North Hills East

[Jones_]

First of all, a TIF doesn't mean that it freezes the amount of property tax you pay at the present level. You would still pay the full income tax, but all the property tax over what you paid in the year before the TIF would be channeled to improvements in public infrastructure around your project.

Kane is trying to sell his parking deck as a piece of public infrastructure. And then, he's suggesting that, rather than the city building the deck itself, that they give the money to him so he can build the deck.

[RALNATIVE]

The Wake County Commissioners unanimously voted in favor of the TIF for the NHE parking decks. My thinking is that this will undoubtedly force the City Council to approve Kane's request; hence, bringing Kane's grandest vision for this project that much closer to reality.

NHE Project

[JeffC]

I'm not sure how I feel about the whole TIF thing (selfishly, I'm close enough to North Hills that the grand $800 million vision versus the $100 million run of the mill strip mall would certainly help my property values).

But I don't think I agree with this whole "opening the floodgates" argument. It is fairly easy for the powers that be to distinguish between some schmo developer who wants TIF money to dig up more farmland in the far northern or southern reaches of the city for yet another cookie cutter development, and Kane's project, which will transform a seedy apartment complex and a group of rundown 1960s office buildings into something really landmark in a key and highly visible site.

If other developers have such visionary ideas, I trust that our process can separate these kernals of wheat from the rest of the chaff.

[DanRNC]

If the TIF is issued, does Kane have to meet minimal investment projections? I think the number is somewhere around $800 million.

[Cary NC]

Here is the lastest. County approves plan to use TIF.

http://www.newsobserver.com/politics/story/647338.html

[RALNATIVE]

If the TIF is issued, does Kane have to meet minimal investment projections? I think the number is somewhere around $800 million.

[Jones_]

I'm not sure, but I think that the city would be wise to pose a minimum requirement if they do approve the TIF.

[Cary NC]

It appears that Kane has reworked the deal to be private loans instead of government bonds.

From N&O article...

"TIFs use bonds to pay for new development that otherwise wouldn't occur, repaying the debt with future tax revenue from the project.

On Monday, Kane presented a reworked proposal to county commissioners that would use private loans instead of government bonds but would still rely on 75 percent of future tax revenue to repay the debt over the course of 20 years."

So in Kane's case he will use future tax revenue to payback private loans. Right.

[Jones_]

It appears that Kane has reworked the deal to be private loans instead of government bonds.

From N&O article...

"TIFs use bonds to pay for new development that otherwise wouldn't occur, repaying the debt with future tax revenue from the project.

On Monday, Kane presented a reworked proposal to county commissioners that would use private loans instead of government bonds but would still rely on 75 percent of future tax revenue to repay the debt over the course of 20 years."

So in Kane's case he will use future tax revenue to payback private loans. Right.

[Cary NC]

Here is the article from WRAL.

I found this interesting from the report

"But the City Council declined Kane's request for the city to issue tax-increment financing, or TIF, in which the city borrows $75 million for a public parking garage. TIF loans are paid back with increased taxes generated by the project involved.

Kane's new plan, however, calls for what he said is a synthetic-like TIF request that poses no risk to either the city or the county. Under this type of financing, he said, the developer borrows the money and is responsible for paying it back.

In return, however, the developer would be limited to paying only 75 percent of expected taxes for the next 20 years, which is more than what would be paid if the property was left to be developed at the expected market value of $125 million.

Kane said the developer would be taking all the risk by borrowing the money privately to pay for public improvements and paying back the debt only after the project generates the anticipated tax revenue."

So it looks like this is a way to get a tax credit essentially.

[JeffC]

This is all very interesting and relevant and probably not thought of in the general argument. The City pretty much has to raise the assessed value of the property up enough so that Kane is being forced to pay enough tax money to pay himself for the parking deck that the City has secured (whew). A net zero for the City in this scheme is really a net loss (hmm so the first assumed net zero is not really net zero....anyway) because this development must be supported by other tax supported services such as fire, police, incremental administrative staff at the City and County level etc. etc. Is the City going to assess enough above the TIF minimum to cover these considerations as well? I hope so or it really is of no benefit to the city at all, would just become a very upscale tax drain, like the very downtrodden areas TIF's are normally supposed to be helping start out as, but then increase enough in value to close the tax drain gap they previously were. I wonder if this minimum assessed value has been figured out, though I am sure it is a very hard to nail down number.

[ncwebguy]

I belive the N&O's numbers figures

Kane presented a reworked proposal to county commissioners that would use private loans instead of government bonds but would still rely on 75 percent of future tax revenue to repay the debt over the course of 20 years.

[Jones_]

but aren't you making the mistake of looking at this project in a "bubble" and not considering the property tax impact in the surrounding neighborhoods? We bought a house in March, and couldn't afford to get into very similar houses to the one we bought that were located within 2 miles of North Hills in all directions, because property values in that area have skyrocketed since the redevelopment of the main mall. NHE will extend the bubble of wildly appreciating real estate values all the way to Wake Forest Road along the St. Albans/Hardimont corridors. So the project will increase property tax revenue from a wide swath of N. Raleigh that is itself already developed and has infrastructure in place...

