Loading...
HomeMy WebLinkAboutAgenda - 10-19-2004-7bORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 19, 2004 Action Agenda Item No. ~ ,~ SUBJECT: Proposed Constitutional Amendment on Use of "Self-Financing Bonds" DEPARTMENT: Manager/Finance/ Economic Development PUBLIC HEARING: (Y/N) No ATTACHMENT(S): September 2004 Report from NC Budget & Tax Center Various Opinion Pieces/News Articles INFORMATION CONTACT: Rod Visser, ext 2300 Ken Chavious, ext 2453 Dianne Reid, ext 2326 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To receive a report on the proposed amendment to the North Carolina Constitution that would authorize local governments to issue so-called "self-financing bonds" BACKGROUND: One element included in the balloting during the November 2, 2004 General Election will be a proposed amendment to the State Constitution that would permit local governments to issue tax-supported debt without voter approval for certain economic development related activities. The Board of County Commissioners requested that staff provide a report on the nature and mechanics of these so-called "self financing bands". Staff have compiled a variety of background documents that describe how these bonds would work and what some of the pros and cons are, from the perspective of advocates and opponents of the proposed constitutional amendment. Of particular note is the September 2004 analysis of the proposed amendment prepared by the North Carolina Budget & Tax Center, which provides some historical context, advantages and disadvantages of this type of financing, and recommended improvements to the proposal on the ballot. Also of note is that the North Carolina Association of County Commissioners' Board of Directors has voted unanimously to endorse the constitutional amendment. County staff, in consultation with the County s bond counsel, are not recommending either support for or opposition to the proposed amendment, but offer the following observations in addition to the varying views cited in the accompanying background materials: Orange County's debt management policy as currently written does not permit the use of debt for the types of activities contemplated under the proposed constitutional amendment. • In order to receive Local Government Commission (LGC) approval for a project, commitments from the business partners will need to be firm, In other words, "you can't build it and hope they come", • The debt obligation resulting from these bonds is a direct obligation of the issuing unit and therefore counts against the unit's debt ratios and in Orange's case, the County's own debt management policy parameters. • In most cases, the property taxes generated from these projects would be insufficient to cover the entire amount of debt service, This would mean that the issuer could be required to pledge other revenues, toward the project (property taxes could not be pledged.) The issuer may also be required to obtain bond insurance, The authorization to use self-financing bonds, if approved by North Carolina voters, may be beneficial to certain local governments who view it as an appropriate and useful tcol to promote certain economic development initiatives, Staff would recommend that Orange County be extremely cautious in the possible use of this debt instrument, should it become available, because of the risk that promised economic development benefits to cover the cost of debt service may not fully materialize, FINANCIAL- IMPACT: There is no direct financial impact associated with this report, If the constitutional amendment passes, it would provide an additional tool to North Carolina local governments far debt issuance. Any financial impact would depend, then, on whether Orange County should decide to use this financing mechanism at some point in the future. RECOMMENDATION(S): The Manager recommends that the Board receive the report for information only, r r ,~ ~:. u ~=~,~_ ,~ ~. I ~ ,4 ,..~, , ~, BY AMNA CAMERON, FISCAL POLICY ANALYST 3 Executive Project Development Financing (often called "Tax-Increment Summary Financing") is an economic development tool that allows local governments to issue tax-backed debt without voter approval.. The plan is financed by allocating increases in property tax revenues within a designated area to pay off the debt, typically in 10 to 25 years. • For the third time, North Carolina voters will decide the fate of project development financing. Two prior attempts, in 1982 and in 1993, failed overwhelmingly at the polls by a vote of 77.5 percent and 72.8 percent, respectively. • Proponents of this initiative argue that local governments in North Carolina need this additional financing tool in order to fund public improvements that will bring economic development to areas that need it the most and at the least possible cost to taxpayers, . Though not without important strengths, the proposed amendment and the authorizing legislation have several critical omissions, such as the exclusion of information necessary to evaluate projects. In addition, the potential impact to housing, schools, and local government services are largely unstudied in North Carolina and common safeguards to prevent negative impacts on services or the surrounding community are not included. Overview n November 2nd, voters will be handed a ballot to elect oindividuals to local, state, and federal ofFces. This year the ballot will also include a constitutional amendment that could lead to a fundamental change in the way loco/ governments can finance debt. If approved by a majority of voters, local governments would then be BC BOOGET & TA% CENTER • BTC RFOORT4 7 Eleven Year Itch Strikes Again. Should "Self-Financing Bonds" Pass in its Third Attempt for Voter Approval? y What is project Development Financing? allowed to issue tax-backed debt without going before local voters as is required under current law. Previous efforts to win voter support have failed as voters resoundingly defeated the effort in bath 1982 and 1993.. This issue of BTC Reports discusses the pros and cons of "Project Develapment Financing'; examines the movement's histary to gain approval, and gives recommendations far changes that should be implemented. (")roject Development Financing (PDF) arid Tax-Increment Financing (T1F) work in 'I the same manner. Both are methods of financing local government projects through the issuance of "self-financing bonds." North Carolina and Arizona are the only states without this financing option.. The process begins with a taxing district (i..e,, city or county) preparing a detailed analysis of the plan to invest in the development or redevelopment of a tract of commercial land. The financing scheme can be used for a variety of purposes. Examples of potential projects include expanding a school, building sidewalks, acquiring land for an office park or shopping center, demolishing or renovating an unused warehouse, or paying for the planning costs associated with site development for a private corporation. If the project is approved, a bond to fund the project is issued. The bond is paid for by reallocating the amount of increase in the "base valuation" of properly tax revenues that occur in the designated district. Once the bond is repaid (they are typically issued for 10 to ZS years); property tax revenues return back to the taxing district 2 BTC REPORTS NC BUDGET Rc TAX CENTER •~ ~ . ~. 