The North Little Rock School District today provided me a copy of a letter it sent North Little Rock City Attorney Jason Carter proposing a settlement of the district's lawsuit over the city's tax increment finance district set up in late 2008.
Here it is. Carter said he had not received a copy of the Nov. 4 letter yet, though he confirmed he'd had a discussion on a settlement with Smith. I've sent it to him and he promises to try to get a city response. The suit is scheduled to go to trial next Wednesday. The North Little Rock School Board, which would have to approve a settlement of the suit, meets next Thursday.
Unless this is the first part of a process in which the city is expected to make a counter-offer, I can't readily see the city taking this deal. It would exclude all school district tax revenue in the TIF district from going into the TIF pot for potential improvements aimed at spurring further redevelopment. The city would also have to turn over to the schools money collected so far. That was the point of the lawsuit, particularly to prevent the city from capturing property taxes on the $30 million Enclave apartment project. ON THE OTHER HAND: Most lawyers I've talked with think the city has scant chance of prevailing in the lawsuit, particularly on procedural grounds, and saving face by a settlement would be useful. The TIF district would continue and capture some small revenue from the city and county.
The city met on New Year's Eve 2008 to create the gerrymandered district (extended along city streets although the law requires contiguous parcels of land) to include the Enclave before that property went on tax rolls at its new, higher assessment. Under TIF law, the value of property is frozen at the level that existed when a district is created. Future increases in value that produce increased taxes accrue to the benefit of the TIF district, not taxing entities. There are a number of small property millages — city and county, for example — affected, but the big school millage is the primary revenue-producer of TIF districts.
Settlements generally indicate both sides get something. The city's gain would be less tangible than the school district's, but it would still have its TIF district.