C I T Y O F

UIICHITR
February 12, 2009

Sedgwick County District Attorney Office

Attn: Ann Swegle, Deputy District Attorney
535 N. Main
Wichita, Kansas 67203-3747

Re: City of Wichita TIP District

Dear Ms. Swegle;

You asked for a response from the City relative to a complaint received by your office
pertaining to the City Council's actions on or about December 2, 2008, in the expansion
of a TIP District and adoption of a TIP District Plan. We have attached for your
information an outline of the City actions relative to this TIP as well as relevant
documents, both for background and pertaining to the actions in question.

KSA 12-1770, et seq., adopted in 1976 and subsequently amended on many occasions,
sets forth the Redevelopment District or Tax Increment Financing ("TIP") Act. Three
sections of that act are important for review of the complaints herein: KSA 12-1770a
(Definitions), 12-1771 (Establishment of a Redevelopment District), and 12-1772
(Establishment of a Redevelopment Project), and I have also attached those statutes.

The complaints, in general, are premised on a misunderstanding of this District and of

the distinction between KSA 12-1771 (Redevelopment District) and 12-1772
(Redevelopment Project). The actions in question arise out of the addition to or
expansion of a "District" and the approval of a "District Plan" as provided in KSA 12-
1771(e) & (f) (Exhibit Tabs J - M). No "Project Plan" has been proposed in this
expansion area.

Department of Law
Gary E. Rebenstorf, Director of Law and City Attorney

City Hall -13th Floor -455 North Main -Wichita, Kansas 67202-1635
T 316.268.4681 F 316.268.4335
www. wi ch itag ov. org
District Attorney Office
Page 2
February 12, 2009

The Center City South Development District was established in May of 2007 (Tabs A-
D). The original district includes an approved "District Plan" (Tab D). In 2008, the City
undertook efforts to expand the Center City South Development District to include
property adjacent to the new Arena. The first effort (Tabs E - G) was repealed (Tab I)
after a County threat to use its veto power under KSA 12-7771 (d) (see Tab H).
Thereafter, following coordination and agreement between City and County staff and
officials, the City undertook a second effort to expand the District boundaries (with a
smaller area and more limited scope of funded activities). The expansion of the District
and the approval of a new District Plan are the actions being questioned (Tabs J - M).

Notice and Hearing. We have outlined in Tabs J - M the steps that were taken in
conformance with KSA 12-1771. An "addition" to the District or a "substantial change"
to the District Plan is allowed in KSA 12-1771 (e) & (f), following the same procedures
for notice and hearing as is required for the establishment of the District (KSA 12-
1771 [a] & [b]). In this case, the City adopted a Resolution (Tab J) giving notice of the
hearing, the proposed boundaries, and the proposed district plan. The hearing was set
for December 2, 2008, notice sent by certified mail to the County, School District (USD
259), and each owner and occupant of land in the District, and notice published one
time eight days before the hearing (Tab K). The minutes and related documents from
the hearing are included at Tab L. Following the hearing, an ordinance was adopted
that included the findings of eligibility, boundaries, legal description, and the approved
District Plan (Tab M). All of these steps specifically follow the statutory procedures of
KSA 12-1771.

Addition of "Parking" to the District Plan. The original approved 2007 District Plan
included the following under Redevelopment:

"Projects in the proposed redevelopment district will include mixed-use

developments, residential, office, retail, entertainment, hotels and other uses.
They will include demolition and new construction as well as rehabilitation of
existing buildings. Tax increment financing may be used for property acquisition,
demolition, utilities, drainage, street improvements, streetscape amenities, public
outdoor spaces, landscaping and parking facilities." (Tab D, Exh. B, sec. 4)
(Emphasis added.)