5 Is PDF Different ~DF and TIF differ in that TIF projects are regarded as being applied more From Tax- narrowly than PDF Historically, TIF projects are limited to urban city centers in Increment an effort to redevelop a blighted area located within an inner city. In contrast, Financing? PDF projects will be used throughout the state and are geared more towards new " " redevelopment , Some critics economic development projects as opposed to believe that proponentr are making use of the term PDF, as distinct from TIF, in order to avoid the perceived negativity associated with the word "tax". This view is bolstered by the fact that the most noticeable difference in the legislation between the failed 1982 constitutional amendment and the current version is that the phrase "tax-increment" has been removed. Prior TIF Currently, North Carolina's constitution prohibits the issuance of this form of Proposals Have debt without voter approval; and state law requires voter approval to change Failed the Constitution. As a result, the General Assembly has passed legislation concerning self-financing bonds three times. The prior two referenda were resoundingly defeated at the polls, On July 29, 1982, voters defeated the amendment on a vote of 182,147 for to 810,565 against, or 77..5 percent On November 2, 1993, the amendment was again soundly defeated by a vote of 176,762 for to 651,190 against, with 72..8 percent of voters against the proposal.. In fact, the 1993 amendment passed in only one of North Carolina's 100 counties. Hertford county passed the amendment by 21 votes. Ballot Language (proponents of the latest self-financing bond package assert several reasons for Edited for 1 the previous two failures at the, polls, The two most cited explanations for Success? failure are that vo'ter's fear projects will lead to tax increases and second, that due to the complexity of the projects, voters did not receive adequate information to fully understand the advantages associated with TIF. Proponents have sought to respond to these perceptions in the expansion of language that will appear on the 2004 ballot Specifically, the ballot language is more detailed both in explaining how the project can be financed and in providing a greater explanation of self-financing bonds, Interestingly, in comparison fo the earlier versions, the language is less clear in explaining that voter approval is not required to issue the bonds. The 2004 ballot language will read: [ ]For [ ]Against Constitutional amendment to promote local economic and community development projects by (i) permitting the General Assembly to enact general laws giving counties, cities, and towns the power to finance public improvements associated with qualified private economic and community irnprovementr within development districts, as long as the financing is secured by the additional tax revenues resulting from the enhanced property value within the development district and is not secured by a pledge of the local government's faith and credit or general referendum; and (ii) permitting the owners of property in the property, which is binding on future owners as long as the development district is in existence. In comparison, the 1993 ballot read: [ ]For [ ]Against Constitutional amendment permitting the General Assembly to enact general laws permitting issuance of bonds without a referendum to finance public projects associated with private industrial and commercial economic development projects, with the bonds to be secured in whole or in part by NC BIIGGET H[ TA% CENTER ~ BTC REPORTS 3 Advantages of the Current Legislation the additional revenues from taxes levied on the incremental value of the property in the territorial area. The 1993 version removed the words "tax-increment" from the ballot language.. The 1982 version read: [ ]for [ ]Against Constitutional amendment permitting the General Assembly to enact general laws permitting the issuance of tax-increment bonds, without voter approval. TiF projects in other states have been criticized for several reasons.. This analysis seeks to scrutinize the proposed PDF amendment in order to assess what it does well and where it falls short. The proposed amendment attempts with mixed success, to taI<e several positive steps to ensure the community will benefit from each project Initial Application is Detailed -The "development financing plan" must include the project's boundaries, purpose, cost, how it will be financed, projections for increases in land values, and how long it will take for the increased property values to pay off the bond. In addition, the project's impending effect on the community must be described, such as how many jobs will be created, the impact on affordable housing and displacement in the area, and on services. If the effect is negative, the plan must describe what activities the local government will undertake to lessen such impact, • Public Notification and Hearing -All businesses and homeowners within the designated district must be given ample notification about proposals because they are sent first-class mail (in contrast to notification by a newspaper ad) that includes information about the project and the required public hearing to be held.. • Size of Districts are Restricted -The district may not exceed five percent of the total land area of the city. To reduce urban sprawl, legislation also caps the land size for large retail developments located outside a central business district to 20 percent of the total allocated space designated to a project, Layers of Approval Required -The proposals are thoroughly reviewed during multiple steps imbedded in the approval process., 1. Before the city can approve the project, the Department of Environment and Natural Resources must first conduct an environmental impact study. However, this provision applies only to new manufacturing facilities. In contrast, if a new retail shopping center or any other type of project is approved, there will be no environmental study and no study to determine the impact on traffic, Z. After the city approves the project, each affected county commissioner must be sent a notice of the development plan, Although the county is not required to officially approve the plan, the commissioners are given 28 days from the date the information was mailed to disapprove the plan. 3, The most significant and comprehensive examination of the project, its effects, and the security of its financing, is conducted by the Local Government Commission (LGC). The nine member commission, established in 1931, is headed by the state treasurer, The commission is charged with approving all local government requests to borrow 4 BTC REPORTS • NC BUDGET &T0.% CENTEk 7 money and is largely responsible for maintaining the fiscal health of North C'arolina's municipalities. Traditionally, it takes a conservative approach and conducts in-depth analyses of projects brought before it to ensure a high success rate. The commission will examine the feasibility of all PDF projects, analyze and ensure that the financing method is optimized, and consider the financial strength and standing of the issuing district before issuing approval, Disadvantages of the Current Legislation Wage Standards Required - A growing sentiment among experts is that private industries should not receive state or local government dollars if its workers are not afforded living wages, Businesses should not be subsidized unless the state is prepared to offer additional subsidies to these workers, who will financially qualify for social services programs such as Medicaid.. The 2004 PDF legislation mandates adherence to wage standards by businesses involved in PDF projects.. The proposed amendment allows the Secretary of the Department of Commerce to nullify the requirements on a per project basis, In another notable omission, the PDF amendment includes no requirement that businesses benefiting from PDF investments provide health insurance coverage to employees, "But For"provision -The proposed amendment includes a "But For" provision, which requires that the resulting project or redevelopment would not happen without the PDF process. Though this requirement is loosely written, the intent appears to remain applicable, To approve the plan, the LGC must believe that the private development forecast included in the development financing plan, would "not be likely to occur" without the issuance of this method of financing. Changes Restart Approval Process - An updated financing plan is not required if changes are made, but the wage standards must be reassessed, the environmental review must be conducted again, affected businesses and residents must be informed, a public hearing must be held, and county commissioners must be informed and given the time to disapprove the project, However, the LGC i'iQQS not reissue approvah The initial boundary can be enlarged during the first five years of the project, following this process. Reducing the project size does not require any notification or reauthorization, n addition to the areas for potential improvement noted above, the PDF I amendment has a number of significant shortcomings that beg to be addressed prior to passage and/or implementation. These include: • 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, Pennsylvahia, South