Discrepancies in financial estimates have Sedgwick County commissioners asking for clarification about a tax increment financing district recently approved by the city.
County chief financial officer Chris Chronis told commissioners Tuesday that the city’s financials for a proposed development at 47th Street South and I-135 differ from the developers’ estimates.
The Wichita City Council voted 6-1 earlier this month to establish a TIF district for a project that would include retail, restaurants, hotels, health care and office space and be named Southfork. Developer Jay Maxwell wants the TIF district to pay for streets and water and sewer lines in the project. It also would be used to enlarge a drainage channel that drains the 72-acre site and 125 homes to the south.
The county has to sign off on the TIF district, which would allow new tax revenue generated by the project to be used for some development costs.
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Chronis said the project qualifies under state law for a TIF district because the property is in a flood plain. In 2004, the Legislature amended the definition of a blighted area to include one in which more than half is in a 100-year flood plain certified by the Federal Emergency Management Agency Chronis said 50 of the 72 acres are in a 100-year flood plain.
Drainage improvements are planned, but Chronis said developers have said that the property will “almost entirely remain in the flood plain” after those improvements.
Chronis said the city estimates that the project will net almost $2.1 million over 10 years without tax increment financing. With it, it would net about $8.4 million after 10 years, he said.
But the developers, he said, have estimated a net loss of $6.8 million without a TIF district and a net loss of $600,000 with the financing.
“They are completely different than the city’s estimates,” Chronis said of the developers’ estimates. “Even with infusion of TIF funding, there is a cumulative net loss. That certainly is cause for concern.”
Chronis also noted that by the city’s estimates, the project would be in the black without the special district, raising questions about whether the special financing would be necessary.
Commissioner Jim Skelton, who supports the project, told Chronis “we need to get these numbers issues resolved.”
Tim Austin, an engineer working with Maxwell on the project, said the discrepancies could be because “we’re taking a very cautious approach. It’s not a field of dreams.”
Allen Bell, the city’s urban development director, said that “the city routinely adjusts the raw information provided by developers to reflect what we consider to be more realistic assumptions.”
He said he was not aware of Chronis’ meeting with commissioners “so I cannot comment on what differences were discussed.”
He said he will meet soon with a representative of the project and county staff about the numbers.
“Until that meeting is held, I cannot comment further,” Bell said.
The city and developers also differ on the overall cost of the project. The city estimates the project will cost about $153 million. The developer estimates the total cost of the project will be about $103 million.
Commissioners are set to make a decision on the project Jan. 4. They do not meet next week.