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January 08, 2005
Of Mice & Men
I've been watching, with growing amusement, the impending disaster of our Mayor Dan's Grand Plan for 'revitalizing' the downtown Fayetteville area by using Tax Increment Financing district(s). (A TIF basically works by allowing a municipality to earmark property tax moneys for special urban renewal projects.) Mayor Dan and our esteemed city council recently created a TIF district, which was primarily aimed at renovating a long-defunct hotel off the dowtown square. But Mayor Dan's Plan has hit a slight snag.
As the value of property within the district increases, the increment is divided between the school district, for debt service, and the project plan. At issue is the constitutionally mandated 25 mills for educational equity, which generates nearly all of the money used for TIF projects.
If the 25 mills is exempt from the increment, TIF would not generate enough money to pay for projects.
Everyone is waiting for the state's Attorney General's opinion on whether or not the 25 mills can be included in a TIF. Though the AG's opinion is merely advisory, it's fairly certain that if the city goes ahead with the TIF, there's going to be a lawsuit over this issue....especially since the Fayetteville school system just got broadsided by a $39.9M estimate of costs to upgrade their schools to meet the new court-mandated educational standards.
No problem, said Mayor Dan. The city can just loan the necessary money to the developers.
If tax increment financing cannot be used for the redevelopment of the Mountain Inn, the city may want to loan the developers the $3.5 million to start the project, Fayetteville Mayor Dan Coody said Wednesday.
The money for the Mountain Inn could come from the proceeds of the Wilson Springs Business Park sale if the General Assembly takes away the option of tax increment financing, Coody told residents gathered for a special Ward 2 meeting.
Oops, he really didn't mean "loan", because, umm, that's illegal.
Though it would be illegal for the city to loan developers money to start the Mountain Inn project, the City Council may designate $3.5 million to secure bonds, explained Fayetteville City Attorney Kit Williams.
The council must approve bonds for the Mountain Inn project on Jan. 25, at which time it must also approve an emergency clause so that the bond ordinance would take effect immediately, according to a memo written by Steve Davis, director of finance and internal services.
Bonds, yeah, that's the ticket.
It is important to be cautious in making decisions, Williams said, because the TIF law has yet to be interpreted by the Supreme Court and $3.5 million would be attractive to plaintiffs ’ lawyers. "Misuse of tax payer money is always illegal exaction. Before we do anything at all we need to do a lot of care," Williams said. "(The earmark) should only be used as a last resort in order to save the project."
Ya think? At least someone employed by the city appears to have a little common sense.....though the most frustrating thing about being an attorney is that clients too rarely follow the advice they're given when it disagrees with what they want to do.
Me, I'm just sitting back and LMAO at the whole mess. I think anyone who was fool enough to vote in a former land developer as mayor deserves exactly what they get.
Posted by Rita at January 8, 2005 08:04 AM