THE CORPORATE WELFARE THAT IS THE TAX INCREMENT AREA MOVES FORWARD WITH THE APPROVAL OF ITS FIRST READING.
ESTIMATES OF THE WINDFALL OF RICHES FROM THE TIA GOES FROM PROJECTED $32 MILLION IN 10 YEARS TO $20 MILLION IN TEN YEARS ONCE AGAIN PROVING THAT PROJECTIONS ARE HYPERBOLE AND THEY HAVE NO CLUE WHAT THE REVENUES WILL ACTUALLY BE
By Nicole Barde
There were scant Staff and Board updates so I’ll just move to the meat of the meeting.
SIDENOTE- I don’t remember why this meeting was moved from Tuesday to Monday…except that it is a holiday week and because the process “lost” a step when Blockchains pulled out of the original deal which included the County’s floating a bond and the creation of the Special Assessment District. All of the agreements had to be redone and approved by the murder of lawyers involved.
They want to get this done by the end of the year and the next meeting is December 4th when this whole deal will get approved…ostensibly.
But I digress early………
The meeting was kicked off by a new presentation about the new pipeline deal. I highly suggest that everyone who has been following along read that presentation which starts on page 6 of the agenda packet.
In a nutshell….same as the old deal but without the County being on the hook for the bond so there is no liability on the County’s part and no encumbrances on the properties of the companies.
Tax Increment means any and all taxes which are collected over and above the “baseline” of what we currently get from the Tax Increment Area. So the county and the state will still get 100% of what they are entitled to up to that “baseline” amount. The tax revenues that the companies get diverted back to them to pay for the pipeline will come from what is above that “baseline” amount.
Since there will be no interest payments ( due to no bond) the cost of the pipeline will go from about $60 million dollars to about $32.9 million dollars and the payment schedule is over about 20 years with the hopes of prepaying it all in 9 years if the expected increased tax revenues come from increased property assessments due to accelerated development.
All property tax except for School Operating and School Debt/Capital is subject to being diverted back to the companies thru the TIA over and above the current “ baseline” tax revenues collected, only 50% of the revenues from Modified Business Tax and Sales tax are eligible to be diverted back to the companies thru the TIA but remember that certain taxes are abated for some of these companies so 50% of already abated taxes isn’t a lot …..relatively speaking.
The “Flow of Funds” slide was and still is confusing…there are the terms “reimbursement”, “ further reimbursement”, “scheduled payment” and other movement of funds language that left me, at least, confused. When I asked about the terms I was told that the presenter “made them up” while trying to simplify the explanation. No sidenote needed on THIS one.
I also asked how it was that the V&T ¼ cent sales tax monies could be diverted from its original use since it was voted on by the Storey County voters on the 2010 ballot. I was told that the TIA and all of its rules were passed by legislative action and supersedes voter actions.
Lastly, the pipeline will still be owned by the TRI GID.
Sam Toll, Editor of The Storey Teller, got up to ask how the companies will get reimbursed and was told that they will pay the developer ( TRI, LLC) for the construction of the pipeline and then give that paid voucher to the county to get reimbursed. If they don’t pay the bill they don’t get the reimbursement from the diverted tax money in the TIA.
Sam also objected to the use of public funds to pay for the pipeline for some of the richest companies in the world. If they need this money, he said, then they have other problems.
And so ended the presentation.
The next agenda item was the first reading of the establishment of the TIA. During this agenda item, I got up to read a statement into the record which you can see at the end of this article. I had submitted all of the signatures that we received thru the community meetings in the Highlands and in Lockwood as well as during other times. 110 opposed the use of public funds for the pipeline, 10 were unsure and NONE were in favor.
The Commissioners passed the first reading of the TIA creation.
Caution….HUGE digression ahead:
SIDENOTE- I had heard that the reason that Blockchains really pulled out of the original plan was because they did not want their property to be encumbered by the bond terms since they plan to do things with and/or sell that property ( more on that at a future date) …..not because they were afraid of being called a corporate welfare recipient feeding at the public trough on money that would otherwise be used to help the countys citizens.
Onward….in looking at the revenue projections presented today I noticed that they seemed different from the last presentation in August so I compared them. Very interesting. First of all I see no disclaimer as to the accuracy or “promise” of the projections. Are these a guarantee?
