At a time the City of Wichita is under severe budget pressure, shouldn’t unnecessary travel be the first place the city looks to save money?
At the August 18 meeting of the Wichita City Council, an agenda item was approved without discussion or presentation of any details other than what appear here: “Approval of travel expenses for Council Member Janet Miller and Kelly Harper, Wichita Area Sister Cities President, to attend the International Cities Conference in Paris, France and the Sister Cities Loire Festival in Orleans, France, September 21-27.”
It took several phone calls and emails, but I’ve learned that the estimated costs for this trip are $1,587 for Miller and $2,137 for Harper. That’s a total of $3,724.
And yes, the city is paying these expenses for Harper, a private citizen. Van Williams, the city’s public information officer, said that Harper, who will also serve as an interpreter, is leaving three days earlier to help prepare for the trip.
I’ve asked Miller several times to explain why this trip is a good idea. In an email message, I explained while that my nature is to be critical of expenditures like this, I’m willing to listen and learn. I asked if she could give me some insight or reasons as to why it is wise for the city to spend this money. Also, what are the benefits of the Sister Cities program?
But she won’t respond to email or telephone messages.
Council member Miller is aware of the budget pressures at city hall. At one time she suggested salary reductions as an alternative to layoffs and service cutbacks.
Travel — especially a junket like this — is an easy item to cut. Citizens need to demand an explanation as to why the city is paying for this trip.
While I was watching the City of Wichita’s cable channel 7 (where it’s all things good about Wichita, 24/7) Mary K. Vaughn, Director of Housing & Community Services appeared with an announcement:
The city has a free paint program. If homeowners meet income guidelines and their houses are located within certain areas of town, the city will give them free paint.
Here’s my question: If someone can afford cable television — that’s where the city’s channel 7 appears — can’t they buy their own paint?
Wichita airport, golf, Sweden’s economy, federal government hiring needs, depression.
Drop in fliers could alter terminal plan
The Wichita Eagle reports that a drop in passengers might cause the airport to alter its plans. “The trouble locally is that Wichita was counting on increased traffic to finance a planned new terminal building to replace its 1950s-vintage facility.” I’ve been in favor of keeping costs at the airport as low as possible, which means making a small renovation rather than a wholesale replacement. See Wichita’s new airport terminal: Has its time passed? and Consider carefully costs of a new Wichita airport terminal: “As Wichita considers building a new terminal at its airport, we should pause to consider the effect an expensive new terminal would have on the cost of traveling to and from Wichita, and by extension, the economic health and vitality of our town. … Airlines are starting to become alarmed at the high costs some airports charge airlines for using their facilities.”
Wichita City Council approves $1 golf fee increase
The Wichita Eagle reports an increase in golf fees at city-owned courses. Editorialist Rhoda Holman wrote: “To their credit, the six Wichita City Council members who voted Tuesday to raise golf course fees clearly hated to do it.” What, does hating to do something mitigate its effect or make it heroic in some way? If the city really wants to improve the golfing experience for Wichitans, it should immediately sell all the courses it owns.
The Swedish Model
There are those in America who praise Sweden as an example of a country with a huge government and prosperity at the same time. In The Swedish Model, the Cato Institute’s Richard W. Rahn looks at the history of Sweden over the last century and concludes this: “Those who wish to chase the Swedish model need first to decide which model they seek: The high-growth, pre-1960 model; the low-growth model of the 1970s and 1980s; or the reformist, welfare-state model of recent years. The irony is that the current Democratic Congress and administration are rapidly emulating the parts of the Swedish model that proved disastrous and rejecting those parts that are proving to be successful.”
Federal Government Needs Massive Hiring Binge, Study Finds
A Washington Post story finds that “The federal government needs to hire more than 270,000 workers for ‘mission-critical’ jobs over the next three years, a surge prompted in part by the large number of baby-boomer federal workers reaching retirement age, according to the results of a government-wide survey being released Thursday.” All told, the study found that the federal government needs to hire 600,000 workers over the next four years, which would increase the workforce by one-third.
The Real Town Hall Story
E.J. Dionne Jr. writes in the Washington Post that the impression that television viewers may form of the last month’s town hall meetings may be false: “Much as the far left of the antiwar movement commanded wide coverage during the Vietnam years, so now are extremists on the right hogging the media stage — with the media’s complicity.”
What Happened to the ‘Depression’?
Writing in the Wall Street Journal, economist Allan H. Meltzer makes the case that the recession is probably over, or will be soon: “Most economists now believe that the recession is expected to end before much of the government spending takes hold.” The spending referred to is the stimulus bill passed earlier this year. So what should we do? “The proper response now is to repeal what remains of the misguided stimulus and avoid the cap-and-trade program.”
At the same time that the City of Wichita is struggling with its budget, including making layoffs, senior managers still travel.
City council members still travel too, as last week the council approved travel expenses for Janet Miller to travel to France for a sister cities meeting. It’s unclear whether the city will also pay for the Wichita Area Sister Cities President to make the trip.
Some of the trips the Wichita managers made sound like worthwhile trips. In the private sector, however, travel to conferences and such is one of the first things to be cut when budgets are stretched.
