Re: Mayor or League lobbyist: which one answers for Topeka's double standard?

Henry -

As I dig into your questions, it’s worth noting these discussions often involve a tension between two legitimate interests. The city wants and needs to support development, while protecting taxpayer investment and public resources. A business, in turn, has an understandable interest in securing as much available assistance as it can to make a project work, reduce its investment and manage risk. Those goals can overlap, but they are not always in step. The city’s responsibility is to find a balance: support projects that bring meaningful public benefit while ensuring public contributions are reasonable and accountable to taxpayers.

Kansas law does not require Topeka to use a local but-for analysis for TIF, CID or RHID applications. Topeka adopted the requirement through local policy. Under Kansas law, a local policy can set standards beyond state law’s minimum requirements. In fact, cities are encouraged by the state to do so, and the Governing Body can amend its policies.

That does not make a but-for test unreasonable. The question it addresses is whether a proposed project could proceed without public assistance - and, if not, what is the most reasonable level of assistance needed to make it feasible. The analysis is an estimate based on financial information and assumptions. It cannot establish with certainty what a developer would have done in a hypothetical situation. The Kansas Legislative Post Audit report you reference recognized that limitation. However, that does not mean a city should provide incentives to a project without asking questions. It means a city should understand the analysis’s limits and use it as one of several tools alongside feasibility review, financial analysis, public-benefit commitments and other performance safeguards.

You present this as if Topeka is alone in using a but-for test or other scrutiny standards. We are not.

Other Kansas cities use a but-for analysis and comparable financial and public-benefit review. Overland Park’s policy requires a developer to document the project’s profitability and feasibility with and without requested incentives. Its Governing Body considers the developer’s private investment and financing plan, expected tax revenues, the cost of future public services and the project’s contribution to adopted development goals. The policy generally favors pay-as-you-go financing and says the City will not put its general revenues at risk for a private redevelopment project.

Leavenworth’s economic-development incentive policy applies a but-for principle to incentives. It also asks whether the incentive would give one business an unfair advantage, whether public benefits justify the subsidy, what jobs and investment are expected, and what additional public-service costs the project may create. Its incentive agreements include performance criteria, and the City reserves the right to audit compliance and discontinue or recover incentives if agreed requirements are not met. City of Gardner’s policy likewise requires a but-for showing and evaluates the project’s contribution to local economic goals.

Kansas City, Missouri provides a nearby example of a formal but-for review. Its program requires a cost-benefit analysis for each project, with approval by the Commission and City Council. The project must also meet the applicable redevelopment area requirements.

For a neighboring state sample, Nebraska state law provides a regional example. For redevelopment plans, state law requires written findings that the project would not be economically feasible and not occur in the redevelopment area without the incentive. It also requires analysis of costs and benefits to local governments, the community’s economy and the demand for public and private services, with a finding that the project is in the community’s long-term best interest.

These policies do not use identical formulas, and a but-for analysis is not the only form of scrutiny. They do show that – like Topeka - cities use a combination of financial feasibility review, public-benefit standards, limits on public exposure, performance agreements, but-for tests and follow-up review to decide whether an incentive is justified.

Topeka evaluates whether public assistance is necessary and proportionate. That assessment includes a full project budget and financing plan, other public incentives the project might be receiving, expected revenues, the applicant’s proposed investment and risks the city and taxpayers would take on.

You state Topeka caps private applicants’ returns at a 7.5% cap rate. That does not describe a universal cap across TIF, CID and RHID. The City’s policies differ by incentive type, and the RHID policy’s financial criteria are not a blanket cap applicable to every incentive application. We have approved higher, and lower. But it is certainly our starting point. The project economics, type of incentive, proposed public contribution and public benefits also matter. It is fair to scrutinize whether a particular threshold or method is appropriate – and I have no problem taking another look at that with the council. But it is not accurate to treat one figure as a universal rule for every program.

A but-for analysis does not mean the city will approve a project just because it appears to need assistance. The project must still be eligible, financially credible and consistent with other city policies and public goals. Nor does the test mean the city has to reject a project that could proceed without assistance. The city may decide the public benefits justify support, but it should explain to taxpayers why that support is warranted.

