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Department of Finance
Office of Urban Development
City of Wichita
Introduction to Tax Increment Financing

Tax Increment Financing (TIF) provides an urban development strategy for financing redevelopment
in communities throughout the country. TIF creates incentives for private investment in urban rede-
velopment by applying the incremental growth in tax revenues resulting from private investment to
fund public improvements in the redevelopment area. This report reviews the history and perform-
ance of TIF in the City of Wichita from 1991-2011 and also the projected performance of each TIF
through the TIFs end year.

The performance of a TIF can be evaluated in a number of different ways. Included in this report are
evaluations of the current performance of each TIF by calculating debt service payments paid
through 2010 and the TIF revenue collected through 2010 to support these payments. Equally im-
portant are the evaluations of projected performance included in this report for each active TIF. For
projects where developments have been completed, projections for TIF revenue are made through-
out the closing TIF year assuming a 2% assumed growth every year past the 2010 actual revenue re-
ceived. For projects where development is still in progress, projections are assumed based on the
current project plans. Projected performance is evaluated by calculating how projected TIF revenues
achieve payment of the districts debt service by the closing year of each district.

For each TIF district, a table is included to show current and projected performance. A number of TIF
districts show a surplus at the closing year of the district (East Bank, Old Town Cinema, 21st and
Grove, Northeast Redevelopment District, and Center City South). If projects achieve full payment of
all debt service before the scheduled closing date of a district, it is possible to close the district be-
fore scheduled. The Finance Department will continue to evaluate TIF performance to ensure pro-
jects are closed out when appropriate.

In 2006, with the creation of the Douglas and Hillside Redevelopment District, the City began requir-
ing a shortfall guarantee from the developer for all TIF projects financed with general obligation
bonds. The Douglas and Hillside, and Ken-Mar projects are both projected to end with a deficit of
TIF revenues to pay the full debt service. Both of these districts, however, were established post-
2006, so the LLCs related to both developments (CHUV LLC and H.H. Holding LLC, respectively) have
agreed to the shortfall guarantee.s.

Statutory History:

The Kansas Legislature first authorized Tax Increment Financing in 1976. The act allows for the issu-
ance of special obligation bonds and full faith and credit tax increment bonds to assist in the devel-
opment and redevelopment of eligible areas. Initially, eligible areas were those in which property
was blighted or in need of conservation due to dilapidation. Over time, the act has been amended
to expand eligibility to include additional areas. According to K.S.A. 12-1770a, eligible areas under
the act currently include:

Blighted areasincluding areas of environmental contamination and 100-year floodplains
Conservation areasover half of buildings older than 35 years; evidence of dilapidation
Enterprise Zonesas officially designated by cities prior to July 1, 1992
Intermodal transportation areasapplies only to the Gardner, KS project
Major commercial entertainment or tourism areasas officially designated by cities
Bioscience development areasowned by or leased to the Kansas Bioscience Authority

Additionally, state legislation limits the ways that municipalities may spend TIF funds. Current stat-
utes identify the following eligible uses of TIF funds:

Property acquisition;
Relocation costs;
Site preparation, including demolition and environmental remediation;
Sanitary and storm sewers and lift stations;
Utility relocations and extensions;
Paving, including parking lots;
Drainage conduits, channels, levees and riverwalk canal facilities;
Plazas and arcades;
Parking facilities, including multi-level parking structures;
Multisport athletic complex (in Johnson County);
Museum facility (in Manhattan); and
Costs supporting the above uses, such as design and financing.

Specifically excluded uses are costs related to building construction, except for multi-level parking
structures and uses specifically authorized by statute.

The approval process for the use of TIF, as prescribed by state law, starts with the establishment of
the redevelopment district by city ordinance, following notification of the county and school district,
as well as property owners and residents in the area, and a public hearing. Following this hearing,
the governing bodies of the county and school district have 30 days in which to veto the establish-
ment of the district. Once established, one or more redevelopment projects may be undertaken
within the district, either consecutively or concurrently. Before any TIF funds may be expended on a
project, the governing body of the city must adopt a project plan, setting out the details of the pro-
ject(s) and its financial feasibility. Project plans are first approved by the planning commission and
then adopted by city ordinance, passed by a two-third majority vote held after a public hearing.

In many cases, the criteria a project must meet in order to qualify for TIF (such as blight, old and de-
teriorated structures, and economic obsolescence) also make these areas eligible for additional pub-
lic funds. Low Income Housing Tax Credits (LIHTC), Community Development Block Grant (CDBG)
loan guarantees, HUD 108 grants, and HUD Economic Development Initiative (EDI) grants represent
additional sources of public funds that may be available for redevelopment in eligible areas.


