the point where the council, aided by city staff, used a narrow legal interpretation in order to circumvent a statutorily required public hearing process.

    The issue was a downtown hotel to be developed by a team lead by David Burk of Marketplace Properties. The subsidies Burk wants, specifically tax increment financing (TIF), require a public hearing to be held. The city scheduled the hearing for September 13th.

    That schedule, however, didn’t suit Burk. In order to provide him a certain comfort level, the council agreed to issue a letter of intent stating that the council intends to do the things that the public hearing is supposed to provide an opportunity for deliberation.

    I, along with others, contend that this action reduces the September 13th public hearing to a meaningless exercise. This action is not good government, and it’s not open and transparent government, despite the claims of Mayor Carl Brewer. It goes against our country’s principle of the rule of law, part of which holds that our laws are more important than any single person.

    Several times council members — and once city attorney Gary Rebenstorf — explained that the letter of intent is non-binding on either party. But: No matter what information is presented at the September public hearing, no matter how strong public opinion might be against the incentives involved, is there any real likelihood that the council would not proceed with this plan and its incentives, having already passed a letter of intent to do so? I think there is very little possibility of that.

    Persuasive arguments will be made that since the city issued a letter of intent, and since the developers may have already taken action based on that letter, it follows that the city is obligated to pass the plan. Otherwise, who would ever vest any meaning in a future letter of intent from this city?

    During the discussion, no one was able to explain adequately why a letter of intent — if it is non-binding and therefore does not commit the city — was asked for by the developers. Despite the lawyerly explanation of Rebenstorf and council members — including the mayor — the letter does have meaning. Practically, it has such a powerful meaning that it makes the holding of the public hearing on September 13th a mere charade, a meaningless exercise in futility.

    It’s not just me and a handful of others who contend this. The Wichita Eagle’s Rhonda Holman, who is usually in favor of all forms of public spending on downtown, wrote: “Even though the letter of intent will be nonbinding, it risks making the Sept. 13 public hearing on tax-increment financing seem like a pointless afterthought.”

    In his remarks, City Manager Bob Layton explained that the meeting was the first time for council members to “formally vet this project and all of the incentives.”

    He added: “If the council were to say, for instance, there were two or three pieces of that that you had discomfort with, that would then put everyone on notice that the deal may not go forward.” He said this is the purpose of today’s action, and he added that the action is non-binding.

    I would suggest that since the council, with the exception of Council Member Michael O’Donnell (district 4, south and southwest Wichita), found no problems with issuing the letter of intent, it has no problems with the deal, and this is what makes the September public hearing, as Holman said, a “pointless afterthought.”

    Astonishingly, the manger said while this is “not intended to be the normal process,” he said that he “kind of like it” as it gave an initial opportunity to gauge the sentiment of council members.

    I’m glad the manager didn’t mention the sentiment of the public, as with little notice as to the content of the deal and its incentives, citizens had no meaningful opportunity to prepare.

    An example of the contorted logic council members use to justify their action: Council Member Jeff Longwell (district 5, west and northwest Wichita) explained that issuing letters of intent is a common practice in real estate deals. He confused, however, agreements made between private parties and those where government is a party. Private parties can voluntarily enter into whatever agreements they want. But agreements with government are governed by laws. Yesterday, the city council announced its intent to do something for which it is required to hold a public hearing. That didn’t violate the letter of the law, but it certainly goes against its spirit and meaning. Longwell said he has no problem with that.

    Their bureaucratic enablers helped out, too. Wichita Downtown Development Corporation President Jeff Fluhr, in his testimony, said we are working towards becoming a “city of distinction.” That we are, indeed — a city distinguished by lack of respect for the rule of law and its disregard for citizens in favor of special interests.

    A few observations from the meeting follow.

    Public investment

    In response to a question from the mayor, Allen Bell, Wichita’s Director of Urban Development, said that the ratio of private dollars to public dollars for this project is about 2.2 to 1. Whether these numbers are correct is doubtful. It will take an analysis of the deal to determine the true numbers, and the details have been available for only a short time. But if correct, this ratio falls well short of the stated goals. Two years ago, when agitation for a new round of downtown planing started, boosters spoke of a ratio of 15 to 1. Eventually planners promised a ratio of 5 to 1 private to public investment for downtown. This project, while of course is just a single project and not the entirety of downtown development, doesn’t reach half that goal.

    Order of events and media coverage

    During the meeting, Council Member Pete Meitzner (district 2, east Wichita) conceded that “the order of events is confusing.”

    Before that, Council Member Janet Miller (district 6, north central Wichita) claimed that there had been much media coverage of the proposed hotel, and that the public was actually getting two opportunities to talk about this project. She said that the media had published information about today’s meeting and the public hearing on September 13th.

    Miller is gravely mistaken. Until a Wichita Eagle article on Saturday, I saw no mention of the letter of intent, and no detail of the form of subsidies to be considered for this project. The city’s list of legal notices contains no mention of the action that was taken at this meeting.

    Questions not answered

    During my remarks to the council, I related how last year the Wichita Eagle alleged that David Burk, the managing member of this project — and I quote here: “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.”

