TIF, and State Incentives.

[Paramount747]

I know everyone here seems to know my politics, but I hate to sound like the Tea Party, but why does Metro, and the State offer so much in Tax Payer Money to finance towers in this city?

 

It seems lately every developer including Tony G, Omni Hotels, Highwoods, Thompson Hotels, Highwoods, and  the rest will not build anything without relying on the government to help finance the projects? I thought these free market Capitalists were against public/private partnerships? I thought they did not like relying on the government for anything. The Tea Party Capitalists stopped the AMP due to State and local Government funding, but they don't mind government helping to build hotels and skyscrapers? Should these corporations who are rich as hell finance their own projects?

 

Someone please explain. FieldmarshalDJ, where are you?

[Guest]

John, as you know the government is not 'paying' anything (well maybe an employment credit) they are but allowing the new development to keep some of the newly generated tax revenues to help finance the development/relocation/HQ/hiring/etc.

 

I wil admit there are great incentive deals and there are questionable deals. I am happy to say that almost all of the ones I know about - from Nissan to Beretta to Volkswagen - to Bridgestone are the former. In fact, the biggest 'bust' in incentive deals is the 'green' solar panel plant - Hemlock Semiconductor in Clarksville .... never even opened. ; )

[Paramount747]

John, as you know the government is not 'paying' anything (well maybe an employment credit) they are but allowing the new development to keep some of the newly generated tax revenues to help finance the development/relocation/HQ/hiring/etc.

 

I wil admit there are great incentive deals and there are questionable deals. I am happy to say that almost all of the ones I know about - from Nissan to Beretta to Volkswagen - to Bridgestone are the former. In fat the biggest 'bust' in incentive deals is the 'green' solar panel plant - Hemlock Semiconductor in Clarksville .... never even opened. ; )

You are probably right, but I never hear those on the right of my politics ever complain about such incentives except when it is for projects they do not like. A.K.A the AMP. I just don't understand why billion dollar corporations always get free public money, but states are closing hospitals because they don't want to fund them. It just seems stupid and a waste. I would rather rural hospitals stay open than giving 50 Million to Bridgestone which could easily finance a 100 story tower with their own money.

[UTgrad09]

I think TIF is a good thing when it is used prudently. I definitely think the city is starting to teeter on the edge of what is a prudent use of TIF, though. As for other incentives, unfortunately that's just the name of the game in the corporate world. There's no doubt that corporations bring a lot of benefits to our city and state, especially the larger ones. But the larger ones are also the ones that seem more likely to jump ship if they can save money elsewhere. Meanwhile, small businesses wonder where their incentives are.

 

One argument I would make on the behalf of urbanity is that these incentives may help land large office or hotel developments that want to locate in the city or in a tower, but choose suburban settings as a means of cost savings.

[smeagolsfree]

It's better than seeing 1300 jobs and a large corporate entity relocate to another State.

[titanhog]

It's today's game...and we either have to play the game or risk these hotels and corporations going elsewhere.

 

We can call their bluffs...but we may end up empty-handed, like so many states/cities that would love to be in our situation.

[fieldmarshaldj]

I know everyone here seems to know my politics, but I hate to sound like the Tea Party, but why does Metro, and the State offer so much in Tax Payer Money to finance towers in this city?

 

It seems lately every developer including Tony G, Omni Hotels, Highwoods, Thompson Hotels, Highwoods, and  the rest will not build anything without relying on the government to help finance the projects? I thought these free market Capitalists were against public/private partnerships? I thought they did not like relying on the government for anything. The Tea Party Capitalists stopped the AMP due to State and local Government funding, but they don't mind government helping to build hotels and skyscrapers? Should these corporations who are rich as hell finance their own projects?

 

Someone please explain. FieldmarshalDJ, where are you?

Don't look at me. I'd only offer them an incentive if they actually built Sheet Music.

[farm_boy]

Calculating TIF is easy math. Provide ABC Company with TIF. In exchange:  ABC Company will employ X number of employees (and in this case, ADD +600 employees). Average salary of 93k will produce taxes plus how many other taxes will ABC Company pay (excluding the property abatement). ..... it becomes rather simple math. The TIF granted to Bridgestone is less than the revenue generated, therefore .... the city will profit. It was noted in the news, city leaders acknowledged that bringing Bridgestone downtown will generate more city revenue (taxes) - even with the incentives in place.

