Last night at the Redevelopment Authority meeting, Evansville City Administrator Dan Wietecha indicated that the city would use one of its options to amend the TIF 5 to add some parcels next to Romano's Restaurant for a possible hotel and/or bowling alley development, as well as add a parcel up near Symdon's that was noted earlier and was on the list to be added.
He asked members of the Redevelopment Authority to bring any other parcels that needed to be added to his attention, and indicated that there would be a notice in the paper for citizens to advise if they had a parcel that they felt belonged in it.
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Does this mean that people will be apologizing to Roger Berg for the snarky comments over the last week?
ReplyDeletewhat makes him think he will ever be able to build next to romanos?? The dnr shut him , Francious down>>> he can not build in a wet land which is what he was trying to do.
ReplyDeleteWhy should anyone apologize to Roger?? All the comments I heard here and other blogs, were pretty tame, and nothing was said that was not true.. Roger will ask for Tiff money everytime and anytime he thinks he can and he is one of the contractors that uses it almost to the point of abuse.
ReplyDeleteIt is my understanding that structures cannot be constructed on the wetland part of the enlarged parcel north of Romano's, but the added wetland could be used to meet zoning requirements (e.g., building setbacks). The wetlands might even be used to meet some protion of the storm water management requirements, although that is just unfounded speculation on my part.
ReplyDeleteI appreciate Grumps's comment about the shots that are taken at Roger Berg over and over again on this website. The guy has lots of ideas and is willing to invest his own money in projects, so of course his projects end up being the subject of applications for assistance. If the rule were that no project involving Roger Berg could receive assistance, the city would stagnate and rot.
what does this have to do with Roger?? He is already in TID#5,
ReplyDeleteIf the snarky comment fits then... well you know the rest.
Well if a bowling alley goes in on Union street I will be getting strikes alot more often as the lanes will be at a angle as it sinks into the marsh.
ReplyDeleteSeriously though what if the process of getting tiff money was reversed?? What if they first had to prove it a worthy risk over the course of five or ten years , then get there money???
There are no guarantees with these districts, and tiff 5 is very questionable at this point.
We can not ask people to improve their buildings, form a TIF district, invite folks to apply to the RDA, then attack them when they do!
ReplyDeleteSnarky comments often are born from a lack of understanding. A little TIF 101 education would serve everyone well. I think if the public had a better understanding of how TIF money flows, they would have greater peace of mind.
bill and grumps I will agree with the both of you. There is a lot of people here that do not understand how TIFF's work, they see "DEVELOPERS" stealing money not people that improve a town.
ReplyDeleteIt would be much diferent if there was 50 people looking for TIFF money and just 1 or 2 get the money, but there are only one or two developers that just ask
Here, here...someone has finally said it. Thanks Karen.
ReplyDeleteI would like Karen Aikman or Bill Connors to tell everyone what will happen if one of these tiffs fail. Which they could , there are no guarantees. Tell them just what there tax bill would look like. Tell all of the story, start to end if these or a tiff fails. Tiffs have failed. What happens then. Don't just talk about the pretty buildings . What is going to happen to our tax bills if one of these tiffs fail.
ReplyDeleteWe as tax payers should all be nervous about various things going on in our community that will directly effect our taxes.
1. These tiff districts
2. Lake Leota,, could go to a ref.
or the city could just decide
authorize payment to fix lake
without asking residents if
they want this added expense on
their tax bill.
3. There is no doubt to me that
some where in Heidi Carvins head
she is thinking ref., before the
h.s. is paid for.
No. 2& 3 are bad enough to have
possible coming at the same time.
Tiff 5 at this point is a dangerous tiff, there are alot of what ifs with this one.
Bill I think your giving Roger way to much credit. Your statement is not tested, meaning that you don't know how many other people would step up and do building rehab etc. with the taxpayers money if Roger didn't.
ReplyDeleteI like Roger, I don't appreciate some of his practices but then that isn't the topic. If you put your self out there the way he does then you better have thick skin.
I also think that the "snarky" comments do have some basis.
Wich means time and time again he is requesting and recieving tax dollars, Tiff, energy assistance, grants loans. Which is fine except no one knows what is the pay back and what it actually costs the tax payer at the end of the day.
I can say that for all of the money this city and Roger have put in to it that my property taxes have more than doubled in 6 years.
I don't view TIFs as developers stealing money. I understand that the increased tax revenue pays off the bonds. Nonetheless, if someone applies for TIF money with the idea of putting a business in a location that will likely fail and then sells the property it would have that appearance. Of course all of this is all speculative and is a moot point at this time anyway as far as a bar on exchange street.
ReplyDeleteI think some people do feel like it does matter who you are as far as applying for TIF money. I attended the Economy store meeting over one year ago and there was an exception made by Economic RDA to exceed the typical 25% TIF limit. I believe it will be around 50% of the expected appraised value. When the rules are changed people do wonder if anyone else would get the same deal.
When Roger gave the presentation he provided a lot of sentimental imagery about the workers who came here over 100 years ago and built that building, but failed to provide much substance. Some of the numbers were not complete, yet the project was approved anyway. I believe it was conditional but from my observance of city governance, once "the ball starts rolling" it is hard to stop it and any subsequent hurdles seem to be a formality once the initial vote is taken on anything (John Morning's denial for a new subdivison off of C is the exception, he received PC approval but didn't make it past the common council vote).
I am on the fence and don't have a strong opinion on the economy store. I don't think rebuilding that building will revitalize the downtown if there isn't a strong effort to put in the right mix of businesses to attract people to shop here from out of town (like Mt. Horeb, New Glarus, etc.) At the time of the RDA meeting it didn't seem like there had been any planning as far as what type of businesses would be recruited. It felt kind of like a "field of dreams" to me.
What efforts are being made as far a plan to attract the right mix of businesses? I heard the new bar is going in there. Are there any other commitments as far as other businesses? If not what type of businesses are being or are going to be recruited?
I hope there is success with the project, because if it fails it does pose a risk to taxpayers (I looked online back when this was approved and didn't have any luck finding stories of failed TIF districts so hopefully that is a very rare occurrence). It just seems to me it was approved prematurely because the presentation was a lot of fluff and little fact and perhaps that should be a black eye on the RDA for approving it without all of the facts rather than the developer. However, once again people wonder if people that are well connected get deals that no one else would.
Well said Mark, thank you.
ReplyDeleteTIDs that appear to be less than successful can borrow from other TIDs in the city in order to close the district on time. So even if TID #5 takes some risks (which is almost always the case when you are delaing with redevelopment and thus is exactly the reason why TIDs were come up with anyway) we do have a very good looking TID #6 (mixed use- industrial & commercial)and a slam dunk TID#7 (industrial)to potentially borrow from.
ReplyDeleteIf you remember your Evansville history I believe you will find that the Stoughton Trailer Facility helped close a previously created TID.
Now next time you tell your kids to do their homework I implore you all to heed this very lesson.
To the last anon, I was at the PC meeting when the RA company set up TID #4. They made it clear in the presentation that TID's do fail and they had one in another town that did fail. They also sited that it is incumbent on the city government to make sure they don't fail.
ReplyDeleteRobbing Peter to pay Paul is never a good idea!
TIDs do, indeed, fail sometimes. Sometimes, money from a TID that is doing well financially is used to pay of debt incurred in a TID that is not doing well. Futhermore, if a community is not willing to take a risk, there is no opportunity for reward. The goal should be to take good risks, not avoid risks. Investing in a business that is likely to fail would not be a good risk.
ReplyDeleteTID No. 5 is nothing like any previous TIDs in Evansville. The previous four TIDs were created to fund specific projects that were identified in advance (e.g., TID No. 4 was created to provide some of the financing for improvements needed to bring the Stoughton Trailers plant to Evansville). In these TIDs, it was easy to look at the risks and rewards of the specific project and make a decision about whether to fund it.
TID No. 5 covers a large area of the city and was created to provide incentives for individual private redevelopment projects that did not exist at the time TID No. 5 was created. It also was created to provide financing for needed downtown public infrastructure projects, such as this year's Main Street projec, and that is where most of the money will be spent and debt incurred. The city took a risk that the public infrastructure improvements, together with wise investments in private redevelopment projects, would generate enough of a tax base increase and tax increment revenue to pay off the debt (primarily public infrastructure debt) the city would incurred. If the city cannot find viable private redevelopment projects that produce substantially more tax increment than is consumed by financial incentives for the projects, TID No. 5 will fail financially.