Performance of Tax Increment Financing:

A financial feasibility study is conducted for each TIF project before it is presented to the City Council
for approval. As part of that study, property valuation for the completed project is projected in order
to estimate the incremental tax revenue generated by the development. The amount of TIF bonds
that can be issued is based on this projection.

In 2006, with the creation of the Douglas and Hillside Redevelopment District, the City began requir-
ing a shortfall guarantee from the developer for all TIF projects financed with general obligation
bonds. Prior to 2006, only the Hotel at Old Town project included a TIF shortfall guarantee. The
shortfall guarantees for each project are structured individually with each developments LLC.

Of the TIF projects that have been completed to date, with permanent financing issued, progress to-
wards projected valuation is as follows:

The 21st and Grove Redevelopment District is currently at 64 percent of the projected value.
The East Bank Redevelopment District is currently at 67 percent of the projected value.
The Northeast Redevelopment District is at 82 percent of the projected value.
The Old Town Cinema District is at 91 percent of its projected value.

In order to determine if each project will generate adequate revenue to pay the debt issued, revenue
estimates beyond 2011 were projected at an annual appreciation of 2 percent for all completed pro-

All of the TIF districts are expected to generate the revenue necessary to support their 2011 bond
payments. The following table illustrates current and projected performance results for TIFs that are
now permanently financed.

Performance at Project Completion: Valuation Assessments
TIF District
Base Year
Assessed Value
at Completion
Actual As-
sessed Value as
of 2010
Percent of
Value as
of 2010
Base Year
21st & Grove $39,031 $1,932,220 $1,245,535 64% 3091%
East Bank $518,762 $21,723,130 $14,510,339 67% 2697%
NE Redevelopment District $11,567 $337,033 $277,675 82% 2301%
Old Town Cinema II $480,633 $4,144,141 $3,780,953 91% 687%
Tax Increment Financing in the City of Wichita:

The City of Wichita has utilized TIF since 1991, with the introduction of the Old Town Redevelopment
District. Presently, in 2011, the City has eight TIF districts established, seven of which are currently
active. TIF districts established and still open are:

East Bank (1995),
21st and Grove (1995),
Northeast (1998),
Old Town Cinema (1999),
Douglas and Hillside (2006),
C.O.R.E (2008, not currently active),
Center City South (2008), and
Ken-Mar (2009).

One TIF district was created and closed shortly after, with no negative impact to the City:

Broadway and 47th (2006)

Two TIF districts have been successfully closed out:

Old Town (1991, re-established in 1993)
Central and Hillside (2001)

Not all TIF projects have been fully financed by bonds. The Central and Hillside project was financed
with temporary notes which were retired in three years without issuing bonds. Bonds have not yet
been issued for the Northeast Redevelopment Project (13th and Grove), the Douglas and Hillside
Project, the Ken-Mar Project, and the Center City South Project. The Northeast Redevelopment Pro-
ject and Ken-Mar Project are being financed on a pay-as-you-go basis and the TIFs will repay the
Debt Service Fund. Temporary notes have been issued for Douglas and Hillside and Center City
South; permanent bonds will not be issued until property values reach a point that will sustain long
term debt payments. Except for the Old Town Cinema, every district utilizing permanent financing
generated enough to pay their 2010 bond payments.

East Bank Redevelopment

East Bank Redevelopment Dis-
trict, created in 1995, was part
of the Citys initiative to de-
velop a convention hotel adja-
cent to the Century II Conven-
tion Center. Since then, this
district has also been used to
provide tax increment financing for the WaterWalk commercial development project, as well as STAR
financing for the River Corridor Project.

The original district was bounded by McLean Boulevard to the west, Kellogg Avenue to the south,
First Street to the north, and Broadway Avenue to the east. The initial TIF-funded project in the dis-
trict included the Hyatt Regency Hotel, a conference center connecting the hotel to Century II, a 500-
car parking garage, riverbank improvements, renovations to the promenade level of Century II, and
other public infrastructure improvements. TIF bonds in the amount of $6,000,000 were issued in
1999 as part of this $50 million project.

