The Vote is in 76,999 to 1

"[G]overnment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

August 15, 1986 (Reagan in remarks to the White House Conference on Small Business)

There are currently about 77,000 people living in Decatur. (Actually the number continues a long downward slide.... but you get the point.) Monday night (10/16/2006) the Council voted to subsidize one developer/landlord and a single $140 billion out-of-state bank (Regions Bank) at the cost of millions of tax dollars paid by Decatur taxpayers. If you pay property or sales taxes in Decatur, thank the Council for voting against you 7 to 0.

Recall that the City of Decatur taxpayers already pay the highest property taxes on their real estate in Central Illinois. Decatur property taxes are 20% to 50% higher than other communities.

The Council voted to approve a development agreement with Reynolds Development that requires the City to rebate to Reynolds Development owners 75% of property taxes for 19 years (up to $200,000 per year) with the all other City taxpayers making up the difference. The development agreement was first announced to the public last Friday, and only one short business day later, the Council voted 7-0 in favor of it. (Yes... Reynolds Development is owned by the same folks that own the company managing out of control health claims for the City; also see unanswered questions at end of this post.)

Now, we like lower taxes and we are glad to see someone invest in Decatur. But who is doing the investing? And, what about some on the Council that have said that no one avoids investing in Decatur because of high taxes? Whallllaaaaahhhh... here comes a "great deal for Decatur" that is conditioned upon $4 million in tax relief, and, a donation of land acquired and improved by Decatur taxpayers at a cost of $2 million. Unlucky City taxpayers pick up the tab for rebated tax revenues subsidizing this project.

Simple facts:

Property tax rebates for project           $3.8 million

City previous investment in land             2.0 million (300 North Water)

Additional city land investment               2.0 million (Purchase & demolition across street)

Total                                               $ 7.8 million

Sales proceeds to City from Land               Zero

Building Value-developer                       $ 12 million

Property taxes -rebate to developer             75%  ($3.8 million over 19 years)

Hmmmmmm.... those are the real numbers. Council members will be quick to point out that the deal isn't really that bad. We ask "for who"? The City is spending $ 4 million to buy and tear down 2 city blocks for these two businesses & then gives an additional $3.8 million in tax rebates.  Good for who? Even for government math, the deal is simple to calculate and impossible to explain.

If any other taxpayer in Decatur spends $50,000, $500,000 or $5 million on their home or business, they would have to pay the additional property taxes of 3% of the amount spent. But not this deal. The Council voted 7 to 0 to give back 75% of the additional property taxes and give the land away and give back 50% of any sales taxes collected.

Again we like tax reductions, but we like them for everyone, not for just a few well connected elite in Decatur.

What happens in a tax subsidy like this is the following - tax districts determine what amount of taxes they need to pay for essential government services. Then they apportion that tax levy to all taxpayers except those that are given a pass through a TIF or enterprise zone. Therefore, the fair share of taxes not paid by the developer from this project are pushed onto the already over taxed properties of everyone else that lives in Decatur and pays taxes. Be sure and thank Mr. Mayor and the City Council.

Oh....wait... let's not forget all the new jobs that are contractually committed to be created by this taxpayer investment....... ZERO. There are no new jobs committed by the developer or the tenant. Isn't this a great deal for taxpayers? We think not.

You should know that several community "leaders" came up and spoke in favor of the proposal. They said we could attract more doctors and more chain restaurants. Well we ask... will those doctors live in Decatur and pay taxes here when their bosses live in the countryside & other tax districts? (Many "leaders" in our community avoid high taxes by not living in Decatur tax districts.) What a deal. If we attract more chain restaurants, will we eat out more or simply put out of business another local favorite restaurant that can't compete with a national chain subsidized by the City Council with your tax dollars?

There are several very important questions that remain unanswered. Ask you Council person to explain the answers to you about these issues:

Key Questions

• Does the Developer have financing commitments for this project? From whom and on what terms? What amount of cash equity is the Developer investing in the project? Has the Developer given the City any form of financial assurances that it can perform its financial obligations related to this project? What penalties are built into the project if the Developer does not complete the project as described?
• Have the terms of leases with the two known tenants been agreed and presented to the staff/council?
• What is the value of the plot of land being given to the developer?
• How many new jobs are being created over the next five years? How many jobs are being retained as a result of this project? Are there contractual commitments with the City related to the retention and creation of jobs? Are there penalties for failure to perform these commitments? What are the penalties?
• What rate of return is the developer expecting from this project? Is the developer willing to share the rate of return, or alternatively, the excess rate of return from this project with the City/TIF?
• Will the Developer proceed with the project with reduced City/TIF financial incentives?
• Have the Developer or tenants made any commitment to maintain their ownership of the project?
• What role is the State of

  Illinois Economic Development

  department playing in this opportunity? What role is the Economic Development Corporation of

  Decatur

  and

  Macon

  County

  playing in this transaction? If none, why not?
• Will the Developer’s plans for this project be affected in any way if the City modifies its health insurance services relationship with the Developer?
• Is the City prepared to offer similar incentives to all other developers in the

  Decatur

  area that are upgrading the properties?