Tuesday, September 07, 2010

MDHA is tourism industry's, Mayor Karl Dean's pocket ace for winning tax revenues where there are none

As you watch Metro Council start discussing (with little debating) Mayor Karl Dean's proposal to bankroll a private hotel chain, Omni Hotels, to lend more credence to the Music City Center, keep in mind some important information that Tennessean reporter Michael Cass passed along today:
Mayor Karl Dean wants to use property taxes from as many as two dozen downtown developments to repay $25 million the city would borrow to buy land for a convention center hotel ....

Some council members and citizens are questioning this particular use of the tool, known as tax-increment financing [TIF], saying it uses money that might otherwise be spent improving streets and other urban infrastructure.

Usually in tax-increment financing, new tax revenue from the development being funded is used to pay back the city. But in this case, because the city has already offered Omni Hotels a substantial discount on its property taxes, there is little left to reap, so the city proposes to turn to taxes from other properties to pay for the land.
Unlike the tourism taxes, which the state requires Metro to spend on a new convention center, these property taxes are a windfall that could be spent on any public infrastructure that might serve the broadest common good. Instead, the $25 million is going to subsidize a hotel which will serve the hotel first, the local restaurant and entertainment industry next, and the business special interests in general next. Any service that might be provided to the public by these property taxes comes in a distant last.

Dedicating our tax dollars to the Omni corporation even serves Karl Dean personally before it serves Nashvillians. By maximizing corporate dollars with property taxes, Mayor Dean is keeping campaign promises he made to wealthy donors to build the Music City Center. Likewise, he is maximizing his chances of getting more campaign donations for his re-election. Leveraging $25 million from MDHA serves Karl Dean's own political career. The return to his war chest will likely be abundant. Outside of short-term construction jobs, common Nashvillians outside of business interests will not see much in the way of improvements in their communities as time goes by.

One of the purposes of TIF is progressive: to provide opportunities for investment and economic development in communities that are underserved and present riskier opportunities for growth. However, the progressive purpose is nowadays stripped away. In its place a trickle-down rationalization is attached suggesting that pouring tax revenues into already developed areas awash in assets and revenues provides jobs to workers who may not otherwise have employment. That is the best the Dean school of progressivism has to offer: a few indirect gains.

The selected So-Bro site is saturated with entertainment money proximate to Bridgestone Arena, the Country Music Hall of Fame, the Symphony Hall and swank condos. The neighborhood is knee deep in money. Any one of the three other possible sites recommended by Nashvillians before the Dean Team selected So-Bro would have been a been a truer progressive justification for TIF because each one is more transitional than Lower Broad.

As CM Emily Evans tells Cass, Metro government is changing the public purpose of financing development with extra property taxes to fit the narrow interests. I would add that those are the interests of the party elites who drive politics in this city. We've shifted TIF from funding that assures that all boats rise to funding that protects the interests of a privileged few crumb chuckers. And the damage could be collateral in the Metro budget, as CM Jason Holleman warns Cass: Downtown streetscape improvements may have to be pulled out of the General Fund, which is supposed to be used for neighborhoods across Davidson County. There will be no trickle down for neighborhoods.

I have spent the last few years working with MDHA managers on streetscape issues. I am not surprised that MDHA intends to lavish money on Omni Hotel (like they did when the overspent their PR budget on McNeely Pigott & Fox) to the detriment of even a utilitarian approach that would commit the greatest amount of money to the greatest number of people. They become spendthrifts on matters involving streetscape development that makes a community better, because that community has little or no power to sway Courthouse politics.

The Omni Hotel episode should underscore to voters that we really have two local tax collecting agencies in Metro. One is the bona fide Tax Assessor's Office, which must operate transparently and be accountable to property owners. The other is the Metro Development and Housing Agency, which can collect and hoard taxes beneath the surface, and which can channel money in ways that do not serve the greatest good. As Metro Council discusses Mayor Dean's proposal to use MDHA to channel money to the Omni Hotel corporation I hope that you will think over contacting your council member. I hope you will consider asking them to hold the Mayor accountable for spending public tax money for the genuine public good.

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