    This Eagle article and a companion article went on to quote these people as having trouble with and being concerned, to varying degrees, with Burk’s acts: City Attorney Gary Rebenstorf; City Council member Jeff Longwell; City Council Member Lavonta Williams, now serving as vice mayor; then-Vice Mayor Jim Skelton, now on the Sedgwick County Commission; and City Manager Robert Layton.

    In particular, the manager said, according to the Eagle, that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

    The manager’s quote is most directly damaging. Despite the fact that nearly all the property taxes Burk pays directly enriches himself and only him, he still doesn’t want to pay them. And according to the Wichita Eagle — not me — he engaged in deception in order to reduce them.

    None of the four people in the council chambers — Rebenstorf, Longwell, Williams, and Layton — explained their apparent change of mind with regard to Burk’s acts.

    Burk, who addressed the council immediately after I asked if he cared to explain his actions, decided to avoid the issue. In his shoes, I probably would have done the same, as there is no justification for the acts the Eagle accused him of doing. He, and his political and bureaucratic enablers in Wichita city hall, have to hope this issue fades.

    Campaign contributions

    Council member O’Donnell asked about a parking garage to be built at a cost of $6 million to the city: Will the city be putting this project out to competitive bid? Bell replied no, that is the developer’s request. City attorney Rebenstorf added that there is a charter ordinance that exempts these types of projects from bidding requirements.

    O’Donnell said that awarding the construction contract to a company that has made campaign contributions to all council members (except him) “seems a little questionable.”

    The company in question is Key Construction. Its principals regularly appear on campaign finance reports, making the maximum allowed contribution to a wide variety of candidates. Similarly, Burke and his wife also frequently make the maximum contribution to city hall candidates.

    O’Donnell is correct to publicize these contributions. They emit a foul odor. In our political system, many people make contributions to candidates whose ideology they agree with, be it conservative, liberal, or something else.

    But Burk and others routinely make the maximum contribution to all — or nearly all — candidates, even those with widely varying political stances. How can someone explain Burk’s (and his wife’s) contributions to liberals like Miller and Williams, and also to conservatives like Longwell, Meitzner, and former council member Sue Schlapp?

    The answer is that Schlapp and Longwell, despite their proclamations of fiscal conservatism, have shown themselves to be willing to vote for any form of developer welfare Burk and others have asked for. They create tangled webs of tortured logic to explain their votes. Meitzner, along with his fellow new council member James Clendenin (district 3, south and southeast Wichita), seems to be following the same path.

    Several council members and the mayor took exception to O’Donnell’s raising of this matter. Clendenin, for his part, objected and said that the public has had over 30 days to consider and take exception with this project. This contention, like Miller’s, isn’t supported by any facts that I am aware of. It appears that the first mention of any of the details of the plan and the subsidies is contained in a MAPC agenda that appears to have been created on July 29. Besides not being 30 days in advance, the MAPC agenda is an obscure place to release what Clendenin believes is adequate public notice.

    Regarding the issue of campaign contributions, the mayor — without mentioning his name — strongly criticized O’Donnell for bringing up this matter. Many people watching this meeting felt that the extreme reaction of Brewer and others to O’Donnell’s observation reveals a certain uneasiness regarding these contributions. I don’t believe the mayor and council members are taking illegal bribes, although when any city is enriching people with millions of dollars of developer welfare there is always that threat, and in some cities and states such practices are commonplace.

    The fact remains, however, that there is a small group of campaign contributors who — over and over — ask for and receive largess from city hall.

    The mayor’s criticisms

    In his comments, Mayor Brewer accused opponents of providing only partial facts about matters, because the full facts did not support their case. He was referring to my remarks that a lawsuit brought against the city by a party who felt the city had reneged on a letter of intent was litigated all the way to the Kansas Supreme Court. In my remarks I didn’t mention who won that case — the city did — and the mayor believes this is an example of slanting the facts.

    The mayor went on to make accusations of “grandstanding” from some of the public and “some council members” because there are cameras in the council chambers. He mentioned that news media are present at every meeting and that council meetings are broadcast on television.

    The mayor should take notice, however, that most people who care about public affairs and policy are severely disappointed with news media coverage of city hall events. The resources of news gathering agencies, especially newspapers, are severely depleted as compared to the past. In my coverage of a talk given by former Wichita Eagle editor Davis Merritt, I wrote this: “A question that I asked is whether the declining resources of the Wichita Eagle might create the danger that local government officials feel they can act under less scrutiny, or is this already happening? Merritt replied that this has been going on for some time. ‘The watchdog job of journalism is incredibly important and is terribly threatened.’ When all resources go to cover what must be covered — police, accidents, etc. — there isn’t anything left over to cover what should be covered. There are many important stories that aren’t being covered because the ‘boots aren’t on the street anymore,’ he said.” See Former Wichita Eagle editor addresses journalism, democracy, May 11, 2009.

    In addition, Bill Wilson, the reporter the Wichita Eagle sent to cover the meeting, has a documented bias against the concept of free markets, and against those who believe in them.

