Thursday, February 23, 2006
Condominium Developer Seeks Tax Break from Mt. Lebanon School District
The TIF Proposal That Will Not Go Away
There are a multitude of problems that come with a plan to develop glitzy condominiums along Washington Road in Mt. Lebanon. All stem from the fact that—surprise, surprise—the developer says he must have a TIF (tax increment financing) to proceed. An attorney for the developer recently appeared in front of the school board to make the case for a TIF.
The attorney was quoted as saying that one argument against the TIF would be that the free market should be allowed to work. In her view, since the property has sat vacant for over twenty years, the market has failed. “That’s what the free market has done” was the exact quote.
Balderdash. The Mt. Lebanon parking authority owns the key piece of property and has held it on behalf of the municipality for the “appropriate” development. The property has never been offered on the free market to other buyers who might have long ago developed it. Indeed, the property has been valued at $400,000. It might even be more if an open bidding process was permitted. But in any case, the market has not failed. It has been prevented from working by government officials who presume to know best.
Recall too, that a previous developer who insisted on tax increment financing had the property tied up for several years only to abandon the project once his private financing arrangements failed.
There are other issues with using a TIF. If the project is built with private dollars, there will be no diversion of taxes to service bond indebtedness. Using a TIF requires prevailing wages and inflates the building cost. And taxpayers will be subsidizing upscale living spaces, which in itself, is morally objectionable. Yet another problem, at least from what can be gleaned from the newspaper report, is that the development group doesn’t understand that the law requires a redevelopment or industrial authority to make the presentation to the taxing bodies and make the estimates of the tax revenue. One of those authorities steers the process, not the developer, developer attorneys, or a parking authority or a municipal official.
Officials should have done a better job of selecting the prospective developer and sought out someone who could have done it without subsidy. That would have made for a much better situation for all concerned—except of course the TIF seeking developer and their attorneys.
There are a multitude of problems that come with a plan to develop glitzy condominiums along Washington Road in Mt. Lebanon. All stem from the fact that—surprise, surprise—the developer says he must have a TIF (tax increment financing) to proceed. An attorney for the developer recently appeared in front of the school board to make the case for a TIF.
The attorney was quoted as saying that one argument against the TIF would be that the free market should be allowed to work. In her view, since the property has sat vacant for over twenty years, the market has failed. “That’s what the free market has done” was the exact quote.
Balderdash. The Mt. Lebanon parking authority owns the key piece of property and has held it on behalf of the municipality for the “appropriate” development. The property has never been offered on the free market to other buyers who might have long ago developed it. Indeed, the property has been valued at $400,000. It might even be more if an open bidding process was permitted. But in any case, the market has not failed. It has been prevented from working by government officials who presume to know best.
Recall too, that a previous developer who insisted on tax increment financing had the property tied up for several years only to abandon the project once his private financing arrangements failed.
There are other issues with using a TIF. If the project is built with private dollars, there will be no diversion of taxes to service bond indebtedness. Using a TIF requires prevailing wages and inflates the building cost. And taxpayers will be subsidizing upscale living spaces, which in itself, is morally objectionable. Yet another problem, at least from what can be gleaned from the newspaper report, is that the development group doesn’t understand that the law requires a redevelopment or industrial authority to make the presentation to the taxing bodies and make the estimates of the tax revenue. One of those authorities steers the process, not the developer, developer attorneys, or a parking authority or a municipal official.
Officials should have done a better job of selecting the prospective developer and sought out someone who could have done it without subsidy. That would have made for a much better situation for all concerned—except of course the TIF seeking developer and their attorneys.