Carolina, and Wisconsin, each of which has subsidized Wal-Mart through TIF projects totaling over $100 million. NC BUDGET E[ TAY CENTER ~ ST(.' REFGQT$ 5 Projects Can Be Funded Under Existing Financing Options -Despite the current unavailability of PDF in North Carolina, localities have other readily available financing options. Local governments currently issue debt to pay for the types of projects this legislation would fund, such as general obligation bonds or industrial development bonds.. In addition, the state's extremely (some would say exceedingly) generous economic development package includes varying incentives, grants, tax credits, and funds that encourage local development. The state has also moved toward authorizing certificates of participation (COPS), which can also be issued without voter approval. COPS, as well as lease-purchase arrangements are also already available to local governments and do not require voter approval, Urban Sprawl May be Exacerbated - "Urban sprawl" results when large amounts of undeveloped land outside a city's boundaries is developed for residential or commercial purposes, resulting in the destruction of natural habitats, the reduction of vital wetlands, strained water supplies, and worsened traffic. Because PDF projects may be funded by a city or multiple cities, by a county or multiple counties, and can therefore be used anywhere in the state, it is certainly possible (perhaps likely) that the use of this financing scheme will increase urban sprawl. Annual Report Information is Minimal -The required annual report must include only four pieces of information: 1) the base tax valuation of the property in the district, 2) the current valuation, 3) how much debt remains, and 4) the anticipated date the bond will be paid off.. As a result, no meaningful analysis can be conducted to determine if the project was successful in meeting the initial goals set forth in the development financing plan. For example, the number of jobs anticipated versus actual jobs created will not be in the annual report. An analysis of whether the city was successful in ameliorating the negative impacts attributable to the project will not be found either_ Moreover, in addition to the weak reporting requirements, the reports are not required to be released to the public. No Clowbock Provision -The term "clawbacl<" describes the ability of a municipality to seek reimbursement from a private company that receives some form of government subsidy but fails to meet specific and agreed upon contractual obligations. For example, a city agrees to renovate an existing warehouse bought by XYZ company on the condition that the company be in business and hire 50 people by 2006, but XYZ decides to move to Virginia instead after the renovation is complete Instead of benefiting from the increased property value due to the renovation, XYZ should be required to repay the funds spent by the city. The PDF amendment includes no such requirement. Belief that Taxes Will Not Increase May be Overstated -When an undeveloped piece of land is developed or when a downtown district receives a facelift, inevitably, local governments will incur greater responsibility and thus, their costs of providing the same level of service to the district will rise. Usually, the taxes generated in redeveloped or newly developed areas are used to pay for the normal operating expenses incurred by a district Since the property tax revenues are devoted to paying down the project's financing bond, the issuing district must raise these revenues elsewhere. For example, a city may need additlonal fire or police protection for the area, wastewater treatment facilities may need to be expanded, or roads that lead to the PDF district may need to BTC nEPORT$ ~ NC BUDGET $t TA% CENTER be widened or repaved, More people moving to an area mean that schools need to grow, more teachers need to be hired, and school allotments must rise. Without the property tax revenues associated with this designated area to pay for these services, it stands to reason that other taxes or fees will need to raised to pay for the greater demands placed on the district. Other Options for Improvement Financial Impact to State is Uncertain -PDF will affect two state agencies, the Board of Elections and the Local Government Commission (LGC) in the state treasurer's office, but to what extent the LGC will be affected is not Imown. The General Assembly's Fiscal Research Division and the LGC were unable to provide estimates of the costs to the LGC to legislators. Forecasting and Financing Tricky-The ability to repay bonds depends on accurate forecasting of revenue growth.. Unforeseen eventr or poor forecasting may lead to underestimating the growth in the property tax values.. The debt- issuing locality may be required to sell public property within the district to make a payment on the bond or may need to pledge other revenues. ' n addition to the areas of potential improvement noted above, there are two other shortcomings that the proposed amendment fails to address: Additional funds for housing assistance -Low-income families may be displaced by the rising costs of living in areas that benefit from the development. To lessen displacement, several states require that a portion of property tax revenues dedicated to TIF bonds be allocated to local or state housing trust funds such as the North Carolina Housing Trust Fund. The proposed PDF amendment includes no such language.. 2. Public Education May Be Impacted -Research has shown that TIF projects can harm public education, Therefore, numerous states authorizing TIF do not permit the percentage of property tax revenues devoted to education to be diverted. However, the proposed amendment does not stipulate any portion of incfeased property tax revenues be used for schools, leaving public education vulnerable. In a survey conducted by the National Education Association, 4Q of the 48 states using TIF responded that school property taxes were affected as a result of 71F projects.. Conclusion Istorically, voters in the state have been reluctant to approve of initiatives that H increase public debt or that eliminate voter approval requirements, If approved, PDF will produce a fundamental and constitutional change in the way local governments can issue debt without voter approval, Voters must now decide if the shortcomings and omissions addressed above outweigh this latest attempt to further economic development in the state, 1 Sanders, John and john Inmax, jc., "Amendments to the ComUWUon of North Urolina: 17761996", University of North Carolina at Chapel Hili, Institute of Govemmenq 1992 (Note To[ai number of voter against the amendment in 1993 was I'uted as being higher than Wtai publuhed by the NC 0oard of EleNons. The figure publuhed by the BoartJ of Elec2iom is cited..] 2 "Abstma of Votes Cart for Conriitu6onai Amendment and Bond Referendum Special Elenion, November Z. 1993" North Carolina Board of Elections.. 3 Radfed NoNs Carolina Senate 0ii1 775, 2001 Session, North Carolina General Assembly, The bill u located at hng// I Vht 12003/6'11 /AIIV /S t /5725 ht I. 4 Sanders, john and john Lomax. Jc. "Amendments to the CorutiWUen of Narth Carolina: 17761996". University of North flC BUDGET ~ ~rAZ CENTER STC REPORTS /0 Carolina al Chapel Hill, InsdWle of GwemmenL 7997.. 5 Ibid. 6 Nonh Carolina Office of State Treasurer. 