Kansas law has separate requirements for different kinds of public financing. General Bond Law includes rules for municipal bond issuance, including sale procedures and statutory limits on bonded debt. Many of these incentives deal with special-obligation bonds and full-faith-and-credit. Special obligation bonds are payable from specified revenues and not general obligations of the city. Full-faith-and-credit bonds can pledge the City’s taxing authority if designated revenues are inadequate; state law requires a feasibility study demonstrating project benefits will exceed costs and project income would be sufficient to pay project costs before bonds are issued.

Those distinctions matter. A special-obligation bond does not expose general City revenues the same way as a general obligation, but still depends on sound projections and a viable project. A full-faith-and-credit pledge creates a more direct risk for the city and taxpayers. The city needs to understand the repayment source, assumptions behind the revenue forecast and what protections apply if the project underperforms or outright fails.

The City’s bond rating is part of a broader financial picture and a reason to put in measures such as but-for tests when determining how the city will allocate incentives. Cities use bonds to finance public infrastructure, including streets, bridges, water and sewer systems, and public facilities. In August 2026, S&P Global Ratings assigned an AA rating to Topeka. AA has a strong, high-quality investment-grade rating: S&P describes it as reflecting a very strong capacity to meet financial commitments. It is one category below S&P’s highest rating, AAA, and indicates Topeka is a creditworthy borrower. Ratings can vary by bond type and change over time. A strong rating helps the city attract investors and borrow at lower rates than it could with a weaker rating. That reduces long-term borrowing costs, saves the taxpayers money and preserves funding capacity for infrastructure and development projects that benefit residents.

The connection to incentive review is not that a but-for analysis is a rating-agency requirement or that the test automatically improves a rating. The connection is that sound review procedures help the City manage overall obligations and revenue assumptions behind its financial decisions. A disciplined review avoids committing public resources where a project does not need them, test whether expected revenues are realistic, and identify who bears the risk if projections fall short. Those practices support the City’s ability to plan for future obligations and preserve borrowing capacity for needed projects - including development-related infrastructure - while keeping long-term costs down for residents.

Topeka’s policy includes safeguards beyond the but-for question. It generally favors pay-as-you-go arrangements, limits the use of the City’s full faith and credit for third-party projects, and calls for review by financial professionals and bond counsel when bonds are involved. The but-for analysis is one part of a larger set of guardrails.

The city makes decisions through public meetings, and City records are subject to Kansas open-records requirements. The city follows those laws.

I support protecting proprietary information for businesses when they go through these processes. At the same time, a private entity seeking taxpayer support or redirection of public revenue should expect the City to review proposals carefully. Residents should be able to understand the public commitment, the decision-making process and basis for the City’s action. The City’s review may require detailed financial information from a business that cannot be released publicly. That does not eliminate the need for a public explanation of the project’s costs, expected benefits, performance conditions and City’s risk.

Kansas has expanded reporting on economic-development incentives and directed more attention to evaluating whether public incentives produce intended results. Those Legislative efforts recognize the need for data and accountability and are a direct message from the Kansas Legislature to use additional tools more stringently to assess projects that could receive incentives. And the message to cities it to utilize incentives less in general, if possible. They do not create a requirement that a private business provides the public with its records or identify every person who may benefit from its success. This is why a city must balance confidentiality with the public’s understanding of how incentive dollars will be used by a private entity and who specifically is the beneficiary of those public dollars and incentives.

The Kansas Legislative Post Audit advised local governments to evaluate incentives from several angles. It cautions that a single return-on-investment figure is not enough to determine whether an incentive is working: evaluations should also consider policy goals and who benefits or bears costs. The Government Finance Officers Association recommends local governments assess which incentives are the right tool, consider the fiscal risks of diverting future revenue, and evaluate whether a project could proceed without public assistance.

Kansas also maintains an economic-development incentive database created by the Legislature. It covers numerous incentive programs and recipients, including programs administered by multiple state agencies. State law separately requires evaluations of state incentive programs to estimate economic and fiscal impacts. These state practices reflect a broader expectation that public incentives be tracked and assessed and only be given with strict scrutiny, while leaving cities room to choose local review standards suited to their circumstances.

