by Dan Schroeder
Dear RDA Board members:
I write concerning your agenda items for Tuesday, October 13, which call for extension of tax increment collection for the CBD Mall District and for associated mitigation payments to certain taxing entities. My concerns fall into three categories.
1. The RDA is breaking a promise.
Please refer to the attached “Ogden City Update” newspaper ad that appeared in the Standard-Examiner on May 31, 2007. In this taxpayer-funded advertisement, the city repeatedly promised that starting in 2015, the various taxing entities (including the library, school district, county, city, and smaller entities) would “begin receiving the full benefit of the tax income from The Junction.” If you pass Resolution 2009-6, you will be breaking this promise to your constituents (Click to enlarge image).
You might object that the promise was made not by you but by the mayor’s office. However, in RDA matters the mayor is actually acting as the RDA Executive Director, and answers to the RDA Board. The Board could have ordered the Executive Director not to make promises that could not be kept, or to publish a correction the following month, rescinding his unrealistic promise. Because the Board took no such action, the Board bears a portion of the responsibility for the mayor’s promise to the citizens.
2. The mitigation payments are grossly unfair.
The proposed “mitigation payments” are plainly being used to buy a bare minimum of the needed votes on the Taxing Entity Committee. In effect, these payments allow some entities to receive tax revenue from the Junction while others receive none. This redistribution of legally prescribed tax rates violates the fundamental principles of property tax collection, and sets a disturbing precedent whereby a coalition of taxing entities can “gang up” to increase their own tax receipts while decreasing that of the other entities.
In the present instance, the mitigation payments would go to the Ogden School District and three of the smaller taxing entities. No mitigation payments would go to the Ogden City general fund, Weber County, the library, the Paramedic Fund, 911 service, or the Weber/Morgan Health Department. As a result, all of these entities will either have to cut services or raise everyone’s taxes.
3. This revenue will merely encourage more debt.
If the purpose of this action were to help pay down the existing debt associated with the Junction, there would be no rush. The RDA district is not set to expire for another five years, so there is plenty of time to negotiate the terms of the extension after we have a clearer picture of the Junction’s financial situation and how much tax revenue is at stake.
However, according to the minutes of the June 25 Taxing Entity Committee meeting, this issue is coming up now because the administration wishes to use the additional revenue as collateral for additional debt. Apparently the administration is still trying to facilitate construction of a major new hotel on the vacant Junction parcel east of the Salomon Center, despite the fact that market conditions are inadequate to make such a hotel financially viable. Rather than respecting these market conditions, the administration apparently wishes to subsidize the hotel with a new taxpayer-financed parking garage and perhaps other incentives. The proposed tax increment extension would allow the RDA to borrow several million more dollars, on top of the $34 million of existing debt associated with the Junction.
Conclusion
While it might seem irresponsible for the RDA Board to turn down free money, the Board must also remember its ethical obligations as public stewards. For too long, the Board has passively allowed the administration to dictate the terms of its dealings. Now is the time for the Board to take control and direct the administration to keep its word, treat everyone fairly, and plan conservatively for the future.