7 "Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money b Fnance Its Neeer-Ending Growth". Good lobs Firsq May 2004.. e "Pmtecdng Pubfic Education from Tax Giveaways to Corporadorvs: Property TmcAbatemenss, Tax Increment Finanung, and Funding for Schoa6, NEA Researth Wanting Paper, January 2003.. The mporY maybe accessed at: htto~//wurw goo4jobsfrst org/ndf%edu p~f. y North Carolina Justice Center P.O. Box 26068 . Raleighs NG 27671.8068 9'19/656-2176 . elaineta~ncjustice.org ~u~t~~u t~u~t~~ui~~u ~un~~t n~~~ut~~nt~~u t~~ut~t~t t~~ 1~1~**~~:~~:~~ALL FOR AADC 270 ORANGE CO. ECONOMIC DEVELOP. COMMISS20N PO BOX 1177 HILLSBOROUGH hIC 27275-'1177 NONPROFIT ORG 115 Postage PAID talcigh, Nosh Carotin: Permit No. 1424 NCACC P.O. Box 1488 Raleigh. NC 27602-1488 Tel: (919) 715-2893 Fax: (919)733.1065 E-mail: ncacc ncacc.org Click here for directions to the Albert Coates Local Government Center Legislative Goals Committee sets three meeting dates: Oc NCACC urges Congressional support of increased federal Medicaid funding The North Carolina Association of County Commissioners urges counties to contact their federal representatives and ask for their support and sponsorship of • Contact federal fiscal relief targeted to escalating state and county Medicaid costs. U.S Senate and House companion bills have been introduced in the 108th Congress Executi to provide $6 billion in enhanced federal Medicaid participation, Search_ memb_e • Click here for more information. NGAGC president campaigns for Amendment One NCACC President Breeden Blackwell has filmed a Public Service Announcement to encourage citizens to vote for Amendment One.. The NCACC Board of Directors voted unanimously last October to endorse Amendment One to give local governments an additional economic development tool. Currently, North Carolina and Arizona are the only states that do not allow local governments to issue self-financing bonds. • Click here to see the Public Service Announcement. • Click here to read an editorial by Blackwell that appeared in the Sept, 20 edition of the Fayetteville Observer. • Sample resolution in support of Amendment One: Word ~ PDF Mental health reform impacts area authority employees' retirement benefits The North Carolina Association of County Commissioners and the North Carolina Council of Community Programs have been working together to address one of the side effects of mental health reform -the termination of area authority employees upon divestiture of the area authority, and the potentially detrimental impact on the retirement benefits of the former employee. • Click here for more information http://www.ncacc,org/ • 'Essent County Govern school; Deceml • Funds local e_r sed_itime. control • N.C. Co Comm Prograr confere (PDF pr • Associl Membe Prograr ~~ ~. _. ,,•m The Jack FJ-isto~c ~ 10/14/2004 NCACC heraldsun,com: printer-friendly story [back] ~O~ sunald Amendment One, but use with care The Herald-Sun October 1.3, 2004 4:58 pm On Nov. 2, North Carolinians will be asked for the third time since 1982 to give their assent to amending the state Constitution so that local governments can bypass a referendum on revenue bonds for public-private economic development projects. Amendment One would do so by allowing tax- increment financing (TIF) in this, one of two states lacking such authority (the other is Arizona). There is a place in the spectrum of public financing for TIF, and the mechanism For' using it here contains numerous safeguards, but voters should do their homework before deciding to vote for or against Amendment One. To hear the enthusiastic backers of TIF tell it, this means of financing streets, parking decks, sewer systems and even affordable housing needed to lure private money into specified redevelopment districts is akin to perpetual motion. The idea behind TIF is simple: Redevelopment raises property values, thus producing higher property taxes which are then used to retire TIF bonds issued by the state. Ergo -- no cost to the taxpayers, But there is a cost. You,just don't see it, because the tax revenue that must go into retiring TIF bonds isn't available for other public purposes, And, in case of default by developers, the taxpayers are the ones who will twist in the wind. North Carolina learned a hard lesson about the perils of exuberant public financing during the Great Depression, when many local governments were forced to default on bonds. As former deputy state treasurer Charles Heatherly noted not long ago, it took 30 years to clean up the mess and restore North Carolina's reputation in the bond markets. None of this is to suggest, however, that approving TIF would be a fiscal disaster for North Carolina in the current economic climate. Because TIF bonds would have to meet a stiff series of qualifications overseen by the nine-member N.C. Local Government Commission, the likelihood of approval for off- the-wall economic development projects promoted by nonprofit groups, a source of frequent scandal in Durham, is essentially nil. We should also note that one of the members of the Local Government Commission is the state treasurer, whose office has been a bulwark of sound fiscal policy since the 1960s, So most safeguards against abuse of TIF ar'e in place. We suggest one more: A requiremenfmaking developers responsible for reimbursing government for infrastructure expenses if a project falls through or, worse, fails. TIF is not a financing mechanism to be used lightly or frequently. TTF moves accountability for incurring public debt another step away from the taxpayers, and for that reason alone should be invoked only as last-resort financing. Amendment One, yes -- but with eyes wide open. http://www,heraldsun.com/tools/printfriendly,cfm?StoryID=532516 10/14/2004 heraldsun,com: archive date search i3 Pamper Yourself Find A Spa Near You home :archives calendar I classiFleds I shopping I movies herald Reconsider Amendment One backing Ah' sun °°' Col Local News DAN COLEMAN Columnist pbi Durham Chapel Hill Herald Am Orange Saturday, September 11, 2004 Granville Final Edition Ads Person Editorial5ection r Chatham page Z Sections NalionNVorld State Last Tuesday, the Chapel HiII Town Council endorsed an ill-considered constitutional sports amendment that is being foisted on the people of North Carolina. There is an all-out Business push this year to gain approval for "Amendment One," which would allow cities and --® weather counties to issue what are being called "self-financing bonds." Opinion ~ Technology HeaithrMed More commonly known as tax increment financing (TIF), this is a method that Arts & Features authorizes local governments to issue bonds to subsidize development and to do so SH Fun & Games without placing them on a ballot for voter approval. North Carolina voters rejected TIF Gallery amendments in 1982 and 1993. Religion Resources Hot Topics TIF bonds are a bet against the future value of a property. With TIFs, government Archives spends that future value now on improvements that often amount to little more than a My clipFile subsidy for private developers. The TIF is undertaken in the hope that future revenues Traffic will be sufficient to pay off the bonds, a risky proposition. Air Travel Maps vote8ook TIFslock in the current tax rate on a property to be developed. The value of x subsequent improvements is not subject to regular property tax. Instead, the F9 equivalent of that tax (the "tax increment") is diverted to repay the subsidy. One of the risks associated with this kind of financing is the gamble that the improvements will actually be made and that they will maintain value over a period of many years sufficient to pay off the bond. Town Councilman Mark Kleinschmidt was troubled by the resolution's claim that self- financed bonds do not raise taxes, He pointed out that this is only true if everyone fulfills their responsibilities and the project works out as planned, But even when legal requirements are in place to force developers to stick to their TIF commitments, they can often abandon those obligations with little more than a slap on the wrist in return. There are too many instances where taxpayers have had to bail out economic development projects. TIFs are promoted with the loftiest of expectations. Originally formulated to help cities improve "blighted" areas, the term blighted has been stretched to include just about anything a developer might imagine. Chicago has spent $62 million in TIF funds to subsidize national retailers such as Home Depot, Borders and Starbucks, A study of a New Orleans TIF found that it would require Wal-Mart to pay 38 percent less than it otherwise would in property taxes, In addition, there is uncertainty as to whether TIFs are even needed. Proponents presume that development will not occur without incentives, but there is no proof that http://www.herald-sun.com/archives/tJRNDetail.cfm?URN=0462109956 10/13/2004 heraldsun.com: azchive date search this is the case, After a 10-year study of Iowa TIFs, Iowa State University researcher David Swenson concluded that "[tax] increment spending has not yielded measurable and distinct economic or social outcomes." A major problem with TIFs is that, while most are authorized by municipal government, they affect all entities that