Amendment One

John,
I would support a TIF amendment if it ensured that the bonds only financed projects like the one you describe above, a genuine public need that serves the people. It would have to minmally do the following:
1) ensure that the jobs actually went to the locally unemplyoed
2) demonstrate that the project would not be done without the bond support
3) provide some security to the community from the private partner (i.e. if they pull out before the TIF period plus x years, they pay for the bond-financed improvements).
4) No other conventional financial instruments (e.g. GO) are available to fund the project.

The language of Amendment One is far indeed from such requirements.

--Dan

John--here's the list of what TIFs can be used for: "The financing, issued in the form of bonds or other debt instruments, could be used for airports, auditoriums and arenas, hospitals, museums, parking facilities, sewer systems, storm sewers and flood control facilities, water systems, street improvements, public transportation facilities, railroads, affordable housing, land development for industrial or commercial purposes, utilities, and redevelopment. Redevelopment includes purchasing and improving property to help local redevelopment commissions. The bonds may also be issued for municipal service district projects."

This comes directly from the Staff Attorney who drafted the legislation. You'll note that arenas and auditoriums are on the list. When asked the citizens could stop a project after the public hearing required to create the development financing district, the attorney's response was "no". Citizens have no options for preventing their legislators from authorizing a TIF.

I also emailed Prof. David Lawrence from the UNC Institute of Government to get his perspective on these issues. It will be interesting to see what Prof Lawrence and attorney Jessup may have to add. I invited them both to post here.

Terri, I have been doing a lot of reading about this subject and I am starting to change my opinion of some aspects of this proposal. It seems that the general taxation authority will NOT be pledged with TIF's under Amendment One.

The main problem with trying to understand this issue is finding a copy of the text of the amendment itself online. Here (at last) it is:

Article V of the North Carolina
Constitution is amended by adding a new section to read:
"Sec. 14. Project development financing.
Notwithstanding Section 4 of this Article, the General
Assembly may enact general laws authorizing any county, city, or
town to define territorial areas in the county, city, or town
and borrow money to be used to finance public improvements
associated with private development projects within the
territorial areas, as provided in this section. The General
Assembly shall set forth by statute the method for determining
the size of the territorial area and the issuing unit. This
method is conclusive. When a territorial area is defined
pursuant to this section, the county shall determine the current
assessed value of taxable real and personal property in the
territorial area. Thereafter, property in the territorial area
continues to be subject to taxation to the same extent and in
like manner as property not in the territorial area, but the net
proceeds of taxes levied on the excess, if any, of the assessed
value of taxable real and personal property in the territorial
area at the time the taxes are levied over the assessed value of
taxable real and personal property in the territorial area at
the time the territorial area was defined may be set aside. The
instruments of indebtedness authorized by this section shall be
secured by these set-aside proceeds. The General Assembly may
authorize a county, city, or town issuing these instruments of
indebtedness to pledge, as additional security, revenues
available to the issuing unit from sources other than the
issuing unit's exercise of its taxing power. As long as no
revenues are pledged other than the set-aside proceeds
authorized by this section and the revenues authorized in the
preceding sentence, these instruments of indebtedness may be
issued without approval by referendum. The county, city, or town
may not pledge as security for these instruments of indebtedness
any property tax revenues other than the set-aside proceeds
authorized in this section, or in any other manner pledge its
full faith and credit as security for these instruments of
indebtedness unless a vote of the people is held as required by
and in compliance with the requirements of Section 4 of this
Article.
Notwithstanding the provisions of Section 2 of this
Article, the General Assembly may enact general laws authorizing
a county, city, or town that has defined a territorial area
pursuant to this section to assess property within the
territorial area at a minimum value if agreed to by the owner of
the property, which agreed minimum value shall be binding on the
current owner and any future owners as long as the defined
territorial area is in effect."

So it specifically says the general taxing authority may not be pledged. And therefore the bond holders cannot force a tax rate increase. And if that is the case, then I do not have such fundamental problems with the amendment.

Mark,

Correct me if I'm wrong, but although no funds beyond those authorized by the amendment may be pledged to pay off the TIF the county or municipality is still risking its credit. If its true that the town's bond rating may be impacted should the revenues not be sufficient to pay off the bond, there will be extraordinary pressure to put before the voters another bond that does rely on general taxing authority to pay off the TIF. Should the voters reject such a bond and the town subsequently defaults on the TIF due to insufficient TIF revenue, won't this impact the terms (interest rates) available for future indebtedness thereby making it more expensive to issue bonds in other contexts? This would make it more difficult for the town to borrow in the future and put increased pressure on taxes.

I'm open to a critique ...please.
As I said the night I voted against endorsing this amendment, I'm not sold either way on this and I'm even less decided now regarding what I'll do on election day.

Mark K.

Yes. However, as Terri pointed out, the same would be true with other debt instruments that the town might issue.

For example, Carrboro borrowed money from a bank to buy the Adams Tract. Naturally, we should not have a problem paying it back, but if we did have problems, it could affect our tax rate and bond rating. So in some ways TIF's are not so different than existing non-voter-approved debt instruments that are avialable to NC municipalities.

Joe Capowski's point above is still dead-on: Saying "the increased development will retire the bonds" ignores that the new development will demand services of its own that the taxes on the new development cannot pay for (because the taxes on the new development are being used to retire the TIF indebtedness).

And I still think this will all get more use in building sports arenas than it will in lifting up low-income communities. But that is simply a matter of opinion.

I guess I was previously arguing that we should be opposed to this amendment on principle, but given what I read this morning, I have to drop that objection.

Other concerns remain valid.

I asked the lawyer who drafted the legislation if general taxation authority will be pledged to support a TIF. Here's her response:

"A portion but not all of the taxing power is pledged -- the portion being the taxes on the increased value within the district. Without TIF, the increased value within the district would be part of the general tax base.

