Voice For Liberty

Tag: Wichita city government

  • As Wichita considers new ventures, a look back at some data

    As Wichita considers new ventures, a look back at some data

    The City of Wichita will soon be flooded with data regarding downtown convention and performing arts facilities. Past experience should warn us to be skeptical.

    Goody Clancy, a planning firm hired by Wichita Downtown Development Corporation, told a Wichita audience that the planning effort for downtown Wichita is grounded in data and hard analysis.1

    But at least some of the data Goody Clancy used turned out to be total nonsense.

    Specifically, Goody Clancy presented Walk Score data for downtown Wichita. Walk Score is purported to represent a measure of walkability of a location in a city. Walkability is a key design element of the master plan Goody Clancy has developed for downtown Wichita. David Dixon, who leads Goody Clancy’s Planning and Urban Design division, used Walk Score in a presentation delivered in Wichita.

    Walk Score is not a project of Goody Clancy, as far as I know, and David Dixon is not responsible for the accuracy or reliability of the Walk Score website. But he presented it and relied on it as an example of the data-driven approach that Goody Clancy takes.

    For example, the score for 525 E. Douglas, the block the Eaton Hotel is in and mentioned by Dixon as a walkable area, scored 91, which means it is a “walker’s paradise,” according to the Walk Score website.

    Walk score data for 525 E. Douglas, in 2010. Click for larger.
    But here’s where we can start to see just how bad the data used to develop these scores is. For a grocery store — an important component of walkability — the website indicates indicated a grocery store just 0.19 miles away. It’s “Pepsi Bottling Group,” located on Broadway between Douglas and First Streets. Those familiar with the area know there is no grocery store there, only office buildings. The claim of a grocery store here is false. It’s an office, not a store.

    For a nearby library, it listed Robert F. Walters Digital Library, which is a specialized geological library costing $1,500 per year to use — over the internet.

    For a drug store, it listed Rx Doctor’s Choice, which is a company selling oral chelation treatments by mail order. It’s nothing at all like a general-purpose drug store. One of those is nowhere nearby.

    There were other claimed amenities where the data is just as bad. But as Larry Weber, then chairman of the Wichita Downtown Development Corporation told me, Walk Score has been updated. I should no longer be concerned with the credibility of this data, he said.

    He was correct — partially. Walk Score was updated, but we should still be concerned about the quality of the data. Now for the same location the walk score is 85, which is considered “very walkable.” The “grocery store” is no longer the Pepsi Bottling Group. It’s now “Market Place,” whose address is given as 155 N. Market St #220.

    If anyone would ever happen to stroll by that location, they would find that address — 155 N. Market number 220 — is the management office for an office building whose name is Market Place. It’s not a grocery store. It’s an office. So I became even more concerned about the credibility of this data and the fact that Goody Clancy relied on it. I was also concerned that Weber thinks thought this was an improvement, and that he felt I should not be concerned.

    David Dixon and Goody Clancy did not create the Walk Score data. But he and his planning company presented it to Wichitans as an example of the data-driven, market-oriented approach to planning that they use.

    But anyone who relies on the evidence Dixon and Goody Clancy presented would surely be confused unless they investigated the area on their own.

    And since this reliance on Walk Score was made after Goody Clancy had spent considerable time in Wichita, the fact that someone there could not immediately recognize how utterly bogus the data is: That should give us cause for concern that the entire planning process is based on similar shoddy data and analysis. We also ought to be concerned that no one at WDDC or city hall looked closely enough at this data to realize its total lack of correspondence to reality.

    When I presented these concerns to the Wichita Metropolitan Area Planning Commission in 2010, Scott Knebel, a member of the city’s planning staff who is the city’s point man on downtown planning, address the concerns raised by me. He said, “In terms of the Walk Score, I suspect Mr. Weeks is absolutely right, it probably is a relatively flawed measurement of Walk Score.” He added that the measurement is probably flawed everywhere, downtown and elsewhere. He said that Goody Clancy used it “as an illustration of the importance of walkability in an urban area.”

    An isolated incident, long ago?

    Seven years later, should we be concerned about this incident?

    If that was the only example of low-quality and deceptive data, we could say sure, that was long ago. Let’s forget this and go forward. Our city leaders are smarter now.

    Except they’re not.

    The oft-cited claim of 26,000 workers in downtown Wichita is another example of misuse of data, and in a very big way. It comes from the U.S. Census Bureau. This particular data set counts all Wichita school district employees as downtown workers, even though nearly all work at locations scattered throughout the city.2

    If we accept this data as meaning what WDDC and the city says it means, we’d have to believe that 7,740 people work in a one square block area from First to Second Streets, and Wichita to Water Streets. That block is mostly surface parking, but it does hold the administrative offices of the Wichita school district. So all school district employees are counted as working in this block.

    There is similar problem in another block. All City of Wichita employees are treated as though they work at city hall. But they don’t.

