The money grab | Arkansas Blog

Thursday, September 20, 2007

The money grab

Posted By on Thu, Sep 20, 2007 at 8:44 AM

Why does NLR Mayor Pat Hays hate the NLR public schools? Why does he keep adding to the Tax Increment Finance Districts he wants to create in the city -- first a sporting goods store in Dark Hollow, then a huge mixed use redevelopment along the river and now four more TIFs for office/commercial projects in downtown.

Do your eyes glaze at invocation of TIF? It's simple. In NLR, it will mean developers will be given an exemption from about 15 mills in property taxes. Money that would otherwise go mostly to the public schools -- and also to Children's Hospital and the city and county -- will go instead into developers' pockets for investment in their property.

If you could get Mayor Hays to give you a similar deal on your $100,000 house in NLR, it would be worth $300 to you every year to put into your deferred maintenance fund or to spend at the subsidized Bass Pro Shop or the new Irish pub that is nearly built across from the mayor's office.

That pub? Here's where it really gets screwy. The TIF mechanism was set up by the legislature at the behest of profit-hungry developers and city officials looking for a way to steal school tax growth. The cover story was that the money would be used to fight blight. Hah.

An excellent story this morning on this subject by Jake Sandlin of the Arlkansas Democrat-Gazette notes that it's a little hard to claim you need a tax break to battle blight when the subsidy targets a $5 million project that is already underway and partially nearing completion.

The whole downtown NLR land bubble is worth examination. There's been some speculative pricing already, for one thing. But I think the city should think hard about handing out money voted for schools to developers when plenty of other people in Argenta have invested their own money and sweat in the reviving Argenta neighborhood.

Lawsuits are needed. One would contest giving blight money to projects that already can stand on their own. Another, or perhaps the same one, could also challenge diverting school millage above the 25-mill base rate (that's already been ruled off-limits to TIF grabs) to purposes other than schools. I don't think the Constitution allows expenditure of money voted for schools for any other purpose.

Please, don't tell me how these TIFs will help the schools indirectly. They'll be deprived of the vital normal growth they expect in property taxes to meet ever growing costs. Schools would get no benefit from any rise in sales taxes or income taxes that might be generated by these projects, except in an exceedingly indirect fashion.

Whatever happened to the free market? It's working reasonably well downtown, both in NLR and LR. Some fine new buildings are rising without taxpayer subsidy. What makes these parcels different? Need a parking deck, mayor? In LR, property owners taxed themselves in an improvement district to build them and hamburger taxes have also provided a revenue stream. Nobody dreamed of asking the school district to pay for them.

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