Also, a key issue is the one I discussed in my previous e-mail. Although without a vote there is no technical pledge beyond the increased value in the district (plus any revenues or property pledged) as a practical matter the citizens will be bound to pay off the debt over the 20 years or other period of the bonds. If the pledged source of funds is inadequate and the government chooses to default on the bonds, their credit rating would plunge, debt expenses would grow, and they would find it difficult to borrow in the future. These dire financial consequnces would have essentially force the government to pay off the debt even if the pledged revenues are insufficient. To pay off the debt in this situation, they would need to find the funds elsewhere. In the absence of budget surpluses, they would need to raise taxes or cut spending."

I think this basically says that the vision and understanding that go into writing the plan and predicting the success of the project are what protect the citizens against additional tax burden. With the Local Government Commission there to review the plans, it seems like a good but not perfect safeguard.

In reference to Joe C's comment:
I think the point of the TIF is to borrow to build the infrastructure (water/sewer/transporation, etc.) so that a developer can build new houses, businesses, or (shudder) a sports arena. The repayment plan on the TIF (http://orangepolitics.org/2004/09/amendment-one/#comment-19528) should anticipate paying for the services the new development will require as well as paying back the bond. In a perfect world that should work--as well as the fact that it will provide additional employment, increase the services to current residents/businesses, and create further growth opportunities.

I'd say the risk on the TIF is much lower than a bank loan or a COP.

" With general obligation bonds–the kind we currently issue by a voter referendum—- our community pledges to the bondholders it will use the community's full faith and credit to repay the bonds. With TIF bonds, we do not pledge to the bondholders our full faith and credit. Self-financing bonds prohibit the bondholders from forcing the community to raise taxes to pay off the bonds.

Comment at 2:32pm 9/28/2004 by Anita

"So it specifically says the general taxing authority may not be pledged. And therefore the bond holders cannot force a tax rate increase. And if that is the case, then I do not have such fundamental problems with the amendment. "

Comment at 7:58am 10/1/2004 by Mark Chilton

It seems we're reading the amendment in the same way, at least on this issue. So to use a business analogy, we the taxpayers are not signing a personal guarantee on the note. Therefore, we the taxpayers do not owe the money in the same way we do on a GO bond. I would think the assessed risk of a TIF bond---its rating and interest rate offering--- would be a reflection of the lack of that "personal guarantee" and would be different from a general obligation bond. So Jeff, to your statement. "Anita,Citizens in a town either owe the money, or they don't" my answer would be that they haven't signed a personal guarantee by a referendum.

One red flag I see is that not even the pro-amendment one camp (http://www.amendmentone.org/index.cfm) posts the entire amendment. They just have their summry pitch for it. What are they afraid of us seeing?

Also, I automatically distrust any group named "...for jobs & progress".

To Will, aka Mr. Open Source,

Red Hat? 'nuff said ;-)

Domain ID:D103946496-LROR
Domain Name:AMENDMENTONE.ORG
Created On:06-Feb-2004 15:30:13 UTC
Last Updated On:07-Apr-2004 03:56:52 UTC
Expiration Date:06-Feb-2005 15:30:13 UTC
Sponsoring Registrar:Tucows Inc. (R11-LROR)
Status:CLIENT TRANSFER PROHIBITED
Status:CLIENT UPDATE PROHIBITED

Registrant Name:Virginia Ingram
Registrant Organization:Capstrat
Registrant Street1:1201 Edwards Mill Road
Registrant Street2:Suite 102
Registrant Street3:
Registrant City:Raleigh
Registrant State/Province:NC
Registrant Postal Code:27607
Registrant Country:US
Registrant Phone:+1.9198280826

Registrant Email:webmaster@capstrat.com
Admin Name:Donna Jackson
Admin Phone:+1.9198280806

Admin Email:djackson@capstrat.com
Tech Name:Scott Reston
Tech Organization:Capstrat
Tech Phone:+1.9198280608
Tech Email:sreston@capstrat.com

CapStrat

Facts

Date established: 1994

Founders: Ken Eudy and Steve Meehan

CEO: Ken Eudy

Ranking: Capstrat is one of the largest communications firms in the Carolinas and one of the top 75 agencies in the United States in fee income and number of employees.

Services offered: Brand positioning, crisis communications, media relations, collateral design, Internet strategy, Web design, government relations, issues management, lobbying, advertising, precision marketing, direct marketing.

Current clients: Affiliated Computer Services (ACS), Amerix Corporation, Blue Cross and Blue Shield of North Carolina, MCNC, Morehead Planetarium and Science Center, NC Economic Developers Association, NC Health and Wellness Trust Fund, NC Insurance News Service, North Carolinians for Jobs and Progress, Progress Energy, Quintiles Transnational, RBC Centura, Red Hat, State Animal Response Team, Transom Development, UNC-Chapel Hill Carolina Physical Science Complex

ACS? 'nuff said ;-)

I've read a lot of these comments, but not all. But I'd like to add one point I haven't seen so far, and this objection is hard to get around. Most of the types of projects funded by TIFs would place additional burdens on our current infrastructure. If additional schools, police officers, firemen, etc. are needed for these developments, where will the money come from? The taxes from the developed property itself are already pledged to repay the bond (and it's a myth this money is enough anyway). So, although there are no _direct_ additional tax burdens to pay off the bond, there are plenty of _indirect_, expensive, long-term costs to be paid for with higher taxes from everyone else.

This is a shell game, pure and simple. Let's continue to take the time to ask the voters directly whether or not we should make these long term financial commitments. If it's a good idea now, it will be a good idea in a year.

Some rural or poor counties might not use these funds for private development, but for basic infrastructure and human services needs.

