Renaissance Pointe idiocy
I have posted about this topic before. Please read this post from 3/1/11.
The September 20th, 2011 Journal Gazette ran a story highlighting the ground breaking at Renaissance Pointe.
For details on this project please read the above post that I referenced. This project is being paid for pretty much entirely with tax payer dollars. The total subsidies involved in this project are over 95% of the cost of the project.
This may be the dumbest project I have ever seen in Fort Wayne. Tom Henry should have been embarrassed to attend this ground breaking ceremony?
Is there a single reader of this blog who thins Renaissance Pointe is a good use of almost 11 million taxpayer dollars?
Mike
President Obama and his most recent stimulus plan
President Obama wants to spend another 447 billion dollars we do not have in a combination of tax breaks and tax cuts. He calls this plan a middle classed jobs bill…
I want to bring up several points about the politics behind the President’s recently unveiled plan:
- 1st off this is the opening salvo of his 2012 Presidential campaign; the President knows that his plan as written can never pass either the Republican House nor the Democratic Senate.
- The President (A Democrat) is flying all around the country and asking Congress to pass his bill RIGHT Now. Today. Tomorrow. As soon as possible.
- The Democrats control the United States Senate. That being said the Democratic Senate has NOT EVEN SCHEDULED a vote on this bill. So while the President is flying around the country demanding that his most recent legislation be immediately passed the chamber that his Party controls is so disinterested in the President’s Bill that they have not scheduled a vote on this very bill.
- The President’s most recent bill does not have even ONE Democratic Senator sponsoring it.
President Obama is utterly lost and has NO IDEA what he is doing. It is painful to watch our President. Very painful.
Mike Sylvester
How we could have avoided looking at 2.9% Property tax hike
Tom Henry’s announced plan to increase the property tax levy by the max. allowance of 2.9% for next year will generate $3 million more property tax. Just to put this into perspective, one of the city’s many TIF funds will next year increase well over $4.4 million from property taxes - that’s the Jefferson Illinois Road Economic Development Area TIF - fund # 317. So all the talk about how the use of these “give-aways” is not a tax increase is shown up for it’s falsehood! Remember that little, if any, of the funds generated by the Apple Glen/Jefferson Pointe development have been used within the original area of the EDA - it wasn’t needed because the developers used their own money to create the most profitable mall in the region - they did it the old way instead of sucking on the public teat. So it looks like our property taxes ARE going up just so we can support the development of Harrison Square, an area that was “tacked on” to the Jefferson Illinois EDA to enable the multi-million dollar purchase of the properties which were given at a $17.50 price to Hardball Capital for our unneeded new downtown ballpark.
Quoting Matthew Continetti in last week’s Weekly Standard, “In today’s economy, risks are socialized while profit is privatized. The government uses deficit spending (or tax diversions) to shape investment decisions and supports markets that otherwise wouldn’t exist.” (Words in brackets are my addition.)Boy does this ever define our Fort Wayne Redevelopment Commission’s actions in the last 5 years! (Including the recent decision on the New Harrison!).
Republican Bean Dinner
The Republican Bean Dinner will be Tuesday October 25th, 2011. The guest speaker is Rand Paul.
I am going to try to attend this year. Rand Paul is my kind of Republican…
Mike
Fort Wayne Mayor’s race
The race for Fort Wayne Mayor is the “top of the ticket” race in the upcoming City elections in November. It always gets a lot of attention because it is a very important race. The Mayor of Fort Wayne wields a lot of power and both major political parties covet the office for obvious reasons.
The race should generally be a close race due to the demographics of Fort Wayne since neither Party holds a significant majority of registered voters.
I have been critical of both Paula Hughes while she was a County office holder and I have been critical of Tom Henry since he has been our Mayor. I am still not sure who I will vote for in November. I am still tempted to not vote for any candidate for that office.
The majority of my friends and clients are Republicans, Libertarians, Tea Party members, Independents, and those who tend to favor smaller government. I have discussed this race with about ten of them and they all plan on voting for Paula Hughes. About half of them are excited about Paula Hughes and think she will do a good job. The other half are less impressed; however, prefer her to Tom Henry and will be voting for Paula Hughes.