    Does any of this matter? It ought to matter. The planners tell us they use data to make decisions. This week the city council decided to hire a consulting firm to investigate the feasibility of a refurbished or new convention center and performing arts center. I’m sure much data will be presented. Based on our past experience, we’ll have to carefully examine data for appropriate usage.

    —
    Notes

    1. Weeks, Bob. Goody Clancy market findings presented to Wichita audience. Available at https://wichitaliberty.org/wichita-government/goody-clancy-market-findings-presented-to-wichita-audience/. ↩
    2. Weeks, Bob. Downtown Wichita jobs, sort of. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/. ↩
  • Wichita about to commit to more spending. Bigly.

    Wichita about to commit to more spending. Bigly.

    This week the Wichita City Council considers hiring a consulting firm to develop plans for a new performing arts and convention center.

    Options from the City of Wichita.
    It’s no secret that many in Wichita want a new performing arts and convention center to replace Century II. Documents produced by the city sketch four possibilities ranging in price from $272 million to $492 million.1 2

    The two least expensive scenarios keep the existing Century II structure, while two call for completely new buildings, including the possibility of a performing arts center located a few blocks to the east of the present Century II and proposed convention center site.

    Apart from the financial desirability of these projects is the question of how to pay. The traditional approach would be for a city to build, own, and operate the project, paying for it through long-term borrowing. (Governments, including Wichita, often speak of “bonding” projects, a word which seems less foreboding than “borrowing.”)

    This week’s business for the city council foreshadows the city using a different method. The firm the city wants to hire, Arup Advisory, Inc., is an advocate of “P3” or public-private partnerships. A report Arup prepared for the City of Los Angeles3 recommended that the city use a method known as Design Build Finance Operate and Maintain (DBFOM), which Arup says is used interchangeably with P3.

    In the DBFOM or P3 model as applied to Wichita, a third party — thought to be George Laham — would do all the work of designing, financing, building, and operating a convention center and possibly a performing arts center. Then, the city simply pays a fee each year to use the center. It’s called an “availability payment.” Most people call this rent or lease payments.

    The Los Angeles document explains the potential benefits of using DBFOM or P3:

    Here, the City as asset owner hires a developer team to take on the full project development responsibility (design, build, finance, operate, maintain) and pays them an annual service fee for the availability of the functioning capital asset (i.e. infrastructure as a service). The service fee is called an “availability payment” in the P3 industry; it is a contractually scheduled pay-for-performance arrangement where the private partner is paid to design, build, and finance a turnkey capital asset and then is responsible for the operation and maintenance of the asset according to performance standards set by the City. The availability payments are fixed at the time the P3 contract is signed and are only subject to indexation to an agreed inflation index (e.g., US or Los Angeles region CPI) and deductions for non-performance against the contractually defined performance standards. The availability payments, which are the only form of compensation by the owner to the P3 developer, start only when the P3 developer has satisfied all the conditions stipulated in the contract for successful completion of construction and start of operations. These features provide substantial incentives for the P3 developer to achieve on-schedule and on-budget construction, as well as optimized life-cycle maintenance over the long term that meets the owner’s needs.

    A common strategy recommended by Arup is to “cross-subsidize” with real estate. This is vaguely defined as to “unlock significant land value” in city-owned real estate near the convention center. Specific to Wichita, the proposal from Arup to the city includes, “Assess potential revenue from the monetization of city’s owned land located in proximity to the Century II facility and determine the size of the cross subsidy to the project expansion design schemes 1 and 3.”4

    What are the benefits to the city of pursuing the DBFOM/P3 path? The Los Angeles document gives these: “No impact on debt capacity; significantly reduced cost to the General Fund, structured as an obligation to pay a service fee (i.e. availability payment) to the private partner where the value of the service fee is less than the sum of all the relevant LACC costs [for other options].”

    To emphasize, again from the Los Angeles document: “… the City’s budgetary obligation is in the form of a service fee (i.e. availability payment) to the private partner, recorded as a contractual liability on the City’s balance sheet, as opposed to a debt obligation, which does not impact the City’s debt capacity.”

    In other words, the city can make a decades-long financial committment without appearing to take on debt. Yes, the city’s committment — the “availabity payments” — will be characterized as payments that need be made only if the convention center facility is kept up to certain standards. If, not, then the city can stop paying. But then Wichita would have no cenvention center, and no performing arts center. Instead, the city would have one or two big, hulking, empty buildings in downtown.

    Should Wichita do this?

    Convention business is on a long downward trend. The Arup report for Los Angeles recognizes this:

    Over the last two decades, most large and medium size American cities have experienced a spur in convention center development. According to the Brookings Institution (2005), exhibit hall space in the US grew from 40 million square feet in 1990 to 85 million in 2014 distributed among 400+ facilities. There is a sense in the Convention business that the supply may be exceeding demand.

    (For more on convention center trends, see Should Wichita expand its convention facilities? The Brookings report by Heywood Sanders is available at Space Available: The Realities of Convention Centers as Economic Development Strategy.)