I wish we could separate the issues of funding private development with public money vs. funding needed public infrastructure.

Without this, will Charlotte and Raleigh still be able to build their gigunda stadiums or whatever? If not, it's worth voting no. But it doesn't change a lot.

Joan,
The term infrastructure does cover a lot of ground. You mentioned tourism-related projects as being desirable, but a stadium is tourism-related, and one you don't like. Maybe some examples of projects you have in mind would help.

Really basic infrastructure like sewer, water or parks are not the sort of projects for which TIFs are used. TIFs are designed for private or private/public partnerships where the property will be taxed. Strictly public property does not generate tax revenue, so the debt payment must come from me and you.

I can't think of a project where a TIF might be used, that wouldn't also create a long-term debt burden to the other residents of our county (see my last post). If the property is to be in any way privately owned (and generate tax revenue), a TIF will dedicate the additional tax money to service that debt. All the other additional public services needed by that property will have to be paid by...that's right, me and you.

I also worry that this will up the ante for any project the town or county wants to happen. Knowing that this funding is available, won't companies and developers demand it to consider our area? If it was truly win-win, I wouldn't care. But I think we'll be the loser in the long run, yet have to participate to be competitive.

Ed--seems to me you haven't read any of this discussion. The purpose of TIFs is to fund infrastructure and to create a payback plan that doesn't tax the residents.

Joan--TIFs can be used for stadiums. But they can also be used for water and sewer, transporation, etc. See for the list taken directly from the proposed legislation:
http://orangepolitics.org/2004/09/amendment-one/#comment-19536

Terri,
Beware of the way things "seem." Remember our state motto. No, I read your post. I just didn't accept it as fact. You didn't give any way to check your source, and I couldn't find anything on the nc.gov site. I'll concede you could be absolutely correct. The "development district" could include taxable properties which benefit from the infrastructure improvements.

But my same objection applies. For example, if the increased taxes from properties in the district are dedicated to repaying the debt on a water and sewer TIF bond, who is going to pay for the additional schools, police officers, and fire stations?

In fact, if TIFs can be used this way, I am even more opposed. Water and sewer, of all things, can wait for voter approval. They should only be funded if we agree this is a good long-term financial decision.

Ed--everything I have referenced comes from the three sites Anita put in her description of the topic or through references provided by the legislative aide who is writing the bill. Since we can't post attachments here, there's no way to share that.

I understand your point about the additional taxes for schools, fire, etc. But isn't that true of all development? When Meadowmont or Southern Village were developed, did they provide ongoing support for the additional emergency services, schools, water, etc. they would be using? No, the developer paid a one-time impact fee and each new owner paid a one-time impact fee. Ongoing support for the additional services has to come through tax revenues.

To me, the important point in this discussion is that town councils, county commissioners, etc. already have the tools to invest in infrastructure or other projects such as arenas, land purchases, etc. without citizen approval. The Carrboro Alderman did not ask the voters if they should take out a loan for the Adams tract. The CH council are not asking for voter authorization to proceed on the two parking lot developments. Both of those projects will add to service requirements.

The TIF provides greater oversight through stricter accountability requirements than either a COP, a bank loan, or a partnership with a developer. Based on the research I have done, a vote against this amendment simply removes a secure investment tool from local governments. This decision comes from reading through all the references provided in the initial discussion description and through the discussion here--no specific references.

The tax revenue from development done without government backing ALL goes to offset the extra burdens on public services. It's usually not enough (or larger cities would have lower tax rates), but at least it's a contribution. But TIFs (and other public-funded financial vehicles) siphon off some of this money. All this money has to come from someplace. If the public finances any development, no matter the method, it ends up coming out of our pocket. TIFs are not "self-financing," no matter how it is spun. That's my chief complaint, that this won't cost us anything. And with that rationale in place, it will likely be overused. As I said before, it's a shell game.

Please try to read the entire legislation that will be enacted if Amendment One passes! I know it is long and repetitive, but there are some very enlightening sections on what will happen once this is passed. Redevelopment Authorities will be created and given the power to use eminent domain to clear current property owners from the district if necessary. Once they get this amendment, there will be nothing to stop further expansion of the TIF legislation in the future. This is what happened in Iowa. Iowa expanded their TIf legislation twice and now they have whole cities that have declared themselves TIF Districts. Iowa has over $5 billion in Tax revenue tied up in repaying TIF Bonds. Their schools are suffering just like California's, and the State has had to bail out school funding needs to the tune of over $400,000 just this year!
I have scoured the country for information on how TIF has worked out in "the 48 other States that have TIF" and compiled it all on a website:
www.noamendmentone.org.
Be sure to type .ORG because Capstrat bought up seven "noamendmentone" domains with .com, .net.,.info and others and linked them to their Jobs & Progress website. Why would they go this far to divert people from www.noamendmentone.ORG?
Ken Eudy excused it as "preventive medicine"!
Are they afraid of an informed citizenry?
Jobs & Progress is a front group for the League of Municipalities and their affiliates along with NCAPA and NCSmartGrowth Alliance and some others.
Their "You have the power" commercial tells you nothing but they do convey one thing correctly; You DO have the power, to vote yes or no to development schemes, and they want you to give it up.

Cathy Heath
www.noamendmentone.ORG

An excellent study on the NC legislation that would govern TIF if Amendment One passes can be found at this link:

The NC Budget & Justice Center; http://www.ncjustice.org/btc/2004pubs/BTC09_23_04.pdf

Senate Bill 725 (House Bill 1293) in full:

http://www.ncga.state.nc.us/html2003/bills/AllVersions/Senate/S725vc.html

Thank you all for discussing this issue in such a thoughtful and informative way.
OrangePolitics.org is always interesting to read.

