February 4, 2023

City, Wind Surge hit customers with undisclosed tax & fee

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Wichita city leaders are up in arms after the Wichita Eagle reported the owners of the Wind Surge — the city’s Minor League baseball team — are tacking a pre-tax 8% surcharge called a “Ballpark Development Fee,” onto sales at the park.

“This is the first I’m hearing of this,” Mayor Brandon Whipple told the Eagle

Wichita City Council members complained they didn’t approve the fee, that fans weren’t informed and that — since the stadium is owned by the city — “development fees” shouldn’t be needed.

Whiple’s outrage is a bit disingenuous, considering the City of Wichita is imposing an extra 2% sales tax on purchases in areas around the new ballpark and much of the WaterWalk area.  And like the surprise 8% surcharge imposed by the Wind Surge, there is no signage notifying shoppers of the extra tax.

According to the Eagle, revenues from the tax will be split between the city government and the private-sector developers. The city will receive the first $10 million in revenues, developers receiving the next $30 million and revenues above the initial $40 million will be split 50-50.  

But Whipple refuses to answer questions about the tax district and whether he supports transparency in taxation.

On March 28, The Sentinel emailed Whipple, asking — among other things — “In the interests of transparency, would the city support a sign at all checkout counters within the district informing customers that they are paying an additional 2% over what they would have outside the district?”

Whipple declined to respond.

Wind Surge CEO Jordan Kobritz, told the Eagle, that while signs for the 8% ballpark surcharge are not currently in place, they have been ordered.

“There is a sign — well, they may not have gotten it applied yet,” he said Thursday afternoon. “We haven’t really gotten started yet: signs that are set up for the sales tax, the CID and the ballpark development fee.”

Additionally, the city created the conditions which led to the fee, which Korbitz said is being used to recoup some $10 million in development in land surrounding Riverfront Stadium.

In 2019 the city “sold” over 4 acres of land surrounding the stadium — presumably prime real estate — to the team for $1 an acre.  Now the team wants customers to pay for some of their development costs on the property.

Avoiding transparency

Other questions Whipple declined to answer were: 

  • “Why would developers, who have presumably at some point recouped their investment, be entitled to tax dollars beyond expenses?
  • “This area is also presumably prime real estate, so why would developers need tax money at all?”

Moreover, some of the financing for the Riverfront Village development — and the stadium — came from $42 million in STAR bonds. STAR bonds are a controversial economic development program which is designed to “assist the development of major entertainment or tourism destinations in Kansas,” according to the Kansas Department of Commerce.

However, an August 2021 audit by the Kansas Division of Legislative Post Audit found not only have STAR Bonds been misused — only three of the 16 attractions reviewed met the tourism-related requirements — but the program was sold on the idea that out-of-state sales tax revenue would pay for the developments within 20 years, which turned out to be wildly optimistic.

The audit reviewed three separate projects — including one in Wichita — and concluded it could be more than a century before one of the projects would paid off, and in all three cases the district was likely to be developed without STAR bond financing.

Additionally, another study by Dr. Arthur P. Hall for Kansas Policy Institute found that STAR bond projects in Wichita simply shifted existing money to other parts of the city.  And instead of creating new jobs for the city, employment mostly shifted as well.  Kansas Policy Institute is The Sentinel’s parent company.

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