Community improvement districts turn public taxing authority over to private businesses. They create a confusing array of sales-tax rates within the city limits. And their jacked-up tax rates can last 22 years, long after the elected officials who approved them are gone.
Given all that’s wrong with community improvement districts as designed by the 2009 Legislature, perhaps it was too much to expect the Wichita City Council to make things right with appropriate signs. Still, the sign design that won unanimous council approval Tuesday was a disappointment.
The sign will be visible enough — at least 24 square inches. But it will constitute the bare minimum in public disclosure, reading only “this project made possible by community improvement district financing” and referring people to a city website for the specific sales-tax rate and explanation.
Proponents of the CIDs point to their value during this time of extreme caution for business expansion and tight financing for new development projects. CIDs work by charging as much as 2 percentage points more in sales tax within the district — with some of the extra revenue going toward construction, land acquisition, equipment, operating costs and the like.
CIDs won’t work with full disclosure, experts say: Retailers, especially small ones, view the signage as having a negative affect on their businesses and wouldn’t agree to become tenants in such districts if the higher tax were disclosed in signage. Plus, the state won’t let the city require the CID tax to be specified on the cash register receipt.
But if transparency about CIDs is bad for business, how can CIDs be good for citizens and the community?
Community improvement districts may have their place in Wichita, especially in dead zones where their strategic and limited use could make the difference. For example, the CIDs for the Marriott Fairfield Inn and Suites at WaterWalk and the Broadview’s renovation into a Drury Plaza Hotel have the double attributes of serving downtown’s revitalization and costing mostly out-of-towners.
But CIDs don’t belong in parts of the city enjoying plenty of development (such as at Kellogg and Maize Road, where the council approved a CID for the Bowllagio project). Nor should they be used in neighborhoods where the poor would bear the burden of the higher tax rates and the developers’ costs (such as the proposed grocery store near Planeview).
And especially with Tuesday’s vote likely to encourage many more CID proposals, a political question looms larger than ever:
Why do City Council members, especially the fiscal hawks who wouldn’t be caught dead voting for a general tax increase, view these CIDs as something other than tax hikes? The record will reflect that with each CID approval this year, council members have voted to require Wichitans to pay either 8.3 or 9.3 percent sales tax where they otherwise would have paid 7.3 percent. That’s a tax hike — and one reason among many why the city should use CIDs with more care going forward.