The Wichita city council unanimously approved an emergency measure today to expand the Delano TIF district, so the city can collect more property tax revenue to pay off subsidies to developers in the district. The emergency vote was taken after the first reading of the emergency measure, which city officials justified as being necessary because today’s meeting was the last of the year. The city needed the approval in 2019 so it can capture 2020 valuation increases to pay off the subsidies.
According to Joe Norton with Gilmore & Bell, the bond counsel for the city, it is an emergency because property valuations need to be set before the year starts.
“Property values in TIF are established at end of every year and so by getting this modification changed then the value going forward in 2020 will include these modifications as opposed to waiting potentially waiting a year to get them involved,” said Norton.
The TIF approved on Tuesday expanded an existing TIF district on the West to include more parts of the Delano district. According to Mark Elder, economic development analyst with the City of Wichita, the expansion is an amendment of West Bank boundary which seeks to nearly double the existing boundary to capture more taxes from the Delano area for development of the area.
Celeste Bogart Racette took city council members to task for a lack of transparency over exhibit items in the agenda.
“It talks about how when the ballpark is developed any access land that you find you own in these intersections, specifically public right of way. They will deed this to the developer.” Racette continued, “So here is my question? I tried to look at the exhibit to see what land would fall under this map you just put on there, it is referenced exhibit M. M is empty.”
As Racette said that she showed the blank agenda page to the crowd in the city council chamber. There were audible gasps.
“So my question to you all, I can’t tell what land you are talking about. Exhibit M is empty, What of this land could possibly be deeded to the developers as referenced in section 4.06?” said Racette.
Christopher Parisho, representing the Delano Neighborhood Association, spoke in favor of the TIF, noting that it allows the Delano groups to fund the neighborhood plan and the district had to go to the city on a case by case basis to gain funding.
“Hopefully if this works as proposed. It will be a great way for us to get some of these things done and make Delano even better,” said Parisho.
Tax incremental financing (TIF) is a public financing method that diverts future property tax increases to a specific development project in the designated area. City money is not diverted to pay for TIFs, but the city does lose revenue by losing out on property tax revenues, and that often leads to higher property taxes for everyone else.
Former Sedgwick County Commissioner Karl Peterjohn says most TIF districts don’t produce the projected valuation gains needed to pay off the subsidies, leaving the city – and utlimately taxpayers – to pick up the tab. “When I was on the county commission, I was aware of only one TIF that worked as predicted. I tried to get more detailed information from the city at the end of my second term in 2016 but they wouldn’t provide it.”
No estimate of the potential property tax increase on properties within the TIF district was provided in the meeting. Typically with TIFs, a base valuation is established, and once the TIF is put in place an equalized assessed valuation (EAV) increases the property value. The property tax revenue that results from the difference between the base value and EAV is how the TIF generates revenue to pay for development.
In the end, in a 7-0 vote, the city council voted to increase property taxes in the Delano TIF district by raising property higher valuations.