    The mayor, when delivering his criticism, does not use the names of those he criticizes. It would be useful if he did, but it would mean he has to take greater accountability for his remarks.

    Following are links to excerpts of testimony from the meeting — perhaps examples of the “grandstanding” the mayor complained about: John Todd, Shirley Koehn, and Bob Weeks.

  • Wichita city council to decide between rule of law, or rule by situation

    Tuesday’s Wichita City Council meeting will provide an opportunity for the mayor, council members, and city hall staff to let Wichitans know if our city is governed by the rule of law and proper respect for it, or if these values will be discarded for the convenience of one person and his business partners.

    Here’s the situation: a person wants to gain approval of a tax increment financing (TIF) district project plan. This requires a public hearing, which the city has scheduled for September 13th.

    But this schedule doesn’t suit the applicant. He has a personal business need — an expiring purchase option — and wants the city to issue a letter of intent stating that the city intends to do all the things that are the subject of the September public hearing.

    The letter of intent is not binding, city officials tell us. The council will still have to hold the September public hearing and vote on the incentives the developer wants. And the list of incentives is large, amounting to many millions of dollars. Whether to issue these incentives deserves discussion and a public hearing.

    But the letter of intent, in effect, circumvents the public hearing. It reduces the hearing to a meaningless exercise. No matter what information is presented at the September public hearing, no matter how strong public opinion might be against this project, is there any real likelihood that the council would not proceed with this plan and its incentives, having already passed a letter of intent to do so? I imagine that persuasive arguments will be made that since the city issued a letter of intent, and since the developers may have already taken action based on that letter, it follows that the city is obligated to pass the plan. Otherwise, who would ever vest any meaning in a future letter of intent from this city?

    And the developers are planning to take action based on this letter of intent. To them, the letter does have meaning. If it had no meaning, why would they ask for it?

    That bears repeating: If the letter of intent is non-binding, why issue it at all?

    The last time someone felt the city reneged on a letter of intent, it resulted in a court case that went all the way to the Kansas Supreme Court. I imagine the city is not anxious to repeat that experience.

    Part of the purpose of public hearings and their advance notice, usually 30 days or so, is to give interested parties time to prepare for the hearing. But citizens are given just a few days notice of the proposed letter of intent. The parties who will receive the subsidies, of course, have known about this for some time. Their bureaucratic and political enablers have, too.

    The issuance of the letter of intent on Tuesday, if the city council decides to do so, is an affront to the rule of law. It would be a powerful statement by the council that it intends to go ahead with the project and its subsides, public hearing — and citizens — be damned. It is a striking show of arrogance by the city and its political leadership, which is to say Mayor Carl Brewer.

    After Tuesday’s meeting we will know one thing. We will know if the Wichita City Council and city staff value the rule of law more than the needs of one small group of people. We won’t really know about individual city staff, but the council members and mayor will have to vote on this item. We’ll know exactly where each of them stands. Expect waffling.

    Tuesday provides citizens a chance to learn exactly how the mayor and each council members value the rule of law as compared to the needs of one person and his business partners. It is as simple as that.

    The project

    The project is the development of a new hotel in an existing building downtown. It sounds like a neat project and would be a great addition to Wichita. But — this project is a product of central government planning backed by massive government intervention in the form of millions of dollars of subsidy. Pretty much all the tools have been tapped in the proposed corporate welfare, even one form that will require the city to pass a special charter ordinance.

    The lead developer, David Burk, is well known in Wichita and has produced a number of successful projects. (We must qualify this as “seemingly successful,” as it seems as all of Burk’s projects require some sort of taxpayer involvement and subsidy. So we don’t really know if these projects would be successful if they had to stand on their own.)

    I’ve written extensively on the problems with government-directed planning and taxpayer-funded investment in downtown Wichita. See Downtown Wichita regulations on subsidy to be considered or Downtown Wichita revitalization for examples. This project suffers from all these problems.

    Furthermore, we see the problems of the public choice theory of politics at play here. Perhaps most prominent is the problem of concentrated benefits and dispersed costs. In this case Burk and his partners stand to garner tremendous benefit, while everyone else pays. This is why Burk and his wife are generous campaign donors to both conservative and liberal city politicians.

    Burk and past allegations

    The involvement of Burk in the project, along with the city’s response, is problematic. City documents indicate that the city has investigated the backgrounds of the applicants for this project. The result is “no significant findings to report.” Evidently the city didn’t look very hard. In February 2010 the Wichita Eagle reported on the activities of David Burk with regard to property he owns in Old Town. Citizens reading these articles might have been alarmed at the actions of Burk. Certainly some city hall politicians and bureaucrats were.

    The opening sentence of the Wichita Eagle article (Developer appealed taxes on city-owned property) raises the main allegation against Burk: “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.”

    A number of Wichita city hall officials were not pleased with Burk’s act.

    According to the Eagle reporting, Burk was not authorized to do what he did: “Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

    Council member Jeff Longwell was quoted by the Eagle: “‘We should take issue with that,’ he said. ‘If anyone is going to represent the city they obviously have to have, one, the city’s endorsement and … two, someone at the city should have been more aware of what was going on. And if they were, shame on them for not bringing this to the public’s attention.’”

