Tax Abatement vs. Tax Increment Financing (TIF)

**50+ comments, time for a new post/subject**

When the Cozad development proposal was originally broached at the October 9 meeting, many (myself included) were confused about the difference between tax abatement and tax increment financing. The latter has gotten a pretty bad rap as it has been overused and abused by areas that are obviously non-blighted.

Class today we will cover the differences between these two types of economic development tools. In addition, we will have a discussion on the merits of such tools.

Tax Abatement

A Tax Abatement is basically a reduction of a tax assessment. In Missouri, a "Chapter 353 Tax Abatement" is an incentive that can be utilized by cities to encourage the redevelopment of blighted areas by providing real property tax abatement and eminent domain.

Tax abatement is available for a period of 25 years, which period begins to run when the Urban Redevelopment Corporation takes title to the property. During the first 10 years, the property is not subject to real property taxes except in the amount of real property taxes assessed on the land, exclusive of improvements, during the calendar year prior to the calendar year during which the Urban Redevelopment Corporation acquired title to the real property (353.110.1 RSMo). During the next 15 years, the real property may be assessed up to 50% of its true value (353.110.2 RSMo). This means that the city may approve a development plan, which provides full tax abatement for 25 years



Tax Increment Financing (TIF)

Tax Increment Financing (TIF) is a popular and potentially powerful tool for places that need economic development the most, yet have the least to spend. By allowing jurisdictions to use portions of their tax base to secure public-sector bonds, the mechanism allows fiscally strapped localities to finance site improvements or other investments so as to "level the playing field" in economic development.

Under a TIF, property taxes within the TIF District are frozen for up to 23 years. The property owners then make Payments In Lieu of Taxes (PILOTS) to a "special allocation fund".
Additionally, 50% of any new local Economic Activity Taxes (EATS) (e.g. local sales taxes, earnings taxes, utility taxes) generated from the project are also paid to the fund while the District is in effect.
The proceeds of the fund are then used to reimburse the developer for eligible project costs or to retire indebtedness incurred to cover those costs.

Sources: The RCGA and The Brookings Institute


Class Discussion
Is this the best or only way for Overland to get development?
Did we use this for Home Depot or Office Depot?
Is this just a form of corporate welfare?
Most importantly, while it brings development to Overland, does the lack of property tax revenue hurt the school district?

Please post your replies.

Put it on the Ballot

The most interesting development in last night's city council meeting was the ORT's obvious disregard for their job requirements. They pretty much surrendered and admitted their lack of ability to govern with Sellers proposal. In his motion, he suggested that the "Free Trash" be placed on the April ballot for the voters to decide. May and O'Connell rightly pointed out the absurdity of such a motion that would need to state how it would be funded.

Do we pass a tax increase as part of this proposal?
Do we vote on the trade-off (e.g. if we get free trash, then we don't get a full-strength police or public works department)?

Council members are elected to make these decisions and to create a feasible budget that keeps us safe and maintains the roads. Thus Sellers pretty much stated he couldn't do that with his motion.

As sad as that may seem, it really could be fun. The World Series isn't the only game in town. It's time to play "You Vote For It!", a game that is sweeping suburban Overland. The object of the game is to name various other issues that we can have placed on the ballot that falls under the scope of aldermanic duty.

I will get us started:

• Place on the ballot to get the pot hole fixed on my street.
  
• Place on the ballot a stop sign at (place street name here) and (place other street name here).

What other issues can we add?

The Mayor's Next Tactic to Fill the Ward 3 Seat?

An interesting story about Wellston's woes appears in the Post. In that city, the mayor just tried to strong-arm in his aldermanic appointment, even though that appointment had just been voted down by the majority of the board.

I can't decide who is stealing from whom on this one?

Yes, but does he know Tom Cruise?

As pointed out in previous comments, Norm Parrish has an article in today's Post regarding the scare flier. I thought the scary flier was just an early Halloween treat, courtesy of our mayor and her two-and-a-half men on the council. It was great work on Norm's part as he hunted down the name of the actual mailing service Economical Mailing Services and its owner, Doug Carr.

Who is Doug Carr? On the surface he appears to be an irresponsible businesperson. He takes business from fradulent/phony companies and risks his bulk mail permit by doing such work. Will the postal inspectors dig into his mailing practices and discover a bounty of such companies that he risks a mail fraud conviction?

What is Economical Mailing Services? Norm points out that they are local. Here is what I found.

Business Directory St. Louis had the following listing for the company:
USA-63114 SAINT LOUIS, 1804 KORANDO AVENUE

Infopages had the following:

Economical Mailing Services
10426 Lackland Rd
(314) 428-6245
Saint Louis, MO 63114


However, some interesting stuff was found doing a company search. This was on the Truth about Scientology site:

Doug Carr and WISE Directories
WISE, the World Institute of Scientology Enterprises, publishes directories listing their members.
Doug Carr appears in a recent WISE directory:
2004 WISE Directory:
Category: Mailing Services
Doug Carr
Economical Mailing Services
10426 C. Lackland Dr.
Saint Louis, MO 63114
United States Tel. +1 314-428-6245
E-Mail: bdcarr@[provider].net

Perhaps the Mayor is in Good Company

Did this scandal start in Overland and work it's way up?

