Sedgwick County Commission opposes tax credits for art district

Sedgwick County commissioners on Tuesday basically rang the death knell on tax credits for the Commerce Street Arts District, regardless of whether the Legislature passes a bill to allow it.

The commissioners directed their Statehouse lobbying team to oppose House Bill 2368, which would provide property tax breaks for the redeveloping artists colony in what was once one of Wichita’s roughest and most dilapidated neighborhoods.

Even if the bill passes in Topeka, it would give the commission and the Wichita school district veto power over the creation of the tax district – an option that commissioners indicated they’ll exercise if it gets that far.

“Personally, I think this is a bad idea,” said commission chairman Richard Ranzau. “I mean, there are lots of areas and business entities that would like to have special treatment and exemption from property taxes … I think the best solution in my estimation is to not even create this.”

“I’m opposed to this bill in current form,” added Commissioner Karl Peterjohn. “I have my own plan for ending property taxes at the county level.”

The bill was largely written by the city of Wichita in consultation with artists who have taken up business, and in some cases residence, along what was once a decrepit, boarded-up stretch of Commerce Street from Waterman to Kellogg, just south of Intrust Bank Arena.

Now that they’ve tidied up the neighborhood and developers are moving in to build new condo lofts and office space, property values are rising.

The fear among the artists, who made the neighborhood a desirable place to do business, is that tax increases could raise their rents to the point where they can’t afford to stay and will have to either disperse or relocate en masse to another decayed area, said Elizabeth Stevenson, an architectural consultant and co-founder of the Fisch Haus art gallery.

It’s called the “SoHo effect” and draws its name from a New York City neighborhood that artists made hip and trendy – and then found themselves pushed out of by rapidly rising property values.

The House bill would allow the city to establish a special tax district for the art colony, abating property taxes by 80 percent for five years and phasing the tax credit down to zero by year 10.

Commissioners consulted their lawyers and finance department to make sure that whatever happens with the bill, they can avoid losing the county’s share of tax dollars if it passes.

Chief Financial Officer Chris Chronis assured them they can.

The way the bill is written, “All the governments (city, county and schools) are participating and … are given an option to kill off the district at its creation,” Chronis said.

Commissioners appeared more or less satisfied with that answer, although they said they would rather not have to pass a resolution of opposition to block the district.

“I guess I’m glad they at least gave us the opportunity to take action to not be included,” said Commissioner Dave Unruh. “And if they wrote the language that that just stifles their whole project, well then, OK, so be it. But I would prefer to have it written so that we would have to opt in rather than opt out.”

Commissioners directed the lobbying team to advocate for that amendment if the bill appears likely to advance out of the House Federal and State Affairs Committee, where it was heard last week.

“Instead of giving us 30 days to say ‘no,’ I think both us and the school board should have to, within 30 days, take an affirmative action saying ‘yes,’” Ranzau said.

Rep. Steve Brunk, R-Wichita, said he sent the bill to the revisor’s office for some rewriting. He said he is not sure whether the committee will have time to debate and vote on the bill this session.

As another potential fall-back position, commissioners suggested the bill could be amended to allow the city to move forward and abate its own portion of the tax without bringing the county and schools along unless they specifically agreed to join.

Commissioner Jim Howell said he’d like to see that practice adopted for all tax-abated redevelopment districts.

“I don’t think it’s right for government units to make tax decisions for each other,” Howell said. “It’s a problem with home rule, frankly.”

This story was originally published March 10, 2015 at 6:46 PM with the headline "Sedgwick County Commission opposes tax credits for art district."