Wichita City Council members should have foreseen the flak they are getting for approving five-year property-tax rebates on 1,000 new homes in certain developments, and been more skeptical of the idea and thorough in scrutinizing it for unintended consequences.
Council members understandably wanted to facilitate new-home ownership in the city, as the Feb. 14 meeting agenda described the program. They also were concerned about how much stress the recession was putting on area home builders, and mindful of the competitive implications of similar incentives offered by Maize and other suburbs. And City Manager Robert Layton made the potent argument that the program could accelerate the collection of the more than $3.3 million in delinquent tax and special assessments from builders hit hard by the downturn.
But it’s troubling that the council could vote for the rebate program without being clear on whether the city would have partners in it. Some City Council members said Wichita Area Builders Association officials indicated that Sedgwick County and school districts would not oppose the plan. Last week county officials said they won’t join the rebate plan, however, pointing to state law prohibiting the county from rebating property taxes. The Wichita school board hasn’t acted on it either.
That means the homes will be constructed, boosting the builders as advertised. But the participating buyers won’t benefit nearly as much as if their city, county and school property taxes were all being rebated.
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It’s also unclear how familiar council members were with a Feb. 1 report on the rebates done by Wichita State University’s Center for Economic Development and Business Research, and especially a key conclusion: that without the rebates an estimated 787 new homes would be built over 18 months, as the city’s general fund netted $2.3 million, and that if 1,000 homes were built under the program in that period, the city’s general fund would net just $730,457.
That sounds like a strong case for doing nothing, at least from where city officials sit.
In voting for the rebates for those who could afford new homes, the council also did a disservice to those trying to sell existing homes without such come-ons to potential buyers. And there is no maximum appraised value under the program, furthering the impression that this is a tax giveaway to people who could manage without it.
It also could be argued that such a program risks ceding authority for tax policymaking to developers and builders, as do the community improvement districts in which sales taxes are higher.
If the program kick-starts new-home construction and has significantly expanded the tax base five years from now, City Council members will look smart in hindsight. For now, though, they look as if they passed a special deal for builders without vetting it for fairness and common sense.
For the editorial board, Rhonda Holman