$725,000 handout to developers is a prime example of a Wichita sweetheart deal | Commentary

It’s funny how an election campaign can light up an issue that has been otherwise ignored.

“Sweetheart deals” fits that description as Lily Wu, No. 1 among the August primary voters, faces off against incumbent Mayor Brandon Whipple in the Nov. 7 general election mayoral campaign.

During the KPTS televised primary election debate, Wu called for action.

“As mayor, I will make sure that we will restore trust in city hall by ending all sweetheart deals,” she declared.

Amazingly enough, eight-year council member Brian Frye, then a primary election candidate for mayor, responded by indicating he’s never seen such a deal during this tenure.

So, as a public service to help educate the public and these various candidates, allow me to update everybody on the most glaring “sweetheart deal” still circulating in City Hall.

A quick review: (Cue the musical theme, Bing Crosby singing, “Let Me Call You Sweetheart”)

Developer David Burk and fellow cronies spent thousands of dollars to help council member Cindy Claycomb win election in 2017.

Claycomb then did her part by orchestrating a $725,000 tax gift to Burke and his associates to build luxury patio homes in a vacant area just north of Sim Park.

Without the tax subsidy, those development costs would have to be paid by the developer and recovered with the sale of the homes, or at least a special assessment against the property.

The rationale provided by Claycomb, the developer and City Manager Robert Layton was that the area was “blighted” and Burk needed the $725,000 boost to reach an acceptable profit level on the sale of the homes.

The “blight” ruse was substantiated by a study by an out-of-city consulting firm hired by the developer. It was not surprising that the consultant report said just what the developer needed to justify the Tax Increment Financing and the $725,000 handout.

But that’s how sweetheart deals work.

The council, including Mayor Whipple, did the usual bobble-head response and approved the tax award on a 7-0 vote. Current councilmembers Maggie Ballard and Mike Hoheisel weren’t part of that crew, but now inherit responsibility for dealing with it. Ballard made a big deal of the Riverside project in her successful campaign to unseat Claycomb.

Those circumstances alone qualify this sleazy scenario as a “sweetheart deal”, but apparently not enough to raise a pulse on the City Council.

But, wait, there’s more.

To justify the tax subsidy, the city manager’s office provided the council with a “gap analysis” that stated the subsidy was absolutely necessary to raise the developer’s profit margin to an acceptable level.

As absurd as that sounds, there it is in black and white. An email from the assistant city manager confirms the absurdity in plain English.

The analysis says Burk would only make a paltry 7% profit without the subsidy, but a more acceptable 13% profit with the handout.

Nothing about blight, or special circumstances, just a blatant handout to guarantee a profit for the developer.

But the gap analysis profit margins are based on a home sale price of $325,000. I recently took a tour of a model home in the project area and learned that the sale price is right around $400,000 per home.

Fourteen of the 40 homes have already been sold, so apparently the higher price isn’t much of an obstacle.

Certainly, construction costs have gone up by double digits in recent years, but it appears the developer has easily compensated for inflation by raking in more than $3 million above the amount in the 2020 gap analysis.

And that is where the election comes into play. If Wu is serious, she should be screaming for revocation of this “sweetheart deal”.

In turn, Whipple should take this opportunity to cleanse his record and lead the charge to revoke the deal. Otherwise, he’s just another suitor in the City Council bedroom as it hosts the latest “sweetheart.”

If the developer had a moral bone in his body, he would voluntarily forego the $725,000, considering the $3 million windfall.

The council should also publicly declare that using tax dollars to subsidize luxury patio homes and guarantee profits for rich developers is no longer a part of Wichita’s housing policy.

The council’s opportunity to do the right thing comes up later this year when the council votes to issue bonds that pay out the $725,000.

One way or another, it’s time to open up the City Hall bedroom doors, kick out the “sweethearts” and change the sheets.

Dale Goter is a media consultant, former journalist and former lobbyist for the city of Wichita.