You mentioned a few projects.

Hotel Topeka. The Governing Body’s decision to acquire the hotel followed a public process and vote. The decision reflected the stated importance of preserving a conference center in Topeka, as well as potential effects on tourism, events, downtown activity and other local businesses. It is not accurate to say the city made the decision without economic analysis.

The city will recoup costs through project revenues, including CID and transient guest tax collections. The hotel will also return to the property tax rolls after a period and is now in the hands of a private company.

You cite the County’s $3 million appraisal against the City’s bid of approximately $7.6 million. The city does not set the County’s appraised value. The prior year’s appraisal was nearly twice the $3 million figure, raising a broader concern about how abrupt valuation changes affect local government, taxpayers, homeowners and business owners. As you know, I support changes at the state level to improve the property-valuation process. The appraisal figure does not alone settle questions of public purpose, economic effects or long-term financial success and benefit.

The city and Topeka business community cited projections for room nights, visitor spending and tax revenues as part of the reasons for preserving the hotel and conference center. This includes increased visitors to Topeka, more sales tax collection and benefits to retail, restaurant, hotels and other businesses in the city – all which will have significant economic benefit to citizens and private business. This importance has been supported by the County, which is investing in improvements to Maner Conference Center, and continues to support the Stormont Vail Event Center, another tax subsidized entity through the County.

220 SE 6th Street / Link Innovation Labs. This was a joint City, County and JEDO effort, with public funding approved through the JEDO process. It was not a private application moving through the City’s process, and the procedures are not identical. It is inaccurate to describe it as a city project that proceeded without economic analysis or a public decision process. JEDO, with consideration by county and city staff and elected officials, approved funding for Innovation Center 2.0. During that process, considerable economic information, analysis and other cost information was provided in open meetings and is public record.

Gordon Center. The Chick-fil-A and Whataburger projects have received TIF and CID support, along with additional development there. That support – as with any project - is not “no strings attached”: the businesses chose to seek public incentives, and the city has a responsibility to evaluate the requests and protect the public interest. The traffic study’s scope is not the same as the financial review used to evaluate whether public assistance is needed. I understand your frustrations about the traffic study, shared some of them, and I had conversations during that time with the developers.

College Hill. Interesting you brought up the Legislative Post Audit report because one of the projects they examined heavily was The College Hill project. The College Hill redevelopment, of which you were involved, is an important example of why the city must take long-term public exposure seriously. The Legislative Post Audit reported substantial taxpayer costs connected to the project, estimated at approximately $6.5 million. The report cited the College Hill project as a reason to examine past practices and strengthen protections. The lesson is that commitments and projections should be reviewed carefully, documented clearly and tracked over time.

You have argued if the City requires private applicants to pass a but-for analysis, it should apply that exact same test to every City, County or GO Topeka initiative — or eliminate the requirement. I agree that all uses of public resources deserve serious scrutiny. But the appropriate analysis depends on what the public entity is being asked to do, how the project is financed, who bears the risk and who receives the benefit. Consistent accountability does not require an identical technical test for every kind of project.

For a private development incentive, the but-for question is whether the project or investment would occur without the requested public assistance — and whether the amount of assistance is justified by the public benefits expected. It is not a test of whether a business is struggling or unable to build without help. It is intended to assess whether public assistance would change the private investment decision and produce activity or benefits that otherwise would not occur. If a project would proceed without the incentive, the city should carefully consider whether committing public resources is warranted.

A City-sponsored capital project is a direct public investment considered through the City’s budget and capital-planning processes. Such projects may be funded through some combination of taxes, fees, grants, dedicated revenues or bonds. The key questions include whether the project is a public priority, whether it is affordable over its full life, how it compares with alternatives, what public benefits it is expected to provide and who bears the risk if costs or revenues differ from projections. That is a different analysis from asking whether an incentive would induce a private investment, but it does not exempt a public project from financial analysis, transparency or accountability.

