Wichita Voters Overwhelmingly Reject ‘Incentive’ for Hotel Developer

Wichita Voters Overwhelmingly Reject ‘Incentive’ for Hotel Developer
March 21, 2012

Voters in Wichita, Kansas have trounced a proposed $2.25 million tax rebate for a hotel development that had the support of the Wichita City Council and the Wichita Downtown Development Corporation.

Despite the urgings of city leaders, the tax rebate proposal lost by 61-38 percent in the Feb. 28 special election. Opposition came from groups including Americans for Prosperity and the newly formed citizen-activist organization Wichitans for Tax Fairness.

Wichita Downtown Development Corporation Chairman Tom Docking said, "I completely misread the mood of the voting public on this one."

Admission ‘Gift’ for Rebate Opponents  

Councilmember Jeff Longwell said of the results, "I wasn't terribly surprised, especially after you look back at some of the statements during the campaign."

He highlighted one big “mistake” the developers, led by Paul Coury, made: They stated they would build with or without the rebate.

Americans for Prosperity’s Susan Estes called that announcement from the developers a “gift.” She said it showed voters the developers didn’t need the extra money and local jobs were not at risk.

The planned $22.5 million downtown Ambassador Hotel was to be awarded nine government incentives totaling approximately $15 million. The tax rebate itself was worth approximately $2.25 million over 15 years.

‘When Is Enough Enough?’

County Commissioner Richard Ranzau pointed to citizens’ outrage over the amount of government versus developer cash.

“These guys had hardly any of their own money involved. It was just so excessive. I think that was another mistake that they're making. . . . Even for people who in general support incentives, when is enough enough?"

Estes led much of the opposition’s voter outreach and said among the people she thought likely to be receptive to her message were members of the “World War II generation” who had avoided personal debt and been financially responsible.

County Commissioner Karl Peterjohn noted that although most of the approximately 40 precincts in his district voted against the rebate, two of his wealthier precincts voted for it. Estes said this was a pattern throughout the contest.

"The higher the income area, the more likely they were to believe that an expert could predict” the economic results of the incentives, Estes said. While wealthier voters were still suspicious of federal economic planning, they believed their municipal politicians could do a better job.

Fairness, Honesty at Issue

Many rebate opponents depicted the plan as an unfair advantage for one hotel. As AFP activist John Todd put it, “That's not a level playing field.”

Wichita’s hotel guest tax is 6 percent of each room rental, and the proceeds usually go to Wichita’s general tourism fund. The defeated measure would have rebated the Ambassador Hotel 75 percent of the tax.

Docking said the tax rebate “was portrayed in a lot of circles in a way that was not accurate. . . . There were actual statements that this was money that would have otherwise gone to police and fire protection.” Ranzau said he knows of no one on the opposition side who made that claim.

However, the rebate may not have been the focus of voters’ anger.

"The guest tax rebate was probably one of the least offensive of all the measures City Council passed” to support the developer, said Bob Weeks, chairman of Wichitans for Tax Fairness. He said it was defeated because it was the only incentive that voters were given the chance to reject.

Development ‘Mania’

“Financial incentives are important to the revitalization of downtown, because they have a proven history of effectiveness,” a spokesman for Mayor Carl Brewer wrote in an email to Budget & Tax News. “Wichita will continue to use existing incentives.”

But Kansas University Professor Art Hall, whose research Bob Weeks often cites, called the Wichita government’s emphasis on downtown development a “mania.” As for the plethora of incentive and subsidy programs Wichita offers, “We should just get rid of all of it."

Reflecting on the defeat of the rebate, Docking said, "The anti-development, anti-tax populace out there are numerous and they're well organized."

Weeks objected to this characterization.

"We're not anti-development,” he said. “I am a capitalist. . . . Anti-tax, yes, we're very much that. But 'organized' I don't think applies to us at all. We beat it back this one little time."

Mike Reid (mikereid@mises.com) writes from Manitoba, Canada.