    A commitment of this size needs public input in the form of a vote. The “availability payments” the city may commit to will be characterized in various ways, but they represent a long-term commitment by the city that it can’t escape. If promised revenues from expanded convention trade don’t cover these payments, taxpayers will have to pay. The city, unfortunately, doesn’t have a good record of honesty with citizens:

    • In 2014 the city told citizens that $250 million in new sales tax revenue was required to provide drought protection. After the vote on the tax failed, the city found less expensive ways to provide the same protection.5
    • Subsidized city projects have not delivered promised benefits.6
    • The city is not truthful in reporting the number of people working in downtown Wichita.7
    • Despite much investment in downtown Wichita, both public and private, business activity is declining.8
    • Despite much investment in downtown Wichita, both public and private, total property valuation is declining.9
    • While touting transparency, the city fails in many basic ways, even though the city communications staff has been expanded.10 11 12

    Citizens and taxpayers should insist the city address these issues before committing to any new project, much less one the size of a renovated or new performing arts and convention center.

    And — most importantly — the people need to vote up or down on this project.

    Update: On May 9 the city council decided to hire this firm.

    —
    Notes

    1. City of Wichita. Grand Vision: Wichita Performing Arts & Convention Center: ‘Millenials Place.’ Available at https://wichitaliberty.org/wp-content/uploads/2017/05/Century-2-Vision.pdf. ↩
    2. City of Wichita. The Heart of Downtown: Catalyst to a 21st Century Riverfront. Available at https://wichitaliberty.org/wp-content/uploads/2017/05/Analysis-of-century-2.pdf. ↩
    3. City of Los Angeles, Office Of The City Administrative Officer. Public-private Financing Options For The Los Angeles Convention Center Expansion Project. Available at http://cao.lacity.org/Reports/20151223%20CAO%20LACC%20Alternative%20Financing.pdf. ↩
    4. City of Wichita. Agenda Packet for May 9, 2017. ↩
    5. Weeks, Bob. In Wichita, the phased approach to water supply can save a bundle. In 2014 the City of Wichita recommended voters spend $250 million on a new water supply. But since voters rejected the tax to support that spending, the cost of providing adequate water has dropped, and dropped a lot. Available at https://wichitaliberty.org/wichita-government/wichita-phased-approach-water-supply-can-save-bundle/. ↩
    6. Weeks, Bob. Downtown Wichita’s Block One, a beneficiary of tax increment financing. Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-block-one-beneficiary-tax-increment-financing/.
      Also: Ken-Mar TIF district, the bailouts. Available at https://wichitaliberty.org/wichita-government/ken-mar-tif-district-the-bailouts/. Since the bailout, the situation at the former Ken-Mar center has worsened.
      Also: Wichita TIF district disbands; taxpayers on the hook. Available at https://wichitaliberty.org/wichita-government/wichita-tif-district-disbands-taxpayers-hook/.
      Also: Wistrom, Brent. Warren bailout poses dilemma — city loan, vacant theater both carry risks. Wichita Eagle. Available at https://brentwistrom.wordpress.com/clips/eagle-exposes-lost-taxdollars-in-downtown-theater-loan/. ↩
    7. Weeks, Bob. Downtown Wichita jobs, sort of. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/. ↩
    8. Weeks, Bob. Downtown Wichita business trends. There has been much investment in Downtown Wichita, both public and private. What has been the trend in business activity during this time? https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/. ↩
    9. Weeks, Bob. Downtown Wichita tax base is not growing. There’s been much investment in downtown Wichita, we’re told, but the assessed value of property isn’t rising. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-tax-base-not-growing/. ↩
    10. Weeks, Bob. Wichita check register. A records request to the City of Wichita results in data as well as insight into the city’s attitude towards empowering citizens with data. Available at https://wichitaliberty.org/wichita-government/wichita-check-register-2016/. ↩
    11. Weeks, Bob. Wichita doesn’t have this. A small Kansas city provides an example of what Wichita should do. Available at https://wichitaliberty.org/wichita-government/wichita-does-not-have-this/. ↩
    12. Weeks, Bob. During Sunshine Week, here are a few things Wichita could do. The City of Wichita says it values open and transparent government, but the city lags far behind in providing information and records to citizens. Available at https://wichitaliberty.org/open-records/sunshine-week-wichita/. ↩
  • On Wichita’s STAR bond promise, we’ve heard it before

    On Wichita’s STAR bond promise, we’ve heard it before

    Are the City of Wichita’s projections regarding subsidized development as an economic driver believable?

