Snake Oil Part II
|In the old days when the snake oil
salesmen hawked their
elixirs on the street corners, they weren't
required to divulge the contents of their their "good medicines". Had
the folks known what they were being asked to swallow, they would have
run those squawkers out of town on a rail. Fortunately for us, now days
the snake oil salesmen/developers must give the public at least some
information about what they are pushing.
This was the case at a meeting of the Lenoir City Industrial Board meeting Monday night. With a larger entourage than O.J Simpson, Dr. Bob Overholt presented his request for twenty million dollars of tax payer money to kick off his Town Creek development. After about an hour of discussions and questions, the board voted to forward the proposal with a recommendation to adopt to the Lenoir City Council and the Loudon County Commission.
Here's how it would work according to the developers. It's called Tax Increment Financing (TIF). A TIF boundary would be established. The proposed boundary would include the Town Creek Development and in addition, would also include developer, Tracy Roy's property on Adessa Boulevard, all the existing businesses along Hwy. 321 from the interstate to the Highland Park Ruritan Club. The Waffle House, two motels, Adessa Auto Auction and other vacant properties. One mysterious aspect of the boundary is that it keeps changing. The map presented at the meeting Monday was even different than the one presented to the board in their information packets.
Once established, all properties within the boundary would have their property taxes frozen at their current rate for twenty years. As development continues and the property values go up, the taxes that would have gone to the city and county will now go to the developer to pay for the roads, sewers, water lines etc. The roads, sewers, water lines etc. are estimated to cost 20 million dollars. All paid for with tax payers money.
The developers claim this is a good idea for the city and county governments because, that while it is true the local government will lose millions in property tax revenues, possibly 60 million dollars, the city and county would actually receive more in sales tax revenues. This shows the developers have little understand how government and taxes work. According to the Tennessee Department Of Revenue, all sales tax in Loudon County, including Lenoir City, Loudon, Greenback, Philadelphia and Farragut are sent the the state for distribution. The first 50 cents of all sales tax dollars collected in all taxing jurisdictions goes to the Loudon County and Lenoir City school systems at the rate of 69% and 31% respectively. The second 50 cents of the sales tax dollar goes to the taxing government, Loudon County, Lenoir City, Loudon, Greenback, Philadelphia and Farragut. Lenoir City gives 75% of their sales tax revenues to the Lenoir City Schools. Loudon County government receives NO sales tax revenues from Lenoir City or any other of the cities.
Estimates and projections of future huge sales tax revenues from the development are pure speculation and may or may never materialize. A large portion of the development is slated to be upscale condos, retirement communities and professional offices none of which collect or pay sales tax. But even if the projections are even close, you can see that with the structure of sales tax distribution, the school systems might benefit but local government who will be tasked with providing social services to the new development benefit very little if any.
Ironically, at the exact time Overholt and company were making their pitch for the city's tax dollars, Mayor Brookshire and city administrator, Dale Hurst, were standing before the Loudon County Commission asking for financial help on a road project that the city lacks the money to construct.
Local officials are going to be asked to make an impossible commitment for an impractical purpose. Hopefully they will read the label on the snake oil before they make all of us swallow it.