    Council member Lavonta Williams, now serving as vice mayor, was not pleased, either, according to her quotations: “‘Right now, it doesn’t look good,’ she said. ‘Are we happy about it? Absolutely not.’”

    In a separate article by the Eagle on this issue, we can learn of the reaction by two other city hall officials: “Vice Mayor Jim Skelton said that having city development partners who benefit from tax increment financing appeal for lower property taxes ‘seems like an oxymoron.’ City Manager Robert Layton said that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

    The manager’s quote is most directly damaging. In a tax increment financing (TIF) district, the city borrows money to pay for things that directly enrich the developers, in this case Burk and possibly his partners. Then their increased property taxes — taxes they have to pay anyway — are used to repay the borrowed funds. In essence, a TIF district allows developers to benefit exclusively from their property taxes. For everyone else, their property taxes go to fund the city, county, school district, state, fire district, etc. But not so for property in a TIF district.

    This is what is most astonishing about Burk’s action: Having been placed in a rarefied position of receiving many millions in benefits, he still thinks his own taxes are too high.

    Some of Burk’s partners have a history of dealing with the city that is illustrative of their attitudes. In 2008 the Old Town Warren Theater was failing and its owners threatened to close it and leave the city with a huge loss on a TIF district formed for the theater’s benefit. Faced with this threat, the city made a no-interest and low-interest loan to the theater. The theater’s owners included David Wells, who is one of Burk’s partners in the project being considered by the council for the letter of intent.

    Entrepreneurs are not always successful. Business failure, if handled honestly and honorably, is not shameful.

    But when a business is already receiving taxpayer subsidy, and the response to failure is to demand even more from the taxpayer — that is shameful.

    Burk and Wells, by the way, played a role in the WaterWalk project, which has a well-deserved reputation as a failed development. In 2011 the city’s budget includes a loss of slightly over one million dollars for the TIF district that has benefited its owners to the tune of over $41 million.

    Burk has been personally enriched by city hall action before. An example from the same article: “A 2003 lease agreement gave Burk use of the retail strip at the front of the parking garage for $1 a year for the first five years.” Nearly-free property that you can then lease at market rates is a sweet deal.

    These gentlemen have had their bite at the taxpayer-funded apple. Now they want another bite, on their own schedule, without regard to rule of law and the public.

  • Wichita’s letter of intent for Douglas Place LLC

    On Tuesday August 9th the Wichita City Council will consider passing a letter of intent to do something. Then, on September 13th, the council will hold a public hearing on whether the city should do the things contained in the letter of intent. Is this putting the cart before the horse? The agenda packet for the meeting is available at Wichita city council agendas, or an excerpt of the relevant pages is at Letter of Intent for Downtown Incentives for the Douglas Place Project.

    Mayor Carl Brewer
    Manager Robert Layton

    Gentlemen,

    I am concerned about the letter of intent for Douglas Place LLC to be considered at Tuesday’s city council meeting. Without regard to the merits of this project, it seems that endorsing a letter of intent regarding a matter, and then later on holding a public hearing on the very same matter, reduces the public hearing to a meaningless exercise.

    I realize that Tuesday’s item is only to pass a letter of intent, and that the council would still have to pass ordinances implementing the ideas mentioned in the letter. The text of the letter states so: “This letter of intent is subject in all respects to subsequent actions by the City Council to authorize specific incentives outlined herein and does not constitute a binding obligation of the parties … ”

    But prior to this, in the same paragraph, the letter states “… this Letter of Intent with Douglas Place LLC, is submitted in order to set forth the agreement of the parties concerning the principal elements of Douglas Place LLC’s commitment to the City and the City’s intent to provide the incentives outlined herein … ” (emphasis added)

    The city’s intent could not be more clear.

    Mayor and Manager, no matter what information is presented at the September 13 public hearing, and no matter how strong public opinion might be against this project, is there any real likelihood that the council would not proceed with this plan and its incentives, having already passed a letter of intent to do so? I imagine that persuasive arguments will be made that since the city issued a letter of intent, and since the developers may have already taken action based on that letter, it follows that the city is obligated to pass the plan. Otherwise, who would ever vest any meaning in a future letter of intent from this city?

    May I also ask this: What is the need for this letter of intent? If the developer is not going to take action based on the proposed letter, why is it necessary?

    I would urge the city to withdraw consideration of this letter of intent until after a public hearing is held.

  • Wichita and its political class

    The discussion at yesterday’s Wichita City Council meeting provided an opportunity for citizens to discover the difference in the thinking of the political class and those who value limited government and capitalism.

    At issue was Mid-Continent Instruments, Inc., which asked the city for a forgivable loan of $10,000. It received the same last week from Sedgwick County. According to city documents, the State of Kansas through its Department of Commerce is also contributing $503,055 in forgivable loans, sales tax exemptions, training grants, and tax credits.

    At the city council meeting Clinton Coen, a young man who ran for city council earlier this year, spoke against this measure, which he called corporate welfare.