Cathy

From today's Herald-Sun:

http://www.heraldsun.com/orange/10-532204.html

Thanks for the links, Cathy. I read through the NC Budget & Tax Center report. I encourage everyone to read it. Here's a quote from that report, voicing a concern about the way this amendment is worded:

Definitions are Too Broad – To be approved, a district must meet one of three
criteria. The district must be blighted, in need of conservation or rehabilitation,
or be “appropriate for the economic development of the community.” This
language appears to be extraordinarily much too vague and opens the
potential for projects loosely defined under the guise of economic
development to be placed anywhere in the state, rather than targeted to areas
truly in need of redevelopment. For example, using this definition, a Wal-Mart
superstore could receive a subsidy if built within city limits. This very problem
has occurred in California, Colorado, Iowa, Illinois, Maine, Missouri, Mississippi,
Ohio, Oklahoma, Pennsylvania, South Carolina, and Wisconsin, each of which
has subsidized Wal-Mart through TIF projects totaling over $100 million.

This is only one objection among many, some echoing the objections I've stated earlier.

TIF Reevelopment - Orange Co. California Style

Garden Grove Neighbors Triumph

June 30 , 2002

By Steven Greenhut
The Orange County Register

Listening to the parade of residents imploring the Garden Grove City Council on Tuesday night to spare their homes from the redevelopment wrecking ball, I was struck by a short and simple speech given in Spanish by an elderly woman. I don't speak Spanish, but I understood the two words she said repeatedly - "casa" and "familia."

That's what the redevelopment battle in Garden Grove was all about - home and family. It's what counts in any language and any culture. And it's why about 800 residents, many carrying signs, packed the council meeting, and why for hour after hour, one resident after another stepped up to the microphone and explained why the city should scrap its plan to turn their neighborhood into a theme park.

Regular folks, from varying ethnic and socio-economic backgrounds, clearly and calmly explained why in America people should have the right to live their lives and raise their families on their own property. They talked about the pride they took in their properties, and disputed the bogus portrait of blight painted by the Urban Futures consultants paid to justify the city's proposed project.

They asked for nothing more than to be left alone - to have their homes kept out of a grandiose big-government plan to take their properties by force and market them to an out-of-town developer, as a means to generate additional tax revenue for the city.

The simple wisdom portrayed by residents contrasted sharply with the attitudes of the stone-faced bureaucrats and consultants, who seemed annoyed that anyone would question the city's plan.

The city's presentation, by Community Development Director Matt Fertal, was as disingenuous as the promotional videotape the city had members of the police department deliver to affected residents in the days prior to the meeting.

The city's basic argument: Garden Grove needs centrally planned redevelopment plans to lure new tax-generating hotels and businesses to the city. The videotape even featured previously displaced city residents who literally thanked God for having had their home taken.

Garden Grove residents, including many who didn't live in the targeted redevelopment area, didn't buy this crude propaganda attempt. The few people who did support the city's plan tended to be those with financial interests in redevelopment.

Well-dressed hotel operators who receive subsidies from the city praised the plan on Tuesday night. So did Laura Archuleta, president of Irvine-based Jamboree Housing. Her testimony epitomized the absurdity of the redevelopment process. Redevelopment earmarks 20 percent of tax-increment funds to "affordable" housing, so plans such as the city's are good for lower-income residents who need homes, she said.

In other words, Archuleta was backing a plan that would throw thousands of real people out of their affordable, non-subsidized homes so that government funds could be diverted to her company to develop subsidized affordable homes for other people.

Insane.

The firefighters also took a similarly self-interested stance. As people entered the meeting hall, the union handed out letters praising the city government for its foresight and planning. Union officials said the association was neutral, but praised the council for making "hard choices." I wonder what union members would say if the "hard choice" involved their home, neighborhood or family.

To the firefighters, as to the consultants, it's all about cash. If redevelopment assures that they have plenty of money or lucrative contracts, then they're all for it - regardless of the impact on other people's homes and livelihoods.

Fortunately, this latest story of redevelopment abuse is ending on a happy note. The efforts of Manny Ballestero, the Santa Ana school teacher who organized his neighbors to oppose the plan, paid off. As he pledged at the meeting, "We'll fight you until hell freezes over, and then we'll fight you on the ice."

The crowd was ready to fight, but then something unusual happened. The council - Mayor Bruce Broadwater, Mark Rosen, Mark Leyes, Bill Dalton and Van Tran - decided to oppose a staff-driven plan that everyone could see was ridiculous. As Leyes said after voting to remove the houses from the targeted area, "We've moved a long way tonight toward doing the right thing."

Rather than act like a rubber stamp for the city staff, the council said, OK, this is an overreach. Each council member defended the city's redevelopment programs in general, but said there was no need to demolish single-family tracts. Perhaps they should have done the right thing earlier, and perhaps they were only responding to public pressure.

But they did the right thing in the end. Even Mayor Bruce "Bulldozer" Broadwater gregariously joined his fellow council members in recommending that most tracts be taken out of the expanded redevelopment area. And, in fairness, the Bulldozer treated upset residents throughout the night with decency and good humor - a far cry from the Cypress City Council, which imperiously maligned church supporters who spoke at a recent meeting to defend their property from eminent domain.

As an aside, notice that the organizing efforts here were purely grassroots. Those self-styled Latino activists who always are grabbing headlines crying "racism" were nowhere to be found when thousands of residents, a large proportion of them Latino, were about to be thrown out of their homes.

Those "for the working guy" Democratic politicians who represent the area didn't lift a finger to help, either. Assemblyman Lou Correa was noncommittal. State Sen. Joe Dunn met with the group, and expressed concern about the redevelopment plan, but he didn't do anything that mattered. U.S. Rep. Loretta Sanchez wouldn't meet personally with the residents. These snubs weren't lost on Ballestero and others.