But the result of such a failure for property tax payers in the city won't be much different than what they would have experienced if the city had not created TID No. 5 and had gone ahead with the necessary public infrastructure projects.
Bill Connors
Former Evansville City Administrator
I think Bill C. answered Watchin, but since I was called out, I will address Mark.
ReplyDeleteI’m glad Bill is around so he can correct me if I am wrong, but unless things changed after I left the RDA we agreed to consider going above the recommended 20% limit and consider a 25% involvement with the Ace building provided some pretty detailed conditions were met. I believe there is a state law that limits any single TIF contribution to 30 some %. So at 25% we would have been over the rule of thumb guideline, but below the legal limit.
Mark is correct in his recollection of some sketchy details by Roger Berg, but it was early days and Roger didn’t have all of the facts. Roger was ‘fishing’ because the early estimates indicated problems with bowing walls, extensive fire damage (if my memory serves me) and he wanted some guidance from the city that a 25% TIF application would even be entertained. What we really told Roger on that evening was that we would possibly break through the 20% suggested glass ceiling if it made financial sense to do so. I would not go so far as to say the project was approved during that meeting. I haven’t been following it too closely, so I don’t know what TIF% Roger Berg ended up with.
Another concern that gets bantered around is the idea that the renting business needs to be successful. I have been trying to get some specifics, and I haven’t been able to so, this is a bit speculation on my part, but while I understand building income in the form of rents is sometimes taken into consideration in assessing a commercial building, I would be shocked if the rent weighed heavily in the value. Surely building values don’t significantly rise and fall with the comings and goings of tenants.
I suspect the bulk of the property tax assessment lies in the quality of the plumbing and roof, and things of that nature and any rent income is cream in the coffee.
Back to the Ace building, a small group of investors own that property. It is private property. The city cannot tell them whom they can and cannot rent to. Also for the very reasons Mark identifies, I should think it would not be in the city’s best interest to “favor” the Ace building by sending all inquiring businesses to locate there rather than any other location.
If the perception is that all TIF money is going to Roger Berg, or he is the only one asking for it, then the frustration with that should not be directed at Roger, but at the city for not spreading the word or doing enough to invite other property owners to apply.
The surest way for the TIF to fail is if no one improves their buildings.
I never suggested the city should have a say in what will be or won't be in that building now that the TIF has been agreed on. My thought at the time of the meeting was I would have liked to have seen some more direction from the developers as far as what they envisioned for the building before TIF money was approved.
ReplyDeleteI think the general thought of people questioning the risk is what happens if the mortgage and taxes go into default due to an empty building because businesses choose not to locate there? I don't know how deep their pockets are, perhaps their assets are substantial enough that the city isn't exposed to any risk?
Additionally, I agree that the appraiser is not just going to lower the value due to empty storefronts, however the market value will go down if the building is empty and put up for sale. Why would anyone want to pay a high price tag for a building that is sitting at 20% occupency (unless they have an alternate use in mind?) If it sells for far less than it is appraised at that will effect the future appraisal.
If it gets sold at a lower price what happens to the deal of the taxes being paid based on the purchase price + restoration cost vs. the actual appraisal value (the appraiser stated it would not appraise anywhere near the purchase price + restoration cost). Do the developers have to pay the bonds off at that point, if they sell the property? I can't think the new owner would take on that liablity if they paid far less than the what the city and developers have put into the building.
Anon,
Wouldn't TIF money that is taken from one TIF to help pay off a failing TIF, keep the successful TIF open longer and subsequently prevent the additional tax base generated from going into the citys operating budget while the failing TIF is being paid off? That does effect your mill rate.
Under my premise, the assessed value of the building is not dependent upon the rate of occupancy. I have read that there are three approaches to property tax assessments, one of which takes a projected stream of rental income into account, but it didn't say how much etc.
ReplyDeleteWhen I was in real estate lending, we used a formula that took a small percentage of the estimated rental income and applied it to the buyers income rather than the value of the building. I simply cannot say for certain how commercial buildings are assessed in Evansville. I would hope conservatively.
I also assume as a taxing authority, the city TIF would have something of a first lean on the property, so in the case of the ACE store where there was some talk of potentially exceeding the assessment, in the worst case scenario, at even 25% any reduction in sales price should still produce the TIF amount. It would be the mortgage lender who carries the greater risk.
