Subsidy

Won’t anyone develop in downtown Wichita without incentives?

Won’t anyone develop in downtown Wichita without incentives?

Action the Wichita City Council will consider next week makes one wonder: If downtown Wichita is so great, why does the city have to give away so much? Next week the Wichita City Council will consider a package of incentives for the developer of a large downtown building, the Finney State Office Center. The building has an appraised value of $7,902,570, per the Sedgwick County Treasurer. The city will sell it for $100,000. That's a mere 1.3 cents per dollar, if the county's valuation is reasonable. (But, the $100,000 is non-refundable, should the purchaser decide not to close on the…
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Economic development incentives at the margin

Economic development incentives at the margin

The evaluation of economic development incentives in Wichita and Kansas requires thinking at the margin, not the entirety. When considering the effect of economic development incentives, cities like Wichita use a benefit-cost analysis to determine whether the incentive is in the best interests of the city. The analysis usually also considers the county, state, and school districts (although these jurisdictions have no say over whether the incentive is granted, with a few exceptions). The idea is that by paying money now or forgiving future taxes, the city gains even more in increased tax collections. This is then pitched as a…
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Beware of government arts spending

Beware of government arts spending

Art is too important to be dependent on politicians and injecting politics into anything inevitably tarnishes it, writes Lawrence W. Reed of Foundation for Economic Education. Economist Lawrence W. Reed is president of the Foundation for Economic Education in Atlanta, Georgia. He is the author of the forthcoming book, Real Heroes: Inspiring True Stories of Courage, Character and Conviction. Follow on Twitter and Like on Facebook. While in Wichita Reed appeared on WichitaLiberty.TV in this episode. An abridged version of the following appeared in the Wichita Eagle. Beware of Government Arts Spending By Lawrence W. Reed While visiting Wichita in…
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WichitaLiberty.TV: Wichita and Kansas economics, and government investment

WichitaLiberty.TV: Wichita and Kansas economics, and government investment

In this episode of WichitaLiberty.TV: Wichita sells a hotel, more subsidy for downtown, Kansas newspaper editorialists fall for a lobbyist's tale, how Kansas can learn from Arizona schools, and government investment. View below, or click here to view at YouTube. Episode 131, broadcast October 30, 2016. Shownotes Article: Wichita, give back the Hyatt proceeds. Instead of spending the proceeds of the Hyatt hotel sale, the city should honor those who paid for the hotel -- the city’s taxpayers. Article: In Wichita, developer welfare under a cloud. A downtown Wichita project receives a small benefit from the city, with no mention…
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In Wichita, developer welfare under a cloud

In Wichita, developer welfare under a cloud

A downtown Wichita project receives a small benefit from the city, with no mention of the really big money. Today the Wichita City Council approved a subsidy for a project in downtown Wichita. The city will lend the developer of a project at 303 S. Broadway $620,000 to improve the building's facade. The property must repay this amount through an assessment on its property tax. The benefit to the property is that the city is able to borrow money at a lower interest rate, and this reduces the cost of borrowing for the project. The agenda packet for this item…
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WichitaLiberty.TV: Lawrence Reed of Foundation for Economic Education

WichitaLiberty.TV: Lawrence Reed of Foundation for Economic Education

In this episode of WichitaLiberty.TV. Lawrence W. Reed, who is president of the Foundation for Economic Education. Topics include free markets, education, trade, and arts. View below, or click here to view at YouTube. Episode 129, broadcast October 9, 2016. Shownotes Foundation for Economic Education Book: Excuse Me, Professor: Challenging the Myths of Progressivism Book: Real Heroes: Inspiring True Stories of Courage, Character, and Conviction
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In Wichita, more sales tax hypocrisy

In Wichita, more sales tax hypocrisy

Another Wichita company that paid to persuade you to vote for higher taxes now seeks to avoid paying those taxes. Next week the Wichita City Council will consider issuing industrial revenue bonds to benefit a local company. In Kansas, IRBs are not a loan of money from government. Instead, the bonds are a vehicle for conveying property tax abatements, and often sales tax exemptions. [1. Weeks, Bob. Industrial revenue bonds in Kansas. Available at wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/.] The applicant company is Hijos, LLC/JR Custom Metal Products, Inc. City documents give the value of abated taxes at $44,900 for the first year. Following…
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Spirit Aerosystems tax relief

Spirit Aerosystems tax relief

Wichita's largest employer asks to avoid paying millions in taxes, which increases the cost of government for everyone else, including young companies struggling to break through. This week the Wichita City Council will consider offering Spirit Aerosystems economic development incentives that will allow the company to avoid paying some $45 million in taxes. This will be accomplished through the authorization of $280 million of Industrial Revenue Bonds. [1. City of Wichita. Agenda for May 3, 2016. Available at wichita.gov/Government/Council/Agendas/05-03-2016%20City%20Council%20Agenda%20Packet.pdf.] Industrial Revenue Bonds are a vehicle for generating and conveying tax exemptions. [1. Weeks, Bob. Industrial revenue bonds in Kansas. Available…
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Wichita TIF district disbands; taxpayers on the hook

Wichita TIF district disbands; taxpayers on the hook

A real estate development in College Hill was not successful. What does this mean for city taxpayers? Seeking to promote the redevelopment of land northeast of Douglas and Hillside, the City of Wichita entered into agreements with Loveland Properties, LLC, College Hill Urban Village LLC, and CHUV Inc. The original plans were grand: A Northeast Brownstone Complex located at the northeast corner of Victor and Rutan, a Condominium Tower and Brownstone Complex, a West Brownstone Complex, and the South Retail/Residential Complex. A city analysis in 2007 projected that by 2010 the value of these projects would be $61,817,932. Unfortunately, this…
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Energy subsidies for electricity production

Energy subsidies for electricity production

To compare federal subsidies for the production of electricity, we must consider subsidy values in proportion to the amount of electricity generated, because the magnitude is vastly different. When comparing federal subsidies for the production of electricity, it's important to look at the subsidy values in proportion to the amount of electricity generated. That's because the scales vary widely. For example, in 2010 for the United States, as can be seen in the accompanying table, coal accounted for the production of 1,851 billion kWh (or megawatt hours) of electricity production. That's 44.9 percent of all electricity produced. Solar power accounted…
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