Anyway, the residents can be proud they won the battle entirely on their own. They saved their homes from a city staff that treated their properties like little pieces on a monopoly board, to be pushed aside without thought to the hardships - not to mention rights - involved.

Of course, now what's needed is a change in the state's redevelopment law so that this council or future councils - or councils in other cities - cannot so easily use eminent domain to shift properties from one set of private owners to another. If you can't understand why current redevelopment practices are so wrong, then think back to the Spanish-speaking woman's points.

What if it were your casa or your familia?

--------------------------------------------------------------------------------
To reach columnist Steven Greenhut, call (714) 796-7823 or e-mail him at sgreenhut@ocregister.com.

Interesting post, but I think this says more about the elected leadership of this community than about Amendment one.
Even the article's author says that the eminent domain law is what's driving this plan.

"Of course, now what's needed is a change in the state's redevelopment law so that this council or future councils - or councils in other cities - cannot so easily use eminent domain to shift properties from one set of private owners to another. "

I forgot to post the following information that I got a little while back from David Lawrence, Professor of Government at UNC's Institute of Government. The following is the text of his email:

" I won't comment on the amendment itself - we don't take public positions on matters of this sort - but I can answer your questions.

" 1. There was a provision in the state constitution from 1868 that required that bonds issued for activities that were not "necessary expenses" be approved by the voters. Most activities were held by the courts to be necessary expenses, though, and issuance of those bonds did not require voter approval. In 1936 the constitution was amended to create the current requirement of voter approval for almost all general obligation bonds. This in fact was several years after the creation of the LGC, but I suppose there was a common impetus to both - the difficulty that local governments found themselves in during the depression. (The necessary expense provisions were removed from the constitution in 1973.)

" 2. Under the tax increment legislation bondholders could not force a local government to raise its tax rate. If the regular tax rate, applied to the increment, is insufficient to meet debt service, the bondholders are legally stuck. (I suspect, though, that a local government would use general fund revenues to actually pay the debt service, rather than let the bonds go into default; but it could not be forced to do so. The legislation, I should add, permits a local government to add other security to the debt - essentially to pledge specific nontax revenues - and a local government that did add security would be required to use those revenues if the taxes on the increment were insufficient.) This difference from standard GO bonds has been enough for the courts in a number of states to hold that tax increment bonds are not the sort of debt that requires voter approval, but not in all states. It's the uncertainty over what our courts would do that creates the need for the amendment - or a test case - before bond counsel would approve issuance without voter approval."

So there you have it, there are some people in the world who are even more insanely fascinated with municipal finance than me. And apparently David Lawrence is one of them.

A1 is meant to pre-empt any future lawsuits that may arise from the exercise of SB725 TIF Redevelopment Financing Projects.
The Redevelopment Authority is given power to use eminent domain to accomplish the redevelopment.
Eminent Domain abuse comes with TIF Redevelopment wherever it is enacted.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2003

SESSION LAW 2003-403
SENATE BILL 725
SECTION 16. G.S. 160A-505(a) reads as rewritten:
"(a)In lieu of creating a redevelopment commission as authorized herein, the governing body of any municipality may, if it deems wise, either designate a housing authority created under the provisions of Chapter 157 of the General Statutes to exercise the powers, duties, and responsibilities of a redevelopment commission as prescribed herein, or undertake to exercise such powers, duties, and responsibilities itself.
In the event a municipal governing body designates itself to exercise
the powers, duties, and responsibilities of a redevelopment commission, it may assign the administration of redevelopment policies, programs and plans to any existing or new department
of the municipality."

SECTION 17. G.S. 160A-512(6) reads as rewritten:
"(6) Within its area of operation, to purchase, obtain options upon, acquire by gift, grant, bequest, devise, eminent domain or otherwise, any real or personal property or any interest therein, together with any improvements thereon, necessary or incidental to a redevelopment project;

California has abuses of eminent domain BECAUSE it allows TIF Redevelopment. If NC allows TIF Redevelopment, then NC will see eminent domain abuse.

Cathy

"California has abuses of eminent domain BECAUSE it allows TIF Redevelopment. If NC allows TIF Redevelopment, then NC will see eminent domain abuse. "

This statement presupposes that California (and by inference NC) had no abuses of eminent domain in the absence of TIFs. I find that exceptionally hard to believe. If you had evidence that the number of violations of eminent domain instances (and that you could document what constitutes a violation) increased by local governments that were using TIFs, your argument would be more compelling.

Cathy, thanks for posting the full text of the amendment. I didn't realize it included eminent domain. That's even more of a reason to oppose it. The amendment would give NC entities the 5th Amendment power of takings for "public use" for projects that are not public at all: economic development for its own sake. Not to clear up a blighted slum, but to generate business activity and tax revenue. This is a big departure from the traditional sense of "public use."

The U.S. Supreme Court is going to hear a case this term on whether a taking for economic development alone, without more in terms of "public use," is constitutional. A Connecticut case says it is, but this holding is under attack.

"The case will address what property-rights advocates say is an increasingly common practice: the use of government 'condemnation'' power to make room for 'big box' retail stores, shopping malls and office buildings.

"'It is a growing trend among local governments to condemn property for the purpose of raising tax revenue,' said Dana Berliner, an attorney at the Washington-based Institute for Justice, which represents the New London homeowners."

Terri, I think that's what being referred to as "abuse" of eminent domain.

This Amendment One reminds me so much of when I was a young boy, living with my Grandparents, in New Bern, N.C. They owned property, adjacent to Simmons Knott Airport; till one day the city condemned their property and acquired it, at that present day's tax value. How they came to acquire such a high dollar piece of property, is explained as follows.