In 1997, a general reappraisal of downtown property resulted in a significant decrease in property
values. Consequently, there was no overall increase of property tax revenue generated during the
first several years, despite the fact that the Hyatt project had added over $18 million in new property
value. In 2001, the Kansas Legislature amended the state statutes to allow existing TIF districts to be
reduced in size. Following the change, the City reduced the boundaries of the East Bank Redevelop-
ment District by moving the north boundary to Douglas and the east boundary to Main, which re-
moved the areas where the properties had been devalued and restored the projected incremental
valuation, thus resulting in revenues sufficient to
make the debt payments.

In 2004, the City approved the WaterWalk project
plan. This is a 30-acre lifestyle commercial center
located south of Century II, north of Kellogg, be-
tween Main and the Arkansas River. The majority
of City construction for this $130 million project
has been completed. In 2007, the City issued TIF
bonds in the amount of $11,775,000, leaving an
additional $5,124,772 yet to be issued. Valuation
increases in the WaterWalk development are ex-
pected to be sufficient to cover TIF bond payments
over the term of the TIF district.

Also in 2004, the East Bank Redevelopment District
was expanded to include the River Corridor Project
area. This change allowed STAR fi-
nancing to replace CIP funding for
that project, and those CIP funds
were then transferred to the Water-
Walk project. In 2008, the City re-
ceived state authorization to spend
$14,700,000 on projects to be paid
entirely by incremental state and
local sales tax revenues (STAR fi-
nancing) and not from incremental
property tax revenue.

The WaterWalk Commons condominiums and retail space along with the Wichita Realtors office
were completed in 2008. In 2009, Jack DeBoer assumed leadership of the development to move the
project towards completion. Construction began in 2010 for the Fairfield Inn and Suites and was
completed in 2011. The development is now split into three phases, with the first phase, WaterWalk
Commons, complete.

In 2010, $1,882,088 in TIF revenue was collected, with a debt payment of $1,789,613. The following
table outlines the districts performance in 2010.
Revenue from 2010 taxes, projected with 2% annual appreciation is expected to be enough to cover
existing bond payments, without assuming any additional development or debt. The project cur-
rently stands at 67% of the projected value at completion with only $5,124,772 remaining to be
bonded and expended. Assessed property values for the district have increased by 2697% of the as-
sessed value of the base year. The project is expected to support full bond payments. The table be-
low outlines the performance from the beginning of the TIF to 2010, and the projected performance
by the closing year of the TIF district.

Debt Service $ 1,789,613
Transfers from TIF to Debt Service Fund $ 1,882,088
Surplus/(Deficit) $ 92,475
East Bank 2010 Performance
East Bank Performance
1998-2010 TIF End (2024)
Accumulated Debt Service $9,109,931 $ 32,061,940
Transfers from TIF to Debt Service Fund $8,733,214 $ 39,929,048
Cumulative Surplus/(Deficit) $ (376,716) $ 7,867,108
Old Town Cinema Redevelopment

The City established the Old Town Cin-
ema TIF District in 1999. This project
plan replaced the vacant lots and dete-
riorating buildings in the project area
with the six-screen Warren Old Town
Theater, two mixed-use retail/office
buildings, a public plaza with fountains,
and a 600-space parking garage with
ground floor commercial space. The
boundaries for this district are Second
Street to the south, Third Street to the
north, Santa Fe to the west, and Wash-
ington to the east.

TIF bonds, in the amount of $4,985,000, in conjunction with parking revenue and CIP funding, paid
for the construction of the parking garage, the plaza and fountains, streetscape improvements, land
acquisition, and design fees, for a total cost of $9,485,000. In addition to TIF revenue, the original
project plan anticipated $98,800 in annual parking revenue to be applied to the bond payment. That
revenue is now directed into a service fund for maintenance and operations of the garage; any un-
used revenue is transferred to pay the TIF debt service.

Two additional projects have occurred within the TIF District since the project began. The Interna-
tional Harvester Building was remodeled into apartments at a cost of $5,750,000, with financial assis-
tance from Low Income Housing Tax Credits (LIHTC), HOME, and state and federal historic tax credits
totaling $5,053,452. The Marriott
Courtyard was also constructed to the
east of the project area, but within the
TIF district. That project received In-
dustrial Revenue Bonds in the amount
of $15,000,000 and an additional
$1,500,000 from the Faade Program.
Starting in 2011, the Marriott Courtyard
will begin to pay a bond origination fee
of $45,000 for 5 years. In 2016, the
Courtyard will come back on to the tax
rolls and will contribute an estimated
$260,000 dollars annually to the Old
Town Cinema District.

In 2008, the developer appealed the
property valuation for much of the dis-
trict. The reduced property values decreased the TIF revenue from $458,989 in 2008 to $276,948 in
2009, with a 2009 debt payment of $441,956. In 2010, TIF revenues increased to $379,828, but did
not increase enough to pay the full amount of the bond for 2010, $449,081. The following table out-
lines the districts performance in 2010.

