Tag: TIF

Notes from 3/1 Council Meeting

I want to share three things from this week’s Council meeting.

County Medical Examiner Appointment: The Rules Committee was asked to consider the appointment of Dr. Feng Li as County Medical Examiner. The Committee voted to defer its decision for one meeting. The issue was that, while Dr. Li seems highly qualified, he does not live in Davidson County.

Metro has a contract with Forensic Medical Management Services, PLC, to provide forensic pathology services for Davidson County. Dr. Li is the CEO of FMMS, and they apparently do not have any employee pathologists who both live in Davidson County and are qualified for the County Medical Examiner position. State law allows for a doctor outside the county to serve in this position if it is “not possible” to find someone in the county to accept the position.

FMMS ran a job opening announcement for 22 days on the leading national medical examiner organization’s web site, and was unable to find an interested, qualified candidate.

The Committee voted to defer because it wanted to learn more about the search for a qualified candidate who lives in the county. Also, since Dr. Li is the CEO of FMMS, I am asking for Dr. Li to comment on the April 2015 Metro internal audit of the Medical Examiner’s office. I expect that Dr. Li’s appointment will most likely be approved by the Council, but these are questions that should be answered first.

BL2016-149: Infrastructure for Lifeway Project:  This ordinance would obligate Metro to spend up to $3,490,000 for the construction of public infrastructure improvements in the area around a new Lifeway building in the North Gulch area. As part of the deal, Metro will get a 1+ acre park that is supposed to connect to our greenway system. You can see more details in the Council Agenda Analysis, at pp. 10-11. This ordinance passed on second reading after an extensive discussion.

On the one hand, I think there was widespread agreement that Lifeway is a wonderful 125 year citizen of Nashville. We were told that Lifeway provides 1,100 jobs that have an average annual compensation of $53,000, and that Lifeway generates tens of thousands of room nights of hotel bookings each year. So, this isn’t like Dell swooping into town with no track record here. Lifeway is a legit long-time interested and engaged Nashville employer.

Also, there is no tax increment financing. Metro’s obligation would be to build water, street, and other infrastructure.

On the other hand, there was several Councilmembers who expressed frustration over why this particular infrastructure project should have priority over other projects, and over why building this new park should have priority over other new parks around the city. There were also questions about whether Lifeway would really move out of the city if Nashville were to decline to pay for this infrastructure.

These are all good and fair questions, and I’m glad that Lifeway and the administration promised answers to all of them before this ordinance gets to third reading.

As I see it, there are really two issues going on here.  One issue is a completely legitimate long-term complaint – you really can’t find a prioritized list of water infrastructure projects, or park projects, anywhere. So, for example, if any district councilmember has a piece of land in her district that has been acquired to become a park, she really has no earthly idea whether it will be actually built into a park in 2017 or 2018 or 2019 or whenever.

Coincidently, at a Budget & Finance Committee meeting this week, the administration described how they intend to create such a prioritized list that would address this problem. They described that it will take maybe as long as two or three budget cycles to turn what is currently a wish list of projects into a prioritized list that will reliably let people know when a project will happen.  For now, until Metro develops this prioritized list, we will be subject to criticism whenever a new project seems to just pop up.

The second issue is whether Nashville thinks it is a good idea to pay for this infrastructure.  Is Lifeway a good investment for Nashville? Is paying for this infrastructure a better use of $3+ million than something else? I plan to keep an open mind as we receive the rest of the promised information, but my instinct is that this is a really nice opportunity to get needed infrastructure at the base of our important Charlotte corridor, obtain an important greenway connection that otherwise will not be available to us, and help build the inevitable connection between the North Gulch and Germantown.

I think there will be another long discussion about this on third reading on March 15.

BL2016-157: Tax Increment Financing:  This is the ordinance that Councilmember Gilmore and I filed to change the ground rules for tax increment financing. (previous post here)  This passed first reading yesterday. Second reading will be on March 15. I’m thankful that the feedback on this has been very positive, and that we have more than 20 co-sponsors. I’m looking forward to seeing become law.

