TIF districts

Wichita and the Old Town Warren Theater Loan

Remarks to be delivered to the Wichita City Council, July 1, 2008. Mr. Mayor and members of the Council, we are potentially beginning a journey down a road where there are two classes of businesses in Wichita. There are business owners who seek to earn their profit through market entrepreneurship, that is, by meeting the demands of their customers and the marketplace. That's a difficult thing to do. An entrepreneur must sense customer demand and desires, and then commit resources to satisfying customers. If entrepreneurs are correct in their judgments and successful in their execution, they earn profits. There are…
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Warren Old Town Wichita Theater: Good Money After Bad?

This letter is from my friend Darrell Leffew. Not everyone seems to understand the folly of throwing good money after bad. "Taxpayers are already on the hook" is Wichita city council member Jeff Longwell's opinion as expressed in a Wichita Eagle article. Mr. Longwell, I realize you weren't a member of the council when we taxpayers were placed on the hook, but don't help us on another, please. Let us not throw more good money after bad. The Wichita City Council has approved a business loan to the Limited Liability Company that owns the Old Town Warren Theater. That same…
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Wichita city manager’s warning is too late

On Tuesday June 16, 2008, the Wichita City Council agreed to lend the Old Town Warren Theatre's owners $6 million so they could keep the theater open. (City agrees to loan Warren $6 million June 18, Wichita Eagle). Wichita Interim City Manager Ed Flentje issued this warning to the council: "There are in this community much larger businesses with much larger employment who may see this opening as something that will open a door for those businesses to come and say, 'You've done it before, you can do it for us.'" Dr. Flentje, I hate to break the news to…
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Tax Abatements in Wichita

Remarks to Wichita City Council, June 3, 2008. A few months ago I spoke before this council asking that you not grant a tax abatement. At that time I was told that granting a property tax abatement doesn't have any impact on City of Wichita spending. I found this quite remarkable, that new homes and buildings can be built but not consume any additional resources that the city and other local governments supply. If this is truly the case, why should a new development of any type at any location have to pay any property tax at all? There is…
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Remarks to Wichita City Council, April 1, 2008

Following are remarks I delivered to the Wichita City Council, asking them to not approve tax increment financing (TIF) for a project in Wichita. The council approved the financing by a vote of six to one. Thank you to council member Paul Gray for his dissenting vote. Mr. Mayor and members of the Wichita City Council, I ask you to not approve this TIF financing request, and to cease this practice in the future. We need to allow markets to channel capital and investment to where people value it greatest. The profit and loss system provides that guidance. By asking…
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Tax increment financing in Wichita benefits few

Today the Wichita City Council votes on granting $4.5 million in tax increment financing to a developer. Here's an article from August 17, 2006 that explains why the council should not approve this gift. (Note to The Wichita Eagle: Why not report stories like this a little earlier than the day the council is voting?) Recently the City of Wichita formed a TIF (tax increment financing) district to aid a developer who wishes to build in the College Hill neighborhood. How does a TIF district work? The Wichita Eagle reported: "A TIF district doesn't cost local governments any existing tax…
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Tax increment financing in Wichita benefits few

Recently the City of Wichita formed a TIF (tax increment financing) district to aid a developer who wishes to build in the College Hill neighborhood. How does a TIF district work? The Wichita Eagle reported: "A TIF district doesn't cost local governments any existing tax money. It takes property taxes paid on new construction that would ordinarily go into government coffers and redirects it to the bond holders who are financing the project." In the present case, the value of the benefit the developer sought is estimated to be worth $3.5 million to $4 million. Whether this benefit is given…
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Sedgwick County surrenders key tax advantage

Sedgwick County Surrenders Key Tax Advantage By Karl Peterjohn, Executive Director, Kansas Taxpayers Network Spirit Aerosystems CEO Jeff Turner defended the massive spending hike that was used as the primary justification for the county's 8.8 percent property tax hike in his editorial August 9, 2006. Turner's support for this increased government spending ignored some important ramifications behind this economically destructive vote. Sedgwick County has an important fiscal advantage over 19 other Kansas counties. Sedgwick County has no community college and hence no community college property tax. That property tax is a major reason why this levy makes the total tax…
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Tax increment financing in Iowa

Writing from Cedar Rapids, Iowa Readers of The Voice For Liberty in Wichita are well aware that I believe that when the government provides subsidies to businesses -- either in the form of cash payments or preferential tax treatment -- we create a corrosive business environment. Government picks winners and losers for political reasons, rather than letting the market decide which companies are doing a good job. Government also spends money inefficiently. Instead of letting the market decide where to best allocate capital, government chooses who receives capital taken from the people through taxation according to the whims of politicians…
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Tax Abatements For All

Recently I wrote about the Mississippi Beef Plant (The Mississippi Beef Plant Has a Lesson For Us) and its spectacular costs to the taxpayers of Mississippi. I wondered if there were less spectacular failures that we didn't know about because they weren't reported in the news media. Failures in this context could mean a situation where the taxpayers have to make good on a bond or debt that the benefiting company didn't pay, or it could mean a situation where the company doesn't default, but fails to deliver on the promised economic development activity. In an article in the June…
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