Rats. There's an interesting Letter to the Editor in today's PG South section from the lawyer for the Washington Park development proposed for the Bower Hill Road/Washington Road intersection, but so far (at least) it hasn't shown up on the paper's website. So I'll type in and critique the relevant statements. The title assigned by the paper is "Mt. Lebanon TIF won't drain coffers," and the basic argument is that the TIF requested by the Washington Park developer (Zamagias Properties) will add tax money to the town's and district's bank accounts. It won't divert tax resources.
The author of the letter isn't just the lawyer advocating for this TIF. She makes a good part of her living representing real estate developers seeking TIFs
. It's an honest living, and TIFs, in appropriate circumstances, are valid development vehicles. But the letter should be understood as what it is -- advocacy -- and not as what it purports to be -- fact.
The letter starts off by criticizing a "campaign of misinformation, broadcast via Internet blogs." So first, thanks for reading! This blog, I mean, not the misinformation. I'm not aware of other Mt. Lebanon blogs that have addressed this project, but commenters can correct me. To the best of my knowledge, neither I nor Joe Polk wrote the actual blog-words that the letter quotes, but that's a quibble. I can't speak for Joe, but I was clear in earlier posts: I think that this TIF is a bad idea.
Next, the letter sets out some important assumptions -- without acknowledging them as such. When economists make assumptions, which they always do, those assumptions are front and center, so that the assumptions can be critiqued and the analysis refuted. When lawyers make assumptions, which they always do (I'm a lawyer, and I teach law, so I'm on pretty solid ground here), they are as careful as possible to hide their assumptions behind a facade of objectivity. Done well, that makes their arguments seem both right and inevitable, and the lawyers get what they want for their clients. Done badly, the arguments seem clumsy, and the lawyers and clients get nothing -- or worse.
Here, the assumptions are presented smoothly, which means that it's all the more important that they get exposed, so that the argument doesn't carry any more weight than it should.
Letter assumption #1: the Bower Hill/Washington Road intersection is "a prime location.
" That sounds plausible, since that's an intersection where two major roads meet, and it sits at one entrance (not the entrance, but certainly one entrance) to Mt. Lebanon. The argument that follows the assumption is this: This is a prime location, but it has been vacant for more than 20 years, and the vacancy stems from the fact that development would be profitable only if it were publicly subsidized. In other words, the private sector can't develop this "prime location" on its own. But wait. Real estate developers are acutely profit-sensitive, and their informal global motto is "location, location, location." If this really is a *prime* location, then it should have been snapped up and developed long ago. Maybe the location isn't so "prime" after all, and the lack of development reflects market reality. It turns out, however, that the assumption is true. At least I'll grant the assumption. But the argument above doesn't follow logically. If the location really is so special, then maybe the location is profitable even without the TIF. All you need is the right market and the right loan. And if you examine Zamagias's submissions carefully, as Bill Matthews and others have done, you'll see that this is actually the case. Zamagias could develop this site with its own (private) money, and without a TIF, and still make a reasonable profit. Read this letter carefully; it doesn't say otherwise.
Letter assumption #2: "But if we want a signature residential and retail building
and the related public amenities that have been proposed, and if we want the significant increases in tax revenues that this project will generate, Mt. Lebanon and its school district can facilitate this substantial addition to the tax base by using the TIF." But wait! Why does the project need to be a "signature residential and retail building"? The scale of the project is flattering to people who like to think of Mt. Lebanon as an upscale community. I, for one, am endlessly frustrated by that image. Mt. Lebanon needs more housing that's affordable, not more half-million-dollar residences like the ones in Washington Park. Can Zamagias could make its intended profit by forgoing a TIF and building $250,000 condos? If so, I'm all for it. I'm sure the building would still look nice. Just remember: The TIF proposal and half-million-dollar condos go hand in hand.
Letter assumption #3: "I don't know about you, but I like it when my elected official figure out how to pay for public improvements without increasing my tax burden.
" But wait again; there is a tax impact here, but it's hidden, and it's hidden in much the same way that the public subsidy for the proposed Isle of Capri hockey arena was hidden. It can be teased out with a little hypothetical: Here, Zamagias has come to Mt. Lebanon and the School District and made what amounts to the following offer:
We propose to build a fancy residential/retail building in your town, a building that will generate $XYZ thousands of dollars in tax revenue. We know that Mt. Lebanon and its citizens already pay high taxes, and we know that there are pressing capital and other needs around the town -- renovation of the high school, special needs programming in the schools, library services, public safety, sewers and street repairs, and so. Town residents will be taxed for years to come to pay for all of that. However, Zamagias will build our proposed building on one condition: That a large proportion of the new $XYZ thousands of dollars be given by the town and the School District back to us, and dedicated to fixing up the roads around our new building, rather than applied to more significant existing and future needs of the citizens.
I look at that hypothetical offer -- which I think is economically equivalent to the TIF proposal itself -- as an offer to increase my taxes more than those taxes otherwise would increase (the contrast isn't a tax decrease; taxes around Mt. Lebanon never seem to go down). In other words, Mt. Lebanon residents can see their taxes go up a little, relatively speaking, without a TIF, or a lot, relatively speaking, with a TIF.
Letter assumption #4: "At a time when the school district is considering large capital expenditures and the municipality is attempting to hold down residents' taxes, it would be absolutely outrageous to turn our backs on this proposal." But wait! No. It wouldn't be outrageous at all. It would be the height of political, and fiscal, wisdom.
Labels: TIF, washington park