    In response to Coen, Council Member James Clendenin (district 3, south and southeast Wichita) asked if we should ignore companies that want to do business here, or should we allow them to leave? Implicit in the question is that the threat dangled by Mid-Continent is real: that unless the city gives them $10,000, they will expand somewhere else. How citizens and council members feel about this issue largely depends on their perceived genuineness of this threat.

    When Coen recommended that the city cut spending, Clendenin said “I can guarantee you, from what I have seen, this city government has cut a tremendous amount of spending.” When pressed by Coen for examples of cuts, he demurred. Clendenin also said that the $10,000 is needed to show the city’s commitment to the company.

    Perhaps coming to the rescue of her younger and less experienced colleague, Council Member Janet Miller asked City Manager Bob Layton how much has been cut from the budget, and he replied “we’ve cut over $20 million in the general fund over three years.”

    In saying that, Layton is using the language and mind-set of bureaucrats and politicians. In this world, it’s a cut if spending does not rise as fast as planned or hoped for. As you can see from the accompanying chart, Wichita general fund spending has not been cut in recent years. It has risen in each of the last three years, and plans are for it to keep rising.

    Wichita general fund spending

    This illustrates a divide between the thinking of the political class and regular people. Blurring the distinction between plans and reality lets politicians and bureaucrats present a fiscally responsible image — they cut the budget, after all — and increase spending at the same time. It’s a message that misinforms citizens about the important facts.

    Miller also praised the return on investment the city receives for its spending on economic development, citing Wichita State University Center for Economic Development and Business Research and the cost-benefit calculations it performs. These calculations take the cost of providing the incentives and compare it to the returns the city and other governmental entities receive.

    What is rarely mentioned, and what I think most people would be surprised to learn, is that the “returns” used in these calculations is manifested in the form of increased tax revenue. It’s not like in the private sector, where business firms attempt to increase their sales and profits by providing a product or service that people willingly buy. No, the city increases its revenue (we can’t call it profit) by collecting more taxes.

    It’s another difference between the political class and everyone else: The political class craves tax revenue.

    Aside from this, the cost-benefit calculations for the city don’t include the entire cost. The cost doesn’t include the county’s contribution, the majority of which comes from residents of its largest city, which is Wichita. Then, there’s the half-million in subsidy from the state, with a large portion of that paid for by the people of Wichita.

    But even if you believe these calculations, there’s the problem of right-sizing the investment. If an investment of $10,000 has such glowing returns — last week Sedgwick County Commissioner Jim Skelton called the decision a “no-brainer” — why can’t we invest more? If we really believe this investment is good, we should wonder why the city council and county commission are so timid.

    Since the applicant company is located in his district, Council Member Pete Meitzner (district 2, east Wichita), praised the company and the state’s incentives, and made a motion to approve the forgivable loan. All council members except Michael O’Donnell (district 4, south and southwest Wichita) voted yes.

    Going forward

    While the political class praises these subsidies and the companies that apply for them, not many are willing to confront the reality of the system we’re creating. Some, like O’Donnell and Sedgwick County Commissioner Richard Ranzau, have recognized that when government is seen as eager to grant these subsidies, it prompts other companies to apply. The lure of a subsidy may cause them to arrange their business affairs so as to conform — or appear to conform — to the guidelines government has for its various subsidy programs. Companies may do this without regard to underlying economic wisdom.

    We also need to recognize that besides simple greed for public money, businesses have another reason to apply for these subsidies: If a publicly-traded company doesn’t seek them, its shareholders would wonder why the company didn’t exercise its fiduciary duty to do so. But this just perpetuates the system, and so increasing amounts of economic development fall under the direction of government programs.

    While most people see this rise in corporate welfare as harmful — I call it a moral hazard — the political class is pleased with this arrangement. As Meitzner said in making his motion, he was proud that Wichita “won out” over the other city Mid-Continent Instruments considered moving to.

    Another harmful effect of these actions is to create a reputation for having an uncompetitive business environment. Not only must businesses of all types pay for the cost of these subsidies, some face direct competition by a government-subsidized competitor. This is the situation Wichita-area hotels face as a result of the city granting millions in subsidy to a hotel developer to build a Fairfield Inn downtown.

    Even those not in direct competition face increased costs as they attempt to hire labor, buy supplies, and seek access to capital in competition with government-subsidized firms. Could this uneven competitive landscape be a factor that business firms consider in deciding where to locate and invest?

    We can expect to see more government intervention in economic development and more corporate welfare. Former council member Sue Schlapp in April took a job with the Kansas Department of Commerce. Her job title is “senior constituent liaison,” which I think can be better described as “customer service agent for the corporate welfare state.” Her office is in Wichita city hall.

    Increasingly we see politicians and bureaucrats making decisions based on incorrect and misleading information, such as claiming that the city’s general fund budget has been cut when spending has increased. Sometimes they are fed incorrect information, as in the case of a presentation at Sedgwick County Commission that bordered on fraudulent.