At yesterday’s meeting of the the Wichita City Council, a matter was presented to the council that provided an illustration of basic economic principles that are foreign to the council.
David M. Bryan, a Wichita attorney and resident of the building, represented the the homeowners association that is asking for the special assessment financing. He spoke after I did. His wife accompanied him to the podium.
Bryan’s case for help was based on factors that — besides being irrelevant — show just what a fiasco this matter is. It also illustrates just how selfish these condominium owners are in expecting the city to bail them out of their problem.
First, he says that he and the other condo owners represent one of the goals of downtown redevelopment. “We all took that leap of faith and bought the lofts” when the building was still under construction.
He didn’t know what tuckpointing was when he moved in to this building, and he and the other residents didn’t know that this [the need for repair] was going to happen.
He said that he thinks the building represents a sound and good investment in downtown redevelopment, and that the building is part of what the city council wants to accomplish.
Conventional financing for these repairs would, Bryan said, require personal guarantees by all residents, and that would prevent the individual units from being sold unless the entire loan was paid off.
(In my testimony, I made the point that the amount that each condominium owner needs to pay to fix the building is on the order of what it would cost to paint a conventional house of the same value as these units. There’s also a defect in the ownership structure of this building if there is no way to pay for repairs like the present situation, as things like this are foreseeable.)
Council member Paul Gray, speaking from the bench, expressed concern that approval of this request sets a precedent for other condominium buildings in Wichita to make the same request that this building has made.
In the end, council member Lavonta Williams made the motion to approve the financing. All members except Gray voted for it. Vice-Mayor Jim Skelton was not present.
After the council voted, Mrs. Bryan gave Wichita economic development director Allen Bell a pat on the back, and Bell and Mr. Bryan shared a congratulatory handshake. You can see these things by attending the meetings in person.
It appears that the city’s desire for downtown redevelopment is an unsustainable goal that can’t be maintained without continued subsidy. The message is this: When a downtown development gets in financial trouble, make a beeline to city hall. This was the case last year when the Warren Theater received a no- and low-interest loan from the city, propping up the city’s ill-conceived investment in a TIF district benefiting that theater.
Recently we learned that rehabilitation of a downtown hotel is on hold because historic tax credits — that is, outright gifts to developers — are on hold because the state can’t afford to grant them.
Now, buildings that need small repairs that can be deemed to be part of the city’s plan for downtown redevelopment are eligible for special assessment financing.
I don’t think the council is aware of the corrosive effect of these special favors. No news media reported this story. It is a small amount of money that is involved in this case. This matter is emblematic, however, of an activist city council and city staff who believe they can direct economic investment in Wichita better than its citizens can on their own.
While listening to Bryan make his case, I thought this is an illustration of the lessons Henry Hazlitt taught us in his classic work Economics in One Lesson. The first chapter may be read at One Lesson, which I excerpt here:
Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics, or medicine — the special pleading of selfish interests.
While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. …
In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups.
In today’s Wichita Eagle, editorialist Rhonda Holman gives Wichita a big pat on the back for its subsidy given to a low-cost air carrier. She goes so far as to mention a recent New York Times article that tells how Wichita was one of the first cities to do this.
It’s all a little over the top, to say the least. But this is all in the spirit of the claims made to support the necessity of the subsidy. At one time, subsidy supporters claimed that the value of the subsidy would be $4.8 billion per year to Kansas. I think that number is larger than the state’s general fund spending at the time, and certainly not supported by any reasonable interpretation of facts.
Whether the subsidy paid to AirTran is a success is hard to say. If your inclination is towards ever-increasing government involvement in commerce, you probably like the subsidy. Never mind that it may not be providing the benefits we really need.
At one time it was thought that the subsidy would be temporary. All that was needed, leaders such as former mayor Bob Knight said, was to give AirTran a jump start, and in a few years it would then be able to sustain itself without continued subsidy. Now, however, the subsidy is a permanent fixture, even though Holman raises alarm as to whether the state of Kansas will continue its $5 million annual contribution to the subsidy.
My question is this: will AirTran ever report a profit on its Wichita service, thereby reducing the subsidy it receives?
Remarks to be delivered to the August 18, 2009 meeting of the Wichita City Council.
Mr. Mayor, members of the Wichita City Council,
I am here to ask you to deny the request for special assessment financing for the Lofts at St. Francis homeowners association to make repairs to their building.
I’ve spoken to this council about how the facade improvement program, in general, is bad public policy. In this case, it’s bad public policy compounded by the waiver of principles or guidelines that this council recently set in place.
I realize that special assessment financing means that the city is not making a grant of money to the homeowners association. Instead, the city is making a loan, which is required to be repaid over time.
What concerns me about this situation is that two guidelines in the city’s facade improvement program must be waived for this project to obtain special assessment financing.
The first is the private investment match. This is designed to ensure that the property owners have “skin in the game” and that the taxes will be paid back.
Here, the city is proposing that since the building’s owners have made a past investment in this property, there’s no need to require a concurrent investment. It hardly needs to be noted that anyone who has purchased property has made a past investment in that property.