What wasn't realized, until it was too late for quite a few, was that politicians had given the landowners in Craven County a So-Called Tax Break, for the past two to three years. All properties within Craven County had been reaccessed and the tax values lowered, for that time period.
Land that 'may' have been tax valued at say $10,000 per acre and argued as being valued at least such amount, was then through time and manipulation, reaccessed and valued at 'say' $5,000-$7,000.
Now even though, 'realistically', land appreciates in value, sometimes 'at least' an amount greater than the current tax value; the city/county/state governments can argue to acquire any such properties, at no-more-than the current tax value.

So when the city/county/state needs to widen or simply improve roadways, 'Know This'....They can and will acquire any &/all properties needed to widen a roadway. They'll do it, after first having lowered the tax value of your property.

I wonder.....How much did the City/County/State pay the businesses alongside Independence Blvd. to have that roadway widened.
Would they have paid such amount(s), if this Amendment One had been passed then.

I am all for improvements; but 'Do Not' swindled or manipulate me out of my property.

An interesting article in the Oregonian on the affects of a TIF District on taxpayers throughout the County.

http://tinyurl.com/6s2nf

Oregon has Measure 5 which caps property tax increases, so they end up cutting the funding for Public services and schools, and/or raise fees.

Strike Three
October 30, 2004

I hope the sense of urgency and importance to play a role in defeating Amendment One is recognized by all of those who read this letter.

On the heels of the World Series where a baseball team has shown us that obstacles can be overcome with hard work, let's throw Tax Increment Financing in NC a Strike Three. Many of you have been working along with us for several months to educate voters, but our job is not finished. We are battling special interest groups who should be ashamed of themselves for operating such a deceitful campaign in their attempt to receive tax subsidies.

I am extremely impressed at the thousands of citizens I have communicated with that are grassroots activists in their area. I am also appreciative of the willingness for everyone to look at the fact that this issue is not about partisan politics, but instead about our NC Constitutional Right.

With Early Voting past us, I would like to urge all voters to fully recognize the importance of us educating our family and friends about the consequences of Amendment One. While working a Poll in my local area, I was amazed at how many people were unaware or misled about this issue. It was also encouraging to meet many citizens that were already voting against allowing local government to borrow money without voter approval. Many of the voters that were against this item worked for corporations or were members of organizations that have endorsed Amendment One.

Many people are having signs made at their local sign shop and are working a Poll in their area on November 2nd. I encourage everyone to get involved by working a Poll and talk with voters or pass out flyers to vote against Amendment One. You may not be able to take the day off to work, but at least work the nearest Poll before or after work and at lunch. Information on handouts and creative ways to make a homemade sign that appears professional can found in our “How You Can Help” section of www.noamendmentone.org.

You can make a difference in the outcome, but first you must recognize that one person can make a difference. We are living in a State that overtaxes us, overspends and now they want to divert needed taxes from the funding of schools, fire departments and police departments to help special interests fatten their wallets at the taxpayer's expense.

Tax Increment Finance scheme has failed twice already for good reasons and now it is time to throw Strike Three.

Thank you for all your hard work, but it is the 11th hour and we have a lot of work still to do.

Forward this message to and/or call everyone you know.

Sincerely,

Michael A. Joyce
At-large Representative
Cary Town Council

Hi all,
The problem that I have always had with
property tax-funded financial aid for
local businesses is never addressed by the
people who promote Amendment One.
It is this: When a new TIF project is built
that attracts new employees and residents,
if their property taxes are diverted to
pay debt service on bonds, who will pay for the local services (schools, sanitation,
fire, police, etc) that are provided to these
new people?

Interesting discussion--Just a couple of thoughts, in response to some of the rather breathless foregoing commentary: 1. Nobody has mentioned the additional revenue that could be generated by ancillary sources associated with economic development projects potentially leveraged by 'self financing bonds': Ticket taxes, local return on Beer and Wine taxes(entertainment) state collected local sales taxes, local hotel-motel taxes (requires special legislation--but historically not hard to get).

2. I find it a curious postulation that governance by referendum results in inherently superior wisdom(California ballot initiatives, anyone?), and

3. The inference in an earlier post that the NC League of Municipalities is some shadowy, malevolent interest group. Really? I dont think Bill Strom, Ed Harrison, Kevin Foy, Diana McDuffee, or I, among hundreds of other local folks, felt the least bit shadowy at the League conference last weekend.

As has been pointed out elsewhere, any financing tool can be abused. North Carolina Municipal governments are hamstrung like few others in the nation by severe limitations on financing and revenue options. While by no means immune to potential problems, given the strong oversight role played by the LGC in combination with the strict criteria outlined in the legislation, I believe that, on balance, amendment one can provide an important addition to the toolbox for local governments in the provision of infrastructure and promotion of economic development.

Cheers,
Alex

I have read it, Terri. And nothing that I've read addresses the concerns posted here and printed in the paper.

Small communities can fund infrastructure using voter-approved bonds. What is to be gained with TIFs? Absolutely nothing, unless the powers that be feel the public will not approve them. Making TIFs, in this case, nothing more than a way to circumvent public approval. This same point has been made already, so this is all rehashing.

I am almost violently opposed to local government and developers deciding what they think needs to be done and then raising my property taxes to finance their windfall - all without my input. Developers are interested in profit. Local government interest is varied and mysterious, but not often - especially on the issue of development - coincident with mine.
VOTE NO!!!

Local governments can already finance projects without a public vote. The Adams tract in Carrboro was funded through a bank loan; there are also COP bonds. TIFs introduce a much tighter oversight and review process than is required for either of these other two financing options.

Voting no for Amendment One does not do anything to protect citizens against local governments deciding "what they think needs to be done and then raising my property taxes to finance their windfall." In fact, according to my research, Amendment One is more likely to protect your property taxes by giving local governments better options than bank loans and COPS.