The only small Government people I know who are not necessarily planning on voting for Paula Hughes is my wife and I. Neither of us has decided who to vote for yet and neither of us is really impressed with any Mayoral candidate…
There is an Independent in the race; however, he is running a low key race and I have decided that I will likely not vote for Mr. Ahrendt.
So in a comparison of Paula Hughes (R) and Tom Henry (D) here is how I match them against each other:
Advantages for Tom Henry:
- I think that his campaign has been more factual than the Hughes campaign and seems less desperate.
- I think Tom Henry is a very “nice” man and is well thought of in most circles.
- I think Tom Henry is a better “face” for our community.
- I think he will raise a lot more money and money allows more advertising which increases name recognition.
Advantages for Paula Hughes:
- If she is elected she will likely “rock the boat” and replace some of the major political appointees. The Democrats have held this office for 12 years and there is no doubt that we need some new faces. I truly think we need some major changes and our current Mayor is unwilling to really change anything.
- I think Paula Hughes has more passion and energy than Tom Henry.
- Currently our City Council has four Republicans and four Democrats. The ninth member is Marty Bender and while he does claim to be a Republican he votes with the Democrats an awful lot. In fact I have heard several people refer to him as “The Mayor’s City Councilman.” If Paul Hughes wins the election I think he would likely remain the “Mayor’s City Councilman;” however, since the new Mayor would be a Republican I think Mr. Benders votes would swing towards the Republican side if he retains his seat on City Council.
- I think Mayor Henry hires too many consultants (including our current Deputy Mayor) from outside the Fort Wayne area and I think this is flat out wrong.
How to get a bank to fund an uneconomically planned project
Apparently the “New Harrison LLC” (the Company) could not convince the PNC loan officers that the project would be profitable to the extent that the Company would be able to pay back the money that they were asked to loan them. So they required that PNC be absolutely risk free in the transaction! The Company members (Hagerman, Whitley Manufacturing & Barry Real Estate) also saw that this was a very, very risky investment and henceforth required some reduction in their risk. The Henry administration, through the Fort Wayne City Corporate Counsel, Tim Haffner, came up with a “borderline” scam using the Economic Development Area state law (IC-36-7-14) to insure that the members and their creditor could not lose anything in the 7 year borrowing period! This over and above the fact that a majority of the project’s actual cost is being paid through a series of public fund dipping PLUS the fact that $50,000 per year Hardball Capital will be paying the city over 7 years will be placed in a “Residential Growth Fund” which will pay ”an amount equal to the “Gross Rent Minimum” (an amount to be determined by the city and the company prior to closing) in the top 2 floors of the building should they not be rented (or the residents fail to pay?)! If you remember, this yearly payment by Hardball is due to the failure of Barry/Hardball to complete the Harrison in a timely manner, as they promised when this whole Harrison Square boondoggle was approved by City Council and our former mayor.
- First. the land for the New Harrison is being sold by the city to the Company for $675,000 and the Company will pay interest only for the first 7 years. At the end of 7 years, the Company will begin paying (to the city) a monthly amount to complete the payment of principal and interest over the next 10 years. The cost of this part of the Harrison Square land was over $1.5 million plus the cost of the buy-out by the city of the multi-year lease that Subway had with the owner of one of the parcels.
-Second, New Market Tax Credits of $15 million assigned to the Company. This means that 39% of the $15 million ( or $5,850,000) of some corporation’s income taxes will have to be paid by the rest of our narion’s taxpayers just so that the Company gets to sell these tax credits, at a discount, to generate cash for the project - estimated to be 72% of the $5,85 million - or $4,212,000!
- third, The State of Indiana has pledged $4 million in CREED tax credits. This means that some corporation that owes income taxes to the state will get to write-off this amount, of course meaning that other Indiana taxpayers will have to make up this amount, or the state doesn’t get the money. When these credits are sold, again for about 72% of the $4 million, the company will get another $2, 880,000 in cash for the project!