    Sometimes, I think, officeholders just don’t care. It’s easiest to go along with the flow and not raise ripples. They participate in groundbreakings and get their photograph in the newspaper and on television that way. Which brings up an important question: why do none of our city’s mainstream media outlets report on these matters?

  • Kansas and Wichita quick takes: Monday February 21, 2011

    Kansas legislature website. Over the weekend a new version of the website for the Kansas Legislature appeared. It has a new design over what’s been available for the last six weeks or so. It will take a while to shake out the new site, but here are a few observations: Finally, pdf documents are displayed in a standard — that is to say plain — method that should be usable on devices of all types. … Attempting a search produces a “page not found” error. … There is no mobile version that works on devices like an Iphone, which is a popular thing to have these days. … There is a link named “A/V Live” which is not active at this time, but points to the goal of having committee testimony broadcast on the website. Here’s a better idea: almost all conferees that testify before committees have written testimony that is provided to committee members. Make that testimony available to the people of Kansas. This could be done fairly easily — and inexpensively — and is more useful. … The Wichita Eagle has some reporting today about the troubles with the new site. But the biggest question is: why is this work being done during the legislative session? Why not do it from June through December when the legislature is not in session and demand for the site is less? Why wasn’t the old site left running while the new site was built?

    Legislators on Governor’s plan. At a meeting with Wichita-area legislators on Saturday, some spoke on Governor Brownback’s economic development plan. As with much of the news media, legislators seem mostly oriented on the reorganization of some agencies rather than the call for an end — or at least reduction — of targeted incentives and subsidies. Some legislators emphasized that we are competing with other states for jobs. It will be difficult for elected officials to give up the arms race of offering subsidy to companies to come to Kansas, or as we see in the Hawker Beechcraft deal, simply agree to remain in Kansas, even with a smaller number of jobs. … The governor’s plan still contains a slush fund for attracting jobs to Kansas, which should keep the big-government fans happy for a while.

    Could Wisconsin demonstrations come to Kansas? At the meeting with legislators, I asked if the demonstrations taking place in Wisconsin could be seen in Kansas. There, state employees are protesting the governor’s proposal to ask them to pay more for health insurance and pensions. Also proposed are measures that would reduce the power of the state workers union. Representative Jim Ward said: “I don’t think it would happen in Kansas.” While people in Kansas are passionate, we have a tradition of civility, he added. … The Kansas public employee retirement system is among the most underfunded and will probably require someone to pay more. The process of selecting who has to pay — employees or taxpayers — is likely to be contentious.

    Wichita trash. It seems likely that Wichitans will see another trash plan proposed, according to Wichita Eagle reporting. The urge by government bureaucrats like city manager Robert Layton to create a solution to a problem that doesn’t exist is compelling, it seems. While some Wichitans are paying much more than others for trash service, the publicity generated by the Eagle reporting has informed everyone as to how much trash service should cost. … Most candidates for city council seem to be against city involvement in trash service.

    Wichita mayoral forum didn’t go well. According to reporting from KWCH, a forum for candidates for Wichita mayor didn’t go well: “Wichita residents came to a political forum to listen to political issues, but left shaking their heads.” Continuing in the story: “Some say they weren’t impressed with incumbent Carl Brewer either. ‘The Mayor was just relying on his name and everyone else just had wild views,’ said one listener. ‘The Mayor basically knew he wasn’t going anywhere,’ said another listener. Onlookers say a meeting that was supposed to educate them on important issues, just left them with a bad feeling about the political future of Wichita. ‘They just proved why I shouldn’t vote for them in my opinion,’ said Graham.”

    Wichita City Council this week. The Wichita City Council will not meet this week, as it’s a Tuesday after a holiday. Most private sector workers might have trouble remembering there is a holiday today, but not so for the city council.

    Sedgwick County commission this week. At Wednesday’s meeting, the Sedgwick County Commission has several important items on its agenda. The commission will be asked to adopt Project Downtown: The Master Plan for Wichita, November 2010 as an amendment to the Wichita-Sedgwick County Comprehensive Plan. This is the plan for the revitalization of downtown Wichita prepared by planning firm Goody Clancy. This item is not a public hearing, and it is not known how much time commission chair Dave Unruh, who assumed that position in January, will allow for citizens to address the commission. Previous chairs Karl Peterjohn and Kelly Parks — as well as current Wichita Mayor Carl Brewer — always asked if citizens wanted to speak on an item and were generous with time allotted. … Also Jeremy Hill of Wichita State University Center for Economic Development and Business Research will make a presentation. CEDBR has been criticized for for a report it produced on the economic impact of the Affordable Airfares program. That report was produced before Hill started his tenure at CEDBR. … The appraiser will report on real estate valuation trends in Sedgwick County.

  • Wichita city manager Robert Layton on the air

    Yesterday Wichita city manager Robert Layton appeared as a guest on the Gene Countryman Show on KNSS Radio in Wichita and spoke on a number of topics brought up by the host and callers.

