With all the talk about the $16 million in tax incremental financing sought by the proposed Edgewater development, I keep reading references to the city being "paid back" through increased property taxes. People seem to be forgetting a few pertinent facts:
1. If the developer did not get the TIF money, but financed the entire cost itself, the property owners would still owe the same increased property taxes to the city, and the developer would have to repay the bank (or other investors) the entire cost of the development.
2. If the city did not give out the $16 million in TIF, and if the project was built anyway with private financing, the city would still get to collect the same amount in increased property taxes.
3. Keeping these two facts in mind, the $16 million in TIF cannot really be a loan. It is a development grant. The use of TIF is meant to make possible developments that are in the public interest but could not happen without TIF assistance.
Furthermore, the cost to the city would be more than just the $16 million given to Hammes. The city would have to borrow the money, which would increase its debt and raise the interest rate it has to pay on all its borrowing.
I am not impressed with the way the city wants to give this developer a free pass to ignore city ordinances (not just the Landmarks ordinance, but also the shoreline development rules, which are meant to protect the lakes and prevent property damage from flooding).
What really pisses me off, however, is the eagerness to throw millions of dollars of taxpayer money at a private developer for a dubious economic development argument. The developer refuses to commit to hiring local construction workers for family-supporting wages. How much do you want to bet we'll be seeing out-of-town subcontractors bringing in immigrant construction workers for minimum wage?
I do not begrudge hard-working immigrants the right to work in this country, assuming they are here legally. However, when the primary justification for public financing is the addition of jobs to our local economy, I want to make sure those jobs go to permanent Madison-area residents (whether immigrants or native-born citizens) who will spend much of their salaries on goods and services in this area, rather than send it to their families in Milwaukee or Chicago or Mexico.
Several years ago, Beaver Dam gave Wal-Mart a whole bunch of tax incentives to build their distribution center there, in the name of economic development. Residents were horrified to learn that prisoners were brought in for the construction work.
To all the folks who think the city should give carte blanche to any developer in the name of making Madison more "pro-business", be careful what you wish for. The Edgewater is already a profitable hotel. The owners have chosen to neglect the building in order to squeeze more short-term profits out of it. It's kind of like the Rio hotel in Las Vegas, which was recently described as "the most tired and used up looking 20-year-old I know, hands down."
Why should the city give money to an entity that refuses to properly maintain its property?
Why should my tax dollars be spent on corporate welfare, when the city refuses to put enough plows on the street after a major snowstorm?
Why should my tax dollars be spent to further gentrify downtown, when we are already stuck with the white elephant that is Overature Center? That was supposed to re-vitalize the downtown and foster economic development, at no cost to the city. Yeah, right.
I've heard this sales pitch before, and I'm not buying it.