These last two are examles of how a corporation like General Electric can end up oweing no income taxes for a full year or more!
-Fourthly, the city is responsible for infrastucture improvements to be paid by the city. These were to be covered in the July 20, 2007 development agreement in Exhibit E. But, on the city web site under where this agreement is located, Exhibit E is blank. So it appears that the amount required to be spent for this is unknown to the public.
So, for a proported $14.5 million project, at least one half of it (approximately $7.25 million) is being financed through tax revenues plus the city used over $1.5 million to purchase property which it is selling to the Company at at least an $825,000 loss. Plus all the provisions for eliminating any “at-risk” investment by PNC and the members of the Company.
What a great “give-away”!!!
And to top it all off, over 30% of our Fort Wayne “downtown” property is now “property tax exempt”! Really great growth for the future guys.
Russ Jehl for Fort Wayne City Council, 2nd District
I live in Fort Wayne’s 2nd City Council District. I spent some time with Russ Jehl yesterday. He impressed me and I will definately be voting for him in the upcoming City Election.
I do not often give money to political candidates. That being said I liked Russ and think he will be a great member of City Council. I contributed $100 to his campaign yesterday.
Mike Sylvester
Wireless service in Fort Wayne area
We are considering switching wireless phone providers. We are getting some “smart” phones.
We have been looking at AT&T, Verizon, and Sprint.
Have any of the readers of this blog had either positve or negative experience with any of the three in Fort Wayne?
Mike
Guest post from Fort Wayne Mayoral candidate; D. Haley Ahrendt
1) Should you be elected, what will be your top three priorities to accomplish during your term in office?
First: Examine and streamline the practices and the size of our administration, cost, policy and procedures, and operational habits. This will reduce the cities liabilities (debt) by streamlining operations in departments. This can be accomplished mostly by using the monies saved from wasteful spending and raising expectations from administrators to do more with less.
Second: Assist small businesses currently located in our city by helping them marketing themselves to grow and expand their operations, which in turn will new create new jobs. With more people working and spending their money locally you will see more jobs generated, and of course increase our tax base. Also aggressively recruit new companies of various sizes and skill requirements to Fort Wayne and our job market.
Third: I would like to see Fort Wayne use social media. Including the first of its kind interactive city operated website, including a community calendar. This would aid residents to discover more in Fort Wayne, not to mention higher attendance at functions for local businesses, non profits, and charity organizations. Revamping the current web site will be helpful to residents, relocating families, visitors and tourist. It may even be part the deciding factor in choosing Fort Wayne as their city to a potential relocating companies and new residents. This program could be combined with high school and college internships or collaborations, allowing the city to include and encourage input of young people and also keep the cost lower. Fort Wayne will become the city to look at when the program is operating at its maximum potential.
2) What economic development tools and incentives would you support or propose?
I do support some tax incentives to new business considering Fort Wayne as their city to relocate their operations; I do not feel there should be a blanket deal for all new companies looking to relocate to our area. One main focus should be with small business owners in our city who do not receive any tax abatements. The economic development team will be one of the hardest working teams (departments) in the cities administration. Responsibilities will include recruitment of new business, support existing business, and retention of any company that is considering leaving our city.
3) What are some major infrastructure projects you would like to see undertaken, and what are the potential funding sources for these? (e.g. specific roads, bridges, parks, etc)
I oppose spending any money on building any new park in our city. We currently have a sufficient amount of parks that we struggle to maintain now. I do not support clearing off areas around the river for future development. This ideal is premature for the economy. The cost would outweigh any potential gain. We would also need to study environmental issues such as erosion and wildlife habitat.
The city needs to revisit and come up with a solution for the issue Aboite area residents have with the water and Aqua Indiana. The residents pay almost twice in rates as other residents who have city water for service. Aboite residents also pay an additional fee of fifteen dollars to the city for trash and storm charges. This issue was due to poor planning during the annexation of the area.