depend on property taxes, If Chapel Hill or Carrboro issue self-Fnancing bonds, the county and school system will have their revenues from the TIF projects held back as well.. In fact, of all governing bodies, schools often take the hardest hit. Chapel Hill is one of scores of North Carolina municipalities that have endorsed Amendment One. But not all of them mindlessly signed on to the boilerplate resolution provided by its proponents. Monroe, for example, changed the language to remove the clause claiming there would be no increase in property taxes, The reason municipalities support this is simple: TIFs give them an easy way to raise funds, But there is a fundamental principle of democracy that says what is easiest for government is not always best for the people. There are many cases where public scrutiny and a direct vote provide an important safeguard. That is why general- obligation bonds are voted on as ballot issues. Despite the Orwellian sleight of hand that removed the word "tax" from the title of the amendment, there is nothing "self-Fnancing" about tax increment financing, TIFs are essentially a shell game, Like the deficit spending of the Bush administration, they avoid raising taxes for today's expenditures by obligating future governments, Both TI Fs and deficits can be effective fiscal policy tools if used sparingly and wisely. Unfortunately, such wisdom is in short supply, It might be possible to fashion TIF legislation that defined clear social goals, gave all stakeholders a voice and adequately assigned risk to the developer, It's just hard to imagine those requirements coming out of the N.C, General Assembly, In many states and municipalities, those concerned with economic justice must be constantly vigilant against abuses of the TIF system (for example, see www,ncbg.org in Chicago). There is no need to open that door in North Carolina. It is not too late far the Town Council to rescind its hasty and ill-considered endorsement of Amendment One. Dan Coleman is a local author and activist, Readers can contact him at emaildan@ncxr.com or c/o The Chapel Hill Herald, 106 Mallette St„ Chapel Hill, NC 27516. «snve to my chpflle» «e-mall this article-• «prirrter-friendly verslom~ :: privacy statement :copyright ©2004, The Herald-Sun :terms of use :: IMF http://www.herald-sun.com/archives/URNDetaihcfm?URN=0462109956 10/13/2004 15' North Carolinians, for Jobs ~ Progress VOTE FOR AMENDMENT ONE Self-Financing Sonds Overview: Self-financing bonds are a powerful job tool used in 48 states in this country -including every state east of the Mississippi except North Carolina. An amendment to the North Carolina Constitution is requited before local governments can use this tool. In November 2004, North Carolinians will have a chance to vote for jobs and opportunity. Description: - Self-financing bonds will be a tool that local governments can choose -but axe not required to use. - Self-&nancing bonds will finance public improvements such as streets, water and sewer service and sidewalks in special development districts. They also will be used to help spur private development, including the re-use of abandoned textile and furniture factories. - Unlike General Obligation Bonds, self-financing bonds do not require a vote of the people because they do not obligate full faith and credit. - The net gain in property taxes, generated witlvn the district by the improved property, will pay the debt created from bonds issued by the local government. - When the debt is retired, total property taxes generated by the district will go into the local government general fund. - Projects must be approved by independent and non-partisan NC Local Government Commission.. - Limits axe placed on local governments' use of this tool, A total of only five percent of a government's jurisdiction can be in development districts. How our neighbors are using them: Red River Development=Rocl; (-sill SC: Neighborhood enhancement program Total self-Enancing bonds will be $25 million. Projected private investment is more than X140 million with additional tax revenues of $2.1 million annually. Private development includes mall, hotel and theater Manchester Ville Redevelopment District -Rock Hill, SC: X10 million to convert a former garbage transfer station and Brownfield site owned by the City into viable commercial and residential development.. Residential redevelopment includes 238 town-homes ranging from X110,000 to X240,000 and a proposed 312-unit luxury apartment building. Commercial J~ aclopment includes restaurants, a hotel, office space, a cinema, a medical center, and several large retail stores A~~nroximately 900 employees currently work on site. Holl~nvood District -Hollywood, PL: Redevelopment of downtown, including commercial and residential. Bonds will be Eor CIS million, with private investment projected for $100 million. Public projects include streets, parking water and sewer. Smvrna District - Stmn na. GA: ' 'n to $30 trillion in bonds to support the renovation of a 1950s shopping center into high-end condominiums, .rr ~ r Icvel retail and office space. Brooli~n Industrial Parl: - Brool;h n, IA: The Industrial Parh is located in a development district. If a business moves into the district, the town uses self-financing bonds to pay for water, sewer and streets. /~ Self Financing Bonds This truly will be a historic year for North Carolinians. Not only will we be given an opportunity to elect a North Carolinian to the Executive Branch of the government, but we in North Carolina will be given an opportunity to vote on another pressing matter: "Self-Financing Bonds," Voters in November will be asked to consider "Amendment One", which, if approved, would give local governments the opportunity to use self-financing bonds (known to many as "tax-increment financing") as an economic development tool. NCAPA strongly supports this measure and urges you to "pass the word" to others on this matter. Here are a couple of key facts to keep in mind: 1. Self-financing bonds (SFB's) can spur private development by helping to finance public improvements such as streets, utilities and other infrastructural improvements-..without raising property taxes. 2. The use of SFB's is entirely voluntary by a local government. 3. Before a SFB project can be put in place by a local government in North Carolina, it must first be approved by the Local Government Commission to ensure its fiscal soundness. 4, SFB's can not be used throughout a jurisdiction.. They can only be used in targeted development districts (i e., Brownfield sites, areas of disinvestment, etc.). 5. SFB's are viewed by many as a "fiscally conservative" economic development tool. They are used to spur economic development. The increase in property taxes resulting from the development pays off the bonds. Thus, they do not have an impact on taxpayers and property owners elsewhere in the jurisdiction. 6. SFB's have been successfully used throughout the nation. Examples from neighboring states include: • The "Red River Development" project in Rock Hill, SC. SFB's amounting to $25 million are anticipated to result in $140 million in private investment.. Annual ad valorem revenues are expected to increase by $2 1 million. The "Manchester Village Redevelopment Project", also in Rock Hill, SC, will use $10 million in SFB's to convert a Brownfield site into a mixed use development that will include townhomes, apartments, office space, a hotel and other retail and institutional uses Smyrna, GA will use $30 million in SFB's to support renovation of a 1950's era shopping center into a mixed use development containing high-end condo's, and street level retail and office space. t~ North Carolinians, for Jobs ear Progress VOTE FOR AMENDMENT ONE Questions &Answers What is aself-financing bond? It is an economic development tool used by conununities across America to attract jobs, revitalize corrununities and neighborhoods, and increase property values, North Carolina is one of only two states in the country that does not have this tool. How are the bonds used? Local govermnents issue the bonds to pay for public improvements, such as sheets or water and sewer lines, associated with private investment in development districts, What kind of developments? development that can be supported by self-financing bonds include new