The distinction depends on the City’s role and structure of the financing, not simply on whether a project has public or private beneficiaries. Public projects can benefit private businesses, and private development can produce public benefits. When a city-sponsored project includes a private partner or directs public resources to a particular private entity, the City should examine the private benefit, the public risk and whether the public contribution is necessary and proportionate. In those circumstances, a but-for or similar incremental-impact analysis may also be appropriate.

The City uses financial review, legal review, public meetings, project-specific analysis and expert advice. The review should fit the project while consistently addressing public purpose, financial credibility, costs, benefits, risk, transparency and accountability for results. The central question is whether the public entity has a sound basis for committing or redirecting public resources and can explain the public cost, expected benefit and safeguards to residents.

You have said at Council meetings businesses want government to “get out of the way” and let them build. And yet, at the same time, businesses seek taxpayer incentives to help finance projects. If businesses are going to ask taxpayers to help them pay for projects, they must be prepared to provide information to the public and experience a standard of scrutiny. We as a city need to continue to lower regulatory barriers but when it comes to taxpayer incentives a city is not obligated to approve an incentive without having set standards and ensuring significant questions are being asked about the project to protect the public interest.

We must have productive relationships between the city and local businesses. That means listening, making the application process understandable, setting clear expectations and giving applicants timely answers. It also means being candid that public incentives carry conditions and require review. The goal should be to make the city a reliable partner while ensuring public support produces a public benefit.

You have questioned whether my work at the League conflicts with my role as Mayor. My understanding is at one point you sent an ethics complaint to the state about this, and it was not accepted, indicating no conflict. I have been open about holding both positions. The League represents municipalities and provides information, advocacy and services to member cities. My work there helps me understand statewide issues, work with legislators and learn how other cities address common challenges. That experience helps me ask better questions and bring useful ideas back to Topeka.

I do not speak for the League when I make decisions as Mayor, and I am not claiming the League has an official position on the details of Topeka’s but-for policy or on any individual project. Topeka’s Governing Body makes Topeka’s decisions under the law and through its own public process. My responsibility as Mayor is to the residents of Topeka.

Kansas home rule is an important local-control principle, established directly by voters. Voters approved the City Home Rule Amendment in 1960, and it took effect July 1, 1961. Article 12, Section 5 of the Kansas Constitution empowers cities to determine their local affairs and government. It directs that city home-rule powers be liberally construed to give cities the largest measure of self-government.

Local control matters because Kansas cities are not alike. They differ in population, geography, tax base, infrastructure, workforce, housing needs, growth pressures and the kinds of development they are trying to attract. A policy that fits a large urban center with a broad tax base and major redevelopment needs may not fit a small community with a different economy and fewer resources. Local decision-making allows residents and their elected representatives to set policies in response to those conditions, while state law provides common rules and limits.

That is the balance home rule is meant to support: statewide law where uniform rules are appropriate, and room for cities to make local choices where community circumstances differ. Topeka’s incentive policies are one such local choice. The Governing Body remains responsible for reviewing those policies, explaining the public purpose they serve and changing them when local experience shows a change is warranted.

That is the message I give to all cities in my work at the League, and an important concept the League itself advises to all cities. For a better look at League policies, here is a link to the Statement of Municipal Policies, adopted by the cities of Kansas: https://cdn.ymaws.com/www.lkm.org/resource/resmgr/files/smp/2027/2027_state_smp_draft_9-26.pdf

On October 20, the Governing Body voted 9-0 to ask voters to consider allowing the independent auditor the city is hiring to change the charter to allow that individual to report directly to the city council, not city manager. This is common for other cities who have this position to provide balance at the position and ensure the proper oversight is occurring. The city is moving forward with that staff position regardless of the vote, because it is important to help us find cost savings and efficiencies.

Kansas cities use different structures for internal auditing. Olathe’s City Auditor is appointed by and reports to the City Council. The Council reviews the auditor’s proposed work plan, and Olathe’s proposed 2025–2026 audit plan included an audit of economic-incentive monitoring. That example is relevant because it shows how we can use the position to examine this issue.

Wichita has an Internal Audit Division whose charter describes the auditor’s functional accountability as shared among the City Manager, Mayor and City Council. Audit reports go to elected leadership and the public.

