Columns » Max Brantley

The law and North Little Rock

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North Little Rock Mayor Pat Hays is a can-do executive with laudable achievements.

But no one should envy his disdain for the law. It's one thing to prevaricate and cut corners to provide public land for private parking at the baseball park, as Hays has done. But it's another to flout the Constitution and statute to divert school tax money to build a hotel parking deck.

Developers want to build a hotel at Broadway and Maple. They want the city to build the parking deck. No problem, says Mayor Hays. He'll put the hotel property in a tax increment finance district. That freezes the value of the land for tax purposes at its undeveloped rate. The taxes from the increased value of the property when the hotel is built can be diverted by law to pay off parking deck bonds issued in the name of the TIF district.

This is a straight-up application of the TIF process, in which tax money is used to provide infrastructure for a project that wouldn't be built but for a public investment.

But that's not where it ends. Hays is working on a scheme to capture the post-improvement level taxes on two other unrelated and geographically unconnected TIF districts to help finance the parking deck. The districts for the Argenta Place development on Main Street, a block from the hotel site, and The Enclave apartments, nearly six blocks away, were created in 2006. But no TIF project was ever put in motion in either place. Improvements were made without need of public contributions. The property will go on the tax books in 2009 at its higher value.

But Hays is hungry to divert increased taxes (virtually all of which benefit schools) from the two completed projects. The Enclave apartments are particularly critical. Valued for TIF purposes at $2.7 million, the project is for sale for $38 million. It's probably worth about $30 million. The $27 million swing in valuation would produce a hefty $90,000 a year in taxes to pay off parking deck bonds.

I don't think the law allows this. The state statute says redevelopment districts must be contiguous. Hays wants to combine revenue flow from three disconnected districts. He also is hurrying to approve this scheme before the end of the year, when the higher property values take effect and would be lost for TIF purposes.

Hays has a big constitutional problem. The TIF amendment says clearly that redevelopment districts may only be used for projects WITHIN the district. The legislature has tried to legislate around this, but the Supreme Court generally disproves legislative rewrites of the Constitution.

Forget the legalities. TIF bonds are supposed to be floated to spur redevelopment of blighted areas. Hays wants to take school tax money already set to flow from redeveloped, non-blighted areas. This perverts the spirit of the law. It's nothing more than a flimflam to produce money the mayor can't produce by straightforward means, such as a parking improvement district financed by all beneficiaries' property taxes. He prefers to steal kids' school lunch money.

That kind of leadership we don't need on either side of the Arkansas River. Nor is the example a good one for the TIF grifters lurking throughout Arkansas.

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