Downtown development group backs yes vote on hotel guest tax

08/27/2013 9:38 AM

08/05/2014 6:11 PM

The Wichita Downtown Development Corporation’s board of directors has endorsed a “yes” vote Feb. 28 on the Ambassador Hotel guest tax referendum.

City voters will decide Tuesday whether 75 percent of the guest tax revenue generated by the 117-room boutique hotel will be rebated to developers over the hotel’s first 15 years. The estimated total rebate is $2.25 million.

“This is an exciting economic development opportunity,” WDDC chairman Tom Docking said.. “The opportunity to see an entire city block redevelop, jobs created and a beautiful and historic building coming back to life is a great opportunity for any city at any time, but especially during these economic times.”

The endorsement has come under fire from “no” vote advocates like local free market/limited government blogger Bob Weeks, who contend that as a publicly funded entity, the WDDC cannot legally take a position on the referendum. About 88 percent of its funding comes from a 5.95 mill levy established through the city of Wichita’s budget process, which will raise about $600,000 this year. The remainder of the WDDC’s budget comes from private-sector contributions and grants.

Weeks’ group cites a legal opinion from 1993, when then-Attorney General Bob Stephan said that public funds may not be used to promote or advocate a city governing body’s position on a matter that is before the electorate.

Docking, a longtime Wichita attorney, dismissed that as baseless.

“The only citation of authority I’ve seen from them is a 1993 attorney general’s opinion from Bob Stephan that does not at all apply to the facts and circumstances here,” Docking said. “It deals with different entities and issues, and it’s clearly not applicable to us.

“And I’d resort to common sense here in reminding your readers that the WDDC is by its title charged with promoting downtown development. If we’re not in the business of advocating for the Ambassador Hotel, then we’re clearly in the wrong business.”

Weeks told The Eagle in an e-mail that he’s been told City Manager Robert Layton agrees that the WDDC should not take a position on the vote. However, Layton told The Eagle that statement is a “misrepresentation.” Layton said he asked WDDC officials for legal research on the issue, and has been assured their pro-Ambassador stance is legal under Kansas law.

Docking said the board made its decision based on a number of factors:

•  The project fits the criteria of Project Downtown, the downtown master plan.
•  It was the first project to complete the downtown development incentives policy review, which includes a committee of business people, planners and financial experts who review all projects and provide recommendations to the Wichita City Council.
•  The building sat empty for 12 years, generating $22,000 in yearly tax revenue. During the first year, the Ambassador will generate more than $235,000 in estimated additional tax revenue for the city, county and school district.
•  Project Downtown includes a recommendation that downtown Wichita add 250 to 400 new hotel rooms. The Ambassador will bring the total in the plan’s first two years to 248 new rooms.
•  The hotel project has been the catalyst for additional downtown projects, with the entire city block now under redevelopment plans, including the Kansas Health Foundation’s new facility and the former Henry’s building.
•  Local and national investors need predictability when it comes to potential downtown Wichita projects.

Docking said the referendum is a blow to that predictability.

“When we have a referendum, it throws into doubt the predictable success of any given project,” he said. “That could hamper efforts to develop other properties.”

However, Docking said the city shouldn’t back away from the use of guest taxes as an economic development tool out of fear of future referendums.

“I think the guest tax is a very useful tool,” he said. “It applies to visitors in hotels at the property where the (tax is being generated),” he said. “It’s a real good example of user-generated revenue rather than a general tax on the public.”

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