WICHITA — Business owners in a special taxing district surrounding the Old Town Warren Theatre have fought to have their property taxes reduced, forcing the city to cover debts incurred when the city bought land, installed utilities and built a park to spur the development.

Increased property taxes from new development were expected to pay off those debts.

Council members who heard the news in a quarterly financial report this morning were upset and thought the city might have a guarantee from developers to ensure the debt is paid off.

No such guarantee exists for the Old Town Cinema tax increment finance district, said Allen Bell, the city's director of urban development.

The news comes more than a year after the council approved a $6 million low-interest loan to Old Town Cinema developers to finance improvements inside the movie theater. The move was seen as a way to ensure the theater's success and give the TIF district a boost.

In TIF districts, the city pays for things such as property acquisition, landscaping, parking ramps and public parks. The expected increase in property taxes is then captured and used to pay for the improvements.

The Eagle called finance officials about the matter on Monday but got no explanation.

In a presentation to council members this morning, Finance Director Kelly Carpenter explained that a refund of prior year taxes was processed by Sedgwick County because of appeals by property owners.

City Manager Robert Layton said he only recently learned of the tax appeals. He said he didn't know if the city had any way to ensure property taxes pay off debts.

No doubt that defeats the purpose of the TIF, he said.

Council members voted to file the quarterly finance report and didn't indicate whether they would take any action related to the TIF shortfall.