manufacturing plants, re-use of abandoned or vacant facilities, affordable housing, commercial development in inner city areas, redevelopment of areas damaged by enviromnental pollution or natural disasters. Why are they called self-financing development bonds? Bonds are paid off fiom additional tax revenues collected within a development district• that has experienced higher property values as a result of public and private inveshnent within that district. Who creates the development dish°ict? Local govenunents, following discussions with landowners, designate the boundaries of the development districts. The districts don't go into effect until the State Local Government Conunission has approved the development plan, Will the property tax rate be raised to pay off the bonds? No. The existing tax rate in the community and development district stays the same. Who approves issuance of the bonds? The Local Government Comrnission in the St<1te Treasurer's Office has final approval authority.. The Cornnission is an independent non-partisan organization, North Carolina is oue of few states in the country that gives such authority to an arms length state conmussron and the only one that gives the state final authority on approval to issue bonds.. Over many decades, the Corrrrnission has done an extraordinary joL of protecting the financial strength of local connnunities. North Carolina has 25 percent of the AAA financial rated communities in the country, far more than any other state. !g On what basis does the Local Government Commission make its decision? The law establishes seven specific criteria that a community's development plan must meet before the bonds can be issued. One of the most important is that the conunission must be satisfied that the project would not proceed without the public improvements paid for with the self financing bonds.. North Carolina has some of the most rigorous standards in the country for using self financing bonds. What happens if the project fails? In more than 50 years no local bond approved by the Local Govermnent Commission has defaulted. In addition the Connnission can require some bonds to be insured and local governments have a lien and may foreclose on private development to collect the taxes owed on the project. The local governments can require other safeguards of private businesses as part of the agreement to use the bonds. Also, the amendment specifically prohibits pledging the taxing power of the local government to repay the bonds without a referendum, Does approval of the bonds require a vote? No There are three reasons why. First, the law requires a vote onl if the taxing power of the conununity is pledged to pay off bonds. The law clearly states that with these bonds communities will not be pledging their taxing power to pay off these bonds, Secondly, the bonds are used to support projects that are ready to start now and can't afford to wait around months for a referendum. Third, self-financing bonds can be insured. Also local governments can put a lien or foreclose on private development to collect the taxes owed, What about the development's impact on the existing neighborhood? The law specifically requires the development plan to include a description of the benefits to the residents and business owners in the development district and to address what steps will be taken to deal with any possible negative impacts the project will have, How have the bonds worked in other states? There are a variety of economic studies about the benefit of self=financing bonds, There is little, if any dispute, among those studies that there are significant increases in jobs, private investment, property values and tax revenues within the development districts. For example, in Iowa the value of land within development districts grew fiom $650 million to $4 billion - a growth rate 10 times faster than overall municipal property valuation. Property tax revenues collected from development districts there grew from $22 million in 1989 to $118 million in 1999. heraldsun.com: printer-friendly story [back] ` ` sunald Amendment would affect borrowing By BEN EVANS, The Herald-Sun October 12, 2004 10:03 pm DURHAM -- Critics call a proposed amendment to the state constitution a risky corporate handout that would divert tax dollars from basic government services like schools and police departments, Supporters say it's a vital tool in the increasingly competitive world of economic development. And they're quick to point out that North Carolina is one of only two states in the country that doesn't already use the financing option, On Nov. 2, voters will choose, marking yes or no on a statewide referendum "Amendment One." The measure would alter the state constitution to allow local governments to borrow money for economic development projects without voter approval. Under the so-called tax-increment financing proposal, cities and counties could boost public-private developments in targeted areas by selling bonds to pay for parking garages, streets or other infrastructure. The governments would repay the bonds solely from the extra tax revenues the new projects create. Durham officials say downtown's publicly subsidized American Tobacco redevelopment would have been a good candidate for the financing. Instead of paying the project's $4:3.5 million subsidy from their general budgets, the city and county could have created a special tax district around American Tobacco and borrowed against the increased future tax value of the reborn factory.. Under that scenario, the debt would be paid off strictly from that district's new tax revenue. "I think it offers a tool for local governments to provide for development at no tax increase to citizens, as you see generally with [traditional] bond issues," Mayor Bill Bell said. "The good thing to me is that you can absolutely say to the residents that your taxes aren't going up because of this," Critics say that's not quite true. Tax-increment financing erodes city and county tax bases by earmarking future tax revenues for corporate incentives, sticking existing taxpayers, who live outside the special tax districts, with the burden of paying for basic services. Taxpayers also could be left holding the bill if the developments fail to produce expected tax revenues, critics warn:. The debate has created an unusual coalition of liberals and conservatives against the measure. "They're taking the revenue that would have come to the city coffers for schools and police and fire and all of that and paying for a development project," said Chad Adazns, a Lee County commissioner and director of the John Locke Foundation's Center for Local Innovation in Raleigh. "You're not getting any new revenue for .., basic services until that bond is paid off; if that bond is paid off. And you're doing it http://www,heraldsun.com/tools/printfriendly.cfm?StoryID=532241 10/13/2004 heraldsun.com: printer-friendly story while bypassing voters." ao Adams and David Mills, executive director of the Common Sense Foundation in Raleigh, said the amendment's supporters are using slick advertising and misleading information to sway voters, They point in particular to the name "self-financing bonds," which was given to the proposal by such boosters as the N,C. League of Municipalities and several former governors, "They make it sound like that through magic or pixie dust or elves, these projects actually pay for themselves. That's not true," Mills said. In addition, the opponents say the "but for" argument -- that companies wouldn't locate in North Cazolina "but for" the incentives -- is a fallacy. North Carolina doesn't need to give away tax revenues to lure,jobs, they say. But Bill Kalkhof; who recruits business to downtown as president of Downtown Durham Inc,, disagrees. He said American Tobacco, for example, would have never been completed if the city and county hadn't chipped in, "The cost of development in a downtown area is extremely high," Kalkhof said, "It's a lot simpler for developers to go out on green acres and whack the trees down and go to work, So if you want to have as a community policy a revitalized downtown, a revitalized North-East Central Durham, we need to have this tool to compete." Kalkhof said the 10-acre University Ford car dealership near American Tobacco would likely be ripe for redevelopment