WHEN IS CORPORATE WELFARE NOT CORPORATE WELFARE?…… WHEN IT’S A PIPELINE
WOULDN’T IT BE GREAT IF YOU COULD USE YOUR PROPERTY TAX TO IMPROVE YOUR OWN PROPERTY? OH WAIT…..NO…YOU ARE NOT IN TRIC….YOU ARE NOT TESLA
WOULDN’T IT BE GREAT IF YOU COULD VOTE ON WHETHER TO GIVE YOUR PUBLIC FUNDS TO MULTI-BILLION DOLLAR COMPANIES OR NOT?……OH WAIT…NO…IT’S TOO LATE TO PUT IT ON THE BALLOT
WOULDN’T IT BE GREAT IF OUR ELECTED OFFICIALS WOULD MENTION THE NEEDS OF THE RESIDENTS WHEN CUTTING DEALS?……OH WAIT………
BRAVO FULCRUM BIOENERGY……FOR FUNDING YOUR OWN CAPITAL EXPANSION
By Nicole Barde
Pat Whitten’s summary gives a good summary of the updates and key voting items. The “beef” of this meeting was the presentation on and the approval of the next steps of the Pipeline deal. That is what I am going to spend this article discussing.
SIDENOTE- Recall that last year when this came before the Commission they also approved it to proceed at that time. The deal at that time (my articles HERE and HERE) basically had the future tax revenue of the companies involved ( Tesla, Switch, Google, etc) paying for the $35 Million Dollar pipeline directly thru a special Tax Increment Area.
They proposed that the revenues currently being received from the TIA would get locked in (we would continue to get those taxes and revenues now and in the future) but that any future revenue above that baseline is “incremental” and it is THAT future tax that would be used to pay for the pipeline. It was emphasized, with a straight face I might add, that the COMPANIES were going to pay for their own pipeline in this way.
I opposed it then on the basis that ANY and ALL revenue coming from TRIC belongs to the citizens of Storey County, that NO, it is not the companies paying for it, it is the citizens who pay since that revenue would not be available to the County to provide services to our communities and the people in them.
Then we heard that the state had not approved THAT financing scheme and have heard nothing until…..this meeting.
This meeting was awash with lawyers since the attending companies, the bond advisors, TRIC, the deal makers and the county all had representation. It started out with the presentation which you can find HERE. The full “deal” detail is in the agenda packet.
County Manager Pat Whitten kicked it off with many thanks to all involved and did a little preamble about how this is not about “corporate welfare”, that it is about “ corporate partnership”……………
The front end of the presentation talked about all of the benefits of doing this project. How it was good for Reno/Sparks, good for the businesses at TRIC, good for Northern Nevada, good for the environment. How innovative the project is from a reuse of effluent water standpoint which saves Reno/Sparks from having to build more treatment facilities to process it.
They talked about how the companies at TRIC need the water and that it would enable the Park to expand more rapidly, enabling companies to generate more taxable sales, creating more revenues for the County….in essence saying that “a rising tide lifts all boats”….ie..the better TRIC does the better the County will do revenue-wise.
They talked about water rights. TRIC will trade approximately 4000 acre feet of their water rights to Reno/Sparks for the 4000 acre feet of effluent that Reno/Sparks pushes thru the pipeline. TRIC had to buy some of those water rights in order to trade them for the effluent.
The financing people talked about the structure of the deal and the bond structure.
It is important to note that the full cost of this pipeline project is about $150 Million dollars.
$35 Million for the “off site” part ( the pipeline) and the rest for all of the improvements that the TRI GID will need to make to store and transfer that water. So the Developer has skin in the game at the front end in the form of those improvements to the TRI GID.
SIDENOTE- This capital improvement by the GID however will likely get passed along to the users so the developer will not be on the hook for it all. This is capitalism in a free state…and it is good.
As for the $35 million dollar “offsite “ part ..net-net, they are presenting the same deal using our tax dollars but with a couple of twists.
- -Storey County will issue $35 million in bonds to finance the building of the pipeline from Reno/Sparks to the TRI GID . These bonds will be purchased by the state.
- – The interest rate is favorable and enough to cover any costs to the County to administer the deal…about $240k net cashflow per year to the county to defray expenses.
- -A Special Assessment District, comprising of the companies needing the water, will be established and those companies in that SAD will be assessed a special assessment to pay for those bonds…ie pay the state back for the $35 million dollar loan over a 20 year term
- -A special “Tax Increment Area” will also be enacted in the same area as the Special Assessment District, with the same companies, TO REIMBURSE THE COMPANIES FOR THEIR BOND PAYMENTS by using the taxes that they will pay in the future to do that. See slide HERE
- -Meanwhile, it was stated that after the pipeline was built ( with our tax revenues) that it would become the property of the TRI GID.
SIDENOTE- Yes, people hate it when I use all caps but this time I am justified. Read that again. The companies will be paying for their own bond ( SAD) but then the county and state reimburses them for the bond payment by giving them back any taxes they pay (TIA) . It was said in the meeting that it was a great thing for the companies to be able to use their taxes to fund their own capital improvements!!
This is NOT capitalism in a free market…this is corporate welfare….uh …I mean corporate partnership….or a shell game.
YES!!! I want to apply to the county to let me use my own taxes for capital improvements on my well which I have just paid over $20k to get repaired. Oh…and my solar battery bank which needs to be replaced….that’s infrastructure.
Oh, and the Red Dog just put in this fantastic outdoor stage, I’m sure that they would love to take their taxes and pay for that infrastructure.
And then….after the companies use their own…er…OUR taxes to build the pipeline….that pipeline goes to the TRI GID….for free….as an asset!
