Tax increment financing

Wichita TIF projects: some background

Wichita TIF projects: some background

Tax increment financing disrupts the usual flow of tax dollars, routing funds away from cash-strapped cities, counties, and schools back to the TIF-financed development. TIF creates distortions in the way cities develop, and researchers find that the use of TIF means lower economic growth. The consideration this week by the Wichita City Council of two project plans in tax increment financing districts offers an opportunity to examine the issues surrounding TIF. How TIF works A TIF district is a geographically-defined area. In Kansas, TIF takes two or more steps. The first step is that cities or counties establish the boundaries…
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Clawbacks illustrate difficulty of economic development

Clawbacks illustrate difficulty of economic development

Politicians and government officials like clawbacks in economic development incentive agreements. But do these provisions have any negative aspects? When business firms receive economic development incentives from government, the incentives may be given conditionally. That is, there may be benchmarks or conditions that the company has agreed to meet. These benchmarks are most commonly in the form of job counts or payroll value, and sometimes capital investment. But what happens if the company does not meet the benchmarks? Some agreements have clawback provisions that come into play at this time. Sometime the company may be required to repay all or…
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Economic development in Wichita: Looking beyond the immediate

Economic development in Wichita: Looking beyond the immediate

Decisions on economic development initiatives in Wichita are made based on "stage one" thinking, failing to look beyond what is immediate and obvious. Critics of the economic development policies in use by the City of Wichita are often portrayed as not being able to see and appreciate the good things these policies are producing, even though they are unfolding right before our very eyes. The difference is that some look beyond the immediate -- what is seen -- and ask "And then what will happen?" -- looking for the unseen. Thomas Sowell explains the problem in a passage from the…
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Wichita economic development items

Wichita economic development items

The Wichita city council has been busy with economic development items, and more are upcoming. At the November 25 meeting of the Wichita City Council, on the consent agenda, the council passed these items. Approved a sublease in a warehouse. This action was necessary as the incentivized warehouse pays no property taxes due to a subsidy program. Given tax costs and industrial building rents, this policy gives these incentivized buildings a cost advantage of about 20 to 25 percent over competitors. That’s very high, and makes it difficult for existing buildings to compete. This lease is for 40,500 square feet…
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City of Wichita State Legislative Agenda: Economic Development

City of Wichita State Legislative Agenda: Economic Development

The City of Wichita wishes to preserve the many economic development incentives it has at its disposal. The proposed legislative agenda for the City of Wichita holds this regarding economic development incentives: ISSUE: The State of Kansas provides economic development incentives through a variety of programs. RECOMMEND: The Wichita City Council supports the continuation of state economic incentive programs that assist local governments in their efforts to improve their local economies. That’s all the agenda holds. In the presentation for the previous year, the request was more complete, naming specific programs. It’s useful to revisit that list, as Wichita leaders…
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