With the assistance of the bond origination fee paid by the Marriott Courtyard and TIF revenue cap-
tured from the Marriott Courtyard starting in 2016, the district is expected to repay all debt on
schedule. The table below outlines the performance from the beginning of the TIF to 2010, and the
projected performance by the closing year of the TIF district.

Old Town Cinema Performance
2003-2010 TIF End (2023)
Accumulated Debt Service $2,721,669 $ 6,451,282
Transfers from TIF to Debt Service Fund $2,432,747 $ 10,492,333
Cumulative Surplus/(Deficit) $ (288,922) $ 4,259,653
Old Town Cinema 2010 Performance
Debt Service $ 449,081
Transfers from TIF to Debt Service Fund $ 379,828
Surplus/(Deficit) $ (69,253)
21st and Grove Redevelopment District

In the late 1980s, the City made a commitment
to improve the 21st Street corridor between Hy-
draulic and Hillside, and invested $3,700,000 to
improve the roadway, including the addition of
turn lanes and landscaping. Additionally, the City
built a new police substation, branch library, and
fire station on 21st Street. Cessna Aircraft and
Bank of America (then Bank IV) opened new fa-
cilities on the street, and The Boys and Girls Club
renovated their 21st street building. This building has since been vacated and operations have been
moved just slightly north, on Opportunity Drive, to a new Boys and Girls Club facility.

In 1995, the City established a redevelopment district in the area around 21st Street and Grove. TIF
funds in the amount of $1,385,000 were combined with $286,000 in CIP funds to assist with the ex-
pansion of the Cessna 21st Street Training Center on the former Heartspring campus. As part of the
redevelopment project, Commerce Bank constructed a new branch. A new neighborhood shopping
center and DETAMC, a training center, also opened in the area, using a combined total of $425,000
in Community Development Block Grants. A senior center with affordable housing was constructed
by Mennonite Housing Rehabilitation Services using LIHTC in the amount of $5,756,400.

The project was completed in 1998, but the portion of the Heartspring campus which was leased to
Cessna, and thus should have been made
taxable, was left tax-exempt. As a result, in-
sufficient revenue was generated to cover
the TIF bonds in the early years. Not until
2006 was this situation remedied and the
Cessna facilities made fully taxable. TIF
revenues now exceed bond payments.
Revenues in the amount of $205,910 were
collected in 2009 to pay debt service of
$131,725. Revenues in the amount of
$161,481 were collected in 2010. The fol-
lowing table outlines the districts perform-
ance in 2010.

21st and Grove 2010 Performance
Debt Service $ 132,053
Transfers from TIF to Debt Service Fund $ 161,481
Surplus/(Deficit) $ 29,428
Although TIF revenues have seen a decline in 2010, revenues are still projected to pay off the debt
service by the time the TIF ends. The former Cessna facility and Boys and Girls Club facility on 21st
street are currently vacant and on the market. The sale and use of these two facilities has potential
to increase the assessed valuation in this area. The table below outlines the performance from the
beginning of the TIF to 2010, and the projected performance by the closing year of the TIF district.

21st and Grove Performance
1998-2010 TIF end (2018)
Accumulated Debt Service $ 1,594,439 $ 1,989,187
Transfers from TIF to Debt Service Fund $ 1,002,900 $ 2,147,407
Cumulative Surplus/(Deficit) $ (591,539) $ 158,220
Northeast Redevelopment District

In 1997, the City established the Northeast Rede-
velopment District in the area of 13th and Grove
to assist a local community development organi-
zation with the economic revitalization of the
area. The original district was bordered by 13th
Street to the south, Spruce Avenue to the west,
14th Street to the north, and Poplar Avenue to
the east. A market study commissioned by the
developer determined that the area could sup-
port a neighborhood supermarket, although it
took several years to recruit a grocery store op-
erator for a store at this location.

In 2003, in response to neighborhood concerns regarding condemnation of property, the City re-
duced the size of the TIF District to just that which was needed for the grocery store, the lot north of
13th Street North, between North Grove Avenue and North Poplar Avenue. The developer, POWER
CDC, received a HUD EDI grant as a result of special authorization from the congressman represent-
ing their district. This funding allowed Power CDC to acquire the property for the project site.

In 2005, the City approved the project plan for the development of a Save-A-Lot grocery store at
13th Street and Grove. TIF funds were used to reimburse the developer for property acquisition
costs, and to pay for site improvements and paving.

