According to the newspaper article the Broadway Target was built about 20 years ago. It's likely that little-to-no city subsidy remains on the books after that much time, although it's possible. What was the value of that property 20 years ago? What was the total city subsidy at that time? Did it cover more than land and infrastructure? I'd guess Target paid for the building 20 years ago, and now they are selling it. The land and infrastructure remain (sewer/water/curb cuts/sidewalks/site improvements). Given the people employed, wages paid, sales and property taxes received over 20 years, I'd guess that the project was probably a good one over the years-- in terms of the return on that initial city subsidy. And now another viable business is moving in, and requires no new public subsidy. Bravo! I hope Cub operates successfully for another 20 years or longer.
However, Vicky's general concern is valid. Perhaps future city subsidy deals should include a clause whereby if the business walks away (sells the property) and remains solvent, a declining portion of any city funds (P&I), beyond basic infrastructure investment, becomes fully due and payable, thus recovering a balance of the original taxpayer subsidy-- a declining value city lien, if you will. I don't think any such mechanism is currently in place. Such a subsidy recovery mechanism might even reduce the value/attractiveness of city subsidies to businesses in the future. However, it's also possible that such a subsidy recovery mechanism might just push development elsewhere. In general, development is more expensive in the city than in surrounding suburban locations. It's always difficult to balance the front-end investment requirements of a given project with projected future revenue streams over time in a dynamic business environment-- something businesses try to do every day. Business risk and uncertainty represent continual, dynamic threats. Thus, public risk management strategies should strive to protect taxpayers from those same long-term business risks. It's not the taxpayer's responsibility to subsidize business risk. Rather, the taxpayer might have an interest in leveling the playing field in terms of equalizing the business investment required in the city with that required in similar suburban locations, making it easier for large businesses to locate here. And, that's much easier said than done. While the city needs strong businesses-- good employers, jobs and a growing tax base, large businesses often have many options regarding siting decisions-- sometimes it takes a public subsidy to level the playing field, and if done properly, I'd consider it an appropriate public investment. However, low cost spacious parking in the suburbs may equate to an expensive parking ramp in the city-- is that an appropriate public expense in order to get the business to locate in the city? Maybe this is a case where the declining value city lien makes sense? Politician's futures and property taxes rise and fall on such decisions. In terms of public risk management, I think it's appropriate to place restrictions on the overall levels of such development debt, with total annual costs being limited to a percentage +/-, of city operating revenues-- maybe a five year rolling average of revenues, etc. However, such restrictions may limit politician's decision making authority, and thus be difficult to enact. This is where a strong public voice for prudent fiscal restraint needs to be heard. Go Vicky! Michael Hohmann Linden Hills > -----Original Message----- > From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] Behalf Of > Victoria Heller > Sent: Thursday, June 19, 2003 8:32 AM > To: Mpls Forum > Subject: [Mpls] No subsidy for Cub? How dumb do you think we are? > > > http://www.startribune.com/stories/535/3944578.html > > Consider these quotes from today's Strib article: > > "The Target store had been part of a city-funded redevelopment > project." > snip > "Jerry's is not receiving city subsidies to open the Cub store," > > > Here is the way this works: (Estimates based on tax records) > > The City borrows $3 million and builds Target a property. > > Target doesn't like the property any more. > > Target sells the property to Jerry's for ???, say $2 million. > > Target pockets the proceeds instead of reducing the City's debt. > > Jerry's gets the property... snip > > Minneapolis taxpayers get the shaft: Debt remains, tax base drops. > > > Vicky Heller snip TEMPORARY REMINDER: 1. Don't feed the troll! Ignore obvious flame-bait. 2. If you don't like what's being discussed here, don't complain - change the subject (Mpls-specific, of course.) ________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls
