Tuesday, September 28, 2004

Second take on Amendment One

Even before this thread started jumping like crazy on OrangePolitics, I was having second thoughts about Amendment One. Amendment One is a proposed North Carolina constitutional amendment, on the ballot next month, to allow local governments to issue "self-financing bonds." The bonds are used for property redevelopment projects. They are financed through the (expected) net gain in property taxes of the redeveloped property.

The theme of the amendment initiative is "jobs and progress." There's even a so-called blog for it. But the messages are one-way, top-down, unsigned. Today's posting hearkens back to the Carolina "brain drain" of the 1950s that sparked the creation of RTP. Do we get it? "Amendment One is the tool our state needs. It can help local governments plan and provide jobs that will keep communities growing. Our state must have access to good, solid jobs. The stability of a community is important and having the option to use self-financing bonds can only make the state’s future brighter."

Because they don't obligate the "full faith and credit" of the government body, they don't have to be voted on. But if the project doesn't succeed, then the taxpayers could be left to pick up the slack. So it isn't a tax subsidy necessarily . . . but it easily could be that. The Common Sense Foundation objects to the name "self-financing bonds," calling it a euphemism. In most places, it's called "tax-increment funding." Call it what it is, says common sense:

"Tax-increment financing" (TIF) is what most states call the scheme that would be established if Amendment 1 passes on the N.C. ballot this fall. . . .

North Carolina Citizens for Business and Industry (NCCBI), the state's premier business lobbying group, so abhors the word "tax" that it now refers to "tax-increment financing" by a new name: "Self-financing bonds."

"Self-financing bonds" would be a laughable euphemism if it weren't so dangerously misleading. Naming a public policy after its best possible outcome gives the impression that that outcome is a given; in fact with this type of scheme, the results are not always good and can be devastating.

The Chapel Hill Town Council endorsed a resolution in support of Amendment One. Only Mark Kleinschmidt voted against it. At the time, my thoughts ran to places like the Loray Mill in Gastonia, historic site of a deadly labor strike in 1929, which, through the efforts of Preservation North Carolina, is lively again, to the tune of a $50 million mixed-use development. The sad fact of life in North Carolina now is that there are dozens of old mills that could be put to new uses. But those projects can get done--with the help of historic preservation tax credits, for example. In Chapel Hill we've even established that our redevelopment of two downtown parcels of real estate can be accomplished without "self-financing bonds." I don't have a ready answer to the Common Sense Foundation's assertion that "There should be an honest debate about TIF without misleading monikers and outlandish claims from its proponents."

What sealed it for me was an item that came in this weekend's mail: Southern City, the publication of the North Carolina League of Municipalities: "Amidst all this political noise, we must not forget a 'green' issue that is on the ballot--Amendment One." Nice try.

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