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Monday, December 9, 2013

Pay attention: LR grabbing school money for private development

Posted by on Mon, Dec 9, 2013 at 7:27 AM

click to enlarge SEEKING SCHOOL TAX MONEY: Developer Tommy Hodges wants to tap school tax for road improvements at his Bass Pro/outlet mall development. - ARKANSAS BUSINESS
  • Arkansas Business
  • SEEKING SCHOOL TAX MONEY: Developer Tommy Hodges wants to tap school tax for road improvements at his Bass Pro/outlet mall development.
Tommy Hodges,
the developer of Otter Creek, earned deserved High Profile treatment in Sunday's Democrat-Gazette for his decades-long pursuit of retail development there. I've saluted him before for doggedly working through an earlier bankruptcy and other setbacks in landing a Bass Pro Shops, now open, and now building a retail outlet mall, the Gateway Town Center.

But. I was surprised to learn that Hodges' representation to me that the project was being done without Tax Incrementation Finance District money some months ago has undergone a change. The city board of directors will hold a public hearing Dec. 17 on a plan to use TIF district authorization granted with little thought back in 2003 for an earlier unsuccessful plan to divert property tax revenue created by the new development into road improvements. City Manager Bruce Moore also happened to have omitted TIF plans when he told me then the city would contribute some economic development money to the project. State highway money was a certainty from the outset given the location at an already problematic junction of I-30 and I-430.

What's not to like about this? There are questions to consider.

Most of the property tax money diverted to the project will come out of Little Rock School District millage — 9 mills not otherwise obligated to bond debt. I still believe an important legal question remains on whether ANY TIF district can constitutionally capture money voted for school taxes from schools. The Supreme Court left that question standing in an important Fayetteville case that did put the first 25 mills of school taxes completely off limits.

It is mighty easy for city directors to give away school money. You'll find they are historically reluctant to give away their own tax money for improvements needed by private developers. 

Have other commercial developers enjoyed improvement to roads in front of their developments; traffic signals and the like?

By allowing this TIF district for this project is the city opening the doors to wholesale raids on school tax money for the benefit of other private developers? The city describes the plan here. It asserts that the developer will still pay a majority of infrastructure costs and notes the school district will capture some increased revenue on 12 mills dedicated to bonds or ruled off-limits already. The city description is a bit disingenuous. It claims 37 mills of Little Rock's school tax levy will enjoy increased revenue. Actually, 25 of those mills are the state's base charge. The entire state effectively enjoys the benefit of that increased revenue because the money it produces offsets the base support the state provides each school district. It is money the district is NOT getting. It goes to the state.

Every school dollar is important, particularly as the Little Rock district looks to a future loss of millions in state desegregation aid.

Equal treatment of developers is also important, however elated we might be about a regional shopping lure in Southwest Little Rock.

I don't expect the city board, beloved of private interests, to give this much consideration. About as much as it gave this year increasing its financial subsidy to the Little Rock Regional Chamber of Commerce through two separate appropriations even as a lawsuit pends over the constitutionality of that expenditure. But there it is for the record.


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