DA’s office investigates Wichita City Hall over inaccuracies in Century II reports
Prosecutors have opened an investigation of the city of Wichita’s handling of records after a complaint by one of the founders of a group seeking to save the Century II Convention and Performing Arts Center from potential demolition as part of a proposed redevelopment project.
Celeste Racette, leader of Save Century II, says she’s gotten what she believes to be incorrect and/or incomplete information in response to requests she’s filed in her campaign.
A city official admitted there are errors in the documents that were provided to Racette, but said they were inadvertent clerical mistakes in descriptions caused by errant cutting and pasting. The money actually went where it was supposed to go, City Treasurer Mark Manning said.
Racette made a formal complaint to the District Attorney alleging the city violated the Kansas Open Records Act.
Deputy District Attorney Ann Swegle told Racette in an e-mail that she’s looking into it.
“Given your formal complaint against the City of Wichita, this office will undertake an investigation into the matter,” the e-mail said. “As an initial step, I contacted the City Attorney’s Office and asked for a response to your allegations.”
On Friday, she confirmed through an office spokesman that the investigation is ongoing.
Racette has filed multiple requests for information on the city’s handling of the Transient Guest Tax.
The hotel-motel bed tax fund — just under $8 million last year —is generally earmarked to pay for Visit Wichita, the city’s quasi-public convention and tourism bureau, and for repairs at local attractions including Century II, Old Cowtown, Botanica, the Wichita Art Museum and the Museum of World Treasures.
“The information I have been provided . . . contains transactions which are falsely labeled,” Racette alleged in her complaint. “No one reading this report can discern what is actually paid on projects for Century II and/or other cultural facilities.”
In her complaint, Racette provided a list of city expenses that she alleges were reported as Century II improvements but really used for other city projects.
“Every entry listed below has nothing to do with Century II, even when that is the description given for the entry,” Racette wrote in the complaint. “The entries actually represent debt payments on Waterwalk Fairfield Inn hotel and Old Town Cinema TIF (tax increment finance district).”
The city has since conceded the information Racette was given contained at least one $475,000 error.
Racette is a former bank auditor and worked as an investigator for the Federal Deposit Insurance Corporation, a government-created agency that regulates the banking industry and insures depositors’ funds.
Swegle’s response did contain the caveat that she was not sure exactly what Racette is alleging.
“From your complaint, it is clear that you believe that payments purportedly made for Century II were instead made as debt payments for the Waterwalk Fairfield Inn and the Old Town Cinema TIF,” she wrote. “What is not clear to me is the factual basis for that (belief). Any clarifying information would be appreciated.”
Racette had requested documentation of the spending of the Transient Guest Tax going back to 2009.
One red flag is an entry in the 2013 report showing a $475,000 transfer from the Old Town Cinema TIF district to “debt service.”
Manning said no money for the cinema TIF actually passed through the hotel-motel tax fund.
“When the accountant entered that in, he just cut and pasted and made a clerical error, and cut the wrong description and pasted it on that transaction,” Manning said. “It’s that simple.”
The TIF district money comes from an isolated funding stream generated by increased property tax revenue from new developments and is used to pay back debts on city-funded public improvements, such as parking garages and plazas, that support those private projects.
As to the overall question of whether City Hall gave Racette bad information, Manning said “To the best of our ability, we complied with her request.”
The payments attributed to the Fairfield Inn are the fulfillment of a commitment that City Hall made to the developer of the hotel in 2010, according to Manning and City Council minutes.
City Hall provided a $2.5 million subsidy to hotel developer Jim Korroch to help build the hotel at the southeast corner of the WaterWalk development at Kellogg and Main.
Money the city borrowed for Korroch’s project is being paid back over time from bed-tax revenue.
Manning said he couldn’t say whether the Fairfield Inn alone is generating enough tax dollars to pay back the bonds or if the city is having to tap tax money from the other hotels and motels in the community.
