The Right Note is a weekly opinion column. The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.
Last fall, I wrote about the possibility of another Tax Increment Financing District in Arlington. This time for the redevelopment of the Ballston Mall.
This is what I wrote then:
“The argument for TIFs is that the development being paid for by the TIFs will increase revenue to the County above what we would have otherwise received. Therefore, despite setting aside a portion of that revenue to subsidize development, it is still a net benefit to the taxpayer.
However, if a private developer cannot secure financing for a project in one of the most attractive real estate markets in the country, why should taxpayers agree to make up the difference?”
My questions about TIFs then are my questions today. Should Arlingtonians continue subsidizing development with debt? And is it worth setting aside future tax revenue to the detriment of other county needs?
Last week, the County Board took a slightly different approach. For the first time, they are forming a Community Development Authority (CDA). The CDA could receive up to $46 million from bonds. The County is also kicking in another $9 million for transportation needs.
The bonds would still be financed by tax increment financing. This financing sets aside a portion of future tax revenue to finance the bonds. None of those funds will be available for schools or other county-wide obligations.
While a CDA sounds like a separate entity, the board members will be made up solely of County Board members, according to the county press release. If that’s the case, why set up a separate entity at all?
Also in the county press release was this statement, “the bonds issued are not on the County’s balance sheet and thus do not affect the County’s debt capacity or debt rating.”
Who pays if the tax increment funds do not meet the debt service requirements? Best guess is the Arlington taxpayers would still end up on the hook. The honest way to do the accounting is to recognize the bond for what it is, an obligation Arlington must pay.
Whether you call it a CDA or TIF, it is little more than a new way to borrow money.
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