Second, facade improvement projects are required to undergo a gap analysis to “prove” the need for public financing. According to the city’s report: “This project does not lend itself to this type of gap analysis; however, staff believes that conventional financing would be difficult to obtain for exterior repairs to a residential condominium property like this.”
So the city proposes to waive this requirement as well.
There seems to me to be a defect in the manner of ownership of this building. While the homeowners association and the individual condominium owners might not have anticipated that repairs would be needed so soon after the building’s opening, they must have contemplated that repairs and maintenance — to either exterior or interior common areas — would be needed at some time. How does the association plan to pay for these?
So what will happen if the city council doesn’t approve the special assessment financing? The agenda report states “Each individual condo owner would be required to fund a share of the cost.”
Isn’t that what private property owners do: fund the cost of repairs to their property?
According to the Sedgwick County Treasurer’s office, the appraised values of these condos range from $103,000 to $310,200, with an average value of $201,943. The maximum amount being added to each condo’s assessment is $4,022, although I have learned that the actual amount may be closer to $3,000.
That’s along the lines of what it might cost to perform a few repairs and paint a house that’s worth what these condos are worth. So I think it’s hard to make the case that these property owners can’t afford to make these repairs on their own without a loan from the city.
Furthermore, if the goal of the facade improvement program is to provide an incentive for property owners to fix up their buildings, I would submit that such incentive is not necessary in this case. This building is a valuable residential property, and the homeowners have a strong incentive to maintain the integrity and value of their property.
Mr. Mayor and members of the council, let’s ask these owners do just what thousands of homeowners in Wichita do every year: take responsibility for the maintenance of their own property without looking to city hall for help.
At tomorrow’s meeting of the Wichita City Council, council members have this item on their agenda:
“Approval of travel expenses for Council Member Janet Miller and Kelly Harper, Wichita Area Sister Cities President, to attend the International Cities Conference in Paris, France and the Sister Cities Loire Festival in Orleans, France, September 21-27.”
The city council office didn’t have a specific amount that the council is being asked to approve, and it’s possible that the city might not pay for Harper’s expenses.
Still, travel to France for nearly a week, even for one person, is expensive.
Whatever the amount is, it is a small amount when considered next to the magnitude of the city’s entire budget.
But when people are losing their jobs and the city is cutting its budget, expenses like this are highly symbolic.
At Tuesday’s meeting of the Wichita City Council, a privately-owned condominium association is seeking special assessment financing to make repairs to its building. In order for the association to succeed in its request, the council will have to waive two guidelines of Wichita’s facade improvement program.
Special assessment financing means that the cost of the repairs, up to $112,620 in this case, will be added to the building’s property taxes. Actually, in this case, to each of the condominium owners’ taxes. They’ll pay it off over the course of 15 years. (A conversation with the president of the homeowners association brought out the possibility that the actual assessment may be in the neighborhood of $75,000.)
So the city is not giving this money to the building’s owners. They’ll have to pay it back. The city is, however, setting new precedent in this action.
Special assessment financing has traditionally been used to fund infrastructure such as streets and sewers, and new infrastructure at that. The city, under its facade improvement program, now allows this type of financing to be used to make repairs and renovations to existing buildings. That’s if the building is located in one of the politically-favored areas of town.
By using special assessment financing in this way, the city seeks to direct investment towards parts of town that it feels doesn’t have enough investment. This form of centralized government planning is bad public policy. The city should stop doing this, and let people freely choose where to invest.
Besides this, two guidelines in the city’s facade improvement program must be waived for this project to obtain special assessment financing.
The first is the private investment match. This is designed to ensure that the property owners have “skin in the game” and that the taxes will be paid back.
Here, the city is proposing that since the building’s owners have made a past investment in this property, there’s no need to require a concurrent investment. It hardly needs to be noted that anyone who has purchased property has made a past investment in that property.
Second, facade improvement projects are required to undergo a gap analysis to “prove” the need for public financing. According to the city’s report: “This project does not lend itself to this type of gap analysis; however, staff believes that conventional financing would be difficult to obtain for exterior repairs to a residential condominium property like this.”
So the city proposes to waive this requirement as well.
There seems to me to be a defect in the manner of ownership of this building. While the homeowners association and the condominium owners might not have anticipated that repairs would be needed so soon after the building’s opening, they must have contemplated that repairs and maintenance — to either exterior or interior common areas — would be needed at some time. How does the association plan to pay for these?
So what will happen if the city council doesn’t approve the special assessment financing? The agenda report states “Each individual condo owner would be required to fund a share of the cost.”
Isn’t that what private property owners do: fund the cost of repairs to their property?
According to the Sedgwick County Treasurer’s office, the appraised values of these condos range from $103,000 to $310,200, with an average value of $201,943. The maximum amount being added to each condo’s assessment is $4,022, although the actual amount may be closer to $3,000.
That’s along the lines of what it might cost to perform a few repairs and paint a house that’s worth what these condos are worth.
Let’s ask that these owners do just what thousands of homeowners in Wichita do every year: take responsibility for the maintenance of their own property without looking to city hall for help.
