City, business leaders weigh transparency of jobs fund

05/31/2014 4:15 PM

05/31/2014 4:15 PM

A commission independent of City Hall, but including two council members, and a project website are two of the ideas gaining traction as city and business leaders weigh the transparency of a new $80 million jobs development fund – if voters approve a 1-cent sales tax hike this fall.

Transparency in a business not noted for being forthcoming about how it spends public funds – economic development – is one of the big issues before council members, the Wichita Metro Chamber of Commerce and the Greater Wichita Economic Development Coalition. The groups are readying for the increasingly inevitable sales tax referendum in November, as the council invests much of the next two months soliciting more public input on the proposal.

The sales tax would generate about $400 million over five years, with a fifth of that going into a war chest to recruit and retain jobs.

The goal is to turn around Sedgwick County’s plummeting employment growth – 1 percent in the first decade of the 2000s, down from 39 percent in the 1970s and even down from the historically modest 15 percent growth of the 1990s.

“We simply can’t survive with no growth,” said Gary Schmitt, who chairs the GWEDC.

The fund governance proposals are merely a “dialogue” at this point, Schmitt said.

“We’re having a conversation,” he said. “And if there’s anyone out there who has a better idea, let us know. We need you at the table.”

Independent commission

Composed of three business leaders and two council members, the proposed commission would make decisions on jobs incentives independent of City Hall – except in cases where the commission says proposals don’t meet standards for community benefit.

The criteria for jobs proposals to receive incentives are in development, Schmitt said, and will require approval by the City Council and Sedgwick County Commission.

That independent commission would meet at least monthly, Schmitt said, in open public sessions – except in cases where proprietary business information and identities would be used, restricted to executive sessions.

The commission would have ongoing oversight, probably from an accounting firm retained by the city, Schmitt said. That firm would audit all of the fund’s transactions, track the outcome of all incentive negotiations and report regularly – how regularly is under debate – to the City Council and the public.

Website

To boost transparency, Schmitt and city officials point toward the Texas Enterprise Fund and its website at www.texaswideopenforbusiness.com/incentives-financing/tef.php.

The website includes a detailed ledger of approved incentives, including the name of the company, its location, industry, direct jobs, capital investment, amount of awarded incentives, estimated total jobs and percentage of return to the state.

And if the incentive fails, the website also tracks clawbacks, such as repayments and any damages recovered by the state of Texas.

Wichita Mayor Carl Brewer says he likes that idea, but he wants limited information made available to residents about who’s on the GWEDC’s hook.

“I think that certainly as we start moving forward, the citizens should be able to know somehow that we have businesses interested,” the mayor said. “They don’t have to know what that business is, but it’s critical, I think, that once we close a deal the public can access what we offered and what they’re getting. And if we lose one, we should disclose the fact that we’ve been unsuccessful.”

Schmitt worries that a negotiations-underway website would potentially give rise to rumors and could lead people to parties negotiating with the GWEDC.

“I’m not really sure how that could work,” he said. “I think it would raise more questions than provide answers.”

Details of list

The reason, Schmitt said, is the inherent confidentiality in the recruitment process – most companies searching for a new home have 150 or more suitors, and want to sort through them without the public knowing they’re looking.

“I think it would be very difficult to come up with a list. If we say it’s an aerospace job and they’re bringing in 200 people, folks begin thinking and talking and pretty soon we get a call from the company saying Wichita’s just been removed from the list. Somebody called and you’re moving to Wichita.”

Schmitt pledged, however, that when deals “hit this commission, they will become public.”

“Before we go to the commission, we will have a package and a company that says it will agree to that package. If the commission agrees, it will go on this list,” he said.

Schmitt, who’s on the comprehensive plan steering committee planning Wichita’s growth over the next two decades, said flatly that the city’s in trouble if jobs continue to grow at the current negligible rate.

The tab for community infrastructure projects will be $9 billion in the red in 20 years if job growth remains at 1 percent a year, he said.

“We cannot survive as a community with a $9 billion deficit in 20 years,” he said.

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