The upcoming vote on a $2.25 million public incentive for the Ambassador Hotel at Douglas and Broadway is a referendum on the future of downtown redevelopment, the hotel’s backers say.
But the free market/limited government proponents who forced the issue to a public vote say the stakes are broader: Governments choose winners and losers when they provide public incentives for private development projects.
Wichita voters will go to the polls Feb. 28 to decide whether developer Paul Coury’s group can keep $2.25 million in guest tax revenues over the next 15 years. That’s 75 percent of the estimated $3 million in guest taxes the 117-room Ambassador is forecast to generate.
A yes vote means Coury’s group can keep the money; a no vote means the revenue goes into the city’s convention and tourism recruitment effort, funding Go Wichita, the city’s tourism arm. Advance voting already has begun.
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Coury is clear: Had he known Americans for Prosperity would mount a petition drive against the guest tax revenue, he would not have brought his boutique hotel project to Wichita.
“It’s incredible,” he said. “I mean, I’m going to be out $350,000 before we start, to run this Vote Yes campaign and to pay for the election. That’s the incredible part.
“Don’t you think the people circulating the petitions should have some skin in this game? Shouldn’t we at least be splitting the cost of this election?”
The special election is estimated to cost $50,000.
Coury said the political fight also led him to drop his plans for a similar hotel renovation at the Commodore Apartments near Broadway and Central, a 62-unit project that originally lured the Tulsa boutique developer to Wichita.
His position is a message that downtown proponents want to make sure voters understand, especially with the looming prospect of a deal at Union Station, the cavernous train station that analysts say will be financially impossible to revitalize without a long-term public-private partnership that could make the Ambassador deal look small by comparison.
“It (a no vote) is tantamount to saying you don’t want growth in Wichita,” said Tom Docking, the Wichita attorney who chairs the Wichita Downtown Development Corp. “You don’t want the Intrust Bank Arena. You don’t want the Kellogg flyover. You don’t want the children’s museum. You don’t want Old Town.
“Think what Wichita would be like if we didn’t have those amenities.”
If the referendum fails, downtown revitalization will be set back significantly, Docking and Wichita Mayor Carl Brewer say.
“The bigger picture, I fear is that if the referendum fails, it sends a message to the business community that they’re going to have a battle on their hands whenever the economics dictate a public-private partnership. And the opponents are well-organized,” Docking said.
Said Brewer, “The message will be that this community isn’t sincere in what it’s doing downtown … that we sincerely want new business and growth.”
In the shorter term, the referendum’s failure will mean scaled-down amenities and a smaller payroll at the Ambassador, Coury said.
“If I find myself in a position where I need to trim more than $2 million in expenses, then there are going to be some things we need to do for the full hotel experience that simply won’t get done,” he said.
Opposing the subsidy
The leaders of the petition drive frequently advocate for free market and limited government before the Wichita City Council.
Their opposition to the guest tax allocation – they say they’re not opposed to the hotel project in total – is based on two factors: Governments shouldn’t pick winners by providing public incentives to private developments. And the guest tax money shouldn’t be missed by project developers who have cashed in on $15.4 million of public subsidies – a figure Coury dismisses as a “myth.”
The city and the developer’s financial statements put public incentives at $7.7 million.
“We saw that the multi-layered subsidy package to the Ambassador hotel contained one item that we thought was over the top,” said Bob Weeks, one of the AFP supporters who organized the petition drive. “And something passed by a charter ordinance as this was is subject to a protest petition. ... We thought about it and, you know, eight things are going to be in effect here and this one thing seems just over the top.”
“We’re not against the hotel,” Weeks said. “We’re against the ninth government subsidy to the hotel.”
One of the AFP group’s core beliefs is that tax revenues should always be used for public services, not to subsidize private development.
“Taxation is a public function for a public benefit,” Weeks said. “In this case, we’re turning that function over for private benefit and private gain.”
Susan Estes, who is AFP’s field representative in Wichita, and John Todd, another AFP activist, put the stakes of the election a little more broadly: Governments shouldn’t provide public subsidies for private developments because it puts them in the position of playing business favorites.
“Equality of opportunity is what we’re looking for,” Todd said.