New TIF Ordinance

The new TIF ordinance that Councilmember Erica Gilmore and I filed will be considered by the Council for first reading on March 1, 2016. Both MDHA and Metro Legal agreed on the text of the ordinance before it was filed. If passed by the Council, the ordinance would change the ground rules for tax increment financing in Davidson County in three important ways, and also allow MDHA’s Envision Cayce plan to proceed as scheduled.  The three changes are that Metro will get its tax revenue back more quickly, Metro will have more say in what projects get tax increment financing, and there will be greater transparency to show us how our tax revenues are being used by MDHA.

Metro will get tax revenue back more quickly

There are three provisions that will help Metro get its property tax revenue back more quickly.  First, going forward, for every TIF loan, MDHA will no longer receive the tax increment for the property after the loan is paid. Instead the tax increment will go to Metro after the loan is paid.  Second, for any new TIF loans going forward, Metro will be able to retain the portion of property tax revenue that is meant to pay Metro’s own bond debt obligations.  I think that this should reduce or eliminate the potential risk that TIF financing could ever erode Metro’s ability to service its own debt.  Third, if MDHA refinances a TIF loan to reduce its loan payments, the amount of tax increment funds it receives will also decrease – with any excess tax increment going back to Metro.

Metro will have more say in tax increment projects

There are three provisions that will allow Metro to have more control over some types of projects funded by tax increment dollars.  First, going forward, tax increment funds may not be used to support projects outside of the specific redevelopment district where the property is located without prior Council approval.  Second, going forward, if MDHA is selling land it owns in a redevelopment district, and it got that land from Metro (as opposed to federal funds), absent Council approval, the land sale proceeds must be used in the same redevelopment district or returned to Metro.  The third change is technical.  For redevelopment districts created after 2006 (i.e., Cayce Place, and Bordeaux), MDHA currently has the power under state law to collect tax increment funds for every parcel of property in the entire district.  MDHA has never exercised this power.  The ordinance would establish that Metro will only allow tax increment funds to be used by MDHA for properties that actually are being redeveloped (as opposed to all properties in the district regardless of whether they are redeveloped).

We’ll have greater transparency

Under this ordinance, MDHA will provide annual reporting about each TIF loan, including the current loan balance, the estimated maturity date, the amount paid in the last year on the loan, the parcels whose tax revenues are pledged to support the loan, and the amount of tax increment funds received by MDHA from each of those parcels.  The first report would be due 90 days after the ordinance is passed.

The ordinance will approve the Rutledge Hill land sale

In the ordinance, the Council would be specifically approving that MDHA may use the proceeds from the sale of 3 parcels in the Rutledge Hill Redevelopment District as part of the Cayce Place Redevelopment Plan.

During the mayoral and council campaigns last summer, people all over the county wanted to talk about tax increment financing, and whether it has been used fairly, or if it has been a giveaway to developers. My response was always that I didn’t think we, as citizens, had enough visibility into how our property tax dollars have been used for individual economic redevelopment projects.  My sense from the start has been that I might not have any complaint about the vast majority of Nashville’s economic redevelopment decisions over the last ten years – but I simply couldn’t tell because there hasn’t been enough readily available information for a reasonably well-informed citizen to make sense of what has been happening.  My goals with this ordinance are to help Metro get its tax revenue dollars back sooner, to give voters (through their directly-elected Metro Council representatives) more authority regarding tax increment projects, and to create thorough annual reporting about how these property tax dollars are being spent.

I want to thank the Mayor’s office, Councilmember Gilmore, the more than 20 Councilmembers that have agreed to co-sponsor this ordinance, Jim Harbison from MDHA, and Jim’s leadership team for being willing to not only talk about these issues, but agree on all of these important changes.  I am hopeful that the Council supports this ordinance.

 

Mayor’s press release (Feb. 24, 2106)

Tennessean (Feb. 25, 2016)

Nashville Business Journal (Feb. 25, 2016)

Coverage on WTVF-News Channel 5 (Feb. 24, 2016)