Tuesday, March 20, 2007
Taxpayer Investment Follies in Mt. Lebanon
Thanks to a lot of fuzzy and wishful thinking, the Mt. Lebanon school board agreed by a vote of six to three to participate in the Washington Road Tax Increment Finance project. This decision is wrong on many levels.
First, it is based on a false choice argument. To wit, if we don’t build this, the district will not get the added tax revenues generated at the developed site. That’s utter non-sense. If the Parking Authority would auction off the land it has been sitting on for decades, a private developer could build a substantial project on the site at their own expense that would begin immediately paying full property taxes to the district, the County and the municipality. Tax dollars, by the way, that will never be made up by the TIF project because it takes so long for the schools to get the full amount of taxes paid on the development.
The real problem is that local officials want to control who does the building and what type of residential development gets built. They do not trust the market to do the job. So, we have years of behind the scenes deal making to get a project done that suits the officials. Meanwhile, hundreds of thousands in potential tax revenues have not been collected as would have happened if the property had been turned over to a developer and developed years ago.
Second, the $6.1 million TIF is hardly being used for infrastructure. A million dollars will be used by the developer to purchase the property. That amounts to more than $600,000 per acre for “blighted” property. Another million will be spent on landscaping and streetscaping in front of the condominiums--hardly infrastructure but rather part of the project’s amenities. Another million and half is slated to cover financing costs of the debt issue. Preposterous. Good for bond attorneys and underwriters. Every usual suspect gets a piece of the action.
Third, where is the blight need to qualify for TIF? It takes a feat of legerdemain to concoct a blight destination for property that is worth so much money. Only the most cunningly avaricious or the most gullible could countenance labeling this property as blighted. The blight is in the thinking and arguments of TIF advocates.
Fourth, why has no taxing body asked the developer to present certified estimates of project costs with and without prevailing wage labor used on the development? If TIF is used, then prevailing wages must be paid. We know that will add millions to the cost of construction, perhaps as much as the $4.7 million in TIF proceeds that will actually be available for the proposed condo complex. With no TIF, the full amount of taxes will be due to the taxing bodies as soon as the units are sold.
This is so obvious that it makes one wonder what the real motivation is for the TIF. Surely, the school district has no interest in subsidizing union labor with the tax dollars they are forfeiting with the TIF.
And finally, what about the “but for” clause? By law, no TIF should be used when the project can be done without it. But as we saw at the Galleria, where Commissioners wanted to use a TIF, the project was carried out without a TIF anyway. The same would undoubtedly be true at the Washington Road site. Are all those who voted for the TIF absolutely sure a good project could not be done without a TIF? And if it is so important to get this development done, why is the municipality planning to sell its parcels for $500,000? Why not just give the parcels to a developer to help them get this “fantastic, we must have it” complex built?
Overall, this TIF approval makes a mockery of the intent of the TIF program as spelled out in the Pennsylvania statute. Indeed, it is just another example of how even a reasonable law intended to help the redevelopment of old industrial sites can be perverted by those who will look for any chance to get in the taxpayers’ wallet. What is excruciatingly sad is that local elected officials who should know better are aiding and abetting this misguided chicanery.
First, it is based on a false choice argument. To wit, if we don’t build this, the district will not get the added tax revenues generated at the developed site. That’s utter non-sense. If the Parking Authority would auction off the land it has been sitting on for decades, a private developer could build a substantial project on the site at their own expense that would begin immediately paying full property taxes to the district, the County and the municipality. Tax dollars, by the way, that will never be made up by the TIF project because it takes so long for the schools to get the full amount of taxes paid on the development.
The real problem is that local officials want to control who does the building and what type of residential development gets built. They do not trust the market to do the job. So, we have years of behind the scenes deal making to get a project done that suits the officials. Meanwhile, hundreds of thousands in potential tax revenues have not been collected as would have happened if the property had been turned over to a developer and developed years ago.
Second, the $6.1 million TIF is hardly being used for infrastructure. A million dollars will be used by the developer to purchase the property. That amounts to more than $600,000 per acre for “blighted” property. Another million will be spent on landscaping and streetscaping in front of the condominiums--hardly infrastructure but rather part of the project’s amenities. Another million and half is slated to cover financing costs of the debt issue. Preposterous. Good for bond attorneys and underwriters. Every usual suspect gets a piece of the action.
Third, where is the blight need to qualify for TIF? It takes a feat of legerdemain to concoct a blight destination for property that is worth so much money. Only the most cunningly avaricious or the most gullible could countenance labeling this property as blighted. The blight is in the thinking and arguments of TIF advocates.
Fourth, why has no taxing body asked the developer to present certified estimates of project costs with and without prevailing wage labor used on the development? If TIF is used, then prevailing wages must be paid. We know that will add millions to the cost of construction, perhaps as much as the $4.7 million in TIF proceeds that will actually be available for the proposed condo complex. With no TIF, the full amount of taxes will be due to the taxing bodies as soon as the units are sold.
This is so obvious that it makes one wonder what the real motivation is for the TIF. Surely, the school district has no interest in subsidizing union labor with the tax dollars they are forfeiting with the TIF.
And finally, what about the “but for” clause? By law, no TIF should be used when the project can be done without it. But as we saw at the Galleria, where Commissioners wanted to use a TIF, the project was carried out without a TIF anyway. The same would undoubtedly be true at the Washington Road site. Are all those who voted for the TIF absolutely sure a good project could not be done without a TIF? And if it is so important to get this development done, why is the municipality planning to sell its parcels for $500,000? Why not just give the parcels to a developer to help them get this “fantastic, we must have it” complex built?
Overall, this TIF approval makes a mockery of the intent of the TIF program as spelled out in the Pennsylvania statute. Indeed, it is just another example of how even a reasonable law intended to help the redevelopment of old industrial sites can be perverted by those who will look for any chance to get in the taxpayers’ wallet. What is excruciatingly sad is that local elected officials who should know better are aiding and abetting this misguided chicanery.
