September 14, 2011

Americans for Prosperity targeting Ambassador hotel guest tax

A local group is targeting a tax subsidy to a downtown hotel project, launching a petition drive to force more than 10 percent of the hotel's public financing to a vote.

A local group is targeting a tax subsidy to a downtown hotel project, launching a petition drive to force more than 10 percent of the hotel's public financing to a vote.

The Wichita chapter of Americans for Prosperity plans to circulate petitions to overturn an estimated $2 million to $4 million subsidy to developers.

The city would give developers 75 percent of a 6 percent tax the city routinely charges hotel guests. The subsidy would last for 15 years. It is part of a $30 million bonding and incentives plan for Douglas Place LLC approved Tuesday by the Wichita City Council.

The incentives will finance a 117-room Ambassador boutique hotel at the corner of Douglas and Broadway, along with a 282-stall parking garage and urban park.

"Yesterday's vote in the city council to approve public incentives for a private development was disappointing," said Susan Estes, the field director for AFP-Kansas, at a Wednesday afternoon news conference.

"Thanks to this vote, Wichita taxpayers will be paying for a development which should be funded privately."

Estes said the council vote "turns the idea of taxation on its head."

"Taxation is a public function the government uses to pay for public services such as public safety, schools and infrastructure," she said. "However, in this case we are allowing private interests to use a public function for their own purposes."

Douglas Place developers Paul Coury and Dave Burk said they expected the petition announcement.

"I'm not surprised with this group. I'm really not," Burk said. "They can do that legally, so we're going to have to move forward."

Coury said that Americans for Prosperity doesn't understand where the guest tax funding is coming from: Wichita visitors.

"Our gross revenues are new money into the city," he said. "The fact that the city is carving money off of that for our project doesn't change the positive impact for the city.

"I'm not sure why they think I'm getting their tax money."

City council member Jeff Longwell called the petition drive "disappointing."

"We had a very transparent, open hearing, listened to both sides, listened to all of the arguments," Longwell said.

"We moved in a direction we felt was most compelling, and now you have a group that still is unhappy and it is just sour grapes. I'd argue that when they keep pulling these kinds of stunts, they will continue to lose credibility.

The council voted 5-1 to approve the incentives, with council member Michael O'Donnell opposing the plan.

Sedgwick County Election Commissioner Bill Gale said Americans for Prosperity will need 2,528 verifiable signatures to force the issue to a public vote — 10 percent of the 25,273 voters who voted in the last general election.

Because the city had to amend a charter ordinance governing distribution of guest tax funds, the money is subject to a protest petition.

The petition organizers have 60 days to gather signatures following the publication of the city's amendment to a charter ordinance dictating how the city can spend transient guest taxes, according to city documents.

If the necessary signatures are obtained, an election must be held within 90 days of the submittal of the petition.

Coury and Burk said the petition will not delay their project.

"It can't," Burk said. "We're going to have to continue, just because of our schedule, with the demolition and the reconstruction of the building."

And according to Douglas Place's development agreement with the city, it will pay for the cost of the election — estimated by the group at about $50,000.

Americans for Prosperity volunteer coordinator John Todd criticized the lack of "skin in the game" — or the amount of their own money developers are risking with the project.

The city is offering $30 million in incentives and bonding.

According to city documents developers are putting in $7.7 million, of which $7.3 million is federal and state historic tax credits. Developers are turning the former Union National Bank Building into a hotel.

But Coury said the city's agenda report for Tuesday's meeting understated the developer contribution to the project, omitting $2 million in direct developer cash.

"Our total equity in the project is more like $10 million when you count that money," he said.

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