$700,000 tax handout to developer violated city/county policy | Commentary
When the City Council voted 7-0 on Feb. 16 to give a tax handout of $700,000 to developer David Burk and his partners, it apparently violated a very clear city/county policy on economic development. The handout will pay for the sanitary sewer to serve 40 luxury patio homes Burk plans to build on the vacant land immediately north of Sim Park Golf Course in the Riverside residential area.
The Sedgwick County/City of Wichita Economic Development Policy plainly states “Tax increment financing will only be used as a final effort for funding. Developer must prove all other financing efforts have been exhausted.”
An Open Records request to City Hall asking for documentation that the developer had, in fact, exhausted all other means of coming up with the $700,000 was fruitless. No such proof apparently exists. More significantly, no member of the City Council asked that question during any of the several times the issue came before them.
Mayor Brandon Whipple voted for the tax handout, but, when recently informed of the city/county policy, acknowledged that it was never brought forward by city staff. County Commissioner Lacey Cruse said the issue came before the commission, but the staff made no mention of the city/county policy.
Why is this important?
For one, tax dollars are sacred. Nobody wants to pay them, but, once paid, they must be guarded with utmost zeal against misuse and misappropriation.
That explains the city/county policy denying use of TIF funds for anything that could otherwise be funded with private capital. The state Legislature, which authorized TIF funding by local governments, most certainly did not envision TIF funds being handed out to rich developers.
The $700,000 cost of the sanitary sewer and other utilities normally would be borne by the developer, who would recover the money when the homes are sold. Instead, the Council agreed to use the future tax revenues generated by the new homes to pay for the utilities, essentially padding Burk’s profit by $700,000.
It is a HUGE stretch of the imagination to believe this developer, one of most successful and well known in the city, couldn’t find a lender to cover the $700,000. The total cost of the project is $8 million, or about $200,000 for each of the 40 luxury patio homes. The sale price of those homes is expected to be at least $300,000, and, given today’s skyrocketing real estate market, could easily be as much as $400,000 or more. Even taking the low number, that translates into $12 million in sales, easily covering the entire $8 million original cost.
Here’s another factor: The north Riverside property in question is zoned for multi-family dwellings, and the developer originally planned to build an apartment complex. Zoning would allow for as much as 500 units in a five story high rise.
Some people, including City Council member Cindy Claycomb, asserted that an apartment complex would have a negative impact on the community. According to her campaign supporters, Claycomb “negotiated” the deal for 40 single-family patio homes instead.
The developer, along with other major Wichita real estate interests, has been a most generous campaign finance supporter of sitting council members, notably, Claycomb.
Just exactly who brought the $700,000 handout to the table is unclear, but Claycomb certainly had to endorse it during the “negotiation” process.
It wasn’t “negotiation.” It was nothing more than a $700,000 gift of tax money to a rich developer, facilitated by the Council Member who received thousands of campaign dollars from the development and real estate industries.