one day. But it probably wouldn't occur without substantial improvements to streets, landscaping and utilities, he said.. Local government could use tax-increment financing to pay up front for those improvements, and more than cover the debt payments using the new tax revenue. He estimated that the redeveloped site could be worth as much as $80 million, producing about $1.1 million a year in city and county property taxes, compared to a current value of $.3.6 million, which generates about $50,000 in taxes. Kalkhof and others acknowledged that local governments already have options for taking on debt without voter approval, including those used in the American Tobacco project and for the Durham Bulls Athletic Park. But "Amendment One" would streamline the process and allow cities and counties to respond more quickly to the private sector, they say. Supporters also point to die safeguards that the measure would provide, The special tax districts couldn't make up more than 5 percent of a city or county, ensuring that it would be used selectively, they say, and the state's Local Government Commission would have to sign off on all projects.. The state's voters defeated similar tax-increment proposals in 1982 and again in 1993. But this year, supporters have rallied behind the referendum, which won easy approval from the General Assembly last year and earned widespread support among local leaders. "Personally, I support it. I think it's another creative revenue tool for municipalities," said City Councilwoman Diane Catotti, who has expressed concern in the past about economic incentives. "I think it could be advantageous and could be used in targeted areas where you want to see economic development." http://www.heraldsun.com/tools/printfriendly,cfm?StoryID=5.32241 10/1.3/2004 heraldsun.com: printer-friendly story ___ a 1 The Greater Durham Chamber of Commerce is holding a forum Oct. 28 in support of "Amendment One," The event, set for 12:30 p,m. in the Durham Civic Center, will include as guest speakers former governors Tim Hunt and Tim Holshouser, For more information or to register, call 682-213.3. Links related to this article: The Herald-Sun's VoteBook: www.heraldsun.com/votebook/ URL for this article: http://www.hers]d-suacom/durham/4-532Z4Lhtml © Copyright 2004. All rights reserved. All material on heraldsun.com is copyrighted by The Durham Herald Company and may not be reproduced or redistributed in any medium except as provided in the site's Terms of Use. [back) http://www.heraldsun..com/tools/printfriendly.cfin?StoryID=532241 10/1.3/2004 chapelhillnews.com as Chapel Hill. N pHnt window C close window Q Published: qct 12, 2UU9 Amendment One: Useful development tool or corporate giveaway The state refereridum that will appear on the November ballot has support from local government leaders, but faces criticism from both liberal and conservative groups. By MATT DEES, STAFF WRITER CHAPEL HILL -Mayor Kevin Foy says there's only one pending project that would be affected by Amendment One, a state ballot referendum that would permit local governments, on a limited basis but without voter approval, to spend public dollars in support of private development. The proposed development of lots 2 and 5 in downtown Chapel Hill is a possible candidate for the so- called "self-financing bonds" Amendment One would allow, though they have been ruled out by the project consultant for now. But Foy and government leaders across the state still want the option, even as interest groups from all sides of the political spectrum line up to oppose the constitutional amendment. "Are they a good idea in every circumstance? No," Foy said "Are they potentially something that could be used in some areas? Yes." Self-financing bonds, formerly known as tax-increment financing before supporters decided that term turned voters off, work like this: Local governments agree to pay for improvements, such as roads, parking garages or new water and sewer lines, to a site slated for development. The additional property tax revenue generated by the project, in principle, goes to pay for the improvements. Organizations like the N C Citizens for Business and Industry, and prominent names in North Carolina politics including former governors Jim Hunt, Jim Martin and Jim Holshouser, are backing the amendment They argue tax-increment financing, called TIF, will allow local governments, particularly those in areas of the state hard-hit by plant shut-downs, to attract new development N C voters twice have rejected ballot initiatives to allow tax-increment financing to be used without voter approval, in 1982 and 1993. There are restrictions in the current form of the amendment. Only properties in a designated economic development district are eligible for the bonds, and the districts can make up no more than 5 percent of a town or city's land area. The bonds are supposed to target areas that have stagnated economically, though they haven't always been limited to such hard-hit regions in the 48 other states where they're legal. http://www,chapelhillnews.com/news/v-printer/story/ 1727196p-7991250c.html 10/ 13/2004 chapelhillnews.com a3 Only Arizona and North Carolina require voter approval for self-financing bonds. The N C Local Government Commission, which includes the state treasurer, must approve any self- financing bonds Town Manager Cal Horton said the bonds would be just one more "tool in the tool kit" if voters approve Amendment One on Nov 2 "Now an economic development tool is utilized depends upon the philosophy of the community," he said "In our community, the philosophy has been to create an environment where businesses can be successful, but there is no tradition in our community of giving hand-outs." Developers of large, mixed-use developments Meadowmont and Southarn Village, for example, were required to pay for all the public improvements needed to support those projects, Still, the prospect of local tax dollars lining the pockets of developers is one of the chief concerns of those opposed to Amendment One. Both the libertarian John Locke Foundation and the liberal Common Sense Foundation have come out against the initiative Chad Adams, director for the Center for Local Innovation, an arm of the John Locke Foundation, said tax-increment financing is unnecessary and will increase public debt without the public's consent.. "This is a corporate giveaway," he said. "You're not doing necessary infrastructure for government, and who's to say development in struggling areas wouldn't come anyway?" David Milts, executive director of Common Sense, said other states have seen tax-increment financing misused Near Chicago, millions were given to Home Depot to support a development. "We are concerned that TIF creates bad jobs, mostly low-wage, service-sectorjobs,"Mills said. "It's just free extra money for big business." Foy agreed TIF isn't always appropriate. "To me, the question is, if you've already decided you're going to do something we're not debating whether to do ii, we're debating how to do it," he said "I think people should not confuse the merit of the project with how you finance the project." TIF has been touted as a good means for areas that have lost manufacturing jobs to rebound Adams points out that the other two times a TIF amendment has appeared on the ballot came after a recession. He said cities Tike Cleveland and Detroit have used TIF in an effort to boost sagging economies, but those places have not escaped tough times. "i'm not going to sit here and say all of them are bad and horrible,' Adams said. "I think we need to be http://www.chapelhillnews.com/news/v-printer/story/ 1727196p-7991250ahtml 10/ 13/2004 chapelhillnews,com a~ honest about the fact that it can go bad No society has ever been able to borrow its way to success. But Foy said local governments should have the power to decide for themselves. "I fundamentally think local government is far more responsive than federal or state government is to its citizens," he said. "Why do we need the John Locke Foundation or the Common Sense Foundation or anyone else telling us what we should and shouldn't do We don't need that paternalistic attitude from anybody "We should be making our own decisions." Contact Matt Dees ai 932-8760 or at mdees@nando.com, ~ Copyright 2004, The News & Observer Publishing