A UALR staff member has studied and pronounced wonderful the idea of using a Tax Increment Finance District to subsidize a major redevelopment of largely fallow acreage in the Baring Cross section of North Little Rock.
Or so says a news release distributed by a public relations agency helping to support the idea.
I need to do some more studying. I agree that the blighted Baring Cross area is a proper target for the TIF tool. And, if successful, it would build value by adding residences and supporting businesses, not merely subsidize a new retailer to compete with existing retailers.
I'm anxious to hear more on the numbers. With construction value of $116 million at buildout, I don't understand how they can compute a $25 million tax benefit to the local public schools over 25 years. The entire NLR property tax base -- for schools, city, county, hospital, police and fire, etc. -- would only produce about $1.1 million a year in taxes in that amount of new construction, assuming that amount is achieved. Schools would get about half that annually, at most.
You have to wonder a little about the reliability of this information since it says here that this would be the first TIF district in the state. That's not right. One is up and running in Fayetteville. (How could I have forgotten that one, since it formed the test case for using school taxes.) I think they also were formed in both Paragould and Jonesboro, though both those were dealt body blows (in terms of expected tax subsidies) when the Supreme Court said the 25-mill base school millage couldn't be diverted from schools to private projects such as these. In North Little Rock, there's a free 3.7 mills of school tax that the developers can seize for infrastructure work, though I'd still argue -- absent a court decision to the contrary -- that the Constitution prohibits conversion of taxes voted for schools to any use other than schools.
No matter, looks like this project is on Mayor Hays' fast track.
PLEASE NOTE: This is NOT a UALR news release. The UALR official who directed the study will be leaving the school at the end of this semester. The news release notes the study was "commissioned" by North Little Rock, meaning the mayor, meaning it was commissioned by someone looking for support for the idea, it seems to me.
NEWS RELEASE FROM NATALIE GHIDOTTI PUBLIC RELATIONS
NORTH LITTLE ROCK, ARK. (Nov. 26, 2007) A study commissioned by the city of North Little Rock and conducted by the University of Arkansas at Little Rock supports the city¹s decision to create a tax increment financing (TIF) district in the blighted Lower Baring Cross neighborhood alongside the Arkansas River.
The study, "The Lower Baring Cross Redevelopment District Improvement Project," conservatively estimates that total contribution to the state's gross domestic product over the next 25 years will be more than $261 million. Schools in the area will receive more than $26 million in taxes over the next 25 years, according to the study, conducted by Ashvin P. Vibhakar, director of UALR's Institute of Economic Advancement, and Vaughn Wingfield, also of the Institute of Economic Advancement. The study supports the development of the new Rockwater Village, which will be built in the TIF and will feature single and multifamily housing in an intimate neighborhood setting.
The North Little Rock City Council is expected to vote on funding the TIF bond in early December. If passed, the district will be the state¹s first TIF district since Arkansas passed TIF legislation in 2000. Forty-eight other states have successfully used TIF to fund urban redevelopment projects; the first TIF was issued in California in 1952. Once funding is secured for the North Little Rock area, construction of the infrastructure of Rockwater Village, a traditional neighborhood development planned for five blocks along the Arkansas River in North Little Rock, will begin in Spring 2008.
"This new TIF district will do exactly what the TIF law passed in 2000 was designed to do," Vibhakar said. "TIF districts are designed to use future gains in taxes to finance the current improvements that will create those gains. This will do that for North Little Rock and establish a viable neighborhood that will continue to create a healthy tax base for the city." 2006 taxes for the city¹s Lower Baring Cross neighborhood totaled $64,812, according to the Pulaski County Assessor¹s Office. Eighteen of these properties in the TIF district are tax delinquent the oldest delinquency being since 1984 and several since 2002 and 2003. According to public records, almost 20 percent of parcels found in the TIF district are tax delinquent.
Net present value of projected cash flows for a five-year build out of the district is estimated at more than $7 million for the TIF. More than $1 million will be generated for the local library and more than $6 million will be generated for the police and fireman pensions, according to the UALR study.
"Creating a TIF district will only help our long-range vision for North Little Rock¹s downtown and riverfront area," said North Little Rock Mayor Patrick Hays. "This will allow developments such as Rockwater Village to prosper, bringing a needed economic boon to a blighted area of our city. Our schools, police and fire departments will benefit; there¹s no doubt we will experience growth from the public and private partnership in making this urban redevelopment project become a reality."
Estimated construction value at the end of five years in Rockwater Village is approximately $115 million. According to the UALR study, more than 450 workers will be hired over the next five years of construction of the TND. For every dollar invested through the issuance of redevelopment bonds, $16 of private investment will be made a 16-to-1 ratio of private funds to redevelopment district bonds.
"We are looking forward to getting this project underway and contributing to the redevelopment of downtown North Little Rock," said Lisa Ferrell, co-developer of Rockwater Village, along with Jim Jackson. "There is so much potential for this area in terms of beautification, economic development and more."
"The Lower Baring Cross neighborhood is perfectly located for residents," said Jack Finnigan, president of the neighborhood association. "We just need a complete redevelopment in this area. This new TIF will be a win-win for all us."
TIF districts were originally designed and justified as a local method of self-financing the redevelopment of blighted urban areas. These districts provide an annual source of local property tax revenue without having to raise property tax rates. Since the first TIF law passed in California in 1952, TIF districts have spread throughout the nation, becoming useful, effective tools for local governments to finance capital projects in support of economic development.
Upon formation of the redevelopment district, the amount of tax payments to existing taxing entities is ³frozen.² The increase in tax revenue (the increment) is used to retire the debt for the improved infrastructure needed for the development that will result in increased assessed values.
About Rockwater Village
Modern living in classic style. That¹s the essence of Rockwater Village, a traditional neighborhood development created by developers Jim Jackson and Lisa Ferrell. This new development situated on five blocks along the Arkansas River will replace pavement and sprawl with an intimate community complete with housing, work places, shops, parks and easy access to North Little Rock¹s most popular activities, including the new Dickey-Stephens Park and North Shore River Walk.
The environmentally sustainable development will be built in accordance with the U.S. Green Building Council's pilot LEED guidelines for neighborhood development. Residents will have much lower energy costs. And with work, entertainment, shopping and public transportation nearby, long car trips will be avoided.
The neighborhood will feature pedestrian-friendly and narrow streets, tree-lined boulevards, hidden parking lots, old-fashioned town square, open green space, energy-efficient homes and more. Rockwater Village will include single and multifamily homes, a community center, café and grocery store.
For more information, visit www.rockwatervillage.com.