 

Also, remember that Bridgestone is a large charity contributor in our city, pays for naming rights to Bridgestone Arena, etc.  There are many things to consider outside direct revenue for the city/state. And losing Bridgestone would be a huge "black eye" for the city. And it might help with luring a direct flight to Tokyo.

 

To contrast, Not having the Gulch Pedestrian Bridge will not be a "black eye" for the city, AMP would never contribute to a local school charity, and Sticks will not help us get a direct flight to Tokyo. It is much more difficult to have math support a $174 million dollar AMP or $18 million dollar Gulch pedestrian bridge or $850,000 Sticks in the roundabout. Agree?

 

 

**But maybe we could use the Sticks to roast some really big marshmallows .... or make kabobs ....

[Paramount747]

Calculating TIF is easy math. Provide ABC Company with TIF. In exchange:  ABC Company will employ X number of employees (and in this case, ADD +600 employees). Average salary of 93k will produce taxes plus how many other taxes will ABC Company pay (excluding the property abatement). ..... it becomes rather simple math. The TIF granted to Bridgestone is less than the revenue generated, therefore .... the city will profit. It was noted in the news, city leaders acknowledged that bringing Bridgestone downtown will generate more city revenue (taxes) - even with the incentives in place.

 

Also, remember that Bridgestone is a large charity contributor in our city, pays for naming rights to Bridgestone Arena, etc.  There are many things to consider outside direct revenue for the city/state. And losing Bridgestone would be a huge "black eye" for the city. And it might help with luring a direct flight to Tokyo.

 

To contrast, Not having the Gulch Pedestrian Bridge will not be a "black eye" for the city, AMP would never contribute to a local school charity, and Sticks will not help us get a direct flight to Tokyo. It is much more difficult to have math support a $174 million dollar AMP or $18 million dollar Gulch pedestrian bridge or $850,000 Sticks in the roundabout. Agree?

 

 

**But maybe we could use the Sticks to roast some really big marshmallows .... or make kabobs ....

WE can agree to disagree. I am against ALL state and local incentives for corporations, and the jobs they bring. We don't need those incentives to create jobs. Just my viewpoint. There is no reason to give a billion dollar corporation anything at the state or federal level. That is what stockholders are for.

[mirydi]

^Well it's a good thing your not running the show, cause if you were we wouldn't have a Bridgestone tower, or all it's economic impact that accompanies it, along with probably half the other companies and buildings downtown. 

[japan]

Everyone wants a centralized downtown with people living, working, shopping, etc... but they don't want to see how the sausage is made.

[producer2]

and sausage making can get quite ugly....

[Paramount747]

^Well it's a good thing your not running the show, cause if you were we wouldn't have a Bridgestone tower, or all it's economic impact that accompanies it, along with probably half the other companies and buildings downtown. 

Michael, you may be right, but I stick to my progressive principals. Many conservatives who hate government spending hate it until it's given to large corporations, and then they love it. Amazing, the government should not fund anything except wealthy corporations. And people thought Obama and Bush both spent money! What about Haslam and Dean!

[titanhog]

Michael, you may be right, but I stick to my progressive principals. Many conservatives who hate government spending hate it until it's given to large corporations, and then they love it. Amazing, the government should not fund anything except wealthy corporations. And people thought Obama and Bush both spent money! What about Haslam and Dean!

In all fairness...some tax money should go to corporations...and some tax money should go to things like AMP, schools, etc.  One of those helps create jobs and created more tax money that can be collected in the future...and the other helps improve the infrastructure of the city and improves people's lives.

 

The "all-in" approach on one side and "none-in" approach on the other is where we lose as a society.

[mirydi]

Michael, you may be right, but I stick to my progressive principals. Many conservatives who hate government spending hate it until it's given to large corporations, and then they love it. Amazing, the government should not fund anything except wealthy corporations. And people thought Obama and Bush both spent money! What about Haslam and Dean!

