NLR's bodacious grab | Arkansas Blog

Sunday, December 14, 2008

NLR's bodacious grab

Posted By on Sun, Dec 14, 2008 at 7:44 AM

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THE ENCLAVE: Should its property taxes go to NLR schools or to build a hotel parking deck five blocks away?

Good for the Democrat-Gazette for reporting further on North Little Rock Mayor Pat Hays' unprecedented plan to round up revenue streams from three disconnected Tax Increment Finance districts to build a parking deck for a hotel in one of the three.

Bad for the reporter for quoting City Attorney Jason Carter as saying he's unaware of any problem with the plan. He's aware of one, because he and I have discussed it. He acknowledges my argument, though he isn't ready to concede it.

It couldn't be simpler. Amendment 78 to the Arkansas Constitution, which allows cities to set up redevelopment districts such as this, says, with my emphasis supplied:

(a) Any city or county may form a redevelopment district for the purpose of financing one (1) or more redevelopment projects within the district.

(b) A city or county which has formed a redevelopment district may issue bonds for the purpose of financing capital improvements for redevelopment projects within the district.

If the mayor only combines the taxing power of the three existing districts, he will be drawing tax money from two of them for a project OUTSIDE those districts.

The 2005 legislature craftily made a one-word amendment that deleted "within" from the 2001 TIF legislation. But the state Supreme Court has already taken a dim view of legislative efforts to rewrite the TIF amendment insofar as use of school tax money. The court tends to favor plain language of the Constitution. See the recent decision on no-bid state contracts.

The D-G article at least confirms the obvious, though it treats this outrageous Hays scheme as if it makes perfect sense. Hays is rushing to do the combo TIF deal to capture a rise in taxes that would otherwise go mostly to North Little Rock schools. Two TIF districts -- for the multiuse Argenta Place project on Main Street and for The Enclave apartments -- were mapped but never used. Private money built and completed those projects. They go on the tax books at full value Jan. 1. Hays wants to pretend that the TIF districts created the increased value and thus the growth in property tax in those areas can be diverted to an unrelated improvement in another part of town. He could just as easily today create a TIF district for the new Wal-Mart on Maumelle Boulevard and claim its new tax value to build a softball field in Rose City. I don't think it's legal. If it is legal, it's such a perversion of the idea of a TIF as a tool to spur redevelopment of blighted areas that it SHOULD be made illegal.

Simply put: The new parking deck that Hays proposes does not benefit the existing TIF districts that will provide much of the money to build it.

There also remains an unsettled question of whether a TIF district can capture the 14 mills of school tax charged in North Little Rock above the state-mandated 25 mills that the Supreme Court has said may not be touched by pirates like Mayor Hays. This question wasn't squarely addressed in the earlier Supreme Court decision.

The final form of this proposal will be important. The prospect is strong that a public interest group may decide to ask the Supreme Court if the plain language of the Constitution and statute mean what they say, or if Pat Hays can just dream up any old scheme to steal school tax money for his latest brainstorm.

Finally: note the comment about broad use of TIFs in Chicago in today's NLR story (and widespread criticism of the abuse or ineffectuality of TIFs there and in many other places) and a nearby article about the pervasiveness of corruption in Chicago public life.  When politicians view pools of tax money as more or less their own to use as they see fit ... Well, you know the rest of the story.

PS -- Readers are predicting that the mayor will argue for this TIF scam by saying parking is needed all over downtown. Indeed. Thanks to the mayor, any number of developments were approved that didn't provide sufficient parking -- Alltel, Dickey-Stephens, Argenta Place, The Enclave. So now the mayor wants the school district to give up tax dollars to pay for parking he didn't require.

No matter. That argument is irrelevant. 1) Statute says TIF districts must consist of contiguous land. 2) Constitution says TIF districts can only build projects WITHIN the districts. 3) If the may creates a truly new TIF district to throw off revenues for a parking deck, he must give up the demonstrably increased values of Argenta Place and The Enclave that he craves to build his parking deck. I think he's in a legal corner. Laws have meaning. All the coulda, shoulda, wouldas don't apply.

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