The Save-A-Lot opened for business in 2006, and has been a source of pride for the community.
Public improvements totaling $356,868 were financed on a pay-as-you-go basis and TIF revenues are
scheduled to repay the Debt Service Fund. The following table outlines the districts performance in
The table below outlines the performance from the beginning of the TIF to 2010, and the projected
performance by the closing year of the TIF district.
Northeast Redevelopment Performance
2005-2010 TIF End (2025)
Accumulated Debt Service $ 356,868 $ 356,868
Transfers from TIF to Debt Service Fund $ 96,756 $ 642,354
Cumulative Surplus/(Deficit) $ (260,111) $ 285,487
Northeast Redevelopment 2010 Performance
Debt Service $ -
Transfers from TIF to Debt Service Fund $ 33,437
Surplus/(Deficit) $ 33,437
Douglas and Hillside Redevelopment District

In 2007, the City established the Douglas and
Hillside Redevelopment District, bounded on the
south by Douglas Avenue, on the west by Hillside
Avenue, on the north by First Street North, and
included property adjacent to Rutan Avenue on
the east. The area contained several smaller retail
and medical office buildings with some older sin-
gle-family homes along Victor and First Streets.
There was also a large vacant portion where the
demolished Kansas Department of Social and Re-
habilitative Services building was located.

The original project was an urban village that included Brownstones, a condominium tower, and a
retail/residential complex. The TIF was originally approved for $4,450,000 to be used for property
acquisition, demolition, landscaping and public improvements. The improvements included recon-
structing Victor Place and Rutan Avenue, a round-about, decorative street lighting, and a public park.

The Fire Department expressed concerns with navigating the round-about; it was replaced with
decorative entries to the area. The developer also acquired additional property extending the pro-
ject to Hillside. The changes required an amendment to the project plan and an increase in the al-
lowable TIF expenditures. In 2008, the Council approved the changes to the plan and an increase of
the TIF cap to $5,630,000.

Public improvements began in 2007 for the Parkstone project. In April 2008, the developer held a
groundbreaking for the first phase of the project, the Brownstones. Additional work on the develop-
ment was halted due to the economic downtown in 2008 which froze the market for condominium
financing. Actual 2009 revenues exceeded the amount projected, but the delay in construction of
additional phases will diminish expected future revenues. The developer is addressing the market
changes and plans to complete the project with apartments instead of condominiums which will re-
quire an amendment to the development agreement. The projections contained in Appendix A are
based on the revised project.

The full TIF eligible amount of $5,630,000 has been paid by the City and will be financed with tempo-
rary notes until the project generates revenue sufficient to support permanent bond financing or
such time as the temporary notes can no longer be renewed. The following table outlines the dis-
tricts performance in 2010.
Douglas and Hillside 2010 Performance
Debt Service $ -
Transfers from TIF to Debt Service Fund $ 2,609
Surplus/(Deficit) $ 2,609
Pursuant to the development agreement, the City will retain control of development land until the
developer has completed previous phases and is capable of beginning the next phase of the project.
Currently the City retains control of the majority of the land. A shortfall guarantee between TIF reve-
nues collected and debt service payments is included within the development agreement with CHUV
LLC. The table below outlines the performance from the beginning of the TIF to 2010, and the pro-
jected performance by the closing year of the TIF district.

Douglas and Hillside Performance
2009-2010 TIF End (2027)
Accumulated Debt Service $ - $ 9,099,566
Transfers from TIF to Debt Service Fund $ 6,914 $ 5,065,269
Cumulative Surplus/(Deficit) $ 6,914 $ (4,034,296)
Center City South Redevelopment District

In 2007, the City Council established the Center City South
Redevelopment District, initially for the conversion of the
Exchange Place and Michigan buildings into a residential
condominium complex with an attached parking garage on
Douglas Avenue. The original boundaries of the district
were Broadway on the east, English on the south, Main
Street on the west and First Street on the north. In 2009,
the City expanded the district to allow TIF to be used to fi-
nance infrastructure improvements in the area of downtown
in the general proximity of the new Intrust Bank Arena. The
expanded boundaries go from Santa Fe on the east to Main
Street on the West and from north of Douglas on the north to generally Waterman on south.