Certificates of Participation (COPs) monetize assets already owned, I believe, in a lease-back arrangement. So, funds are generated now at the cost of higher lease paybacks over time. I think COPs was one of the reasons Orange County CA defaulted on its debt, right?

A bank loan, while easier to obtain, still has to apply to a valid governmental need, right Terri?

The problem I see with Amendment One, is the problem I see with multi-million dollar tax incentives to attract large business, in both, we're shifting the economic burden to the taxpayer for a very vague and hard to measure goal.

With COPs and loans, today's taxpayer can point to some asset, the Adam's tract for instance, and say "we own this".

When you look at the abyssmal failure of several of NC's big-ticket TIF-like endeavors, Global Transpark, Centennial campus, it should give you pause on voting to empower several thousand municipalities to make the same boneheaded "investments".

Terri, I find it highly unlikely that the development industry would be throwing all this money and effort into getting Amendment One passed, if it would result in more government oversight, review and control, and less access to public funds.

Read the legislation Ed. Read the earlier parts of this thread. There is much more oversight. I've read everything I can about NC's implementation plans and I've been in contact with the lawyer who drafted the legislation. Given all that research, I still seriously considered voting against this amendment because everyone is right that there is the opportunity for abuse. But anything can be abused if there is sufficient will.

I decided to vote for the amendment because there are small communities that have out-of-date, insufficient, or non-existent infrastructure. It is in the best interest of the environment and public health for communities to have sound and sufficient water and sewer lines. It is in the best interest of rural economies and governments if they can bring in broadband/wireless networks. I voted for the positive aspects of the amendment with full understanding that it can be misused to fund boondoggles like sports arenas.

For the sake of small, rural, and low wealth communities for whom this amendment offers possibilities, I hope the abuse will be kept to a minimum. I may be sorry, but I hope not.

Alex, I agree that the public could approve a bad project. Maybe people prefer mistakes they make to ones made by others. Or maybe they feel that two levels of approval (government and the public) are better than one (government only). The question I ask is: why would you want to take the choice away?

Because nothing in your post really answers the main objections stated here. What about voter-approved bonds is so different from TIFs that NC is "hamstrung?" Especially if one ignores the misconception that TIFs are self-financing?

I was reading some of the material associated with the recent Frontline
story on Walmart when I stumbled upon this fun little chart on the largesse bestowed upon
Walmart in the form of TIFs.

