As an article in the Sunday Eagle solved the mystery of an Old Town tax appeal, it left developer David Burk looking as if he'd overstepped his role in the public-private partnership, which has benefited from $11.5 million in publicly funded improvements. Worse, it left city officials looking clueless.
It also left taxpayers wondering who's looking out for them, because they are on the hook for the Old Town Cinema Plaza's inability to generate enough tax revenue to cover its bond payments in the tax-increment financing district.
The reason revenues are falling $190,000 short, City Council members learned last week, is because of successful tax appeals on three buildings: the city-owned garage/retail building, the Warren Theatre Grille and the Southeast Building, home to an Old Chicago restaurant.
Burk, arguably the father of Old Town, should not have represented himself as an agent of the city — at least not without the full knowledge and consent of the city — in appealing property taxes on the combination garage mall, part of which he leases from the city.
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But Burk was appealing taxes for which he, and not the city, was responsible. Surely all taxpayers, even those in special tax districts, deserve the right to appeal their tax bills. A 34 percent increase in the tax value of the garage property from 2006 to 2007 seems like a lot — too much, apparently, because Burk won the appeal.
But it should not have been a surprise to so many officials, including the City Council members, that someone had appealed the tax bill on the city's garage. Indeed, at the time of the tax court case, a Sedgwick County attorney reportedly notified the city's legal department of the appeal to reduce taxes on the Warren theater.
City and county officials need to figure out exactly what went wrong on the Old Town tax appeal and take reasonable steps to avoid a repeat. Private partners need to be warned against saying they represent the city when they don't.
But the city now protects taxpayers by requiring developers in newer special tax districts to make up shortfalls. And it would be unfair to deny the city's development partners the ability to appeal their tax bills. It also would be wrong to look at the tax appeal flap and the Old Town Cinema Plaza's disappointing revenue as evidence that the public-private partnership and the area's tax-increment financing were mistakes.
Decades in the making, the transformation of the Old Town neighborhood from warehouse wasteland to entertainment district has been a winner for Wichita. Public-private partnerships have been integral to that win.
These marriages of convenience aren't perfect, often appearing as if the private partner gets all the rewards while the taxpayers get stuck with the risks. It's up to city officials to be diligent about protecting taxpayers and demanding accountability and transparency not just upfront but for the life of the deal.