A "substantial change" to the District Plan goes through the complete notice and hearing
process, above (KSA 12-1771 (e)). The proposed new District Plan (Tabs J & K, Exh.
C) contains language similar to that quoted from the original plan above, but further
defining the improvement projects (Sections 4 and 5). Following negotiations with the
County over the concerns expressed on the expansion (see Tab H), the City Council
was presented with a slightly revised proposed District Plan at the December 2, 2008,
hearing, which added "Construction of new parking facilities, with tax increment funded
costs not to exceed $10,000,000" to the specified improvement projects (see delineated
Plan in Tab L, Exhibit C, p. 2 and explanation in Agenda Report (rev. 11/26/08), Tab L).
After the close of the public hearing, the City Council voted to "amend the district plan to
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February 12, 2009

allow construction of new parking facilities in the expansion area with TIF-funded costs
not to exceed $10 million" (Minutes, p. 1, Tab L). The ordinance approving the District
Plan includes this language as delineated above (Tab M, Exh. C, p. 2). This change for
the approved Plan is consistent with the notices and statutory scheme; it is not a
"substantial change" to the advertised District Plan such that would require new notice
and hearing.

"Substantial change" (as used in KSA 12-1771 (e)) is defined as "a change wherein the
proposed plan or plans differ substantially from the intended purpose for which the
district plan or project plan was approved" (KSA 12-1770a(t)) (emphasis added).

A "District Plan" is defined as "the preliminary plan that identifies all of the proposed
redevelopment project areas and identifies in a general manner all of the buildings,
facilities and improvements in each that are proposed to be constructed or improved in
each redevelopment project area" (KSA 12-1770a(q)) (emphasis added).

The original 2007 Plan, as quoted above, already provided in a general manner that TIP
funds might be used for "parking facilities," among many other uses. The plan as
advertised for the new expanded boundaries contained this same provision for "parking
facilities" on proposed uses of TIP funds. When the expanded District came to hearing,
the Council and the public knew the "intended purpose" was redevelopment in the
Arena Neighborhood and that the discussion was whether or not the Arena area would
be added to the District for "mixed-use developments, residential, office, retail,
entertainment, hotels and other uses." The scope of individual Project Plans was not
before the Council. The Council did what it was allowed to do, following a hearing: It
adopted an approved District Plan (KSA 12-1771 (b)(1)(B)). The only limitation on final
Council action is that "boundaries of such district shall not include any area not
designated in the notice required by subsection (g)" (KSA 12-1771 (b)(1)). There is not
a prohibition on reducing the boundaries; there is not a prohibition on revising the
District Plan. The purpose of a "hearing" is to hear comments from the public and allow
discussion among the members - there would be no good purpose of having such a
hearing if modifications could not be made. The change made was consistent with the
"intended purpose" of the District.

All the Council has done is to adopt a general plan. Those individuals protesting the
inclusion of parking within the TIP District still will have an opportunity to receive notice
and have a hearing under KSA 12-1772 whenever the City decides to proceed with a
Project Plan that includes "parking facilities." No projects will be built or financed with
TIP funds until a Project Plan is adopted.

Project Plans. There can be multiple projects within a district. "Redevelopment Project
Plan" is defined as "the plan adopted by a municipality for the development of a
redevelopment project or projects which conforms with KSA 12-1772, and amendments
thereto, in a redevelopment district" (KSA 12-1770a(s)). Eventually there will be
Projects to implement the District Plan established above. As stated in that District
Plan:
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February 12, 2009

"Per statute, any proposed redevelopment projects will be presented to the

Governing Body in segments through the adoption of separate redevelopment
Project Plans. Each Project Plan will identify specific project areas located within
the established redevelopment district and will include detailed descriptions of
the projects as well as a financial feasibility study that shows the economic
benefits out-weigh the costs. Project Plans must be reviewed by the
Metropolitan Area Planning Commission and submitted to a public hearing
following proper notification of property owners and occupants, before they can
be adopted by a two-thirds majority vote of the Governing Body." (Tab M, Exh.
C, Section 6.)

We have included for your information, a Project and Project Plan that has already been
approved in the City Center South Redevelopment District, "Exchange Place Project"
(Tabs N - R). Because the Project Plan is adopted under KSA 12-1772, it included
additional steps, including a much more detailed plan, Planning Commission Review
(Tab N), and addition notifications.

No Project Plan has yet been submitted for any of the additional area (so-called Arena
Neighborhood), so the steps in KSA 12-1772 are not applicable to any of the
procedures challenged herein.

Please let Joe Allen Lang or me know if you have questions on the above or the
attachments. Thank you for your consideration.

Sincerely,

ry E. Rebenstorf
!)irect6r of Law and City Attorney

GER/JAL/bam
(7
Enclosures:
Statutory Table & Actions
Exhibits
Statues