The Rock Community Fire Protection District is proposing a property tax hike of 50 cents per $100 in valuation, a big increase over its current 77.6 cent rate (on top of sales and personal property taxes). I plan to get into the larger issue in another post, but at this time I want to talk about one cited reason this tax is being proposed.
Here is a letter that Rock Fire sent out to residents of the district. I didn’t think government entities could campaign for their own tax hike, but here it is, paid for by the district.
Paragraph four talks about a rollback of their property tax over time, then says “this, combined with the redirection of public tax dollars to various TIF projects, has forced us to take serious measures in order to meet budgetary shortfalls.”
What do they refer to? Well, for one, in October 2015, Arnold made a deal with Anheuser-Busch for the expansion of the can production plant in Arnold. As part of the one-sided deal, Arnold agreed to a 100% tax abatement for 20 years, meaning that the can plant won’t have to pay any property or personal property taxes on the new buildings and equipment that come with the project.
Now, this doesn’t really affect Arnold, since the city makes most of its money through sales taxes. But this really puts the screws to other government entities that are also affected by this project and do rely on property taxes, like Rock Fire, which stands to lose over $2 million over the life of the abatement, while incurring additional responsibilities to provide fire coverage for the can plant. The deal also includes no payments in lieu of taxes (pilot), something that Rock Fire attorney Frank Vatterott called “highly unusual.” The city has the power to make these deals without consulting any of the other affected districts, and in this case, without informing them until a month before the deal was ratified.
Fox school district CFO John Brazeal had some harsh words for the city of Arnold (note that, when Fox asks for a tax hike in a couple of years – they are laying the groundwork now – they will undoubtedly cite this same project as justification):
“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” (Thomas Sowell)
Compare the Arnold, MO deal to the Jacksonville, FL deal, both projects currently in progress.
Arnold: $150M project ($20M building + $130M equipment) with a 100% tax abatement of $19.96M over a 20-year term, including $12.72M of school taxes. This on the heels of Arnold’s 2012 project of $88M having a 100% tax abatement of $14.53M over a 20-year term, including $9.59M of school taxes.
Jacksonville: $170M project ($40M building + $130M equipment) with a 75% tax abatement of city taxes totalling $12.0M over a 12-year term. All other property taxes, including 100% of school taxes) to be paid by Metal Container.
Team Jacksonville = smart. Team Arnold = @#$%!
Incredibly, Team Arnold’s starting offer was 100% abatement. This deal was announced in December 2014 following a council approval that took place somewhere other than an open meeting.
It takes no special skill and no special strategy to end up empty handed. Nothing for the emergency services. Nothing for the school students. Not even cheaper beer prices.
It is true that Florida law contains some restrictions on the ability to give away the farm like Arnold did, but still.
On top of the current deal is the 2012 can plant deal that Brazeal mentions above. I’m not sure what that deal cost Rock Fire, but estimating from the amount it costs Fox, it is probably about $1.5 million.
Mayor’s race note: Arnold councilman and candidate for mayor Phil Amato was the only councilman to vote against the can plant deal.
Kroenke TIF Also Hurts Fire District
Another corporate giveaway that is draining Rock Fire’s coffers is the tax increment financing (TIF) that was passed for Arnold Commons in 2005. The project was undertaken by a company called THF Realty, which is run by none other than this guy:
The project also included eminent domain land seizures.
Rock Fire paid over $600,000 of its tax receipts towards the TIF debt from 2008-2012, according to a 2014 Leader article, but then stopped because Rock Ambulance was not paying in. They say they don’t have to since they did not sign off on the agreement. Rock Fire thought this was not fair, and stopped paying until the city filed suit against Rock Ambulance. This lawsuit, filed in 2014, is still being adjudicated. When the suit was filed, Rock Fire paid another $400,000 towards the TIF debt, and continues to keep paying. Under the TIF terms, Rock Fire and Rock Ambulance are supposed to pay half of the sales tax money they get from the development back to the TIF.
So here we see another of the negative side effects that these poorly-negotiated, poorly thought out corporate giveaways have on us.