Mon
Sep 25 2006
02:29 pm
What is the role of government?
By: Number9

I used to know the answer to that question but I am no longer sure. Have we lost our collective minds regarding government and development?

The reason that development can be good is that is provides income to the local government. A case can be made for TIF's, IF there is a return on the investment of the TIF. If the project fails then the local government does not receive the full extent of the projected property taxes and the local government pays the balloon note on the infrastructure. All projects have risks. There are no slam dunk real estate projects. There are no sure things.

We need to have a debate about what is the role of government. It has morphed from what we learned in high school. We cannot fund schools or police retirement because we are using too much tax money to make speculative risky investments with private enterprise on the “hope” the end result will be increased property taxes. That is not the role of government. The government is not meant to be a lending partner to local real estate speculators. That is what banks are for. The government is supposed to build schools and pay its policemen.

In the old days when bonds were used for infrastructure it was a self correcting system. Rarely were extremely risky projects bonded. This is why the Universe Knoxville Planetarium failed. No bonding. But if it were to be done today it would be built with a TIF.

TIF's are like crack in this "Field of dreams" fantasy world of local government where our elected representative really believe, "If you build it they will come". It doesn't work. If our elected representatives rubber stamp every single TIF that comes along they may bankrupt the government. Today Knox County Commission votes on a TIF for the South Knox Waterfront. Tuesday Knoxville City Council votes on the same TIF.

Not all TIF's are bad and our community has had success using TIF's. But haven't we lost all reason with TIF's if every single project must have one?

The vote today in Knox County Commission and tomorrow in Knoxville City Council for the TIF's for the South Knox Waterfront are premature. There are NO signed anchor tenants for this project. This is real estate speculation. Of the 139 million dollars only 51 million dollars has been identified and that is the TIF monies. What do you think will happen today? Will the Hardin Valley High School be fully funded? Or will it be shortchanged? Will the TIF for the South Knox Waterfront be approved 19-0? I think we know what will happen...

Where will the other 88 million dollars come from? Shouldn't the 88 million dollars be secured before the vote for the TIF's. Shouldn’t there be signed tenants? I understand they will say this is a catalyst and if the TIF’s are not used it is no harm no foul. I feel this sends the wrong message to the community and to business. We already see developers feel entitled to TIF's.

Any failed TIF will be paid for by taxpayers. A TIF will fail if the project fails.

The roads for the Turkey Creek shopping complex cost Knoxville and Knox County less than 5.6 million dollars. There was a master plan with signed anchor tenants. It is next to one of the highest income Zip Codes and two Interstate Highways. This shopping complex generates over 10 million dollars of sales tax revenue per year. It is a 500 million dollar project. That is a good return on investment.

The South Knox Waterfront is in one of the lower income Zip Codes. It is not near the Interstate. There is significant risk involved. It cost 25 times more than the Turkey Creek shopping center and has no committed tenants. What is the return on taxpayer investment for the South Knox Waterfront project?

Aren’t we putting the cart before the horse?

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Number9's picture

Rob from Peter to pay Paul

Submitted by Number9 on Mon, 2006/09/25 - 6:01pm.

You didn't have to be psychic to see this coming.

Knox County Commission voted to fully fund the Hardin Valley High School but the missing 6 million dollars must come from the School Boards Capital Plan meaning it will come from other schools.

I know that doesn't make much sense.

The vote was to build the school for 2,100 students. The school board just has to rob Peter to pay Paul to do it.

But they did approve the TIF for the South Knox Waterfront with very little discussion. Yeaaah... The small amount of discussion was Lumpy Lambert's amendment to protect against eminent domain. It is the same amendment the City will add on Tuesday.

And Lumpy Lambert embarrassed himself with the goofiest idea ever. He made a motion to have Mike Ragsdale's brother-in-law Sandy Loy be hired as a consultant to save money on the Hardin Valley High School. Even Ragsdale was embarrassed and immediately shot the idea down. The people from the PBA hated the idea and said anyone could save money on the school by changing the design and there were already enough cooks in the kitchen. They were pissed. It failed something like 3 to 15.

At the end of the meeting Lambert could be heard to say, "I am going to catch it on the radio tomorrow".

It is hard to tell who is more unpopular after this meeting but it is a contest between John Griess and Lumpy Lambert. Griess's motion to make the school board pay for the needed 6 million dollars from their Capital Plan passed 15 to 3.

R. Neal's picture

He made a motion to have

Submitted by R. Neal on Mon, 2006/09/25 - 7:07pm.

He made a motion to have Mike Ragsdale's brother-in-law Sandy Loy be hired as a consultant to save money on the Hardin Valley High School. Even Ragsdale was embarrassed and immediately shot the idea down.

That's pretty funny. Especially considering they already brought in the PBA to consult so they would have adults in charge of managing the project and controlling costs, which immediately went over budget once the PBA got involved, if I recall correctly.

(Do you think Lumpy might have been trying to make a satirical point? Oh, wait. Was that your point?)

Good report. Thanks.

bizgrrl's picture

Yes, the cart before the

Submitted by bizgrrl on Tue, 2006/09/26 - 7:18am.

Yes, the cart before the horse. Sort of like the new convention center. Build it and they will come. When? Maybe Knoxville should have more strategeries before they go forward with more grand plans. I have always thought it a good idea to do something to upgrade the SoKnox waterfront, not this though. Waterfronts can be infrastructure to a city/town, as are parks, libraries, bike paths, etc.  A city has to be committed. This city/town is not committed to much of anything as far as I can tell.

Number9's picture

Where will the other 88 million dollars come from?

Submitted by Number9 on Tue, 2006/09/26 - 10:03pm.

We can see here that this South Knox Waterfront is merely a game of incrementalism.

The Master Plan/Vision Plan should have been redone to include the increased area. But why bother when you can just approve the Redevelopment Plan and TIF?

The Redevelopment Plan and TIF were approved with very little drama. In one area 4 out of the 11 home owners had not received notice of the new area. Damn Post Office. Damn dog. Damn homework.

Where will the other 88 million dollars come from?

Number9's picture

I told you so...

Submitted by Number9 on Wed, 2006/09/27 - 1:21am.

I told you so...

 Don't we all feel just a little dumb right now?

 From the KNS:

Total cost for public improvements is estimated at $139 million over 20 years, said Dave Hill, the city's chief operating officer and the project manager. Some of the money will come from taxpayers, he said.

Okay, you got 51 million dollars. Where will the other 88 million come from? 

Heck, over 20 years it is just 4.4 million a year. Suck it up, you can do it.

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