posted by Mike Madison at 10:15 AM /
In anticipation of the Mt. Lebanon School Board's upcoming vote (next Monday, March 19) regarding whether to participate in the Washington Park TIF, Bill Matthews has assembled the following quick guide to the proposal. As the infamously pseudonymous Watergate source once said (in the movies, if not in real life): Follow the money.
Fundamental Question
Since June ‘05 a fundamental question regarding the TIF has been:
--- Will Zamagias Properties receive an excessive financial return on their investment?
Essentially: What dollars will they put in and what will they take out?
There is no argument Zamagias Properties should make money, otherwise there would be no point. However, if there is to be a public subsidy, the financial return should be sensible. Without a subsidy, the return should be unbounded. The analysis below, uses the developer’s projections from the March ‘07 TIF Plan. The model is also Zamagias Properties’ model, first used in June ‘05.
In other words, these are THEIR numbers in THEIR model. EXCEPT, the developer never calculated beyond “Total Potential Project Return (On Cost)” -- the developer never illustrated “Return on Equity”.
Bottom line: Zamagias Properties is using TIF to minimize their equity investment and generate an inordinate Return on Equity.
A more complete feasibility analysis by Bill can be downloaded here: http://tinyurl.com/2v54mo
Fundamental Question
Since June ‘05 a fundamental question regarding the TIF has been:
--- Will Zamagias Properties receive an excessive financial return on their investment?
Essentially: What dollars will they put in and what will they take out?
There is no argument Zamagias Properties should make money, otherwise there would be no point. However, if there is to be a public subsidy, the financial return should be sensible. Without a subsidy, the return should be unbounded. The analysis below, uses the developer’s projections from the March ‘07 TIF Plan. The model is also Zamagias Properties’ model, first used in June ‘05.
In other words, these are THEIR numbers in THEIR model. EXCEPT, the developer never calculated beyond “Total Potential Project Return (On Cost)” -- the developer never illustrated “Return on Equity”.
Bottom line: Zamagias Properties is using TIF to minimize their equity investment and generate an inordinate Return on Equity.
A more complete feasibility analysis by Bill can be downloaded here: http://tinyurl.com/2v54mo
Labels: municipality, school board, taxes, TIF, washington road
3 Comments:
Holy ROE Batman! What is going on in Gotham City?
Am I reading this right? The developer invests $4,000,000 gets his money back PLUS and additional $6,000,000? I want a piece of the action.
Anon 7:21
You are exactly right -- this is the plan being championed by the Municipality. And by the way, you do have a piece of the action. TIF proceeds (from diverted taxes on the development) help make the $6.6MM "Combined Potential Value of the Project" possible.
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