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Tuesday, May 12, 2015

Phantom Developer Wants More Free Money From Janesville For Expansion, Or Else

This isn't a joke.

At Monday's city council meeting, a phantom developer using the name Capital Circle I Corp just picked up nearly $850,000 in lump sum free money from Janesville taxpayers. That's OK because Janesville taxpayers are loaded with mucho excess cash and almost no one cares about who is getting the free stuff anyways - as long as someone is. Don't let that tax money go to waste is the general rule for the area's small government fiscal conservatives.

At the council meeting, some council members, strangely I should add, tried to entertain the viewing audience with a few questions. As usual unfortunately, the developer wasn't there to take them.

But that's OK again because the Janesville city council gladly took orders and answers for their questions from the developer's representative. At least he was there. Ooops, I actually mean the city's taxpayer-paid director of economic development, Gale Price, was there. But you wouldn't know the difference because the director spoke just lovingly on behalf of the phantom and went on to say how developers are nearly tripping over themselves to build in and around Janesville and that this particular development will have no trouble filling up with tenants. In his over-exuberance, he made it sound as if it's practically sold out before they even break ground and that's why the developer deserves more free money. Or something.

Now you might ask: Why does the phantom deserve the $850K? Well you see, the phantom previously agreed to a TIF contract with the city a few months back that included a "forgivable" loan in an amount roughly equal to expected property taxes paid over the next ten years. The previous lump sum amount was $469K, but since the phantom now has new plans to expand the size of the development by 50%, thus increasing the property's assessed value, they feel Janesville taxpayers owes them the new estimated ten year property tax lump sum of $847K. See how that works?

Although council members did ask a few lightweight questions, most noticeable was no one asked why the developer requires free money to gap his private-for-profit venture costs when interest rates are at an all-time low. No one asked if there were competing proposals from other developers (hey, it's a competitive free market, right?) for the apparent government largesse. Conversely, no one asked if the city was competing with other cities for the developers attention. No one asked why the developer wasn't interested in those certified shovel-ready properties for sale in the county. No one asked why, with all of the supposedly sudden high demand for factory space does Janesville continue to give away free land and money? No one asked how many local jobs the development will create or guarantee. No one asked that since property taxes are now accepted in lieu of payments for taxpayer-funded loans, essentially making the loan money a freebie, if others including existing Janesville small businesses and home owners can get the same convenience. No one asked the right questions.

I could go on with much more ...but I think you get the idea.

Then there's the transparency problem. Some government watchdogs, including myself, think the public deserves to know exactly who local officials are dealing with when handing out subsidies and other free stuff. If you want money from the collective, you should be willing to show up at the least, take questions and accept that the public has a right to know.

Oh ...just for the record, the Janesville council unanimously approved the phantom's request. No joke.

Side Note: It's been a year since the Janesville City Manager, Mark Freitag, pledged for more transparency at city hall, saying it is the "right thing" to do. How's that working out for ya'?

City of Janeville - Economic Development Memorandum


Anonymous said...

What an incredible story of success and failure of the corporate nanny state. Success in that it seeded growth, and failure that the developer came back and unless given more government aid, we can safely assume, would either not expand or dismantle entirely.

Lou Kaye said...

Hopefully Janesville taxpayers understand the first agreed-to $470K or the second $850K is really a lump sum advance from Janesville taxpayers to pay for the developers expected annual property taxes of higher "incremental" value for the next ten years. In effect, they have nullified the developers tax contribution to the TIF District and doubled up those costs of growth on taxpayers outside the TIF. So, not only does the TIF agreement carve out the usual cache of assessed growth property taxes from the general fund, the city administration has the Janesville taxpayers paying the developers end of it. THAT'S unbelievable but true. The problem is, I think most taxpayers don't care.

This borders on money laundering.

Anonymous said...

This seems like some sort of scam considering that the company hasn't even broken ground on the project. I would be interested to see what is found after a little Googling. It's hard to understand why the city is willing to throw money at these big corporations, and then let our local business flounder. If my tax money is going to pay to line someone's pockets, I would like to know who it is.

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