Currently scheduled Infrastructure projects will be reexamined. To ensure the cost of the project is correct to maximize tax dollars. New projects will be thoroughly thought out with long term realistic cost, return on the investment, and the long term cost. Two examples of this are the Ardmore/ Jefferson intersection and the Anthony blvd. expansion program. Grass and trees were installed in the center divides. These projects are already poorly maintained and have a high cost to maintain. Different materials should have been considered during planning for long term cost savings and the aesthetics.
4) Are you in favor of a principle that the light lease funds be used to attract jobs and growing the business base in Fort Wayne?
No, I am not in favor to spend or use the light lease money to loan or recruit business to Fort Wayne. We would put at risk the fund and take the security the fund gives us from current and past residents. No one has proposed giving rebates to residents or helping locally owned families businesses’ that have been paid in over years portions of the fund. Families and business are struggling to stay afloat in our down national and local economy and our administration is proposing loaning the money or building a park.
The lease fund should remain as a nest egg for the citizens and used sparingly. It should be used in ways it will benefit our community in a whole, by the people who paid into it and by their grandchildren. The city should stop the practice of and stay out of financing entrepreneurial ventures. Allow the public sector to compete for such projects, be there for support, and help secure the funding but not provide the funding. Funds for project lending should be done by investors and banks, not tax payer’s dollars. The light lease fund should not be used for only today’s needs; we have to consider the needs of generations to come. They will be the ones paying higher utilities bills to cover the increase that are sure to follow after this agreement. It is the people money.
5) What criteria would you use to appoint people to Boards that impact the business community? Examples of these Boards include: Board of Zoning Appeals, Allen County Economic Development Commission, Fort Wayne-Allen County Airport Authority Board of Directors, Allen County and Fort Wayne Capital Improvement Board, Northeastern Indiana Regional Coordinating Council, Board of Public Works, City Plan Commission, Fort Wayne Redevelopment Authority, Fort Wayne Redevelopment Commission, and Urban Enterprise Association Board of Directors
First and foremost, each person will have to be there for the right reason regardless of political affiliations. They will have to be truly passionate about and want to improve of our city and the equality for its residents. They should be a respected leader, apply business sense, common sense, and practical knowledge. Have conservative spending habits and think outside the box.
This one area alone is a crucial reason why I should be elected as the cities next Mayor.
We see this problem every time the city has a “political power change”. The person most suitable or qualified for the job may be in the opposing party, therefore they will not be considered for it. I have no intention replacing most of the current top administrators. My policy of no contributions from special interest or political affiliations works for the citizens and for our city.
Posted in its entirety by Mike Sylvester
The American Jobs Act, post 2
As mentioned in a previous post this plan will be paid for by increasing the National debt by 447 billion dollars. It will stimulate the economy in the short run and hurt the economy in the long run; this happens each and every time the government deficit spends.
70 billion of the 447 billion (15.7% of the total) is targeted towards tax cuts for businesses. We will discuss these first. For each I will explain the proposal, discuss which Party tends to support this type of proposal, discuss the supposed cost, and then give you my opinion of it.
The smallest portion of this section of the plan is a provision that allows businesses to immediately expense capital property purchased in 2012. In other words rather than depreciate the property over its useful life companies can write the entire cost off on their next Federal income tax return. The Federal government has passed various provisions allowing accelerated depreciation for well over a decade now. Most states refuse to allow them and these provisions make me and other tax professionals a lot of money because they make the tax code more complicated. The politicians argue that businesses will go out and spend more money if they get an immediate tax benefit. Studies have shown that accelerated depreciation does in some cases cause businesses to speed up purchases; however, this just pushes demand from one period to another. Republicans and Democrats both love accelerated depreciation and have passed similar measures for a long time. The small effect this has on demand is likely far less now than it originally was since accelerated depreciation has been the “norm” for so long. Businesses are used to being able to do this and pretty much expect it at this point. This will cost 5 billion dollars. This is due to the time value of money. I obviously oppose this stupid provision.
