We Have Met the TIF, And He Is Us

Jim Carson sent the following to Dan O’Leary in response to his reasoning on the need for a TIF Refinance.  It is so good, I thought it best to add it as its own post.


Dan,

For too long, the City of Keller has treated its Town Center TIF [TIRZ] as some ne’er-do-well brother-in-law to whom we grudgingly loan money in hopes that maybe someday he’ll pay us back. The Town Center TIF was, is and always will be a project of, by and for the City of Keller. Everyone understands that the school district gave up 20 years of incremental tax revenue in return for a Natatorium. The Tarrant County entities signed on as a calculated bet that their tax revenues would be dramatically higher after twenty years of forebearance.

But it was the City of Keller that held all the cards. It was we who took the risk. It was we who would have reaped the rewards. And it is we who must now accept responsibility for its failure. The first order of business is for the city council to dispense with this talk of “subsidizing the TIF” and replace it with “paying for our losses.” It is just wrong to say “the TIRZ design has not paid the costs for this debt.” Intellectual honesty requires that we now say “our TIRZ design has not paid the costs for our debt.”

You did not create this mess. Neither did I. And sadly, neither did the voters of Keller, as they were never offered a vote in the matter. But the voters, and you, and I, inherited this problem. It is not fiscally responsible to punt our problem to a council and taxpayers a decade from now. Nor is it a “no brainer,” as the mayor suggested.

Many of the arguments you and the council members have offered in favor of this proposal amount to “these are conservative estimates, and if the TIF outperforms then we’ll be able to call the debt early and not incur so much interest.” This argument is both circular and specious. If the TIF begins to outperform, you’ll be able to make up the very shortfall you’re trying to wish away with debt. You will have solved a non-problem.

Your final paragraph disappoints me greatly. If the TIF had succeeded, would some other entity have provided the fire, police and other services? It is ridiculous to call this a subsidy. Again, we have met the TIF, and he is us, not our brother-in-law.

I strongly supported you as city manager, and still do, but it hasn’t escaped my notice that your only proposed solution to the TIF shortfall is the one that makes your job easiest. I would suggest that it is your responsibility to offer alternatives to the city council, and the people of Keller, that include cost-cutting measures in lieu of additional debt. I would be happy to offer some off the top of my head, or even sit down with you and the mayor and staff and go through the budget.

Several times in Keller’s recent history we have had Town Hall meetings to discuss specific spending increases. Is it not time to hold some Town Halls to discuss specific spending decreases?

Jim


Update:  My commentary above won’t make a lot of sense to those not well-versed in TIF issues.  For background, read Doug’s prior post, Let’s Just Refinance It Again.

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7 responses to “We Have Met the TIF, And He Is Us

  • Jim Carson

    Dan responds below in italics, and my rebuttal is in regular type. Note that I don’t think there’s a nefarious bone in Dan’s body, but I think he suffers from a catastrophic lack of perspective.

    Jim,

    The TIRZ has always been viewed as a stand-alone venture. It was never designed to create an indebtedness for the Keller citizen. I have never heard anyone ever suggest that the Town Center TIF is just another public debt of the Keller taxpayer. It was always designed to be self-supporting (undoubtedly with the local taxpayer co-signing the note.) You could argue that it was designed to fail, to socialize the risk, but no one has suggested (even when you were on Council) that we give up on the premise of a self-supporting project.

    Wow. Whether you’ve “heard it” or not is irrelevant. The Town Center TIF IS just another public debt of the Keller taxpayer.

    I do not argue that it was designed to fail–I argue that it is failing. And that it is our responsibility. The revenue we receive from Tarrant County and KISD is fixed and invariable. After that, all losses belong to us–that is how it is designed. And as for the suggestion that we give up on the premise of a self-supporting debt? You yourself are suggesting just that, when you propose that $7.4 million be paid solely by the Keller taxpayers of 2019-2028!

    The City Council and the community knows its options. The options are always the same. Don’t spend money on things you are currently spending money on and redirect to the TIRZ debt, or increase the tax rate to raise money to pay the debt, or now a third option—Try and have the TIRZ be self-supporting until the debt is paid off.

    You are wrong–the community absolutely does not know its options, because you haven’t presented them in any meaningful way to the community. It needs to be presented unambiguously: we either cut X, Y and Z, or we saddle a future generation with all this debt.

    I think you misunderstood my last paragraph. I was acknowledging that the Keller citizen subsidizes the TIRZ properties by providing services for which the TIRZ properties do not pay property tax toward.

    It is you who misunderstands, Dan. You are immersed in the minutiae of city accounting, with all the myriad accounts and entities and such. You need to step back and see the city budget from the perspective of a taxpayer. What you see as real, competing interests like TIFs and General Funds, we taxpayers see as left pocket and right pocket.

    The property owners of the TIF district were tasked with footing the entire bill for our Town Hall and Town Center park for the enjoyment of all Keller residents. How dare you denigrate them by calling their police and fire protection a subsidy?

  • Doug Miller

    There are TWO Million, Seven Hundred Thousand reasons not to do this….

  • Big Bob

    Wholly Guacamole! If this truly is a hot topic, being an even number election year we should see many people run for the three available city council seats that are up for re-election…..

    Filing started Monday, Feb 8th and runs thru Monday, March 8th.

    Then again…..

  • Randy Leake

    So Big Bob what place does this mean you are filing for?

  • Big Bob

    Randy-

    Sorry but I have yet to retire so I do not yet quite qualify for a city council seat! And quite frankly, I do not think this TIF “issue” being discussed back and forth here by Mutt & Jeff will create a stampede down to city hall secretary’s office to get candidates filed for a city council seat with the upcoming election. I think Jim summed it up in a comment on this post – – “My commentary above won’t make a lot of sense to those not well-versed in TIF issues”….. and that folks may be the best comment of all! The TIF is what it is from the past 10 years and quite frankly, it doesn’t make a lot of sense to those not well-versed and I would assume that would be about 98% of the registered voters in Keller.

    But I would make a calculated assumption that the average voter does understand our city tax rates and compared to the other cities that border us we are doing quite well – Tax Rates: Keller: .44219 – Southlake: .46200 – N/R Hills: .57000 – Watauga: .58000 – FTW: .85500 and all are quite pleased from that perspective!

  • Doug Miller

    Bob,

    What voters can understand is throwing $2.7 million down a hole

  • Thomas

    If I understand this proposal, we are going to borrow money to pay off money we already borrowed? At first blush I am not in favor either.

    I understand the idea of borrowing money and making interest on it while it sits in the bank, but usually the bank pays less than it charges for money and I think I heard people in the video talking about using the surplus for other projects.

    The current council has done a good job of informing and listening to citizens and I don’t see any big issues that are likely to unseat the current members.

    However, I don’t understand why we can have public input and a referendum on an animal shelter and this kind of decision is going to be made by the council without any public input that I have heard about. In fact the Keller Citizen covered the animal shelter issue and mentioned nothing about this plan.

    This could be an issue that might cause the council members to regret not vetting it with the citizens in the same manner as Rufe Snow, North Tarrant and the dog pound.

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