I think it may be helpful to think of TIF like a sidewalk assessment, it gets built into the property tax. A sidewalk assessment lasts for 10 years or so. If you sell your home during that time, the assessment continues with the next buyer. That buyer includes it as property tax. Some people may evaluate a purchase with consideration to the property tax but it's probably different for every buyer.
As I mentioned earlier, I haven't followed the ACE building since I left, but I understood TIF to be a function of the assessed value. As a member of the RDA, I was recommending NOT using a fixed dollar amount, but a % of assessed value of the finished building. I thought being strong in this way that was a more than fair trade for a little extra percentage. I don't know how it ended up.
I fully understand your concern about foreclosure. When I worked for Chase Manhattan Bank, we lent our own money, not government secured loans like most lenders, and we were conservative. When we would turn someone down and they would counter that we would get our money from any sale, we would return with "we are not in the property selling business" So of course the city doesn't want to foreclose on any building.
You will recall from that night, that Chris Eager was tough on Roger. Much tougher than I would have been at that early stage. Chris was requesting Rogers personal financials. Roger requested a third party review them because the RDA was public and naturally he didn't want his financial statements all over the front pages.
I am certain, Chris evaluated the risk of the group of investors for the ACE building. But as Bill C, mentioned, there will always be some risk. It is the city's job to minimize it as best they can.
Actually, rents are the most important factor determining the value of a commercial building, because any potential buyer of a commercial building would base the price it would be willing to pay on the rents it thinks it could collect if it owns the building. The cost of the bricks, mortar, and other physical characteristics of the building is pretty well irrelevant, unless it induces someone to pay rent. So I remember from the expert testimony I heard in court about the value of commercial buildings during my days as a clerk to a bankruptcy judge and as an attorney specializing in bankruptcy. An assessor does not need to wait until the building changes hands at a lower price to lower the assessed value of a property.
ReplyDeleteThe Economy Store project is a risky project, unless the city negotiated for guarantees to shift that risk to the developers. But even if it is risky, it is so vitally important to the downtown, in my opinion, that taking some risk is worthwhile.
Mark is correct that if tax increment from a financially successful TID is used to bail out an unsuccessful TID, then the successful TID is kept open longer than it otherwise would have been, thus depriving the community of the benefit of the added tax base that comes with shutting down a TID.
But to reiterate what I wrote earlier, life is full of risks, and success is impossible without taking risks. The issue that people should focus on is the balance between the level of risk and the potential reward. Don't take a bigger risk than you need to if you can negotiate for the other side to assume much of the risk, and don't take a big risk unless there is a big potential reward.
Karen,
ReplyDeleteThanks for the info. We don't always agree on everything, but I honestly do appreciate that you openly post and defend your position. I really wasn't trying to personally "call you out," I do recall you being on RDA at that point, but enough time has passed the I don't recall the specifics. I don't recall if this passed unanimously and if not who voted for/against (if my previous posts are slightly off that is why I didn't review the minutes, but tried to post more generally than specifics).
If the financials have been reviewed by a neutral third party and they are happy with that I can appreciate them not wanting their personal financials part of the "public record."
There are movie as well as audio on these meetings--
ReplyDeletehttp://evansvilleobserver.blogspot.com/2007/02/jan-2007-rda-part-ii.html
As has been pointed out, TIF is designed for projects that would not be done except for the TIF mitigating the risk a little. Still they are risky.
TIF #5 was covered in great detail on the Observer and using search at the top of the blog you can get all the minutes.
Specifically, in response to Marks comments, in response to my question to Mr. Otterstein whether a devleopers agreement could be binding on "Heirs and assigns" with respect to holding them accountable for a stated valuation rather than assessement, he answered "Yes."
"The Economy Store II" is a wonderful movie to watch as you slip off to sleep at night. I thoroughly recommend it.
Thanks Bill for helping me out. As it happens I was in a meeting with someone from Hendricks Development Group this early morning, so I asked about how commercial buildings get valued and he told me a building is only worth it's leases. So, I concede I was wrong.
ReplyDeleteBut I still support the ACE project in theory. I no longer know the details of the agreement so I don't have a current opinion on it.
Oh and Mark, I was referring to Watchin in my 'calling out' comment, for asking Bill or me to elaborate further on TIF's.
I did vote for ACE and I consider it my continuing obligation to openly explain my votes.