The second provision is an employer payroll tax cut. Currently employers have to pay 6.2% of their employees wages (Up to the cap of $106,800 per year) in taxes to the IRS who then sends it to the Social Security Administration. This is a business expense that comes out of the employers funds and the employee gets credit for this as taxes they paid into the Social Security system. This plan would drop the tax down from 6.2% to 3.1% for 2012 only. This provision only applies to the first five million in wages paid by each company. This may be best shown with an example. Let’s say you are a small business and have one employee who makes $100,000 per year and then 10 more who each make $50,000 per year. Normally the employer would pay $37,200 in Social Security taxes on behalf of their employees. With this proposal that would drop by $18,600 to $18,600. So the net savings to the employer is $18,600. Since Social Security will get less money than it is supposed to get the General Fund of the Federal Government will go further in debt and drop an IOU into the Social Security Trust Fund. President Obama is hoping that small businesses will turn around and use this money to hire more workers. Generally speaking this is a provision that I would expect Republicans to support. Generally speaking this is a provision I would expect Democrats to oppose somewhat. I oppose this provision because it is temporary and increases the national debt. I also oppose it because it will be hard to ever end. There is no such things as a temporary tax. There also is no such thing as a temporary tax cut it seems.
The above employer payroll tax cut is combined with another provision. Basically the President wants to encourage companies to net hire more workers in 2012 or pay their existing workers more in 2012 than they did in 2011. Basically for this tax break each business will need to compare the total wages they paid workers in both 2011 and 2012. If wages paid in 2012 is greater than 2011 (Due to new hires or hiring more workers) then the company will be allowed to pay even less in employer payroll taxes. Basically each company will be forgiven the remaining 3.1% Social Security match they normally would pay on their employee wages on those additional wages paid in 2012 up to a maximum of 50 million dollars in wages. The Federal government general fund will drop another IOU into Social Security. This is best shown with an example. Lets say SBS CPA Group paid $200,000 in wages in 2011. Then it pays $250,000 in 2011. It will be allowed to pay $1,550 less in Social Security taxes as the employer match and the Federal Government will drop an IOU into the Social Security Trust fund for that amount. To my knowledge nothing like this has been proposed before. In this example my firm would save $1,550 dollars in 2012. Our profits would increase by this amount. Out income taxes would increase. It is ABSURD to think we would spend this money to hire another worker…
The combined cost of the above two employer payroll tax cuts come at a one year cost of 65 billion dollars. I oppose this provision because temporary stimulus at the cost of increasing the National Debt does not solve our problem. Instead it defers our problem so that it will have to be dealt with in future years. I also oppose it because I can just hear the screaming that will occur if it is EVER allowed to expire. Allowing it to expire will be a HUGE tax increase on small businesses and the Chamber of Commerce will go nuts…
I imagine that the 70 billion dollars that this costs will create some jobs in the short term. I think that some companies will likely go out and buy some capital equipment in 2012 that they normally would have bought in 2013. The money will flow to the equipment manufacturer and help their business which in turn will stimulate the economy in 2012… The employer payroll tax cuts will certainly be appreciated by America’s small and medium sized businesses. It will lower their cost of doing business for 2012. This may save a few from closing who are near the “edge.” Further it will increase corporate profits of these companies somewhat in 2012 and that increase in corporate profits will trigger some short term spending.
I doubt these provisions will really create very many jobs. I agree they will create some jobs in the short run because spending will increase; however, I do not see how it can create very many. I will use my firm as an example. We have three full time employees right now and two part time employees right now. Wed, Thur, and Friday of this week I interviewed seven candidates for a new full time position. We will hire a new full time employee who will start October 3rd. This decision was made a couple of months ago and this decision has NOTHING to do with President Obama’s speech. Since we are adding an employee and since we are likely to give our employees a pay raise starting January 1st 2012 (Which also has NOTHING to do with President Obama’s speech) these employer tax cuts will result in my firm paying less in employer payroll taxes. This means our corporate profits will increase. In turn we will pay more in income taxes. The balance will be distributed to the owners to do with as they see fit. My company is small; however, these payroll tax cuts will likely net result in $4,000 more being pocketed by the owners in 2012 net of income taxes… Knowing the owners of my company the vast majority of this money will be saved and not spent…
This tax cut will NOT cause us to hire another employee.
Mike Sylvester
