May 7, 2013

City Council proposal would end direct city investment in business projects

Direct city investment in new or expanding Wichita businesses would end if the City Council adopts a proposal it studied on Tuesday.

Direct city investment in new or expanding Wichita businesses would end if the City Council adopts a proposal it studied on Tuesday.

A new city bidding policy for public-private partnerships would keep the city from having direct financial stakes in new businesses, like the downtown hotels that the city has helped finance in the past. The policy would limit city funding of public-private partnerships to parking garages.

The proposal would not affect the city’s ability to offer other incentives like tax-increment financing and community improvement districts.

The policy has been crafted over several months in response to a 2011 controversy over the city-funded and city-owned parking garage at the Ambassador Hotel on Douglas.

That garage, a $4.2 million project, was earmarked for the hotel’s general contractor, Key Construction, in a no-bid contract but was later bid out — and won by Key — after City Manager Robert Layton and several council members questioned the no-bid deal.

The proposal will be fine-tuned by city staff and brought back to the council for a vote later this year. It would require:

• Any construction project fully funded by the city will be competitively bid.
• City funding for projects, co-mingled with private funding, shall be restricted to parking structures.
• That city funding will be based on a dollar amount per stall, based on the city’s past costs for parking structures.
• Developers can select general contractors for jointly funded public infrastructure projects without bids.

“If it’s going to be ours, it’s going to be a public bid,” Layton said after the meeting.

City staff is continuing to look at provisions to handle unique public infrastructure projects that might arise, he said.

“It’s more of a last resort, for something unforeseen,” Layton said. “As we were working through this, the downtown master plan and talking to developers, it seemed like most of the issues that had raised questions in the past had to do with parking garages and public-private involvement in them.

“Are there then any other scenarios that could come up in the future? Surface parking lots, for example? So we’ll go back and brainstorm with staff.”

Allen Bell, the city’s director of urban development, traced the council’s experience with public-private partnerships back to the mid-1990s and the Hyatt project, where private investors insisted on selecting their own builder.

“The issue of how to bid projects has been a thorny one,” Bell said. “There have been a number of times when people from the general contracting community have contacted the city and complained about the lack of bidding.

“The city, working with developers, has been made to understand how important the relationship between the developer and the contractor is. We’ve been on the horns of this issue for quite some time.”

Bell said the 20-year history of those city-developer business partnerships was largely crafted to advance downtown revitalization.

“And our efforts to increase the number of hotel rooms downtown,” he said.

If the policy discussed Tuesday is enacted, those partnerships are over, based in large part on the recommendation of consultants who developed Project Downtown, the city’s plan to revitalize the area.

“That’s pretty much where the master plan has always been,” Layton said. “And we’re trying to stay consistent with the master plan.”

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