Projections are really nothing more than wild ass guesses. A good projection is a wild ass guess backed by some intelligence , trends and key data points to mitigate the “guess”. The difference between just a guess and a good guess is the degree of swing between projection points and/or the actual data when it comes in. The swings between the August and November projections are fairly large, and in the negative, which means there were not good data sets available at that time or the picture has changed drastically or both… OR…..they just don’t really know and are making things up.
If Blockchains hadn’t pulled out in September forcing a redo of the deal and a relook at the projections the Commission would have made their decision on the August set of numbers….which we now know were off by at least 30%. Additionally, looking at the current projections if you look at the year over year taxes you’ll see that the rate of development/higher assessments is later in the November projection than in the August projections. Wonder why?
If the decision to give away our money is being made based on the expectation of higher future revenues then the Commission needs to look again, and again at the projections including doing some scenario planning. SCENARIO PLANNING! Just like real companies do!
The Commission likes to call this corporate welfare “an investment”.
You know where I stand on this…I say N.O. to any public money going to pay for this pipeline no matter how small….but now the data on which the “investment” decision is being made looks to be a bit screwy ……if I were thinking of investing in a company with these types of projection swings…I’d say N.O.
August 2018 projections November 2018 projections Difference Total taxes Due by 2028 WITH pipeline before taxes are diverted to reimburse the companies
-2020 thru 2028
$150.1 Million $98.3 Milliom $51.8 million less than prior projection
Net Revenues after taxes are diverted to reimburse the companies $126.8 Million $70.0 Million $56.8 Million less than
Total taxes due WITH OUT pipeline $70.1 Million $47.5 Million $22.6 Million less than prior projection
But I have digressed beyond repair……..
Lastly, during public comment Joey Gilbert, Esq, lawyer to the Mustang Ranch got up to object to the denial of a work card to a working girl. Using lawyerly words like animus, tomfoolery, cruel and I can’t remember what else since I tuned out….he accused the Sheriff of being mean.
Sam Toll got up and once again noted that putting public comment at the end of the agenda AND now in the giving away of our tax revenues thru the TIA it sends the message that the constituency comes last in the minds of the Commission. He said, “ those chickens will come home to roost.”
……..and the meeting was over……………
STATEMENT READ INTO THE RECORD AT TODAYS MEETING:
Dear Ms. Stephens,
Enclosed please find the signatures of 110 Storey County residents who oppose the use of public funds to reimburse the companies at TRIC for the effluent Pipeline proposed thru Resolution 18-517 which establishes a Tax Increment Area (TIA)
and 10 signatures of Storey County residents who are undecided on the same issue.
The signatures were obtained thru face to face public meetings as well as an on online petition. I can provide the online file if you wish.
I have also enclosed my prior two statements which were read into the record at the Commission meetings of August 7, 2018 and September 18, 2018 also opposing the use of public funds, thru the establishment of a TIA , to reimburse the companies at TRIC for the construction of the effluent pipeline currently proposed thru resolution 18-517.
I would like to reiterate that I believe that the pipeline project is needed and I wholeheartedly support the County in its efforts to help TRIC in getting the water, rights of ways and other logistics required to make the pipeline happen. I stop short of utilizing public funds to pay for the pipeline or in reimbursing those companies and the developer for its construction or maintenance. By public funds I mean any and all revenues generated within Storey County by residents or other entities, inclusive of the companies at TRIC, which are assessed through taxes or fees.
With an eye on stable future revenues, the State of Nevada and Storey County has already given many of these companies abatements and incentives to locate and operate here. The abatements and incentives give those companies the financial “relief” to more rapidly expand and develop. That is good for Nevada and that is good for Storey County.
However, if after receiving the incentives and even without them, if their financial conditions on their own do not allow them to develop their investments without more public money then they have deeper problems and the State and the County is propping them up with money that would otherwise benefit the residents.
Some of the companies at TRIC may not have located there without the abatements and incentives. While I understand that, I also agree with many other Storey County residents that the continued use of public funds to keep them here is not the best use of our financial resources which would be better spent on improved or increased services for our residents.