I’ve been recently harping on the fact that Elizabeth Kautz’s website claims that there will not be a rise in taxes due to the PAC. While that’s a load of bullshit and everyone knows it, she continues to live in her fantasy world by spouting off claims that the upcoming funds from a decertified TIF district will cover the losses.
The TIF district being decertified will grant the city access to about $900,000 in 2011. With the PAC expected to lose nearly $835,000 alone in the first year of operation and at least (according to original estimates) $220,000 over each of the next four, I have a hard time understanding the mayor rhetoric. Perhaps she took a lesson on the economics of the PAC from Dan Gustafson’s own failures?
By my math, the PAC is going to lose at least $1.5 million but it’s more likely that it will continue to lose nearly twice that much because VenuWorks isn’t doing jack shit to get anything decent through the doors of the Burnsville Performing Arts Center and when it comes down to it, they blame their woes on Burnsville. Instead of Burnsville considering replacing the ineffectual management, as of the last discussion, they’re satisfied with the poor job VenuWorks has been doing.
So the TIF district decertifies and Burnsville pulls out $900,000 to cover some of the PAC losses. Where does the money come from to cover the rest? Remember folks, 1% tax increases cover ~$250,000. How inconvenient for the mayor.
So I want to know, who’s right here? Is the mayor going to make me eat crow when the TIF district decertifies and pays off all the PAC’s current debt or will the mayor have to step down, head hung low, because she took on an impossible bet and lost? So which is it. Crow or not?
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November 20th, 2009 at 10:57 am
I’d pay to see any politician eat actual crow.
November 20th, 2009 at 10:58 am
I’m not sure how this works — Is the $900,000 gained from the TIF decertification a one-time transfer or an annual amount?
November 20th, 2009 at 10:58 am
If I recall correctly, the TIF decertification money was also going to help pay for the debt service on the PAC. Now it is now all going to be used for operating losses alone. The “mortgage” of $20+ million still needs to be paid. I’m interested in seeing the magical accounting that is going to wipe the slate clean to show no correlation between the PAC and the inevitable tax increase.
November 20th, 2009 at 11:06 am
I had the same reaction when I read that statement in the story.
November 20th, 2009 at 11:08 am
I wonder where the number $900,000 comes from. It appears that the TIF district generates approx. $2million in TIF and you would think that this amount would have to be split between city, county, and schools so it is like $675,000 or so. $200,000 difference is a tidy sum of money.
To cover Brandon’s question, Once the TIF decertifies the district is no longer getting money from the properties that paid into the district. So now their taxes go back to the taxing entities that they would normally pay into. TIF is not additional taxes, rather a redistribution of taxes that you would pay anyway. For example if your property taxes are $2000 in 2009, but in 2010 your property is now in a newly established TIF district. You may still pay $2000 in 2010 based on your property values, but the TIF district gets the money instead of the county, city, schools, and others. Its a bit more complicated than that, but in the end that is basically what happens in a TIF district. Again, so when that district decertifies after all of those years of paying into the tif district the money now goes back to the county, city, schools, and others. Hope that helps. Hope that Crow tastes good too.
November 20th, 2009 at 11:10 am
Another way to look at it is this: think about the property taxes generated by a neighborhood, say a 15 block area. Now think about all of those taxes going to pay for one city amenity. What this also means is that those property taxes are not going into the general pot to help pay for the infrastructure/city services needed in that neighborhood (or any other neighborhood, for that matter). So now, in addition to having a budget flush with cash to pay for flowerpots and extensive yardwork in HOC, the all the property taxes from the hypothetical neighborhood are also being used in HOC. Who pays for the infrastructure needs of the neighborhood? You and me, except we have a bigger share, because, well, that neighborhood’s property taxes are being used elsewhere.
What type of wine goes best with crow? Maybe we can suggest an appropriate pairing for the Mayor’s favorite watering hole.