Heckuva way to run a navy UPDATE | Arkansas Blog

Tuesday, December 9, 2008

Heckuva way to run a navy UPDATE

Posted By on Tue, Dec 9, 2008 at 6:09 AM

Commodore Pat Hays, NLR's mayor, is adding on-shore developments to his riverine achievements. And what a way to do it.

He'll be holding a public hearing -- a mere formality, you may be sure -- in a few weeks to use existing Tax Increment Finance Districts to create a revenue stream to build a parking deck and perhaps other facilities for a new hotel proposed for the old Rye Furniture property downtown. Using TIF to redevelop a vacant building is nearly the classic use of this financing tool. Instead of paying property taxes to schools, the city, county, and the Children's Hospital, the developers will use direct the money to pay off bonds that build infrastructure that make the project feasible.

But .....

This particular plan is nuts -- an absolute perversion of the concept of TIFs. Hays proposes to take the school property tax stream not just from the new hotel but also from two other -- already completed -- projects to build the hotel's parking deck. One source would be  the completed Enclave apartments blocks away, by Alltel Arena. It has a built-in parking deck, so hardly needs another. Another source would be from the completed Argenta Place development -- have an Irish stout at Cregeen's, y'all -- at Broadway and Main. Clearly, these projects did not need TIF financing to be built and occupied. They have created new residential demand on public schools that depend on the elasticity of property taxes to accommodate growth, not to meniton ongoing maintenance and the general rising cost of operation.

But Hays wants to reach out and grab this school tax money for a hotel parking deck. Presumably, the NLR Council will rubberstamp this as they did the height variance for the new hotel. (No quarrel with that variance, by the way.)

A lawsuit targeting such TIF thievery of school property taxes -- which the Constitution says quite clearly may be spent only on schools -- and the perversion of the TIF concept by taking taxes from completed projects to build new infrastructure elsewhere seems ripe. I hope somebody takes up the call.

MEANWHILE: NLR Daily News also has an item on the city's candidacy for a vehicle assembly plant in the old Rank Video building.

UPDATE: Legal advice sought. I wanted to check some papers at work, but my memory was correct. 1) The legislature amended the TIF law to, among other things, ensure that only contiguous properties were within a TIF district. This was to prohibit scheming public officials from cherry-picking parcels all over creation to amass a sufficient tax flow diversion for whatever property they had in mind. Sounds like what Hays is doing, right? The law specifies that a TIF district must be "a contiguous area within a city or county n which a redevelopment project weill be undertaken..." 2) A much  bigger problem then is the Constituion and statutory words that say redevelopment districts may be formed for financing redevelopment projects "within the district." Hays proposes to combine tax flow from three distinct TIF districts to pay for a project in ONE of them. Is this legal?

If what Hays is doing now is combining three existing TIF districts into a single NEW TIF district for tax purposes, he might be able to do that. But he certainly couldn't say that the taxable baseline of this NEW district was the property value back when the original districts were formed and before the Enclave and Argenta Place were built. Not with a straight face, anyway. No, a new district must value the property at current value. That eliminates its benefit as a cash producer for his parking deck, seems to me.

UPDATE II: Or maybe, someone suggests, the hurry is to get this new TIF created before the Enclave and Argenta Place property carries the proper assessment on tax rolls. It's been suggested to me it's currently showing unimproved value. I hope the NLR School District bleats bloody hell about this slimy subterfuge. It has opposed even straight TIF districts in the past. Dishonest ones like this should prompt even more howling.

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