Government Subsidy
Birmingham AL 2004 Supercenter $10 million reduced-price land
Gardendale AL 2003 Supercenter $4 million infrastructure
Leeds AL 2000 Supercenter > $500,000 infrastructure
Mobile AL 2001 Supercenter $992,000 infrastructure
Pell City AL 2003 Supercenter $1.1 million land bought with city bonds
Trussville AL 2000 Supercenter $3 million infrastructure
Bullhead City AZ 2000 Supercenter $1.2 million infrastructure
Prescott AZ 2003 Supercenter $6 million infrastructure
Show Low AZ 1999 Supercenter $430,000 infrastructure
Cathedral City CA 1992 discount $1.8 million infrastructure
Colton CA 1991 discount $2.6 million reduced-price land
Corona CA 1994 discount $2 million sales tax rebate/parking lease
Covina CA 1997 discount $5.3 million reduced-price land
Duarte CA 1995 discount $1.8 million reduced-price land
Gilroy CA 1993 discount $408,000 infrastructure
Hemet CA 1992 discount $1.8 million sales tax rebate, waived fees
Lake Elsinore CA 1994 discount $2.2 million infrastructure
Manteca CA 1992 discount $1.7 million site preparation
Perris CA 1992 discount $2.7 million infrastructure (via TIF)
Redlands CA 1991 discount $1.3 million sales tax rebate/parking lease
Rialto CA 1992 discount $2.6 million reduced-price land
Riverside CA 1993 discount > $2.2 million sales tax rebate/parking lease
San Diego CA 2000 discount $6.1 million infrastructure, parking lease
Commerce City CO 1999 Supercenter $1.4 million infrastructure (via sales TIF)
Palatka FL 2002 Supercenter $1.1 million infrastructure (via CDBG)
Zephyrhills FL 2002 Supercenter $600,000 infrastructure (via CDBG)
Altoona IA 2000 Supercenter $1.2 million infrastructure (via TIF)
Addison IL 2005* discount $3.5 million infrastructure
Belleville IL 1994 discount $7 million infrastructure (via TIF)
Bloomington IL 2001 Supercenter $1.5 million enterprise zone/infrastructure
Bridgeview IL 1992 discount $6.7 million infrastructure (via TIF)
Country Club Hills IL 2005* Supercenter $12.3 million property and sales tax rebates
Evergreen Park IL 2005* discount $5.3 million sales tax rebate
Moline IL 1998 Supercenter $2.7 million sales tax rebate
Niles IL 1999 discount $2.9 million infrastructure (via TIF)
Palatine IL 2004* discount $3.5 million site preparation, infrastructure
Rolling Meadows IL 2000 discount $5.3 million site preparation
Vandalia IL 2004* Supercenter $1 million infrastructure
Villa Park IL 1991 discount $1.4 million site preparation, infrastructure
Natchitoches LA 1996 Supercenter $1.5 million enterprise zone
New Orleans LA 2004* Supercenter $7 million property tax breaks
Ouachita Parish LA 1997 Supercenter $840,000 enterprise zone
Ruston LA 1995 Supercenter > $947,000 enterprise zone, infrastructure
Augusta ME 1993 Supercenter $5.7 million infrastructure (via TIF)
Waterville ME 1993 discount $500,000 infrastructure (via TIF)
Cameron MO 1995 Supercenter $2.1 million infrastructure (via TIF)
Chesterfield MO 1997 discount $2.6 million infrastructure (via TIF)
Eureka MO 1995 Supercenter $5.3 million site prep, infrastructure (via TIF)
Fenton MO 2001 discount $10 million infrastructure (via TIF)
Kansas City MO 2001 Supercenter $9.1 million infrastructure (via TIF)
Kirkwood MO 1999 discount $5.7 million infrastructure (via TIF)
Mexico MO 2005* Supercenter $500,000 infrastructure (via sales tax rebate)
Monett MO 1999 Supercenter $1.8 million infrastructure (via prop/sales TIF)
Ozark MO 2004 Supercenter $3.5 million infrastructure
Republic MO 2002 Supercenter $500,000 infrastructure
Wentzville MO 2002 discount $7.5 million infrastructure
West Plains MO 1994 Supercenter $250,000 infrastructure (via sales TIF)
Biloxi MS 1988 discount $350,000 infrastructure (via TIF)
D'Iberville MS 1999 Supercenter $2.3 million infrastructure (via TIF/CDBG)
Fulton MS 1999 Supercenter $900,000 infrastructure (via TIF/CDBG)
Greenville MS 2002 Supercenter $1.2 million infrastructure (via TIF)
Hattiesburg MS 1999 Supercenter $900,000 infrastructure (via TIF)
Ocean Springs MS 2000 Supercenter not available infrastructure (via CDBG)
Olive Branch MS 2000 Supercenter $1.7 million infrastructure (via sales TIF/CDBG)
Pascagoula MS 2003 Supercenter $5 million infrastructure (via TIF)
Petal MS 2001 Supercenter $877,000 infrastructure (via TIF)
Richland MS 2001 Supercenter $363,000 infrastructure (via TIF)
Waveland MS 2003 Supercenter $500,000 infrastructure (via CDBG)
Audubon NJ 2004* Supercenter $1.2 million infrastructure
Lumberton NJ 2001 discount $534,000 property tax abatement
Millville NJ 1994 discount not available urban enterprise zone
Oneida NY 1997 Supercenter $850,000 property tax abatement
Moraine OH 2003 Supercenter > $157,000 infrastructure
Ravenna OH 1997 discount $1.3 million enterprise zone
Streetsboro OH 1996 discount $491,000 enterprise zone
West Chester OH 2005* Supercenter $3.4 million infrastructure (via TIF)
Sand Springs OK 2003 Supercenter $2.8 million infrastructure (via TIF)
Indiana PA 1996 Supercenter $1.1 million infrastructure (via TIF)
Smithfield Twnshp PA 2005* Supercenter $4.8 million infrastructure
Union Township PA 1996 Supercenter $1.3 million infrastructure
North Charleston SC 2004* Supercenter $10 million infrastructure (via TIF)
Bastrop TX 1995 Supercenter $125,000 property tax abatement
Dallas TX 2003 Supercenter $630,000 property tax abatement
Garland TX 2001 Supercenter $575,000 infrastructure (via waived fees)
American Fork UT 2004* Supercenter $1.2 million infrastructure
Baraboo WI 2001 Supercenter $2.2 million infrastructure (via TIF)
Milwaukee WI 2003 discount $4.5 million infrastructure (via TIF)
Beckley WV 1989 discount $1.3 million state tax credits
Logan City WV 1998 Supercenter $3.5 million infrastructure
Nitro WV 1998 Supercenter $4.9 million infrastructure
Wayne WV 1999 Supercenter not available infrastructure

Hopefully our municipalities will avoid using Amendment One to underwrite one of China's best customers.

So, are we ready to finance downtown development with the ill-gotten booty of the ill-conceived TIF? I hope not.

If there isn't sufficient economic benefits to develop the project on its merits alone, then what makes us think TIFfing a project is going to benefit the tax-paying community? And what about TIFs slippery slope, eminent domain? Or, considering what looks to be next year's huge tax increase, an increase necessitated partially by our love affair with bonds , is now the right time to expose the tax-paying public to more financial liabilities? Once again, like ACS and their Faustian bargain, we have a case of being offered "something for nothing". Folks, there's no such thing as a free lunch. According to the TIF promoters, there's no financial exposure, right? Think again. Even if the TIF is paid-off, and even of our town's use doesn't run amok or that every other developer doesn't start demanding TIFfed incentives (ala the recent devilish Dell deal), where's all the money for "incidental" service improvements going to come from? Oh, yeah, I know - let me go fetch my checkbook.

Pay-as-you-go is a good idea in the best of times, but considering our country's coming financial difficulties, a little restraint is more critical now than ever.

Is anyone else planning to oppose the local use of TIFs or is everybody ready to take on more financial liabilities and act like there's no tomorrow?

OK. It appears that the funding is coming from a COPS (certificates of participation).

Though TIFs were discussed, the shrinking footprint of this project made that infeasible.

COPs are secured debt - usually used for essential building (the security being the asset itself). What's unusual, at least to me, is the $7.3 will be secured by one level of parking structure that is tied to a privately owned development.

I'm doing a bit more research but the COPs appear to be figured into our town's overall debt service, thus impacts not only our debt ratings and our forward ability to borrow but the yearly interest payments we make on newly acquired debt (of which bonds is just one part).

$7.3M in acquired debt for a project with less and less reason to exist?

OK, back to biting my tongue.

I'm trying to find out what this bit from the Town's recent PR on the Downtown Initiative means.

The PR piece says:

The Town pays developer maximum $7.245 million using tax-exempt borrowing for public parking spaces ($45,000 per parking space) after construction

I'm a bit confused on the $7.3M increase in funding based on "tax-exempt borrowing" - is it a bond or TIFs that will provide the funds?