Budget Meeting for Full Council

Did anyone attend the budget meeting last night at the community center? We would love if you would post a report to the OVCC blog giving us insight on what happened.

I had full intention of attending but with the rain and all, just couldn't get out. Didn't want to melt you know (as we witches are wont to do around liquids)! Actually, the rain caused such traffic delays that I didn't get back to Overland until after 7 PM, and the meeting was well under way at that point.

Extended Metaphor Anyone?

Police Shoot Goat After Animal Attacks Woman

(CBS4) SUTTON A Sutton womanwas attacked by a goat over the weekend.

The woman, who wishes to remain anonymous, was out walking her dog on Purgatory Road when the goat became aggressive with her. The woman became scared and called 911.

She was saved by a truck driver who let her into his vehicle. But the goat wouldn't quit and kept coming after them even though they were inside the truck.

Police arrived on scene a short time later and shot and killed the animal.

Frank Kudla, the goat's owner, was not happy with the officers' decision to shoot the animal.

"Very inappropiate....Was he life-threatening? Who did he bite? Who did he injure?"

Lt. Dennis Towle of the Sutton Police defends the officers actions, saying the goat reared up on its hind legs and threatened them.

Actions Speak Louder Than Words

Well, we are up to 40 comments on the last post. Thus, I thought time for a new one.

While posting a comment on Sailor's blog, I got to thinking about how The Queen says one thing, but then does something diametrically opposed to her statements.

Some examples I thought of:

1. The Queen says: "I don't plan to sell Wild Acres"
The Queen's action: Escorting real estate agents around the property, accepting bids for the property, etc.

2. The Queen says: "Time to put our differences aside and work for the benefit of the city"
The Queen's action: Despite her statements on wanting the council to cooperate, time and again she does things that are intentionally divisive.

Can you name some examples?

Boy How Time Flies When You Are Having Fun!

Back in the early days of the OVCC blog, John Doe would keep us posted of how many days until the recall process could be officially started. Can you believe it is now less than one week until the recall effort starts?

I am sure the COGG will have updates on their blog (coggoverland.blogspot.com). In the meantime, if the doorbell rings it might not be Avon calling. Or, even the Publisher's Clearing House.

Look for a canvasser in your neighborhood starting this weekend.

From the inane desk of the sweaty pickle...

"She has been unable to do anything, if she were to have been able to removed the chief and the lawyer I think you would see some very positive changes, and if she would have been able to appoint a ward 3 person, then the city could move forward, she has a lot of good ideas that she has not been able to implement...."

My first question is what has she been held back from doing by not being able to appoint Chet Pleban and Ben Branch? What does the appointment of either of these wastes of oxygen have to do with moving forward with a legislative agenda?
Or is it that Ben Branch would have kept the queens opponents in line with his unique brand of jack booted thuggery that Branch was investigated by the FBI for?
Would Pleban have given better legal advice to the city then he has been giving the queen? I don't have a lot of confidence in his legal opinions since the queen, following his and Steve Redman, I mean Doug Rudman's advice has now lost 6 lawsuits.

And where are all these great ideas? In this day and age of instant information and electronic connectivity, IF the mayor had all of these great ideas then why hasn't she put them out in the public forum? It's not like she's still campaigning and needs to keep them hidden so that her competition can't steal them and claim them as their own. (Even though I don't see MB Conlon announcing she is going to turn over executive power of Overland to Skidmark Brown and Charles "Karam it up your A$$". That's a uniquely purzerian thought.)
All I have seen from Purzner is petty vindictiveness, a willingness to trample all over the laws of the state and city, pandering and a complete lack of original thoughts.

On the other website we challenged the ORT supporters to put forth the ORTs ideas and to let us know where the ORT wants to take the city. They have yet to answer. Is it because they don't have an answer or is it they don't want the citizenry to know where they want to take the city?

Really I mean it this time Really Trust Me I don't want to sell the Wild Acres Property

The Queen has posted another missive to her website. In this missive she details all of the problems with the seminary property at Wild Acres. She even goes as far as to call it a "White Elephant." She then states that any rumors to her wanting to sell this property are untrue. (I guess this anti-seminary propaganda is just to make the city look foolish?)

Another topic of The Queen's statement is her disappointment that the city council meeting didn't adjourn to an Executive Session.

1. Who adjourns to Executive Session in the middle of the meeting? That tactic is very questionable.

2. Executive Session isn't the time for a "Meet and Greet" with prospective developers. There is no reason such business should be conducted behind closed doors. This does not fall under the "real estate matters" provision of closed meetings in the Sunshine Law. In addition, Cozad had already discussed such development in an open P&Z meeting. Why the secrecy now?

Again, just more evidence that Purzner has not even a passing interest in upholding or understanding Sunshine Law. At this point, I am not even sure any ORTian could spell Sunshine Law.