    Map of STAR bond districts. Click for larger.
    This week the Wichita City Council will consider a project plan for a STAR bonds district near Downtown Wichita. These bonds divert future incremental sales tax revenue to pay for various things within the district.1

    City documents promise this: “The City plans to substantially rehabilitate or replace Lawrence Dumont Stadium as a modern multi-sport stadium as part of a larger project to develop the river and stadium areas. … Combined, the museum, pedestrian bridge, waterfront improvements and multi-sport stadium will generate significant new visitor tourism as well as provide signature quality of life amenities for the citizens of Wichita and the region.”2

    We’ve heard things like this before. Each “opportunity” for the public to invest in downtown Wichita is accompanied by grand promises. But actual progress is difficult to achieve, as evidenced by the lack of progress in Block One.3

    Trends of business activity in downtown Wichita. Click for larger.
    In fact, change in Downtown Wichita — if we’re measuring the count of business firms, jobs, and payroll — is in the wrong direction, despite public and private investment.4

    Perhaps more pertinent to a sports facility as an economic growth driver is the Intrust Bank Arena. Five years ago the Wichita Eagle noted the lack of growth in the area.5 Since then, not much has changed. The area surrounding the arena is largely vacant. Except for Commerce Street, that is, and the businesses located there don’t want to pay their share of property taxes.6

    I’m sure the city will remind us that the arena was a Sedgwick County project, not a city project, as if that makes a difference. Also, the poor economic performance cited above is for Downtown Wichita as delineated by zip code 67202, while the proposed STAR bond project lies just outside that area, as if that makes a difference.

    By the way, this STAR bonds district is an expansion of an existing district which contains the WaterWalk development. That development has languished, with acres of land having been available for development for many years.

    —
    Notes

    1. Weeks, Bob. STAR bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/star-bonds-kansas/. ↩
    2. Agenda packet for May 2, 2017. Excerpt available at https://drive.google.com/file/d/0B97azj3TSm9MajNOUmQ3dDV0dXc/view. ↩
    3. Weeks, Bob. Downtown Wichita’s Block One, a beneficiary of tax increment financing. Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-block-one-beneficiary-tax-increment-financing/. ↩
    4. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/. ↩
    5. “Ten years ago, Elizabeth Stevenson looked out at the neighborhood where a downtown arena would soon be built and told an Eagle reporter that one day it could be the ‘Paris of the Midwest.’ What she and many others envisioned was a pedestrian and bike-friendly neighborhood of quaint shops, chic eateries and an active arts district, supported by tens of thousands of visitors who would be coming downtown for sporting events and concerts. It hasn’t exactly turned out that way. Today, five years after the opening of the Intrust Bank Arena, most of the immediate neighborhood looks much like it did in 2004 when Stevenson was interviewed in The Eagle. With the exception of a small artists’ colony along Commerce Street, it’s still the same mix of light industrial businesses interspersed with numerous boarded-up buildings and vacant lots, dotted with ‘for sale’ and ‘for lease’ signs.” Lefler, Dion. 5 years after Intrust Bank Arena opens, little surrounding development has followed. Wichita Eagle. December 20, 2014. Available at http://www.kansas.com/news/local/article4743402.html. ↩
    6. Riedl, Matt. Has Commerce Street become too cool for its own good? Wichita Eagle. April 8, 2017. http://www.kansas.com/entertainment/ent-columns-blogs/keeper-of-the-plans/article143529404.html. ↩
  • Growth in Downtown Wichita Jobs

    Growth in Downtown Wichita Jobs

    Even if we accept the measure of jobs used by the City of Wichita, the trend is in the wrong direction. Citizens should ask for truth and accountability.

    Click for larger.
    Click for larger.
    Click for larger.
    The City of Wichita and its surrogates tell us there are 26,000 daytime workers in downtown Wichita, defined as zip code 67202. There is a serious problem with that number, as it includes workers whose “administrative home” is downtown, even though they work somewhere else.1 The largest example of this is the counting of all Wichita school district employees as downtown workers, even though almost all work in schools and other locations throughout the city.

    But even if we use the statistic promoted by the Wichita Downtown Development Corporation, the trend in jobs is in the wrong direction. WDDC promotes the large investment in downtown Wichita, by both private and public sources. But employment is trending in the opposite direction.

    As Wichita considers other large downtown investments, such as STAR bond financing for the west bank of the Arkansas River or a new convention center and performing arts center, we should ask at least two questions:

    • Can we depend on the city to use meaningful and truthful data?
    • Will the city recognize the lackluster results of its economic development efforts?
    • Shouldn’t we insist on progress in projects like Block One before proceeding elsewhere?2

    —
    Notes

    1. Weeks, Bob. Downtown Wichita jobs, sort of. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/. ↩
    2. Weeks, Bob. Downtown Wichita’s Block One, a beneficiary of tax increment financing. Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-block-one-beneficiary-tax-increment-financing/. ↩
  • Downtown Wichita jobs, sort of

    Downtown Wichita jobs, sort of

    The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice.

    Have you heard that 26,000 people work in downtown Wichita, defined as zip code 67202? It’s likely you have, as this number appears in many places.

    It appears in the Wichita city budget. (1)City of Wichita. Proposed Budget 2017 – 2018. Page 2. “Over 26,000 workers also populate downtown every day, working in industries such as education, finance, manufacturing, health care, government, and retail.

    Downtown Wichita brochure.

    It is cited by our chief economic development agency. (2)Greater Wichita partnership. Living & Working. “With a highly trained pool of talent and a deeply rooted entrepreneurial spirit, Downtown Wichita is work central, boasting 26,000 daytime workers in the financial, healthcare, education, oil & gas and creative services industries.” Available at http://greaterwichitapartnership.org/living_working/downtown_wichita.