I understand where your coming from, John. But have you ever heard the saying that sometimes you have to spend a little money to make money? I think that fits perfectly into this situation. Your looking at this short term, and like it's $50M wasted, and money that could have been spent elsewhere, but your not thinking of the return investment on that $50M, which will be staggering. 

[captainwjm]

What is important here is that the incentives get a corporate headquarters to move from the 'burbs [i know it was only Donelson] to the city center.  Not quite the opposite of what was done with Nissan, but as I've said before, there was no need to incentivize a move to Cool Springs [getting them to Tennessee is another matter].  Getting the tower and the workers downtown is what these financing methods should be used for.

[UTgrad09]

and sausage making can get quite ugly....

But it's gooooooood.

[Hey_Hey]

As long as it is legal to incentivize companies to relocated inside places in the US then Tennessee will have to continue to play the game.  Our corporate tax laws and incentive programs are so messed up that we really need to start from scratch as a nation.

 

On one hand we have the highest corporate tax rate in the developed world at 35%.  On the other hand, we have so many loop holes that smart corporations (or large corporations) can cut that down to almost zero in some cases.  At the same time we have state and local governments competing with each other to lure these companies to the locale.  

 

What this has the effect of doing is disproportionately incentivizing larger corporations with more power, even if they are not the most innovative corporations. For example, a startup software company that employees 25 people will never qualify for the large scale tax incentives that companies like Bridgestone do, nor do they have the horde of lawyers, accountants, and lobbyists that can find loop holes and havens to qualify for many of the tax breaks. 

 

I don't want to get too political with this, but it would be far better, IMO, if we flattened the corporate tax rate and jettisoned the write offs, loop holes, and state and local incentive programs.  We could likely make it revenue neutral, but the simplicity would negate the necessity of jobs that don't do anything other than move money from one place to another.  It would also make the playing field a little more even for startups and the big boys.

 

However, until that time comes (and it may never come) Tennessee and Nashville must continue to play the game. If we don't these companies will relocate to other places that are more friendly.

[farm_boy]

WE can agree to disagree. I am against ALL state and local incentives for corporations, and the jobs they bring. We don't need those incentives to create jobs. Just my viewpoint. There is no reason to give a billion dollar corporation anything at the state or federal level. That is what stockholders are for.

 

Very well sir. I will respect your opinion also.

 

I totally understand where you are coming from about giving money to private businesses, especially large corporations. Where are the handouts for the medium and small companies? And what about the mom & pop shops??? Trust  me .... I understand.

 

My opinion is: 1,700 people making 93k is better than 1,700 people on food stamps

 

 

**I have no further comments because this is turning into political viewpoints. I come here for geeks gone wild

[Paramount747]

I am better with this now after a couple of days to think about this. I was reeling from sticker shock. Property tax rates are sure to go up in the downtown loop now due to so much construction. On the East Side we are going to see property tax hikes at 5th and Main as well.

 

It is understandable the State and City must spend money to make money, but my contention is that when one spends money on a project like the AMP, Amphitheater, Sounds Ball Park,  Pedestrian Bridge, or even public art like Sticks, they will all be revenue generators as well.

 

People like to come to cities that have the amenities like I mentioned. Skyscraper office buildings and hotels are not the only income generators.

 

One thing I love about visiting cities like New York, Toronto, San Francisco, Chicago, London, Edinburgh, and many others is they have lots of public art and amenities and here in Nashville when we spend money on amenities, people complain, but when Bridgestone gets 50M, most don't say a word.

 

Just my .02

 

John

[bwithers1]

If your property taxes go up after the next reassessment, it will be because your property value has increased relative to other properties in Davidson County.  New construction project property taxes are surplus to the budget that was set after the last reassessment in 2013.  So foregoing some of those new property taxes is a calculated diminution of that property tax surplus based on anticipation of other benefits, not a subtraction from the existing budgetary funds that must be made up by additional taxes from your or anybody else's properties.

 

At least, that is my take-away understanding based on presentations by the Assessor of Properties after the 2013 reassessment.  Someone please correct me if my recollection is wrong or my understanding is flawed.