Monday, April 13, 2009

Some Clarification about CentrePointe

Lexdan sent me a comment about Friday's post. I think that it makes better sense to reply here than in the comments section.

It is right to say that the Webb's have NOT asked for TIF financing. I have reviewed all the original newspaper articles and can only find a comment by the author that the project would depend on the TIF. It is not a quote, and from reading a lot of other initial mis-information by this writer, it is used to sell newspapers. All of the elements named(pedways, garage, Jumbotron, etc...) fall into the category of public improvements, things that would be done by the local government, are ancillary to and not required for the project to be complete. The TIF was always to benefit the city as a whole and not the CentrePointe project in particular.

After the Courthouse Design Review decision and the mis-information about TIF was flying, partly due to the Herald-Leader articles, the Webb's agreed to assist the City with a TIF application. It was the City that defined the area and picked the infrastructure projects(farmers market, streetscape improvements, etc.). Does it seem strange to you that the City only placed three privately owned parcels, two of them parking lots, in the TIF district? All the rest is publicly owned or street right-of-way. CentrePointe will be the only development with an incease in taxable value from which to divert the tax revenue to TIF financing for a while. Only after the two parking lots are developed will their taxes be available to add to the TIF money pool. The Council knows that and voted to proceed-The Council alone, because the Mayor only votes on ties. There is a new make-up of the Council now, several members have been replaced, but has this new version even attempted to reverse course, as was done on the water company issue?

It was rightly pointed out that TIF was for improving blighted areas like the Distillery District and that all downtown is not blighted, all downtown no , but this block in total definitely was. Probably as a direct result of the time honored tradition of benign neglect of developers all over America, when they ready an area for development. The TIF laws are different for each state and applying what you read from Chicago, or elsewhere, is just promoting mis-information about the subject. The City of Columbus, Ohio created a TIF district over all of their downtown to fund infrastructure projects and not to line their developer's pockets. TIF actually was created so as to become a normal budgetary means for making government improvements.

Lexdan, you certainly don't think like the Webb's, because they are not backing off of this project in any way. What you do not see is the possibilities of this block. If you want a park on this block, then you are asking to expend $8+ million tax dollars plus development costs plus the eliminnation of continuing revenue in taxes for years to come. That, in the City's and prudent taxpayers view is a triple digit millions loss over thirty years or more. Are our taxes not high enough now?

I stand by my original statement of my post from Friday.

3 comments:

lexdan said...

When the plans for CentrePointe were unveiled to the public, they included the TIF money to pay for a JumboTron pedways and other nonsense. That is not in dispute. Now if you are to believe that the Webbs never asked for the TIF money, that would imply that the city came up with the idea. Are you saying that it was the mayor, or the city council's idea to pay for a jumbotron and pedways with taxpayer money? Do you really think that the Webbs had nothing to do with this? I find that very hard to believe especially since the Webbs were picking up the tab for the TIF study.

You say, "All of the elements named(pedways, garage, Jumbotron, etc...) fall into the category of public improvements, things that would be done by the local government, are ancillary to and not required for the project to be complete." Well yes. That's true, but beside the point. The point is that the Webb's want the city pick up the tab on a bunch of "public improvements" that are more or less there to benefit the CentrePointe project. They have since changed what they are asking for to make it more palatable to the public, but it is what it is. In my opinion, if the city wants those improvements to downtown, we should pay for them through the normal budgetary process.

You say "There is a new make-up of the Council now, several members have been replaced, but has this new version even attempted to reverse course, as was done on the water company issue?" The fact the block has been demolished makes it a bit difficult to reverse course and preserve the buildings wouldn't you say?

You agree with me that downtown was not blighted but argue that the block was. Fair enough, but I dont' think defining the blighted area as a single block amidst a thriving downtown is what is intended by the TIF. Will you grant me that?