    State of Downtown Report, 2016. Click for larger.

    The city’s downtown development agency uses this number in brochures and annual reports. (3)Wichita Downtown Development Corporation. Wichita — Center of Progress. Available at http://www.downtownwichita.org/brochure/files/inc/792168633.pdf. (4)Wichita Downtown Development Corporation. State of Downtown Report 2016. This document states over 25,000 workers. Available at http://downtownwichita.org/user/file/2016_State_of_Downtown_Report_2.pdf.

    It appears in a federal grant application made by the city. (5)City of Wichita. Multi-Modal Transportation Connections for Wichita State Innovation Campus. 2016 TIGER Grant Application. Available at http://www.wichita.gov/Government/Departments/Planning/TIGER%20Grant%20Documents/2016%20TIGER%20Grant%20Application.pdf.

    It appears in our state’s largest newspaper, as reported by a journalist billed as a data specialist. (6)Ryan, Kelsey. 9 things happening with Wichita downtown development. Wichita Eagle. June 01, 2015. Available at http://www.kansas.com/news/business/real-estate-news/article22844223.html.

    Promotional material on the former Henry’s building. Click for larger.

    It appears in a Wichita specialty business newspaper quoting a Wichita business leader. (7)Stearns, John. Downtown’s office exodus — Nearly 1,000 are leaving, so why aren’t downtown developers having a heart attack? Wichita Business Journal. October 4, 2013. Available at http://www.bizjournals.com/wichita/print-edition/2013/10/04/downtowns-office-exodus.html.

    It’s advertised on a vacant downtown building, the former Henry’s store at Broadway and William.

    The Wichita Downtown Development Corporation states the data for workers in downtown Wichita, which is defined for these purposes as zip code 67202, comes from the United States Census Bureau, specifically an application called “OnTheMap Application and LEHD Origin-Destination Employment Statistics.” (8)U.S. Census Bureau. OnTheMap application. Available at https://onthemap.ces.census.gov/. The data is commonly known as LODES. Using this application and focusing analysis on zip code 67202 produces the figure 25,850 primary jobs. Round that to 26,000, and that’s the source of the job claims for downtown Wichita.

    But: Census documentation for this data gives the definition of the place of work and a cautionary note: “A place of work is defined by the physical or mailing address reported by employers in the QCEW (formerly ES-202) or Multiple Worksite Reports. An address from administrative data may or may not be the actual location that a worker reports to most often.”

    The Census Bureau continues with another warning regarding this data: “Nonreporting of multiple worksites is especially common with state and local governments and school districts. In such a case, LEHD infrastructure files assign all workers for that employer (within the state) to the main address provided.” (9)“For LODES, a place of work is defined by the physical or mailing address reported by employers in the QCEW (formerly ES-202) or Multiple Worksite Reports. An address from administrative data may or may not be the actual location that a worker reports to most often. The distinction of worksite and administrative address may be especially significant in some industries such as construction, where work is often carried out at temporary locations. In some cases, employers do not provide a multiple worksite report when it would be appropriate to do so. Nonreporting of multiple worksites is especially common with state and local governments and school districts. In such a case, LEHD infrastructure files assign all workers for that employer (within the state) to the main address provided. Bureau of Labor Statistics (BLS) data show a national noncompliance rate of 5.61 percent of multiunit employers responsible for about 4.45 percent of multiunit employment.” Matthew R. Graham, Mark J. Kutzbach, and Brian McKenzie. Design comparison of LODES and ACS commuting data products. Available at ftp://ftp2.census.gov/ces/wp/2014/CES-WP-14-38.pdf.

    Census block 201730043001036
    Census block 201730043001036, satellite view.

    This is highly relevant and important in the case of downtown Wichita. When using the OnTheMap application for zip code 67202, there are two large bright blue dots that stand out from all others. These represent the two highest concentrations of workers in downtown Wichita. One is Census block 201730043001036, which has 7,740 employees. This is a one square block area from First to Second Streets, and Wichita to Water Streets. The block consists mostly of surface parking lots, although there are three buildings. One building is the Wichita school district administration building, and there’s the problem with the way the city uses this data. The school district has thousands of employees. Only a small fraction, however, work in the downtown administrative building at First and Water Streets. The rest are dispersed throughout the city in school buildings and other sites such as the large facility at 37th Street North and Hydraulic.

    But this Census data counts all these employees in one census block. This is an example of the warning the Census Bureau supplies with the data: Nonreporting of multiple worksites is especially common with state and local governments and school districts.

    There’s another example. The second largest concentration of workers in downtown Wichita appears in Census block 201730043001023, which has 3,437 employees. This is the block that holds Wichita city hall. In 2014 the city had 3,270 employees. But they don’t all work at Main and Central. They’re dispersed throughout the city in police stations, fire stations, and other sites.

    (By the way, the 26,000 number is often qualified as daytime workers. But we know that many police officers and firefighters work at night. The same is true for people working at the many hotels, restaurants, and bars in downtown. They aren’t all daytime workers.)

