What is the role of government?
I used to know the answer to that question but I am no longer sure. Have we lost our collective minds regarding local government and development in Knox County?
The reason that development can be good is that is provides income to the local government. A case can be made for TIF’s (Tax Increment Financing), 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 to something very different today. 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?