A regional example is Kansas City, Missouri. Its City Auditor is appointed by the Mayor and City Council under the City Charter, and the Auditor’s Office publishes performance audits and recommendations for the Mayor, Council, management and public.

Our proposal to have the auditor report directly to the Governing Body provides a clear reporting line while preserving the auditor’s ability to examine City operations independently.

You are asking the Governing Body to suspend the but-for requirement immediately, retire it, or apply the same test to every City and GO Topeka project. I am open to reviewing whether the current threshold, method or application needs adjustment. That review should consider the policy’s purpose, limits of the analysis, the costs and benefits of alternatives, and how the same public-accountability goals can be met across different kinds of projects. That review needs to happen with members of the city council, through our committee process.

I do not support considering changes to the policy without completing that review, discussing it with the council and understanding what safeguards would replace it.

Thank you,

Spencer

Spencer L. Duncan

Mayor, City of Topeka

785-207-8985

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From: Henry McClure <mcre13@gmail.com>
Sent: Saturday, October 24, 2026 8:13 PM
To: sduncan@lkm.org <sduncan@lkm.org>; Spencer Duncan <sduncan@topeka.org>
Cc: neberline@lkm.org <neberline@lkm.org>; Governing Body <governingbody@topeka.org>; City Clerk <cclerk@topeka.org>; lisa.schmitt@snco.us <lisa.schmitt@snco.us>; mcre1.9999@blogger.com <mcre1.9999@blogger.com>
Subject: Mayor or League lobbyist: which one answers for Topeka's double standard?

 

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Mayor Duncan,

You hold two jobs. By day, you're the League of Kansas Municipalities' Government Affairs Director, the man who tells legislators how Kansas cities ought to behave. By night, you're Mayor of Topeka, a city that doesn't follow the advice the League would give anyone else. I've copied the League's executive director, Nathan Eberline, because I'd like to know which of your two jobs is going to answer this.

Topeka runs two sets of rules.

If you're a private owner asking for a TIF, CID or RHID, the city makes you pass a "but-for" test. It caps your return at a 7.5% cap rate, and you get to pay for the privilege of having Jeff White at Columbia Capital decide whether you might make too much money. Kansas law doesn't require any of that. Topeka invented it.

If the deal belongs to the city or GO Topeka, the rules vanish:

HOTEL TOPEKA
- City spent: $18,350,135.96
- Sold for: $1,000,000 cash
- City bid $7.6 million against a $3 million county appraisal
- But-for test applied: none

220 SE 6TH ST (FORMER AT&T BUILDING)
- Owner paid $1,512,500
- Taxpayers put in about $9.4 million, including a GO Topeka-backed lease
- Owner's gain at the $8 million asking price: $6,487,500, about 30% a year
- Return test applied: none

GORDON CENTER (CHICK-FIL-A AND WHATABURGER)
- Went through two bankruptcies before the site came back
- About $1.7 million in extra cost tied to the Chick-fil-A and Whataburger work
- In the traffic study, the site's own history wasn't allowed to count

A private developer who lost $17 million on a hotel would be out of business. A private owner asking for a 30% return would be laughed out of City Hall. Topeka does both, and calls it policy. Meanwhile the owner who carried a site through two bankruptcies gets told the past doesn't matter.

So here's the question, Mr. Lobbyist: if another Kansas city called the League tomorrow and said, "We hold our citizens to a strict rate-of-return test, but we exempt ourselves and our economic development partner," what would you tell them? I think we both know. You'd tell them to apply the policy evenly or get rid of it. The League says it exists to help cities follow the rules, not get around them. Topeka is your hometown and your city. Take your own advice.

I'm asking for three things:
1. Your answer, as mayor, on whether this double standard is acceptable.
2. The League's view on how a member city should handle a policy it applies to its citizens but not to itself.
3. A council agenda item to retire the but-for test or apply it to every city and GO Topeka deal.

I'm not asking for another "my initial response was clear." I'm asking for a straight answer, and I'll be sharing whatever comes back with the public.

Henry McClure
(762) 291-2765