    Here’s something to consider: The Wichita school district is moving its administrative offices to the former Southeast High School building at Lincoln and Edgemoor. That’s in zip code 67218. What will happen to the reporting of jobs in downtown Wichita when some seven thousand workers start receiving their paychecks from an office in that zip code, and the Census Bureau adjusts it data accordingly?

    So how many people do actually work in downtown Wichita, zip code 67202? A different set of Census data gives the number 13,593 for 2014. (10)Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/. This data is much more representative of the number of people actually working in a location, although it includes private-sector workers only. So we might add a few to that number. But it’s clear that the claim of 26,000 workers is far from true.

    We’re told that the city makes decisions based on data and analysis. In the city manager’s policy message in the current city budget, the manager wrote: “In 2016, the City was selected by Bloomberg Philanthropies as a What Works City for making a public commitment to use data for informed decision making.” The same document also states: “Departmental goals and data drive decision making within each department.”

    The use of data for decision making is especially important for downtown planning, we’ve been told. In selling the plan for downtown Wichita in 2010, the city’s consultants told us that the plan is “grounded in data and hard analysis.” (11)Weeks, Bob. Some Goody Clancy Wichita findings not credible. Available at http://wichitaliberty.org/wichita-government/some-goody-clancy-wichita-findings-not-credible/. But I showed that data the consultants relied on — a “walk score” — was based on nonsensical data.

    We’re left with a few observations:

    • The claim of 26,000 workers in downtown Wichita is true. But as we’ve seen, it is not true in the way it is used, which is as an indication of the number of human beings actually working in downtown.
    • Did the person who gathered this data about downtown workers know what it means? If not, why not?
    • Did the person who decided to use this data in marketing downtown Wichita know what it means? If not, why not?
    • If someone knew the meaning of this data and decided to use it anyway: What does that tell us?
    • Did no one at Wichita city hall look at this data? As I’ve shown, it’s easy to see that the mapping application says 3,437 people work in the block holding city hall. Did no one look at the big blue dot and that number and realize that it is not real?
    • What if you opened a lunch counter in downtown Wichita based on the claim of 26,000 daytime workers, and then you learn there are really only half that many, with some of those working at night?

    We want to trust our city leaders. We want downtown Wichita and the entire metropolitan area to succeed so that people may prosper and be happy. But episodes like this destroy trust and breed well-deserved cynicism. We can — we must — do better than this.

    References

    References
    ↑1City of Wichita. Proposed Budget 2017 – 2018. Page 2. “Over 26,000 workers also populate downtown every day, working in industries such as education, finance, manufacturing, health care, government, and retail.
    ↑2Greater Wichita partnership. Living & Working. “With a highly trained pool of talent and a deeply rooted entrepreneurial spirit, Downtown Wichita is work central, boasting 26,000 daytime workers in the financial, healthcare, education, oil & gas and creative services industries.” Available at http://greaterwichitapartnership.org/living_working/downtown_wichita.
    ↑3Wichita Downtown Development Corporation. Wichita — Center of Progress. Available at http://www.downtownwichita.org/brochure/files/inc/792168633.pdf.
    ↑4Wichita Downtown Development Corporation. State of Downtown Report 2016. This document states over 25,000 workers. Available at http://downtownwichita.org/user/file/2016_State_of_Downtown_Report_2.pdf.
    ↑5City of Wichita. Multi-Modal Transportation Connections for Wichita State Innovation Campus. 2016 TIGER Grant Application. Available at http://www.wichita.gov/Government/Departments/Planning/TIGER%20Grant%20Documents/2016%20TIGER%20Grant%20Application.pdf.
    ↑6Ryan, Kelsey. 9 things happening with Wichita downtown development. Wichita Eagle. June 01, 2015. Available at http://www.kansas.com/news/business/real-estate-news/article22844223.html.
    ↑7Stearns, John. Downtown’s office exodus — Nearly 1,000 are leaving, so why aren’t downtown developers having a heart attack? Wichita Business Journal. October 4, 2013. Available at http://www.bizjournals.com/wichita/print-edition/2013/10/04/downtowns-office-exodus.html.
    ↑8U.S. Census Bureau. OnTheMap application. Available at https://onthemap.ces.census.gov/.
    ↑9“For LODES, a place of work is defined by the physical or mailing address reported by employers in the QCEW (formerly ES-202) or Multiple Worksite Reports. An address from administrative data may or may not be the actual location that a worker reports to most often. The distinction of worksite and administrative address may be especially significant in some industries such as construction, where work is often carried out at temporary locations. In some cases, employers do not provide a multiple worksite report when it would be appropriate to do so. Nonreporting of multiple worksites is especially common with state and local governments and school districts. In such a case, LEHD infrastructure files assign all workers for that employer (within the state) to the main address provided. Bureau of Labor Statistics (BLS) data show a national noncompliance rate of 5.61 percent of multiunit employers responsible for about 4.45 percent of multiunit employment.” Matthew R. Graham, Mark J. Kutzbach, and Brian McKenzie. Design comparison of LODES and ACS commuting data products. Available at ftp://ftp2.census.gov/ces/wp/2014/CES-WP-14-38.pdf.
    ↑10Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.
    ↑11Weeks, Bob. Some Goody Clancy Wichita findings not credible. Available at http://wichitaliberty.org/wichita-government/some-goody-clancy-wichita-findings-not-credible/.