The Exchange Place Project was initially approved in 2007 to provide $6,000,000 in TIF funds to pay
for land acquisition and construction of a 175-space parking garage, as part of a total project costing
$30,000,000. In 2008, the developer, Real Development LLC, proposed the expansion of the project
to include the renovation of the Bitting Building and changing from condominiums to apartments,
which were approved by the City Council along with an increase in TIF funding to $9,300,000. In
2010, the project was expanded once again and the TIF funding cap was increased to $10,300,000.
TIF funding was also made conditional on the project receiving a $30,000,000 HUD loan and on the
settlement of all of Real Developments debts relating to the Wichita Executive Center. To date, nei-
ther of these conditions have been met and no TIF funds have been spent.

The second Center City South project, the Arena Phase I Project, has been completed. This project
was approved in 2009 and includes the reconstruction of streets in the immediate vicinity of Intrust
Bank Arena and development of a wayfinding system, at a cost of $1,580,000. This amount of TIF
funding is supported by the increase in valuation that resulted from the construction of the Arena.
The construction work was initially funded by Sedgwick County as part of the arena project, to be
reimbursed with TIF funds.

A third Center City South project was approved in 2011. The Douglas Place Project is the conversion
of the historic former Union National Bank building into a boutique hotel and the construction of an
adjacent public parking garage. The City will use $2,920,000 TIF funds together with other City funds
to construct the City-owned and operated garage and an urban park connecting the garage to the
hotel, at a total cost of $7,570,000. The following table outlines the districts performance in 2010.
Center City South 2010 Performance
Debt Service $ 0
Transfers from TIF to Debt Service Fund $ 19,765
Surplus/(Deficit) $ 19,765
A shortfall guarantee between TIF revenues collected and debt service payments is included within
the development agreement with Douglas Place LLC and Exchange Place LLC. Pursuant to the guar-
antee, Douglas Place LLC has promised to pay at least $245,000 in taxes annually. If the actual taxes
are less, Douglas Place LLC will pay the difference to the City. Douglas Place LLC, pursuant to the de-
velopment agreement, only has a right to protest the value of the property if the County valuation
exceeds a value based on a cap rate determined by a third party. The table below outlines the per-
formance from the beginning of the TIF to 2010, and the projected performance by the closing year
of the TIF district.

Center City South Performance
2010 TIF End (2030)
Accumulated Debt Service $ 0 $ 24,249,359
Transfers from TIF to Debt Service Fund $ 19,765 $ 29,102,162
Cumulative Surplus/(Deficit) $ 19,765 $ 4,852,803
Ken Mar Performance
2010 TIF end (2029)
Accumulated Debt Service $ - $ 3,310,350
Transfers from TIF to Debt Service Fund $ 2,927 $ 3,200,615
Cumulative Surplus/(Deficit) $ 2,927 $ (109,734)
Ken Mar Redevelopment District

In 2009, the Providence Square Project was approved
by the City Council. TIF funds in the amount of
$2,500,000 were used to purchase the land and pro-
vide for site improvements; the site was purchased in
early 2009 and site improvements were completed by
the end of that year. Interior upgrades were planned
to be completed as the developer brought in new

Due to the recent recession, leasing activity slowed in
the area, and the developer was unable to secure retail
tenants. Because the implementation of the planned
redevelopment strategy is not feasible during the eco-
nomic downturn, the Developer has negotiated the sale of a portion of the Ken-Mar property to Wal
-Mart Stores, Inc for the construction of a 35,000 square foot Walmart Neighborhood Market. The
City Council approved an amendment to the Development agreement in fall of 2011.

The change in the scope of the project has had a negative impact on the financial feasibility of the
Ken-Mar TIF. TIF-funded project costs will be financed with a pay-as-you-go approach through the
Debt Service Fund in place of the issuance of bonds. The Debt Service Fund will be repaid from in-
cremental tax revenue received by the City from the Ken-Mar District under the States TIF laws over
a 17-year term ending in 2029 when the TIF district term expires, at an interest rate set at 3% APR.
The following table outlines the districts performance in 2010.
A shortfall guarantee between TIF revenues collected and payments towards the projects pay-as-
you-go financing is included within the development agreement with H.H. Holding LLC. Pursuant to
the guarantee, H.H. Holding LLC will pay the shortfall, but are not responsible for unpaid taxes on
property that the LLC sells. As long as the taxes should cover the LLCs debt payments, the LLC is not
responsible for paying taxes owed by someone the LLC sold property to. The table below outlines
the performance from the beginning of the TIF to 2010, and the projected performance by the clos-
ing of the TIF district.