Once again I say…..SHOW ME THE MONEY! The county has yet to provide any forward looking projections of revenues and expenses to back up its claim that TRIC revenues in the future will be gushing forth to provide us all with a better quality of life. How can I trust that the money will be coming in if they don’t do their job and due dilligence to prove it to me?
Later it was explained that, as with the first scheme, the TIA would still provide the current revenues at the baseline to the county and that it would only be future revenues that would be used to reimburse the companies.
Something that was briefly discussed but not elaborated on was the split between State tax revenue and County tax revenue that would be used to reimburse the companies for their bond payments. The use of only 50% of future sales tax and 50% of future property tax in the TIA was mentioned but there wasn’t much detail given so I don’t know what was being described. There is more to this than has been presented.
At the end of the presentation, Pat Whitten made the point that “ it is not OUR money, in this room, that is paying for this pipeline….it is the companies own money that is paying for it.”
Commission Chair Marshall McBride also said that not all of the companies out at TRIC are abated so the County will be getting increased revenues over time as they grow.
During public comment, all of the companies got up to thank the County for such a great deal and noted how it will be beneficial to them.
Sam Toll asked if the TRI GID was in fact a legally viable entity. He described some of the research that he had done into the issues that Douglas County had with a GID up there and the conversation that he had had with State Senator Settlemeyer which suggests that there may be some issues with the TRI GID from an NRS standpoint. Specifically, the County’s responsibilities if the GID were to become insolvent or deemed to be illegitimate. Deputy DA Loomis responded that the County had no obligation to financially “ backstop” the TRI GID but the legitimacy question was never answered.
Sam also asked why not put the Bond up for a vote on the November Ballot. Marshall McBride said that it was too late to do that.
SIDENOTE- That’s nice…….too late to let the voters decide if they agree with the County’s use of general tax revenues to pay for a developer expense. The filing date by the way was July 15th…three weeks ago….how strategic of them to wait until now to discuss this.
But I digress..
Scott Jolcover commented that we are a capitalist society , that the deal is just plain good business , that there is no risk to the county and that it is a wise decision to approve it.
I got up and said that I had heard a lot about how great this deal was for Reno/Sparks and the companies at TRIC. What a great financing deal it was and how everybody wins if TRIC wins….but that not one person either elected, appointed , presenting or attending had mentioned the citizens of Storey County. I then read the following into the record:
Statement made by Nicole Barde for the record at Storey County Commission Meeting of August 7,2018
First I would like to state that I am in favor of this pipeline. Having worked in the semiconductor industry for 20 years I understand fully the need for water in a manufacturing process. I also understand what it takes to attract the types of high caliber companies like Tesla and Switch into a new location and so I am not opposed in principle to the offering of incentives to do that.
What I am opposed to is the continued assault on taxpayers to pay for the costs associated with the operations of corporate entities who should be bearing that burden themselves.
The State of Nevada has given epic abatements to these companies to get them here. They are enjoying tax relief that none of our small businesses enjoy in order to produce their products which we will eventually get sales tax revenues from.
Visitors who come to town are greeted with a sign proclaiming Storey County as “The Richest Place On Earth”.
At the last VCTC meeting, a board member announced that Storey County is the wealthiest county in the United States per capita.
In contrast, when I attended the Community Chest’s needs assessment meeting, Erik Schoen provided a contrasting view.
According to his presentation based on recent statistics from commuitycommons.org:
Storey County’s median age is 54…compared to 37 for the State and the US.
28% of our population is 65+ older and are on fixed incomes. This compares to 14% for Nevada and the US
Storey County has 49% of it’s population designated as “food insecure” compared to 25% for the State and 29% for the US….which means after the hard expenses are paid there is little left for other necessities. 50% of our children are “food insecure”.
Storey County has 7.25% of it’s housing units without kitchen facilities compared to 1.93% for Nevada and 2.84% for the US.
Storey County has little to no childcare facilities accessible or affordable to its residents.
We are not a rich county.
Our people are not rich.
So when I stand up and speak against the pilfering of our tax revenues , past, present or future I speak out because we need those revenues to help our citizens.
We’ve been told that we are the richest county in America. By what standard? Certainly not by the statistics I just read.
We’ve been told that TRI would give the county and it’s resident so much revenue that we could expect a tax roll back. Empty promise.
We are not stupid…we understand that you have to spend money to make money and so we’re waiting patiently for the abatements to cease so that we can have the revenues we need to provide more service to our residents.
Now you tell me that the future revenues of the abated companies are going to pay for a pipeline that only they need and only they will use. You want to use revenues that are needed to help feed, service and support our own residents to build a pipeline for some of the richest companies in Nevada?
What I want to say to those companies is this…. The state of Nevada has given you a spectacular deal…you are enjoying great tax relief….$35 million dollars split between the key companies is the equivalent of an ATM transaction for each of you. Be generous….pay for it yourselves. Let the good people of Storey County keep our revenues so that we may better our lives.
SIDENOTE-I do not believe that a rising tide lifts all boats if you do not own a boat. Without a boat a rising tide can drown you.
I also believe that over time the TRIC revenues will start to come in more heavily….but I also believe that the corresponding increased expenses associated with supporting TRIC will eat into those revenues. The question is how much will be left over for Storey County Residents.
The Commission passed the Deal…which is to say that they approved it to go forward to the next steps which you can see in the presentation.
The rest of the meeting was pretty procedural except for one item.
That item was the approval of Fulcrum BioEnergy’s Bond financing deal whereby they are issuing their own industrial development bonds to pay for their own improvements. Those bonds are for $44 million dollars….they are not asking the County’s taxpayers for anything…nothing….not one dime….nothing…BRAVO!