[NCpride]

Driving past North Hills on my way to work this morning, I noticed that demo has started on the Comfort Inn.

[carynative]

From the story on WRAL tonight, it looks as though Meeker is pretty much dead set against public funding for this. It should be an interesting discussion in council later this week.

[Gard]

Looks like Kane has not given up hope yet: http://www.newsobserver.com/news/wake/story/655960.html

[RALNATIVE]

Looks like Kane has not given up hope yet: http://www.newsobserver.com/news/wake/story/655960.html

[JeffC]

Six months ago I wouldn't have bet a nickel on Kane getting this through the City Council, but now I think there is an even (who knows, maybe better than even) that Kane rolls up Meeker and eeks out an approval...

[bikwillie]

Six months ago I wouldn't have bet a nickel on Kane getting this through the City Council, but now I think there is an even (who knows, maybe better than even) that Kane rolls up Meeker and eeks out an approval...

[ncwebguy]

I don't think the county's approval should have any impact on the Raleigh city council. There are benefits of the increased development, but not for the current price tag, private financing or not.

The "no strings attached" approval from the county is reckless to say the least. I think it is sad that the county is willing to forgo millions of dollars of property taxes on land that was underutilized and the collected property is now almost too valuable to build the threatened big box development on.

It is interesting that the two council members that could cast the swing "yes" vote -- West and Meeker -- are running unopposed this fall. They could say yes tommorow and won't have to answer to voters for two more years, if ever. This could be the last term for both of them if they wanted.

West *should* be idealogically opposed. North Carolina's Amendment One was passed to help improve economically depressed areas (of which there are many in District C) via TIF, not aged apartment complexes surrounded by economic prosperity. If approved, District C will *never* see a TIF because projects like Soleil, 5401, etc. will get theirs as part of the "making good projects great" precednt North Hills East would set. Unfortunatly, I could see his vote being "won" via funding for a couple of more officers in police district 24 or a "job creation program" that doesn't create permanent jobs.

Meeker doesn't have to win any voters this fall. Will he want to run again in 2009? Who knows. By then he might be happy to go back to his law practice full time or seek a higher office.

If Kane can't win either of those votes over in the next couple of months, he can see who wins this fall's election and ask them.

[c_harmons]

It is so obvious that Kane is waiting for the election to see if he can get his votes.

I have some issue with it though. Why North Hills and not West at North or the RBC tower? One might think those more deserving.

[plus2]

Kane better not be waiting until after the election. Now is the best chance he's got. Meeker has been pretty adamantly opposed to this funding plan, plus Stephenson and Crowder aren't likely to vote for it either. So Kane needs all 5 of the pro-any-kind-of-development votes -- Isley, Craven, Taliaferro, West and Kekas. But Kekas isn't running for reelection and Craven and Taliaferro have tough reelection campaigns ahead of them. Therefore Kane could lose potential votes, not gain them after the election.

I think it'll fail now too, because giving money to a private developer is not going to be popular during a campaign season.

[ChiefJoJo]

I have to admit I was surprised too. I thought it would pass the County Commission, but not unanimously. I think Kane's going to get it.

On the council I would think he has yes votes from Isley, Craven, Kekas, and Taliaferro. Nays I would think are Crowder, Stephenson, Meeker, and West. The two most likely to be swayed are Meeker and West. There are a lot of votes in the North Hills area and Meeker is a very conscientious decision maker. He weighs all the details and usually gives a lot of thought before he throws the his hat in the ring, and I think he may start seeing some benefits to it. West isn't idealogically opposed, but sees no benefit to SE Raleigh. He could be swayed if his district got something out of it.

As an interesting side note: Bonner Gaylord was recently appointed to the Planning Commission. He's a friend of Kane's and his son works for Kane Development.

[Jones_]

Kane is hoping the revised proposal, which uses private loans instead of government bonds to repay the cost of the parking decks, will attract more support. If they participate, Kane said, the city and the county would receive a windfall of more than $550 million in tax revenue.

That would seem to at least remove a big obstacle for me in the public financing of a private deck issue. Can anyone explain what the implications would be? No effect on the city bond rating, I assume. Essentially, the city would forgo a certain percentage (75%?) of future tax revenue for the next ~20 years in order to finance the deck.

FYI, Kane has submitted plans for "lots 1-18" for NHE. Hmmm...

[ChiefJoJo]

You've got it in a nutshell jojo. The only implication or more like a rock and a hard place, is that this TIF would be being granted using absolutely no criteria for how it was awarded. Just because he asked he gets it? Is there an application procedure and if so what minimum thresholds has the city implemented? Minimum tax gain? Minumum gross project costs? Net difference in a threatened sprawl project vs. a TIF supported project? Nobody knows who, how, when or what projects will qualify for TIF and the entire issue needs tabled until all that is hashed out.