I don't think you are being fair when you say that "applying what you read from Chicago, or elsewhere, is just promoting mis-information about the subject." We would be foolish not to look to the experiences of other cities when deciding what to do. That experience tells us that TIF may be appropriate in certain scenarios, but that it is often misused. In my opinion it is inappropriate in the situation, but appropriate for the Distillery District.

"Lexdan, you certainly don't think like the Webb's, because they are not backing off of this project in any way." I'll believe that when I see construction begin. I suspect that their funding has dried up and they are trying to find a new source of money. This is idle speculation, but if it were true, would they be acting any different than they are now? They are SELLING CentrePointe, and as such, they HAVE to convince people that everything is A-OK.

As for the park idea, I don't think the economics are as bad as you make out. Perhaps the city could raise the 8 million from private donations. As for the tax revenue, we won't be seeing that for another 30 years if CentrePointe gets built thanks to the TIF. Also, the park could improve the property values and encourage more development downtown. There are a ton of opportunities for infill so it is not like we are totally out of space. Think of it this way. Should the city sell the space with the fountains in front of the new courthouse? Are we losing millions by not putting a big office building there? Of course not.

Thank you for answering my post. I am enjoying the discussion.

Streetsweeper said...

Lexdan, you are twisting my words. I said that the Webb's proposed the idea of TIF to augment the infrastructure in conjunction with the construction of CentrePointe. It only make sense to disrupt the area once to do all the work at the same time. As I explained, the Webb's and their project are the source of the TIF funds and not the recipient of them. There is no other property that will pay into the TIF within the district as defined by the Council. That means that CentrePointe is "picking up the tab" for the City in the form of TIF tax funds, which are diverted from the State tax liability and placed into the normal budgetary process.

No one can replace the destroyed buildings, but the new Council could undo the TIF request and attempt to purchase the property as some have suggested. I am simply saying that they have not appeared to move in that direction. The seem to be behind the Mayor on this subject.

I will not. Kentucky's TIF legislation was originally designed to allow up to one half mile radius of individual properties be included into a TIF district. Still, the funds had to be used on PUBLIC infrastructure alone.

Comparing Chicago's TIF rules to Kentucky's could be like comparing oranges to grapefruits, extremely similar but different.

The City can barely do anything downtown without private developers. Their projects will not get done because of TIF, but TIF will get done because of private developers.

And, get real the City cannot sell the Courthouse Plaza. That belongs to the State, thanks to our nor building an Arts Center with the $6 million we are now spending on the Lyric Theater.

lexdan said...

From the original post:
"It is right to say that the Webb's have NOT asked for TIF financing."

From your response:
"Lexdan, you are twisting my words. I said that the Webb's proposed the idea of TIF to augment the infrastructure in conjunction with the construction of CentrePointe."

So in other words the Webbs PROPOSED the TIF financing, but they did not ASK for it. Such subtlety was lost on me. I apologize.

Yes I realize that the Web's would pay up front for the various infrastructure improvements and that they would recoup that money by paying much lower property taxes for many years to come.

The problem I have with TIF is that this is the kind of thing that politicians can pitch as not costing the taxpayer anything since we aren't paying out any money. Yet for the next thirty years we will be raising that much less in taxes which means we will either need to raise taxes or cut other programs. By financing the improvement through the TIF they avoid the normal budget process where the merits of the improvements are weighed against all the other functions of government. This is not the best way to allocate resources.

Downtown is fine. The property values will rise downtown with or without CentrePointe. TIF is not appropriate here.

With the Distillery District, the whole area really is in bad shape, and the developer is taking a much greater risk which is why I think the TIF is justified in that situation.

The point I was trying to make about the Courthouse Plaza is not that we should sell it. Of course we shouldn't. The point is that you can't just say we would lose huge numbers of dollars in future revenue if CentrePointe doesn't get built on that block (which I think is very likely). If there is a need for that kind of development downtown, something will go up in that area whether it is that particular block or not. If we put a park on that block, we would likely get that same amount of revenue when somebody in the future puts a big development at one of the many other suitable spots downtown.