Tuesday, July 15, 2008

It's good to be Kevass Harding

The USD 259 School Board has for the past six months been bleating about the necessity to generate an additional $350 million through a special bond issue. One of the more outspoken members of the board has been Kevass Harding. But how deep does his support for the bond issue really go?

WichitaLiberty.org had an interesting article on the good Reverend and his business plan to take money away from the school district and sink it into the Ken-Mar shopping center which he has purchased. How is he going to do it? Why a TIF district, of course. Where is that money going to go? Let's find out...

A Tax Increment Finance district is a special taxing district in which money, from tax exempt municipal bond sales, are used to invest in property improvements. As the property values increase, the additional tax revenue goes to pay back the bonds. Recently, in Wichita and elsewhere, the TIFs have been used not just to pay for better roads, street lights and parking garages, but for improvements to private property for the benefit of the property owner.

Allen Bell, City of Wichita development guru, said the TIF money at KenMar would be used to pay for land acquisition, demolition of a small store near 13th and Oliver, landscaping, and utility improvements.

In this case, Reverend/developer Kevass Harding is going to take money from the sale of bonds to make improvements on piece of property. He will receive the benefit of those improvements in the form of ownership of property that has a much greater value. Repayment of the bonds will be spread among property owners in the entire district, not just the owner receiving the proceeds from the bond sales.

The upfront money for the improvements will be repaid by the higher tax revenues generated by the business and homeowners in the surrounding TIF district. During the 15 year bond payback period, USD 259 will not see any of the increased revenue. Because of this, both the school district and Sedgwick County have the right to refuse the creation of the TIF district.

Several months ago, Kevass Harding indicated that he would spend as much as $8 million on the property over time. I don't know Mr. Harding's personal financial information, but according to his latest Statement of Substantial Interest Form filed on July 8th of 2008, he now owns a 30% interest in H.H. Holdings LLC. This company was formed in November of last year, and in June purchased the Ken-Mar Shopping Center for more than $2.2 million.

Kevass Harding's partners in this deal, Pat Ayars from Key Construction and Nick Esterline of Landmark Commercial, are both very experienced in real estate development. What remains unclear is exactly what Harding brings to the table. Does the pastor of Dellrose Methodist Church have the assets to buy a 30% stake in a multi-million dollar real estate transaction followed by an $8 million investment? Do two of Wichita's most accomplished real estate developers need Kevass Harding's guidance on refurbishing a strip mall?

Regardless of Kevass Harding's involvement in H.H. Holdings LLC, there is an obvious conflict between the Harding's financial interest and the interests of USD 259. While Kevass Harding might believe USD 259 needs an additional $350 million, it's not going to come from his new investment property.

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