Harrison Square bond
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"The city plans to repay the $45.9 million bond issue with several revenues, none involving general property taxes that homeowners pay. Money would come from taxes paid within specific geographic areas (a Tax Increment Financing district and Community Revitalization Enhancement District) as well as city income-tax revenue and money pledged from the City Light lease."
"Because the bond market values the reliability of property taxes, the city would traditionally gain a lower interest rate by pledging to use general property taxes as a backup should revenues from the designated sources fall short of the payments. At the same time, the city must prove to the state Department of Local Government Finance that it would never use the backup."
"The department won’t move on the city government bond issue because county government is late on getting some unrelated property tax-information to the department. The bond issue should be judged on its own merits, not used as leverage to force county government to meet over-optimistic timetables for property-tax information."
"A new bond issue without property tax backup might not end up costing appreciably more. Interest rates have dropped half a point since the previous bond issue calculations. The city’s strong credit rating will help get a good rate. And with the strong possibility of a drastic change in the state’s property taxes, a property-tax-backed bond might not garner the best-case interest rates as before."
"Some Harrison Square opponents would like nothing more than for the state to delay the project past the city elections with hope that a different council and mayor would quash the project. Such a step would cause significant immediate damage to the city and immeasurable long-term damage. Land has been bought, buildings are being demolished, agreements have been reached with developers. Leaving the land vacant would create a “hole” similar to – but much larger – than the one between Washington and Jefferson boulevards that blighted downtown until Grand Wayne Center was built.
More importantly, backing out now would send a message to every developer in the world: Don’t trust Fort Wayne, take your business elsewhere."
Friday, September 21, 2007
Bond Decision
Posted by scott spaulding at 9/21/2007 07:43:00 AM
Labels: Financing, Harrison Square
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3 comments:
Much more importantly, backing out now would send a message to every developer in the world: Citizens of Fort Wayne are not patsies - if you plan to use public tax revenues to help float your boat - take it elsewhere! John B. Kalb
I would rather have the jobs. Companies move places because of the taxes. That is why so many companies incorporate in Delaware. The corporate taxes are lower there. Besides what people like John are forgetting is that a tax abatement is not a permanent thing. According to state law, they can only last 10 years.
Also, if the state decides to move away from its reliance on property taxes, good jobs will be important because of the income taxes which they create.
I think John's comment just illustrates that problem the people of Fort Wayne have. They are too short sighted to see the benefits of property tax abatement. Like I said before, I would rather have the jobs.
Non-S Scott - When have I ever said anything about not agreeing with the idea of property tax abatements? You are correct, they only last for 10 years PLUS they are indexed - the first year the property owner pays nothing, the next year 10%, then 20% et al until the 10th year when you are now up to the full rate.
BUT,(and this is what I get upset about)the EDA Tax Incremental Financing (TIF) scheme, when originally set up, was for 50 years - the legislature wisely changed it to 30 years on any established after 1998. The way it was set up, an area that the redevelopment commission believed could be improved for better , more economically-sound factories, commercial establishments, shopping centers, et al which would have the potential to increase the number of jobs and improve the economy of the area, could be designated an Economic Development Area (EDA). The area out toward Roanoke on I69 which was used by General Motors to build the Truck Assembly Plant, was, prior to it's being designated as an EDA, farmland with a few houses and barns. The area was assessed at an amount which yielded property tax revenue for Allen County. After GM invested millions to build and equip the plant, the assessed value of this area increased almost expotentially. Allen County, in addition to granting GM property tax abatement, also used the law controlling property tax funds for EDAs to "set aside" all property taxes over the amount collected before GM came to build into a TIF fund. By law, this TIF revenue could only be used to pay for infrastructure improvements (like roadways, lighting,sewers, water, et al) that were done by the county to make the area useable by GM (often paid for useing money from the sale of civic bonds - in which case the revenue paid off the bonds over the life of the bonds) plus ANY IMPROVEMENTS THAT WERE PLANNED in the document that established the EDA.
This has worked very well over the years - the problem that came up was that redevelopment commissions, mayors, county &/or city councilpersons began to use these EDAs as their "own little slush funds". What happened with the original Jefferson Illinois Road EDA is that Duwayne Bobeck, the first developer, was able to pay for almost all of the necessary improvements, didn't need much financial help - TIF funds paid for enlarging the sewers, new pavement on Jefferson and that was about it. Mr. Bobeck had plans to improve the entire area -what is now Jefferson Pointe-but for various reasons including opposition from the residents in the area around, it was going very slowly. So the Walmart was generating revenue for the TIF fund but there was little need for it. When the developers that proposed Jefferson Pointe presented their plans to the neighborhood associations (like Wildwood Park), they were able and did sell the neighborhoods on the plans that they had for an upscale "outdoor mall". Wildwood Park, with the welcome help of city councilman, Dr. Tom Hayhurst, were able to get $50,000 out of the TIF fund to pay for a part of the noise-barrier wall at Jefferson and Ardmore.
This developer also funded most all of the infrastructure for the new mall - and , again, there was no planned use for the ongoing TIF revenue that was now accumulating faster due to the new commercial buildings and the fact that the 10 year abatements for the Walmart, et al were coming to an end.
This is where our city adminisration and redevelopment department started talking and planning for what they could do with this wind-fall. The law covering EDA TIF funds said that if the borrowed money was paid back and there were no other items left to be done as specified in the original declairatory resolution, then the funds would revert to the general property tax needs - school levies, library, police & firefighters pay, et al. This was not the way they wanted to go - they wanted control of this "free" revenue. Like one of them said, " we are not taking it out of your account - we are just taking it out of your bank!"
This is how we got where we are - our mayor and others decided that we should use a fancy new baseball stadium to try and renew interest in our downtown and then they steam-rolled it to where it is now AN ITEM THE MAJORITY DOESN'T WANT and a stubborn group of six on our council who think they know best for the taxpaying public. Well, we will have to show them on the first Tuesday after the first Monday in November that they were wrong! John B. Kalb
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