Wednesday, December 07, 2011

The larger point

One thing you can say about the debate over Mayor Karl Dean's paradoxical plan to give LifePoint tax breaks for a move over the county line to get back a few tax revenues: at least it hasn't been conducted like last July's IQT relocation debacle. Before Canada realized it, Nashville offered IQT subsidies to lay off 1,200 Canadians. Before the news media realized it, social media reported that IQT shuttered completely. Before Karl Dean realized it, IQT announced that they would not be coming to Nashville.

At least in the case of LifePoint, it feels more transparent than it did with respect to IQT, which finally declared bankruptcy in November, and is now facing government pressure to meet its financial obligations of worker compensation.

While LifePoint does not stand to be the same unmitigated embarrassment, the buckling blow to the Mayor's narrow, unexamined thrust of economic development, it generates a new set of obstacles that can hurt an administration that just claimed that it had no clue that the state orchestrated the diversion of sales taxes from Metro coffers to the Nashville Predators. For all the times we're admonished to trust the Mayor's access to information, he seems to come up clued out when the chips are down (cue IQT).

The most glaring obstacle is the Dean Administration's readiness to overbarter in order to sate commercial desires even at the expense of the balance that reason brings. One prominent Nashvillan described the LifePoint deal to me thusly, "Giving away an eroding resource to move less than a few miles into our county. If they needed consolidated space, then that alone should be enough incentive." But Metro is bound and determined to pile up special-interest incentives at greater future risk to service to the rest of us.

Consistent with past unwillingness to rock Rich Riebeling's boat, the Tennessean reporters editorialized the move as a "victory for Davidson County" and a "significant boost" for the area on north of the Williamson County line.

They also claimed the move will "boost" Metro tax revenues, even though the Mayor's bill before the Metro Council (co-sponsored by CM Sean McGuire, CM Brady Banks, and CM Karen Johnson) requires LifePoint to pay zero property taxes the first 4 years, markedly less than half of property taxes the 7 year after that, and only 75% of property taxes until year 15 of their lease. At that rate how can the Tennessean reporters claim that LifePoint is going to "boost" our revenues with any journalistic credibility?

Incidently, The council could also give LifePoint a break on personal property taxes for roughly $50 million worth of computers, software and other equipment (like "supplemental HVAC," a.k.a. "extra air conditioning for computers") that will go into the data center that it plans at the new building. What computer equipment lasts 15 years?

So, the other obstacle to this project is the Mayor's own logic behind how revenues work. With a decade and a half of paying no or very few property taxes on their property, how is LifePoint supposed to be bringing new revenue into Davidson County coffers? Depending on when LifePoint takes up occupancy, Karl Dean could be done with his last term as Mayor by the time the healthcare company starts paying any revenues to Metro.

But Hizzoner insists to all those media who will listen with unconditional regard that deferred scratch is better than none at all:

“If this project didn’t exist – if we didn’t do this arrangement, they would be paying no taxes. So you’re talking about taxes that only exist because we’re doing this deal. And then you start talking about the things that come from this deal.”

Dean says jobs will flow from construction of the headquarters, spurring restaurants and shopping that could lure other investment. And Dean says jobs in the healthcare sector build on one of Nashville’s core strengths, saying “LifePoint could be anywhere they want to be.”

Again with benefits for the restaurant industry? That was a talking point used to sell Music City Center, too.

This seems like just another expansion of the Dean bubble, a small chimera in a sequence of capital plans--convention center, fairgrounds redevelopment, new ballpark among them--that form a slickly marketed, yet profoundly ungrounded dream of a common good.

LifePoint looks like one more notch on the baton of a Mayor who would someday be King. But after IQT, can we have faith that the Mayor has thought out this process carefully or that Nashville won't be fooled again?


  1. If the year was 1863, Dean and Cheney, err, I mean Riebeling, would be in the midst of privately purchasing some rifle and mini-ball manufacturers while renting out encamptment land in Nashville to whatever army was willing to pay the most.

  2. What is the dollar amount of the "forgone" taxes in question?