  • Downtown Wichita’s Block One, a beneficiary of tax increment financing

    Downtown Wichita’s Block One, a beneficiary of tax increment financing

    Before forming new tax increment financing districts, Wichita taxpayers ought to ask for progress on current districts.

    Windows in the former Henry’s building promote Block One. They’re fading from exposure to the sun. Click for larger.
    I’ll not bore you with the mechanism of tax increment financing (TIF). But if you’re curious, please read Wichita TIF projects: some background and Tax increment financing district (TIF) resources.

    Whatever the mechanism, tax increment financing is meant to spur economic growth. But in one of Wichita’s largest TIF districts, economic activity, much less growth, is difficult to find.

    In particular, “Block One” — a square block bounded by Douglas and William, Broadway and Topeka — has benefited from TIF money, but has stumbled. There is the Ambassador Hotel, which received many millions in taxpayer subsidy in addition to TIF benefits. There is also the Kansas Leadership Center, a handsome new building.

    Block One retail space sits mostly empty, despite the benefit of tax increment financing. Click for larger.
    But on William Street, progress is harder to find.

    The former Henry’s building remains empty. Promotional materials in its display windows have been fading in the sun for four years. Across the alley to the east is 8,400 square feet of retail space, all empty for four years except for a used book store. It’s not for lack of parking that this space is empty, as it lies underneath a taxpayer-funded parking garage. There’s plenty of on-street parking too, as little happens on this block.

    Some of the surrounding property is not doing well, either. The Broadway Plaza building features a large ground floor office or retail space that has been empty for years. South of that, the former State Office Building — directly across Broadway from the former Henry’s building — faces possible demolition.

    Block One ribbon cutting, March 2013.
    Has there been lack of promotion for Block One? No. The downtown development agency uses it as an example of the success of its efforts in downtown Wichita. It has called it “the first complete city block of development along the core of Douglas Avenue.”

    But the legacy of this, at least along William Street, is empty storefronts and a hulking vacant building.

    Now the City of Wichita has approved the formation of yet another tax increment financing district. Sedgwick County and the Wichita School District have an opportunity to veto its formation. Before approving any new tax increment financing districts, we might want to ask for some progress in what we have.

    Block One promotional material. Click for larger.
  • Downtown Wichita business trends

    Downtown Wichita business trends

    There has been much investment in Downtown Wichita, both public and private. What has been the trend in business activity during this time?

    Trends of business activity in downtown Wichita. Click for larger.
    According to the 2016 report from the Wichita Downtown Development Corporation, over the past decade there has been $602 million in private investment and $369 million in public investment in downtown. An additional $190 million investment is in the form of the Intrust Bank Arena. The total, according to WDDC, is $1,161 million.1

    What has been the result of this investment? If you expected business growth in downtown Wichita, you may be disappointed.

    Business activity in zip code 67202, Downtown Wichita. Click for larger.
    The United States Census Bureau tracks business data by zip code.2 The data that is available includes the number of business establishments, the number of employees, and the annual payroll, expressed in thousands of dollars not adjusted for inflation. It includes private-sector workers only, so it does not count all workers.

    Nearby are results for zip code 67202, which has nearly the same boundaries as the Self-Supporting Municipal Improvement District (SSMID). This is a district that pays extra property tax for supporting the WDDC. Its boundaries are from Kellogg north to Central, and the Arkansas River east to Washington. It is greater Downtown Wichita plus Old Town.

    Zip Code 67202.
    The results since 2007 show fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In all cases, the trend is lower.

    This is movement in the wrong direction, the opposite of progress. There may be good news in that the number of people living downtown may be rising. But business activity is declining.

    Trends in business establishments, employment, and payroll for zip code 67202, which is Downtown Wichita. Click for larger.

    —
    Notes

    1. Wichita Downtown Development Corporation. State of Downtown Report, 2016. http://www.downtownwichita.org/2016StateofDowntown/?page=1. ↩
    2. U.S. Census Bureau. County Business Patterns (CBP). https://www.census.gov/programs-surveys/cbp/data.html. ↩
  • Cargill subsides start forming

    Cargill subsides start forming

    Details of the subsidy programs used to keep Cargill in Wichita are starting to take shape.

    This week the Wichita City Council will consider one of the (potentially many) subsidy programs offered to keep Cargill in Wichita.

    Cargill Protein Group is currently located at 151 N. Main. The plan is for Cargill to purchase and demolish the Wichita Eagle building at 825 E. Douglas, then build a new office building in its place. The subsidy program to be considered this week is the Industrial Revenue Bond program1. The city won’t be lending Cargill money. Instead, IRB’s are a (convoluted) method whereby local governments are able to forgive the payment of property taxes. For the case of Cargill, city documents state the tax forgiveness could be worth $1,359,531 per year.2 This would be shared by these taxing jurisdictions, again according to city documents.

