Tax dollars at Risk - way to go, Lawrence

Posted by beatle919 (Marcy McGuffie) on February 7, 2008 at 11:44 a.m. (Suggest removal)

I forgot to say, Dacia does have a petition if you're interested in signing. She'll be at that meeting on Sat.

Posted by justthefacts (anonymous) on February 7, 2008 at 12:04 p.m. (Suggest removal)

Petitions are great, but only if (a) there is a statute that requires the desires therein expressed to have some outcome or (b) the public body to whom it is directed (1) cares and/or (2) believes the signers are all involved voters and not i. bogus or ii. non-voters. Otherwise, a petition has little impact. It's more effective for those who care to (a) write individual letters (not forms) and/or (b) all show up for meetings. Petitions that have no legal binding power are easy to ignore. It's much harder to ignore an avalanche of personal attention.

TIFs have been around a LONG time and are often used to get new businesses to locate in a new area, particularly in parts of a town not doing as well. There is almost always controversy when using them - in part b/c of the whole idea, but also b/c the projects themselves often draw fire (even without the TIF element).

In the wake of the suburban migration of the 1950s and 1960s, many urban cores were left with reduced population and tax bases at the same time that development costs began to increase due to decaying infrastructure. Cities inevitably found that tax abatement alone would not guarantee development. Simply removing blight left large swaths of vacant and unimproved land, and the remediation of these blighted areas did not create, nor sustain, taxes for any municipalities involved. In the 1970s, TIF appeared in California and since has spread to 49 states (AZ does not allow them).

Property taxes are frozen for up to 23 years (maximum life of a TIF project). Increases in city and county taxes due to new construction, rehabilitation and infrastructure improvements from the project are abated for up to 23 years. Instead, property owners make PILOTS (Payments In Lieu Of Taxes), for the amount of the taxes abated, to a special allocation fund as well as 50% of all local Economic Activity Taxes (EATs) (e.g.. sales, utility, and earnings taxes) generated within the project. These funds are used to reimburse the developer for approved project costs. Any overages in the PILOTS are reallocated to the appropriate taxing districts.

For those who want more facts about what a TIF does (and does not) entail, there is a lot of info online about the way they work. Just google TIF and read on.....

Posted by beatle919 (Marcy McGuffie) on February 7, 2008 at 12:49 p.m. (Suggest removal)

justthefacts -

Thank you for your awesome information and insight. I haven't gotten a look at her petition yet, but I know she's really pushing people to go to the meeting and discuss their feelings regarding this particular TIF. Also, showing up to the city commission meeting on Tuesday, is something I know she is pushing...hopefully, enough of those who rally together, will show up to voice their opposition.

I semi-understand the history behind the TIF, but it sickens me that we, as Lawrencians, have to bear the risk of building this hotel. I haven't done enough research...so, I'm just speculating, but with as interrelated and incestuous as our City Commission has been, (former mayors hobnobbing with current commissioners, combining business interests, etc) it wouldn't shock me to find out there's quite a bit of back scratching going on. I need to look into that...

LOL. I'm moving to Arizona...better yet, out of the country like the husband wants to!

Posted by DOTDOT (anonymous) on February 7, 2008 at 1:13 p.m. (Suggest removal)

I'm all for this hotel if a) the developer bears the risk of development through 1) self procured financing or 2) Investors and b) the eventual property owner pays 1) property taxes and 2) the developer for any additional costs incurred for I) site preparation and/or II) additional infrastructure required for traffic management created by the project.

I believe there are actually existing statutes involving the paying of property taxes by property owners, but I could be just overstating the facts. :>)

But seriously, if the numbers don't add up, then it's a bad investment. If it is a bad investment, how does taxpayer funding make it a good one?

This is all fodder for the next yard sign city commission battle. Wake me up when its over.

Posted by DOTDOT (anonymous) on February 7, 2008 at 1:15 p.m. (Suggest removal)

it's

Dang, what is happening to me?

Posted by beatle919 (Marcy McGuffie) on February 7, 2008 at 1:44 p.m. (Suggest removal)

dotdot -

sheesh...what is happening to you? ;-) I swear... *rolls eyes*

okay, maybe I'm just screwing with you a bit.

Hmm, you raised an important question in my mind. I'm trying to think back to last year's city commission battle. If I remember correctly, a couple of the candidates, who were elected, raised quite a few dollars from developers. I'm not sure if Fritzel contributed to any of the current commissioner's campaigns, but it would be of great interest to me if they did...

I guess that's something for me to research.

Posted by lostblend (Keith Campbell) on February 7, 2008 at 2:41 p.m. (Suggest removal)

Justthefacts- nice comment.

I admit that I am not familiar with details of the project (beyond the basics I have read online), but I have studied TIF's and the one fact about this that makes me scratch my head is this...TIF's are supposed to be used in a blighted area. The idea is that the TIF sponsored improvement will increase the value of the surrounding area, thus making them more valuable and allowing for more taxes to be collected from them. I am not sure that I would consider the area in question to be blighted. Some property around KU may not be the prettiest, but the location in proximity to campus gives it value. That being said…it isn't uncommon for valuable land to be approved for TIF. A local example is the Bass Pro Shop that is off I-35 and Olathe which is a TIF project.