Ken Mar 2010 Performance
Debt Service $ -
Transfers from TIF to Debt Service Fund $ 2,927
Surplus/(Deficit) $ 2,927
C.O.R.E Redevelopment District

The CenterCity Organized Revitalization Effort (C.O.R.E) is an initiative among pastors of various
downtown churches to address the deterioration of the downtown area. The organization expanded
its network to include area businesses, financial institutions, neighborhood organizations, Via Christi
Health System, the City of Wichita, Sedgwick County, and USD 259. The project area has an increas-
ing amount of vacant and boarded up houses that have contributed to the deterioration.

C.O.R.E developed a neighborhood plan that was adopted as part of the Wichita-Sedgwick County
Comprehensive Plan. The master plan included four phases, including a catalyst phase. From 2000
-2007, C.O.R.E struggled to find a developer willing and able to undertake the redevelopment.

In 2007, C.O.R.E. partnered with a local developer, Inner City Development Corporation (ICDC), to
move their vision forward. In 2008, the City Council approved a redevelopment district for the
catalyst area of the plan. A project plan was approved, but then shelved due to developer con-
cerns and market conditions. Once the market improves, the City anticipates an opportunity may
arise to work with a new developer on a revised project plan.

Closed Projects:

Central and Hillside Redevelopment District

In 2001, Wesley Medical Center was planning a
major expansion on the east side of the hospi-
tal located near the northeast corner of Central
and Hillside. Plans included demolishing the
Wesley Motor Hotel and constructing a new
hotel on hospital-owned property next to a
City park near the Sleepy Hollow Neighbor-
hood. The neighbors strongly opposed the
plan. Around the same time, a group of local
developers proposed a commercial redevelop-
ment on the southeast corner of Central and
Hillside. This plan included tearing down the
College Hill Medical Tower and constructing a
mixed-use commercial development.

To resolve the dispute between the hospital and the neighborhood, and to facilitate the completion
of the commercial redevelopment, the City established a TIF district that included both the hospital
expansion area and the commercial development area. TIF funds in the amount of $1,375,000 were
used to acquire a parcel in the commercial development area to serve as a hotel site, to pay a por-
tion of the cost to demolish the medical office building, to construct underground storm water
drainage structures, and to complete various site improvements.

Due to the magnitude of the incremental tax revenues generated by the expansion of the Wesley
Medical Center, the revenue generated from the increased taxes was sufficient to retire the TIF fi-
nancing within three years, without issuing long term bonds.

Old Town Redevelopment District

The Old Town TIF District, first established in 1991, then
reestablished in 1993, was the Citys first TIF-funded re-
development project. The boundaries are Douglas Ave-
nue on the south, Second Street on the north, Santa Fe
Avenue on the west and Washington Avenue on the
east. Old Town is the only TIF district that was approved
for redevelopment of an entire district, rather than a
specific redevelopment project. The revenues to finance
public improvements were expected to be generated by
activity within the entire district with no single project as the primary income generator.

The Citys plan, with the help of a preferred developer, was to transform a blighted warehouse dis-
trict into an entertainment district in order to bring citizens back downtown. The concept was to
create a common theme offering ample parking, dining, entertainment and retail shopping. The
plan was anchored by the City-owned Farm & Art Market, which was to be surrounded by retail
shops, restaurants, bars, apartments, meeting halls, and office space. The entire district was to have
an Old Town appearance, including boardwalks and old style streetlights.

In addition to TIF bonds, the Old Town plan included funding from Sedgwick County, special assess-
ments, City CIP funds, and parking revenue. The initial amount of TIF funding was $1,000,000 for
streets and sidewalks and an additional $3,300,000 in TIF bonds were issued for construction of the
public parking garage next to the Hotel at Old Town. All TIF funding has been repaid.

Due to the size of the district and the age of its buildings, investors in Old Town have received public
funding from many additional sources. Two apartment buildings in Old Town have received LIHTC
and HOME Investment Partnership Program funds totaling $1,436,460. These buildings remain full,
with waiting lists for their residential units. Several buildings in Old Town have received State and
Federal Historic Tax Credits in the total amount of $5,002,790. The Manpower building along Doug-
las Avenue received $101,784 for faade improvements. The Kansas Sports Hall of Fame received
$1,700,000 in Public Building Commission (PBC) bonds and a $100,000 grant from Sedgwick County.
The City has also issued Industrial Revenue Bonds in the
area in the amount of $13,385,000.