    • City of Wichita: $378,450
    • Sedgwick County: $340,958
    • USD 259, the Wichita Public School District: $622,723
    • State of Kansas $17,400

    Of note, the city is in a hurry to handle this matter. Pending legislation would reduce the amount of property tax able to be exempted.3

    In addition to the property tax exemption, the IRBs also carry a sales tax exemption for purchases related to construction. City documents give an estimated value of $2,026,291 for the sales tax Cargill will not have to pay.

    Not the entire subsidy package

    The action to be considered this week is likely just a portion of total subsidy package. For example, at one time it was speculated that the City of Wichita would build a parking garage and let Cargill use it as their own. With a proposed capacity of 750 parking spots, this would cost many millions.4

    Now, the city plans to let Cargill construct the garage, and the city will, according to city documents, “purchase a parking easement from Cargill to obtain public access to the parking structure Cargill will complete as part of this project.” It sounds like the city will rent spaces in the garage. It will be interesting to see the rate the city will agree to pay.

    From the state of Kansas Cargill is likely to receive PEAK benefits. Under this program, the Kansas state withholding tax deducted from Cargill employees’ paychecks will be routed back to Cargill.5 (Well, only 95 percent goes back to Cargill. The state keeps five percent.)

    —
    Notes

    1. Weeks, Bob. Industrial revenue bonds in Kansas. http://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/. ↩
    2. City of Wichita. Council agenda packet for April 18, 2017. ↩
    3. Kansas Legislature. SB 146: Continuation of 20 mill statewide levy for schools and property tax exemption of certain portion of property used for residential purposes from such levy. http://www.kslegislature.org/li/b2017_18/measures/sb146/. ↩
    4. Recently the city paid $4.73 million (not including change orders) to build a downtown garage with 270 parking spaces, a cost of about $17,500 per stall. Applying that to a 750 stall garage results in a cost of $13.1 million). ↩
    5. Weeks, Bob. In Kansas, PEAK has a leak. http://wichitaliberty.org/kansas-government/kansas-peak-leak/. ↩
  • Cash incentives in Wichita, again

    Cash incentives in Wichita, again

    The City of Wichita says it does not want to use cash incentives for economic development. But a proposal contains just that.

    Update: The council did not approve this project, by a vote of four to three.

    This week the Wichita City Council will consider a package of incentives for the developer of a large downtown building, the Finney State Office Center. While the city has said that it does not want to use cash incentives, they are proposed for this project.1

    Finney State Office Building environs
    Elements of the proposal are these:

    The Wichita Public Building Commission will sell the building for $100,000.

    The project is also asking for the city to issue Industrial Revenue Bonds. Despite the use of the term “bond,” the city is not lending money to anyone. Someone else will purchase the bonds. Instead, the IRBs are a vehicle for conveying property tax abatements and sales tax exemptions.

    In this case, the developer requests a sales tax exemption for purchases during the renovation. City documents don’t give a value for the sales tax that might be exempted. But the developer has requested IRBs for an amount up to $35,000,000. Therefore, a sales tax exemption might be worth up to $2,625,000, depending on the price of taxable products and services purchased, and the sales tax rate at the time.

    If someone excuses you from paying millions in sales tax, that’s better than receiving cash. But cash incentives are proposed, too. The city proposes a grant of up to $2,000,000, although the city calls this an “investment.”2

    Whatever it is called, this is a cash incentive.

    Also, the Wichita Public Building Commission will pay up to $1,000,000 for improvements to the building.3

    This proposed payment from the WPBC seems to be in violation of the city statutes governing the commission, which read: “Under no circumstances shall any income of the public building commission inure to the benefit of any private person.”4

    I’m sure the city will characterize its $2 million “investment” in some way other than a cash incentive. The city will also say the $1 million from the WPBC is not from the city, which is true. But the city will have to rationalize allowing the commission to violate the clear language of its statutes.

    There are some good aspects of this agreement with the developer, such as a timeline and performance bond requirement. But the cash incentives are against stated city policy and its laws.

    —
    Notes

    1. Wichita City Council agenda packet for April 11, 2017. ↩
    2. ibid. “The City proposes to invest up to $2,000,000 to be used to modernize the building. The investment would only be paid upon completion of the entire building renovation project.” ↩
    3. ibid. “On April 5, 2017, the WPBC approved the Development Agreement/Purchase and Sale Agreement and agreed to commit up to $1,000,000 for building improvements as well.” ↩
    4. Wichita Municipal Code. Sec. 2.12.640 (i). Under no circumstances shall any income of the public building commission inure to the benefit of any private person. https://www.municode.com/library/ks/wichita/codes/code_of_ordinances?nodeId=TIT2ADPE_CH2.12BOAGCO_S2.12.640SAUNCO. ↩