Company. Ail material found on www chapelhillnews coin is copyrighted The News 8 Observer Publishing Company and associated news services No material may be reproduced or reused without explicit permission from The News & Observer Publishing Company. Raleigh, North Carolina The News 8 Observer Publishing Company is owned by The McCiatchy Company htip://www.chapelhillnews,com/news/v-printer/story/1727196p-7991250c.html 10/ 1.3/2004 heraldsun.com: printer-friendly story [back a5 sunald Voters will face choice on borrowing BY ROB SHAPARD, The Herald-Sun October 12, 2004 7:29 pm CI-iAPEL HILL -- When they go to the polls next month to choose their representatives at home, in Raleigh and in Washington, P.C., voters in North Carolina also will decide whether to amend the state constitution. While three constitutional amendments are set to be on the Nov. 2 ballot, the one drawing the most debate is called Amendment One, and would give local governments another way to borrow money for economic-development projects. The Chapel Hil] Town Council saw enough merit in Amendment One to pass a resolution last month in support of it, although at least one council member who voted in favor now has her doubts. The elected boards of Carrboro, Hillsborough and Orange County have not taken up the matter or passed similar resolutions. The Orange commissioners tentatively are scheduled to hear a presentation on Amendment One and talk about the issue at their Oct, 19 meeting. Supporters of'the amendment are hoping that the third go-round will be the charm. North Carolina voters voted down similar proposals in 1982 and 1993. If voters say yes this time, local goverrunents would be able to pursue "tax-increment financing" for certain projects, Critics say that one of the key drawbacks of the proposal is that if voters give approval now in very general terms, then they would be cut out of the decision when it comes time for communities to actually borrow funds for specific projects. Unlike the "general obligation" bonds with which many voters are familiar, taking on debt through tax- increment financing doesn't require approval by the voters. However, cities, towns and counties still would have to get their financing plans approved by the N.C. Local Government Commission, which also reviews plans for general-obligation bond referenda. Tax-increment financing wouldn't be the only option that local governments have for borrowing significant amounts of money without putting it to a voter referendum, Officials within Orange County have tapped some of those options in the past, such as two-thirds bonds and certificates of participation. North Carolina and Arizona are the last two states that don't allow tax-increment financing, or TIF. Supporters of the amendment tend to refer to the financial tool as self-financing bonds, although Chapel Hill officials have used both phrases in their discussions. http://www.heraldsun,com/tools/printfriendly.cfm?StoryID=532204 10/13/2004 heraldsun.com: printer-friendly story a~ The basic idea is to allow a town, city or county to set up a district within the community, one in which officials hope to encourage redevelopment efforts by the private sector. If officials decided they needed to invest public funds in "public improvements" in the dishict to attract business, they could turn to tax- increment financing or self=financing bonds to pay for the improvements. To pay back the money it would borrow under that approach, a community would commit to using the increased tax revenues it would expect to take in as the property value rises within the azea being redeveloped. "I think it's a useful tool to have available," said Cal Horton, Chapel Hill's town manager. "The key thing is that local elected officials need to be in chazge of its use, and make sure that what they do with it is consistent with community values." Horton said some communities have had good results in using tax-increment financing, while others have experienced "questionable" results. It depends in part on how leaders manage it. "Every community would decide how and whether to make use of this tool," he said. "It actually might be of great value to a community that is suffering some economic distress, particularly some of the eastern counties and cities and some of the more remote mountain areas." He added, "I think our council would be very careful about considering using self-fnancing bonds, and would want careful evaluation of risks as well as potential value." One potential application oftax-increment financing here that's been mentioned grows out of the Town Council's work to possibly redevelop some of Chapel Hill's downtown parking lots, in partnership with a private-sector developer or developers, The town's consultant, .Iohn Stainback, has said the town likely would have pay for features like a new parking deck. He's pointed to tax-increment financing as one of the ways that the town eventually could consider to help pay for such costs.. But the council has not committed to redeveloping the lots, or to trying any specific steps such as tax- increment financing. And Stainback said this week that, in crafting a financial model for the town's project, he is not figuring in any reliance on tax-increment financing. In support of Amendment One, Chapel Hill Mayor Kevin Foy will join other local officials from across the state this morning in Greensboro to speak in favor of the proposal.. The press conference, to be held on a downtown street corner where a number of businesses have shuttered their operations, is on behalf of the N. C. Metropolitan Coalition, which has been campaigning for the amendment. The council's Sept, 7 vote for its resolution supporting the anendment was 8-1. Councilman Mark Kleinschmidt cast the only dissenting vote after voicing concerns that the burden would fall back on taxpayers if a redevelopment project didn't work out. Councilwoman Sally Greene voted in favor, but she said Tuesday that she's changed her mind after learning more about the fine print. Greene said that, in supporting the resolution, she had been thinking paztly about the many shuttered mills azound North Carolina that could be prime locations for redevelopment efforts, But she said it seems that communities are finding ways to do such projects without having tax-increment financing as http://www.heraldsun.com/tools/printfriendly.cfm?StoryID=532204 10/1.3/2004 heraldsun.com: printer-friendly story an option. a~ "I have come to realize there are very few checks and controls on keeping this new tool from being used less discriminatingly," she said, "I'm disturbed in general by the fact that it's not being billed as a tax instrument, but in the end, ifa project failed, the community could be stuck paying the bill. "If I thought it was a tool that would be only used in really desirable projects with a greater chance of success and a lot offail-safes, then I would be for it," she added, "But it seems to me that projects are getting done slowly but surely without [tax-increment financing]," Chad Adams, director of the Center for Local Innovation at the .Iolm Locke Foundation, is one of those raising strong objections to the amendment.. Adams, who also is a Lee County commissioner, said he didn't believe that cities and counties could "borrow their way to success," He argued that the state should look to lower personal and corporate taxes in the name of economic development, rather than allowing a financial tool that he described as essentially a subsidy for private ventures. Tax-increment financing "is not a panacea," he said. "It's another method by which local politicians can spend money without taxpayer approval, plain and simple, Instead, "if it's a good [redevelopment] project, take it to the voters," he said. "If you believe in it that strongly, pressure the Legislature to make it easier to hold a referendum," Links related to this article: The Herald-Sun's VoteBook: www.heraldsun,com/votebook/ iJRI, for dais article: http://www herald-sun com/orange/10-532204.Udn1 © Copyright 2004. All rights reserved. All material on heraldsun.com is copyrighted by The Durham Herald Company and may not be reproduced or redistributed in any medium except as provided in the site's Terms of Use. [~aclc] http://www,heraldsun.com/tools/printfriendly.cfm?StoryID=5.32204 10/13/2004