TIF revenue collected in 2010 amounted to $1,005,624
with a debt payment of $343,721. Additional street-
scape and infrastructure improvements have been paid
for on a pay-as-you-go basis through the extra revenue.
The Old Town District has grown 818% from its base
year and has reached 451% of its projected value. The
district was scheduled to expire in 2013, but was closed
before schedule in early 2011 due to better than ex-
pected performance.
Broadway and 47th Street Redevelopment District

The Broadway and 47th Street Redevelopment District was established in 2006. The area was
bounded on the north by 47th Street South, on the east by Broadway, on the south by 48th Street
South, and on the west by Water Street. The project area included an existing 105,660 square foot
shopping center and approximately 9 acres of unused land.

The existing shopping center, built in 1965, was over 40 years old. The center was void of anchor
tenants with only small tenants remaining along Broadway. The surrounding land was contaminated
with oil residue from prior land oil production. Kansas Department of Health and Environment test-
ing identified petroleum pollution greater than initially identified, which resulted in additional reme-
diation requirements for the developer. The TIF project costs were increased by $300,000, to
$1,800,000 to allow for additional remediation expenses.

TIF bonds totaling $2,245,000 were issued to pay for the demolition and site preparation. The devel-
oper removed all but the eastern portion of the shopping center and was prepared to construct the
first phase of a 135,000 square foot Home Depot. Near the beginning of construction for the Home
Depot facility, Home Depot cancelled a number of plans for new Home Depot construction across
the country, the planned Home Depot in the City of Wichita being one of these cancelled sites. Al-
though construction of the facility was not yet initiated, Home Depot bought and cancelled all bonds
issued by the City to finance the project improvements. After the bonds were transferred to Home
Depot, and cancelled, the TIF was closed with no negative impact to the City.

TIF Performance Analysis:

Appendix A shows the debt service schedule for the issued TIF bonds. The spreadsheet tracks the
revenue that was projected in the project plan, the actual revenue generated by the TIF, the bond
payments, and the surplus or deficit of the TIF, both annually and cumulatively. The italicized num-
bers are estimated values appreciated at a 2 percent annual rate. The cash flow analysis in Appendix
A compares projected cumulative incremental tax revenue to debt service, for each TIF district. Dis-
tricts will close in varying years in the future; the end year for each project is represented by the last
column displayed for each district.


The City of Wichita has used Tax Increment Financing (TIF) to assist in the development of nine areas
over a 30-year period. Additionally, these areas have received assistance from multiple outside
sources, primarily public sources of funding. Public and private investment in these areas has greatly
increased property values. The City has also been able to fund needed infrastructure improvements
that would have otherwise required Capital Improvement Program (CIP) funding.

The City follows a conservative approach in evaluating projects for TIF financing. Developers are re-
quired to provide full financial statements that demonstrate a need for public assistance. A gap
analysis and feasibility study are performed by staff and any project considered for TIF must create a
cash flow of 1.3 times the debt payments.

Developers are now required to sign a shortfall guarantee. This document insures that when the
revenue is not enough to pay the bond debt, the developer is required to pay the difference. The
inclusion of the shortfall guarantee protects the City from spending money from the Debt Service
Fund to cover a TIF deficit and also makes the developer more responsible in projecting increased
assessed valuations.

Redevelopment projects supported by TIF have increased assessed valuations in areas experiencing
declining values and deteriorating conditions. The use of TIF and additional public assistance has
rejuvenated project areas, creating pride in neighborhoods and increased patronage by city resi-
dents and visitors from outside the city.

Performance has varied with all of the TIF districts. The experience with the East Bank District has
driven district size to be limited to areas of known investment. The Finance Department now re-
ceives reports from the County listing property owners that have not paid taxes in the TIF districts, or
appealed property values. This process will reduce the risk that taxes are not being paid in necessary

TIF is a valuable tool for the revitalization of deteriorating areas of any City. TIF was created to bene-
fit areas in need of revitalization and to help eliminate obstacles that prevent redevelopment from

City staff and the City Council have a responsibility to evaluate each project and analyze the risks.
The review process insures that TIF is used for qualified redevelopment projects that need assistance
and is not misused by developers simply to increase profits. City staff and the City Council also have
an obligation to monitor the progress in each TIF project and insure that each project is successful.
Current projections show the following TIFs will meet or exceed their bond expectations by the clos-
ing date of the TIF: 21st and Grove, Old Town Cinema, NE Redevelopment, Center City South, and
East Bank. Current projections show that the Ken Mar and Douglas and Hillside TIFs will not be able
to completely pay off bonds with TIF revenue received through the closing year of the TIF. Individual
shortfall guarantees are in place between the City and the LLCs for both the Ken-Mar and Douglas
and Hillside TIFs.