In a recent Spotlight report, resident John Locke Foundation financial expert Joseph Coletti made the argument against the North Carolina Research Campus (NCRC) Tax Increment Financing (TIF) bonds passed recently. The report deals with the two projects that have received TIF financing - the NCRC and the Randy Parton Theater.
The report is interesting in that it deals with the financial details of the NCRC; but gives more detail on the Randy Parton theater. In some places in the report, the two are used nearly interchangeably for a desired affect: TIF financing is evidence of a government-lead boondoggle; here’s the close of the report:
Local governments need to be honest with taxpayers about the costs and risks involved in TIFs and also about their use as targeted economic incentives. The Local Government Commission should also provide more scrupulous due diligence before approving any future TIFs given the poor record of the Randy Parton Theatre
For the first in this three-part series, I thought it would be helpful to point out the differences between the NCRC and the Randy Parton Theater.
| NCRC | Randy Parton Theater | |
| Champion | David Murdock - Forbes’ 204th richest man, former owner of Cannon Mills, owner of Dole Foods | Randy Parton - Brother of Dolly Parton. |
| Main Corporate Interest | Castle & Cooke - one of the largest land owners in the County. | Moonlight Bandit Productions - the name says it all. |
| TIF percentage to total | Project: $1.5 billion TIF: $168 million TIF Percentage: 11.2% |
Project: $24 million TIF: $24 million TIF Percentage: 100% |
| Project Progress before TIF approval | $50 million in demolition and $80 million in Core Lab construction | Project was dependant on TIF approval |
| Number of additional tenants attracted by project | A quick search yields Aniogen and Anatomics - anyone want to help with the remainder? | 0 |
| Amount of money going back to Champion or Main Corporate Interest | $0 | $3 million. $2.4 million which has already been spent, and only about $250,000 has been publicly accounted for. |
It’s clearly obvious that the two projects are not in the same league. Why include them in the same report? The answer is quite simple: the report wasn’t to inform - it was to scare you. Coletti wanted to take the largeness of the NCRC and mix it into the mess that is the comparatively small-time Randy Parton Theater resulting in thinking that the City of Kannapolis and Cabarrus County entered into a big mess. They might have - that’s the nature of risk: which is the subject of Part 2.
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5 responses so far ↓
1 Aaron // Dec 11, 2007 at 5:59 pm
Good post. I’ll point out that I being a libertarian–leaner, am somewhat on the fence about TIF.
In terms of the NCRC, MOST of the funding goes to public infastructure improvements. This is the “after the fact” TIF. As for the “Rockin’ Randy Music Emporium” it is a “because of the fact” project.
Bottom line: let the folks decide to do something, then when it’s in ink, do a TIF to fund the improvements instead of playing SIM city like Roanoke Rapids did with Mr. Parton…
I will agree with Mr. Colletti however, because I was unaware that we as a county could go into default until you told me about it a few months ago. With an idea this new, it would be good to make sure everyone knows what the negatives are.
But in truth, most average citizens don’t know the in’s and outs of COPS either…
2 Bob Carruth // Dec 12, 2007 at 8:58 pm
Aaron, the biggest difference is this:
The #1 payer of the debt on TIF bonds is the increased tax value in the district that is established. Kannapolis formed this district, and will be issuing 100% of the bonds. IF everything falls apart, and there is not enough added value to meet the debt payments, Kannapolis is affected, not the rest of the county. The county’s only obligation is through the interlocal agreement, which we have pledged only those revenues that we actually collect from Castle-Cooke. IF these don’t materialize, then the county has no further obligation.
In a COPs situation, collateral has to be put up, which would have most likely been county owned properties such as the county building, schools, etc. The county would also be on the hook for these debt payments if there was not enough value created in the district, and it could affect the county’s ability to borrow money in the future. The effect of this on the county residents would be much further reaching than TIF bonds.
Hope this clears it up a bit - bottom line - it is government’s responsibility to build schools, roads, and ensure public health and safety, and that’s what this TIF arrangement does, not to promote a private music hall.
3 Justin Thibault // Dec 13, 2007 at 5:27 pm
Bob - Thanks.
Aaron - The County only pledged new taxes from the TIF district. The only money available for the TIF is money that is not being made by the County or the City now.
4 Joseph Coletti // Dec 21, 2007 at 9:27 am
The report was about TIFs. There have been two TIF projects in the state - the Randy Parton Theatre and the NCRC. Would you prefer I talk about the TIF that has not happened to build a parking garage in Raleigh for a shopping center?
The Local Government Commission’s lack of questioning is another common element between the two projects.
5 Justin Thibault // Dec 23, 2007 at 12:39 am
Joseph -
I think we would have preferred more constructive discussion of complicated and important local matters than a cynical attempt to associate our legitimate project with the Roanoke Rapids debacle.