Gracie and I were playing catch up on our websites. We decided to listen to the DeKalb City Council meeting via streaming to make best use of our time. About midway through the Committee of the Whole meeting I was in my truck headed for City Hall.
h/t Mark Charvat
I had just heard Tom Teresinski state that the TIF revenue forecasts did not support the projected additional costs of selling debt obligation bonds as TIF revenue bonds. So he and the rest of the council were leaning towards General Obligation bonds, as staff recommended.
Buyers of TIF Revenue bonds assume the risk that said revenue projections will perform at least to the level that their investment and interest will be paid. General Obligation bonds puts the taxpayers at risk if projected revenues fall short.
Revenue projections have consistently fallen short in recent years. Even property tax projections fell short this year.
If a potential TIF Revenue bond buyer came to the same conclusion Teresinski did, he wouldn’t buy the bonds. Because the project is under performing.
I got to the council chambers to watch the council approve the go ahead with the downtown project and the sale of some $12 million in General Obligation bonds during Committee of the Whole.
It made staying for the regular city council meeting, where the public can provide input and ask questions, rather pointless.
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More of the FLAWED business survey council discussion can be seen here:
http://www.youtube.com/watch?v=sVNHWyCRNnQ
Pevo… your "rambling" is spot on. Other than grandstanding the vote was unanimous. Wait until the public figures out that the grand plans for the "Walkway to Nowhere" were revived…
I watched last night and almost threw up when I was watching this discussion. A few months ago the difference between Revenue bonds and GO bonds was about 300k As you point out revenue were 300k higher because there was more risk involved. Not that "risk" has grown to over 1.5 million which to me means the buyers of these bonds want much higher interest because this has become a project with much higher risk and the buyers are starting to question the projected results
Instead of any discussion on what has increased the risk they CC has just made every property owner underwrite TIF projects with GO bonds. This Tif is failing big time..
Biernacki also gave 3 scenarios last night about the projected TIF incomes. Some were based on a steady property rate for 3 years and a 3% growth for following years. This info was passed to the council to base their decision on. Well their' Projections" have been wrong for the last 3-4 years so why would the council think they are correct now.. I would have thought more of the CC if only one person would have asked, "what happens if property values drop by 15 percent and remain there for 10 years?"
What if the property values are less 10 years from now instead of growing like you propose? Let me give an example. Lets say whoever owns all of the old clinic property decided that it is cheaper to demolish all the buildings in order to not pay taxes on both the building or land. Wouldn't that cause the TIF property taxes to go down instead up up as projected by the council?
Lets say a large fire destroys a major building, wouldn't that lower the TIF property value? Or lets say the University buys more land in the TIF district and that property comes off the tax rolls. Wouldn't that cause the value of the district to go down?
I could go on and on with the lack of questions that were asked but one more point. The staff also presented data on what would happen if TIF just went away and what effect it would have on the General Fund. Did anyone else note that the report only dealt with INCOME. It was pointed out that income to the GF would be about 250k more with TIF that without TIF but no one asked what effect eliminating TIF would have on city EXPENSES. Sure TIF may bring in 250 but what does it cost to bring that in? How many staff people can be eliminated if TIF did not exist? Would we need special snow removal equipment if TIF didn't exist? It was once said that some percentage of Admin costs about 8% (which the city even says is a low ball estimate) can be attributed to TIF. So if TIF goes what Admin employees associated with TIF can also go.
Usually I am very supportive of Staff but I found this to be a real sell to the CC last night instead of providing complete information for them to base a decision on
Sorry to ramble on
Pevo
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Mac Just heard the mayor is all bent out of shape because the state is cutting the funding to DeKalb by 1.2 million and is telling DeKalb to come up with ways to raise money. How about the city just raise the price of providing Fire and EMS service to the University by 1.2 million and call it a wash. See if the city has the guts to do what the state just did to us instead of drafting a letter and just complaining about it.