    Several times host Gene Countryman referred to Wichita theater owner Bill Warren and his assessment of Layton as “best city manager the city’s ever had,” calling Warren’s assessment “high praise.” Warren has good reason to heap praise on Layton. He and his partners have benefited handsomely from actions the Wichita City Council has taken at Layton’s recommendation. Most recently Warren escaped paying property taxes on a new movie theater, and negotiated a deal in where the property tax on an existing property will increase at an agreed-upon rate that is likely lower than what would happen otherwise. Before Layton’s arrival in Wichita, the council heaped subsidy on Warren too, once bailing out the failing Warren Old Town Theater with an interest-free loan.

    Layton also said criticism causes him to “bristle a little bit,” but dismissed his critics as a small minority, although he said he doesn’t discount it.

    On the possible arrival of Southwest Airlines to Wichita, Layton said he feels “pretty good” about Wichita’s chances in receiving service from the popular discount airline. He said that we need to keep the Affordable Airfares Program to keep Southwest interested in Wichita. But later he said “The Southwest business model doesn’t require subsidies over a long period of time.”

    But as I wrote in 2006, we’ve been told before that the airfare subsidies were meant to be temporary: “From the beginning, we in the Wichita area have been told each year that the AirTran subsidy was intended as a temporary measure, that soon AirTran would be able to stand on its own, and there will be no need to continue the subsidy.” History has shown, however, that the subsidy has grown to the point where the entire state funds the subsidy for Wichita. It appears to be a permanent part of the state’s economic program, with Governor Brownback expressing support for continued funding for the program.

    On downtown, Layton said that the city doesn’t want to place businesses in downtown who will be on tax breaks or tax exempt for ten years. If the city is to achieve this goal, it will take a 180 degree change in the mindset in city hall where the mayor and vice-mayor Jeff Longwell complain that we don’t have enough “tools in the toolbox” to incentive businesses. In his State of the City address last week, one of the achievements Mayor Carl Brewer was proud of was the decision by Cargill to locate a facility in downtown Wichita. According to city documents, “The City has also offered a 100% five-plus-five year tax abatement on the new facility.” This is precisely the type of tax break Layton spoke against. Cargill, by the way, received many other forms of subsidy — let’s be clear — corporate welfare — for its decision.

    On the plan for how to handle Wichita’s trash, Layton said his intent was to start a community dialog on the subject, and that has happened. Layton praised Iowa’s bottle bill, which adds five cents to the price of items sold in bottles. He said it makes it easier for people to recycle.

  • North Dakota TIF video reminiscent of Wichita

    The North Dakota Policy Council has a video on YouTube that explains the mechanics of tax increment financing (TIF) districts and the public policy problems associated with TIF.

    The video is presented in three sections. The material in the first section is different from the way TIF districts work in Kansas, but the other two sections are very similar to the way the law works in Kansas.

    At the start of part 3 (“Problems with TIFs”) the narrator states the problem succinctly: “Tax increment financing negatively affects everybody’s property tax bill by taking the tax revenue from increased taxable valuations on the properties in the TIF areas and putting that into TIF accounts.”

    She then presents an illustration showing how the property taxes for non-TIF properties have to rise to make up for the fact that taxes from TIF properties do not go towards paying for city, county, or school district services. While Wichita doesn’t use the term “TIF accounts” as used in this video, the economic effect is the same.

    The video also mentions politically-favored developers being the beneficiaries of TIF districts, specifically mentioning “a friend of the city who might own property that is struggling.” I wonder: is the North Dakota Policy Council aware of the situation in Wichita, where many feel that the city has bailed out Real Development (also known as the “Minnesota Guys”) by not only granting TIF financing to them, but increasing the amount of TIF financing against the recommendation of its independent consultant?

    Compounding the problem is the obvious lack of understanding of the economic effects of TIF districts by members of the Wichita City Council, and possibly by city hall bureaucrats, too. Wichita vice mayor Jeff Longwell has complained to the Wichita Eagle that the public doesn’t understand tax increment financing. We should be questioning Longwell’s own understanding, and that of council member Janet Miller, too.

    Longwell and Miller — the rest of the council too, for that matter — are aided by newspaper reporters like the Wichita Eagle’s Bill Wilson, who is dismissive and hostile towards free markets and those who advocate for them, calling reliance on markets “intellectually shallow” and a “thin ideological argument.”

  • For Wichita city government, open records are not valued

    As a condition of renewing its contract with the Go Wichita Convention and Visitors Bureau, I asked that the Wichita City Council require that the agency comply with the Kansas Open Records Act. As has been the case before, the city council and city staff say they are in favor of open records and government transparency, but their actions indicate that they are not.

    After my remarks, which are presented below, City manager Bob Layton said that my attack on the city attorney was unfair, that it was not he who made this decision not to comply with the Kansas Open Records Act. Instead, he said the decision was made by the Convention and Visitors Bureau’s own attorney. John Rolfe, the Bureau’s president, said he believes that his organization has been open in their explanations of how they spend their funds, at least to the City.

    Rolfe also repeated his mistaken belief that I’ve discussed with the Bureau’s attorney how I might gain access to the information that I’ve requested. These discussions have not happened. That’s not the way the Kansas Open Records Law works. Citizens do not negotiate with agencies to gain access to records. The law says that citizens make requests, and agencies comply.

