City Council approves revised tax-incentive plan for south Wichita project

04/10/2012 5:00 AM

08/05/2014 11:09 PM

Wichita’s City Council has approved a revised tax-incentive plan for a blighted part of south Wichita that seeks to address concerns raised by Sedgwick County commissioners, who vetoed an earlier plan for the area.

The issue is expected to land back on the commission’s agenda for its decision. Commissioner Jim Skelton said he doesn’t think the county board will debate the issue again, but other commissioners said they would.

The city voted 6-1 Tuesday with Michael O’Donnell opposed.

“If we get started on it pretty soon, we might even do some Christmas shopping down there,” said Connie Klassen, president of the South Area Neighborhood Association and one of 11 people who spoke in support of the tax-increment finance district. “The canal route was awesome, but we haven’t had any improvements down there for at least 25 years. Right now, we’re going to Derby to shop.”

Four spoke against the plan, most saying the private sector alone should be responsible for development and not taxpayers.

This was the second time the council had approved a tax-increment financing district for the Southfork project, a 72-acre mixed-use development near I-135 and 47th Street South. Developer Jay Maxwell plans retail, hotel, restaurants and office space on the initial 50 acres, along with a medical complex on the 22 acres west of the Riverside Drainage Canal.

Tax-increment financing, or TIF, captures future taxes in a district to subsidize current improvements for areas the state considers blighted. Costs covered by such financing in a redevelopment district include site preparation, land acquisition and infrastructure.

Under state law governing TIF districts, the County Commission and the Wichita school board can veto a project if significant harm would be done to either. A TIF district channels some money away from those governments and toward improvements.

The council originally approved Southfork as a TIF district in December. The County Commission rejected it in early January on a 3-2 vote because of concerns about the land’s vulnerability to flooding and the lack of any cap on the amount of TIF money.

Skelton and Tim Norton voted yes while Dave Unruh, Karl Peterjohn and Richard Ranzau voted no.

On Feb. 7, the council responded by withdrawing the TIF district and telling the developer to make adjustments that would satisfy the county’s concerns. Those revisions will raise all of the land in the district out of the 100-year floodplain and will cap available tax-increment funding at $16.5 million.

Given those changes, Skelton said he didn’t think Unruh would want to vote on the issue again. “I’m not 100 percent sure,” said Skelton, who attended the City Council meeting with Norton and Peterjohn. “But I’m pretty certain there’s not an objection from the majority of the commission this time around.”

If the commission does not consider the item again, it would take effect by default.

Unruh said he needed to see details of the new plan. He said he was certain he would see the topic on the commission’s agenda again.

“I’m sure it’ll come up for discussion,” he said. “I think we have some commissioners who will insist we have an open discussion on it.”

“Well sure,” Ranzau said. “I think it’s important.”

Ranzau said he understood that Chris Chronis, the county’s chief financial officer, will give the commission an updated financial analysis of the project.

The City Council action doesn’t become official until the second reading of the plan, which is expected next Tuesday. The County Commission and school board then have 30 days to either oppose the TIF district or allow it to take effect.

John Todd, an activist for Americans for Prosperity, asked the council to oppose the district.

“If the project makes economic sense for the private sector and there is a market demand for the project,” he said, “the private developer needs to develop the project for his own profit and the public taxpayer should not be asked to participate.”

Terry Brewster, a south Wichita business owner and lifetime resident, said he doesn’t expect any growth in his business from the Southfork development but that he still supports having the district.

“It’s a quality of life issue for me,” he said. “This is a no-brainer and a win-win for all Sedgwick County citizens.”

There was little discussion by the council.

With the cap, council member James Clendenin noted that Maxwell is putting up $138.4 million for the $154.9 million project — or almost 90 percent of the total cost.

The Southfork TIF also will be secured by $9.8 million in special assessments, which will require a letter of credit and a personal guarantee by Maxwell, said Allen Bell, the city’s urban development director. The letter of credit guarantees 35 percent but the personal guarantee picks up the rest.

This is the first time any of the city’s seven TIF districts has requested a personal guarantee by the developer.

“It reduces our risk by adding in special assessments,” Bell said. “It makes a big difference.”

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