Council OKs $45 million in bonds for downtown Wichita projects

The Wichita City Council on Tuesday took another step toward bringing 230 more apartments and a 273-space automated parking garage to downtown Wichita.

The council approved up to $45 million in industrial revenue bonds and up to $12.5 million in tax increment financing to help push forward a $60 million-plus plan to renovate the vacant Exchange Place and Bitting buildings and build apartment space on East Douglas, as well as the garage.

The IRBs – at no cost to the city, because private loans will be used to buy the bonds – allow the developer to avoid paying sales tax on construction materials and furnishings.

Of the TIF money, $3.825 million will pay to acquire the land and $8.675 million will go toward construction costs associated with the parking garage.

The vote was 6-0. Council member Jeff Blubaugh was absent.

The garage, Wichita City Manager Robert Layton said Tuesday, will be open to the public and so meets a council policy on TIFs that says the city’s assistance for downtown projects must be limited to projects offering public benefit.

With a TIF, property tax collected on the apartments and garage will be poured back into the project rather than go back to the city.

“These buildings and this parking lot have been sitting vacant for a number of years. In fact ... at one point, there were fences up to protect people who walk by,” said Jeff Fluhr, president of the Wichita Downtown Development Corporation.

Council member James Clendenin agreed, saying the renewed safety expected with the buildings’ renovations is “a greater public improvement ... beyond what’s being diverted into the TIFs.”

Blogger Bob Weeks urged the council to reject the incentives, calling the renovation of historic buildings a “lifestyle choice” that should be borne by developers and their tenants. He also told council members that TIF incentives are unpopular with voters.

“Most everyone else pays property taxes in order to pay for the cost of government, not for things that benefit themselves exclusively or nearly so,” he said.

The Exchange Place project originally was approved for tax increment financing in 2007 under former downtown developers Michael Elzufon and David Lundberg of Real Development, who were charged last week with fraud by the Kansas Securities commissioner. The project was taken over in 2012 by KS1 LLC, led by Dallas developer John McWilliams.

Though he has struggled to secure public and private funding, specifically millions in federal historic tax credits, McWilliams has pushed forward, receiving a $32 million loan guarantee from the U.S. Department of Housing and Urban Development.

McWilliams must have all of his financing in place by March 20, a HUD deadline. That loan plus developer equity will pay for the $45 million in IRBs issued by the city of Wichita.

“This will add another 230 apartments to our downtown living (and) will really give a jump start for some other projects that are in the offing but have been kind of waiting for that critical mass moment,” council member Janet Miller said.

The council also voted 6-0 to approve $1.5 million in tax increment financing for brick streets, 33 on-street parking spaces, brick sidewalks, ornamental lighting, landscaping, benches, trash cans, bicycle racks and other improvements along Mosley and Rock Island, between Second and Third. The incentive comes in response to plans by Mosley Investments LLC to redevelop 62,000 square feet of warehouse and commercial space east of the Courtyard by Marriott hotel in Old Town for retail and office use.

This story was originally published March 3, 2015 at 7:02 PM with the headline "Council OKs $45 million in bonds for downtown Wichita projects."