Friday, September 26, 2014
Developer "Wins" $2.4M From Taxpayers, City Council Grovels Into The Camera
You know, some things will never get better regarding Janesville's policies on economic development, and when the quality of the presentation and the expectations from those agreements degrades to the level of Monday's city council meeting, expect the slide to continue on.
The city council as expected, unanimously approved (Farrell was absent) a TIF agreement giving away $2.4 million in land and cash value to a well-connected and deep-pocketed developer, Jeffrey Helgesen. But what was not listed on the agenda was the misdirection communicating the agreement along with what I saw as an embarrassing moment for the taxpayers of Janesville. Literally, several members of the council groveled at the feet of the wealthy recipient through the camera lenses, who could not find it within himself, or a spokesperson, to attend the meeting. It was truly pathetic all around.
Beyond the bad optics, the actual presentation left many important questions never asked and unanswered, deliberately I should add, in what seems like a coordinated effort between the city and the developer to leave major components of the agreement omitted and open-ended.
For instance, during the presentation and also in the resolution, there is no mention of the lifespan term of the TIF District. The TIF District itself was created several years ago, but it is important to know how many years property taxes paid within the boundaries of the TIF will remain segregated from the general fund.
Also, stating that the two developments will generate $12.4 million in "annual tax value" implies to the average observer that that is how much tax revenue will flow into the city's tax treasury each year. Of course that would be a completely wrong conclusion to assume. The $12.4 million figure is the projected ASSESSED value of the development and is nowhere near that amount in annual tax revenue. Remember, property taxes on developed property inside a TIF remains excluded from the general fund for the life of the TIF. Taxpayers will not see a dime more than the baseline tax being paid on vacant land for the next 10 or possibly 15 years.
There is also no mention of jobs and this is where the city leaves itself open for more ransom demands at the hands of the developer and his tenants. Outside of enterprise zone tax credits available to a future employer, we can assume Helgesen will likely use the renter's jobs potential as leverage against the city to pay their lease or turn over more cash or tax awards. By giving the developer 3 years to meet the provisions of the agreement, they basically gave him another hostage to line up for final demands on the city BEFORE he begins construction. You can almost bet on this.
Then, and this gets better or worse depending on your perspective, council members and the city's economic development coordinator create the impression that competition was in play for the agreement.
In fact one council member, Brian Fitzgerald, said "we won this time," just before they voted to pass the TIF agreement resolution. I think when city officials make statements to indicate a competitive bidding process was in play for a $2.4M incentive package, they should also identify which cities or villages Janesville was in competition with for Helgesen's attention - and what "packages" they offered. If Janesville won, who lost?
On the other hand, if Janesville dangled the property and cash hand-out to attract developers, they should list the names of the competing developers and what their job creation offers were. My point of course is that in the vast majority of these deals, competition is not involved at all. These are simply people winning taxpayer funded largesse because of their connections. So why did they mention competition when none exist?
Other questions that should have been asked was whether or not the developer approached private commercial banks for his project or whether he considered buying one of Rock County Alliance's shovel-ready distribution / manufacturing sites that are for sale - but he wasn't in attendance to be asked.
In Rock County, I must be the only one that offers an independent perspective on the area's economic development strategies outside of the local trickle-down borg.
I admit it's a boring subject and many folks shut it out of their conversations, but I would also submit that these agreements play a major role in expanding a rigged system that redistributes wealth to the top, destabilizes free markets, shifts the tax burden and drives the wedge deeper into the wealth disparity gap.
In fact I would say that after public officials ability to sell out our voices exponentially grew via the Citizens United ruling, these local economic development "incentive" agreements are running a close second to being America's next worst problem.
Janesville residents, you are getting som - moked from every angle and as recent Janesville Gazette editorals would say - get informed!
Council Video On TIF agreement The TIF presentation begins at 1:30:00 The council discussion begins at 1:36:20.
Posted by Lou Kaye at 12:04 AM