Posted by beatle919 (Marcy McGuffie) on February 7, 2008 at 2:56 p.m. (Suggest removal)

Keith -

I'm with you in that I'm not all that familiar with the details, but it was my assumption too that they were supposed to be used in blighted areas.

"That being said…it isn't uncommon for valuable land to be approved for TIF. A local example is the Bass Pro Shop that is off I-35 and Olathe which is a TIF project."

But, just because something isn't too uncommon anymore, does that make it right? It seems like these days, too many people are finding loopholes in existing legislation for "the greater good."

With the Bass Pro Shop example, that is a proven chain, with a proven formula. I could see how that would pay off eventually for Olathe...

Hmm. You just raised even more questions in my head. Thank you for chiming in!

Posted by beatle919 (Marcy McGuffie) on February 7, 2008 at 3:22 p.m. (Suggest removal)

Ah, my sister posted this over on Ljworld. She and those working with her, have done their research. Someone was interested in an online petition -here is their question and her response.

mamacita123 (Dacia McCabe Maher) says…
BalkansHawk (Anonymous) says…
“If there is a petition, will a citizen/resident of Lawrence have an avenue to sign it (say an online option) even if they are out of the country and have no direct access to the petition?”

No online options. There is a petition that has been circulated over the last month by a few people. It has no legal value. The city commission can and probably will completely ignore it. I was simply tired of hearing the proponents of this project and members of the city commission talk about how great this project is and how there has been widespread community support with very little opposition.

If this TIF passes, there will be a legal petition circulated in Lawrence. Possibly filing a K.S.A. 12-3013 initiative referenda petion, but we're still looking into our options. Thanks for your interest in this issue.

Posted by justthefacts (anonymous) on February 7, 2008 at 4:34 p.m. (Suggest removal)

TIF's have become a favorite tool for encouraging economic development. Whether it works or not is up to debate, and there are arguments on both sides (as is usual on any issue). For information on some recent TIF uses in the KC area, and the uproar around it, see the following articles:

http://www.kansascity.com/698/story/2476...
http://www.kansascity.com/698/story/2484...
http://www.kansascity.com/698/story/2497...
http://kansascity.bizjournals.com/kansas...
http://www.bizjournals.com/kansascity/st...
http://reclaimdemocracy.org/rdc/kc/kc_ti...

Posted by justthefacts (anonymous) on February 7, 2008 at 4:38 p.m. (Suggest removal)

If you are interested in reforming laws on TIF's you might be interested in this site also:

http://www.newrules.org/retail/tifreform...

Posted by beatle919 (Marcy McGuffie) on February 7, 2008 at 4:47 p.m. (Suggest removal)

Awesome, I shall be busy with those links!

Posted by ladylaw (Terry Bush) on February 9, 2008 at 8:14 a.m. (Suggest removal)

Looks like your "side" has made its point Marcy. The developer says they've decided not to seek bonds: http://www2.ljworld.com/news/2008/feb/09...

Posted by beatle919 (Marcy McGuffie) on February 9, 2008 at 8:48 a.m. (Suggest removal)

Thanks, Terry

Posted by ladylaw (Terry Bush) on February 9, 2008 at 11:09 a.m. (Suggest removal)

Now it may get interesting....we shall see how many people objected to "only" the TIF idea, as opposed to how many are still unhappy (b/c they were using that as as yet one more thing to fight, because in general they object to the entire idea of putting a hotel of that kind in that place). Don't know where you (or your sis) fall, but there seems to have been a rather vocal group who are/were objecting to this hotel idea, no matter what.

Posted by beatle919 (Marcy McGuffie) on February 9, 2008 at 3:41 p.m. (Suggest removal)

Unfortunately, the debate still goes on. While I am pleased that provided this does pass that it is less risky for the city, I still find it disconcerting that the developers are asking for cash back once the tax revenues start to flow in. David Corliss, who is all for the project, said today that the developers will get a decent cut of the pie as a reimbursement. I AM paraphrasing.

Just because the developers (and their bank) are putting the money down up front, doesn't mean that we the tax payers, won't still be getting screwed. When budgets are so tight and the economy is going to shit, it doesn't sit well with me that the city is willing to give them such a tax break. Do the mom and pop's receive the same sort of incentive? No. It's not fair. I, personally have no problem with a hotel being built there. But, I think it needs to be done the old fashioned way. They put their money up to build it and "make improvements" to the area..AND ALL the taxes go to the city...not back into their pockets.

During the meeting this morning, a man who has interest in building the hotel, David Longhurst, had the audacity to say that this hotel would not increase traffic in that area. He later tried backing down on that comment, but that was exactly what he said. I can see those who live in that neighborhood being concerned about increased traffic flow. For him to downplay such a thing just blows my mind!

But really, my big issue is why are we expected to reimburse the developers for building a $6 million parking garage that will only benefit THEM and not the public?

Posted by beatle919 (Marcy McGuffie) on February 9, 2008 at 3:56 p.m. (Suggest removal)

Oh yeah, Mr. Longhurst also said the parking garage will be one where patrons have to pay to park. Hmm...if they're making you pay to park, aren't they already making some money back to pay for building the garage? And frankly, there won't be that many parking spaces available provided they are at full occupancy. Each condo owner gets a space, too. There will be approx. 200 parking spaces (I didn't write the number down). 92 rooms in the hotel...

So yeah, even though they aren't asking the city to pay up front, we'll still end up paying for this project.