    Furthermore, the duty of the Bureau’s attorney is to protect and advance the interests of his client, not the interests of the public. The fact that the city council and the city manager are comfortable with this arrangement is disturbing.

    Any member of the city council could have followed my suggestion to make a motion that the city ask that the Convention and Visitors Bureau to simply agree that they are in fact a public agency as defined in the Kansas Open Records Act. But none of them did.

    Council member Jim Skelton asked questions several times seeking to find out how the agency spends its funds, but he did not give “how” a specific meaning. The city and most agencies would like to present simple and broad budgets or income statements to account for their spending. But this level of disclosure, which is what the Convention and Visitors Bureau provides to the public, is not sufficient.

    Here’s an example why: Last year a trustee for Labette Community College noticed that a check number was missing from a register. Based on his inquiry, it was revealed that the missing check was used to reimburse the college president for a political contribution. While it was determined that the college president committed no crime by making this political contribution using college funds, this is an example of the type of information that citizens may want regarding the way public funds are spent.

    This is the type of information that I have requested. It is what is needed to perform effective oversight. Three agencies — Go Wichita Convention and Visitors Bureau, Greater Wichita Economic Development Coalition, and Wichita Downtown Development Corporation — have all refused to comply with requests like this. The city council members and staff have agreed with their positions.

    This is not transparency. This is not accountability.

    When citizens believe that agencies are not complying with the Kansas Open Records Act, they have three options. One is to ask the Kansas Attorney General for help. But the policy of the Attorney General is to refer all cases to the local District Attorney, which is what I have done. The other way to proceed is for a citizen to pursue legal action at their own expense.

    The Sedgwick County District Attorney has had my case since December 17 of last year. That office has been working on the case, and a decision is expected soon.

    No matter which way the District Attorney decides, the City of Wichita, its quasi-governmental taxpayer-supported agencies, and their hostility to open records is a matter that the Kansas Legislature should notice. We need a better records law.

    Following are remarks I delivered today to the Wichita City Council regarding the city’s compliance with the Kansas Open Records Act.

    I’m recommending that the city not renew its contract with the Go Wichita Convention and Visitors Bureau until that organization decides to follow Kansas law, specifically the Kansas Open Records Act.

    I’ve requested records from this agency. Its response is that the agency is not a “public agency” and therefore is not subject to the open records law.

    Here’s why the Go Wichita Convention and Visitors Bureau is a public agency subject to the Kansas Open Records Act. KSA 45-217 (f)(1) states: “‘Public agency’ means the state or any political or taxing subdivision of the state or any office, officer, agency or instrumentality thereof, or any other entity receiving or expending and supported in whole or in part by the public funds appropriated by the state or by public funds of any political or taxing subdivision of the state.”

    The Kansas Attorney General’s office offers additional guidance: “A public agency is the state or any political or taxing subdivision, or any office, officer, or agency thereof, or any other entity, receiving or expending and supported in whole or part by public funds. It is some office or agency that is connected with state or local government.”

    According to its 2008 annual report, 89% of Go Wichita Convention and Visitors Bureau’s revenue came from the transient guest tax. I suggest that this qualifies as supported “in whole or in part” by public funds.

    The Kansas Open Records Act has an exception, but that does not apply to this agency. There’s no rational or reasonable basis for the this agency’s assertion that it is not a public agency subject to the Kansas Open Records Act.

    Mr. Mayor and council members, look at the plain language of the Kansas Open Records Act, as I’ve explained. Look at the intent of the Kansas Legislature as embodied in the statute: “It is declared to be the public policy of the state that public records shall be open for inspection by any person unless otherwise provided by this act, and this act shall be liberally construed and applied to promote such policy.”

    The policy of the state is that records should be open. Governmental bodies shouldn’t be looking for excuses to avoid complying with the law, as has the City of Wichita and this agency, and has two other similar agencies. Especially when the reasons the city legal staff has used are wrong, both in terms of the letter of the law and its intent.

    Now I realize that Mr. Gary Rebenstorf, the Wichita City Attorney, disagrees with my contention that this agency is in fact a public agency as defined by the Kansas Open Records Act. Mr. Rebenstorf 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 with regard to my records requests, he’s advised this council to keep records closed when the law and the public policy of this state says they should be open.

    He, or perhaps whoever is instructing him as to what opinions to write, is hostile towards towards open records and citizens’ right to know.

    Mayor, you’ve spoken about “building public trust in government” and working to achieve greater transparency. Manager Layton has as a goal “Promoting transparency by providing timely, accurate and relevant information.”

    This is a chance for the political leadership of this city to make a decision: does the city promote transparency by deciding itself what information to release, or does it agree to citizen-driven accountability, where citizens are in charge?

    It’s not only this agency. The Wichita Downtown Development Corporation and the Greater Wichita Economic Development Coalition are similarly situated.

    As a condition of renewing the city’s contract with the Go Wichita Convention and Visitors Bureau, I ask that this council instruct the Bureau to follow the Kansas Open Records Act.