Dream come true or Taxpayer Nightmare?

The City's Pulse Issue #4 March 2007 by Mary Souza
Dream come true or Taxpayer Nightmare? Many of us lose sleep over financing a new house. But what if your banker said, "You pay the money for the house, and we'll pay you back over the next 5 years, with interest. Plus you'll own the house."--Ok, read it again. They will pay you back. You'd pinch yourself to see if you were dreaming! Would you call that a loan? No way. Would you call that a gift? I would. A very nice gift. Well, folks, hold onto your jammies, because this is basically how something called an Owner Participation Agreement (OPA) works. A developer comes to the Lake City Development Corporation (LCDC), Coeur d'Alene's urban renewal agency, to propose building something within the urban renewal district. The developer and LCDC negotiate the "public infrastructure and amenities" to be covered by an OPA, as well as the length of the contract and the interest rate the LCDC pays. The developer is required to meet performance standards set by LCDC -- in other words; the building must be a financial success. So, the developer uses their own money to build the building. Then, over the course of the next few years, the LCDC pays the developer back for the agreed upon items, plus interest. And the developer retains full ownership! Remember: this is public money. Tax dollars. Money that would otherwise go to pay for fire and police protection, schools, roads, etc. Let me give you some real-life examples. Parkside Towers is going up downtown. LCDC is paying the developers $820,000 plus interest. This is a private, luxury condominium building. For the downtown Sherman Lofts high-end condo (the one with the fake brick siding) LCDC will pay $405,000, plus interest. How about the Ice Plant Townhomes just east of City Hall?: $329,000, will be paid to the developer, with interest. But wait, there's more. The LCDC also hands out Grants. Grants too? Yes, in addition to the Owner Participation Agreements, which require that the project be a financial success, LCDC gives outright Grant money -- no strings attached. The Hatch-Mueller landscape architect office on Sherman got a Grant for $36,400. Select Investments, a coalition of well-connected architects and investors, received $57, 275 in Grant money for the Wallace Avenue apartment project. And the Bettis Indiana Arms condo project was given a $38,280 Grant. There are more, too many to list. Developers outside the urban renewal district don't get hand-outs. They pay for the infrastructure themselves, and still must turn a profit. And no one pays them interest on their money! This all sounds unfair to me. It may be a dream come true for some favored developers within the districts but it's a nightmare for the taxpayers, our government, schools and other businesses.

Dream come true or Taxpayer Nightmare?

Many of us lose sleep over financing a new house. But what if your banker said, "You pay the money for the house, and we'll pay you back over the next 5 years, with interest. Plus you'll own the house."--Ok, read it again. They will pay you back.

You'd pinch yourself to see if you were dreaming! Would you call that a loan? No way. Would you call that a gift? I would. A very nice gift.

Well, folks, hold onto your jammies, because this is basically how something called an Owner Participation Agreement (OPA) works. A developer comes to the Lake City Development Corporation (LCDC), Coeur d'Alene's urban renewal agency, to propose building something within the urban renewal district. The developer and LCDC negotiate the "public infrastructure and amenities" to be covered by an OPA, as well as the length of the contract and the interest rate the LCDC pays. The developer is required to meet performance standards set by LCDC -- in other words; the building must be a financial success. So, the developer uses their own money to build the building. Then, over the course of the next few years, the LCDC pays the developer back for the agreed upon items, plus interest. And the developer retains full ownership! Remember: this is public money. Tax dollars. Money that would otherwise go to pay for fire and police protection, schools, roads, etc.

Let me give you some real-life examples. Parkside Towers is going up downtown. LCDC is paying the developers $820,000 plus interest. This is a private, luxury condominium building. For the downtown Sherman Lofts high-end condo (the one with the fake brick siding) LCDC will pay $405,000, plus interest. How about the Ice Plant Townhomes just east of City Hall?: $329,000, will be paid to the developer, with interest. But wait, there's more. The LCDC also hands out Grants.

Grants too? Yes, in addition to the Owner Participation Agreements, which require that the project be a financial success, LCDC gives outright Grant money -- no strings attached. The Hatch-Mueller landscape architect office on Sherman got a Grant for $36,400. Select Investments, a coalition of well-connected architects and investors, received $57, 275 in Grant money for the Wallace Avenue apartment project. And the Bettis Indiana Arms condo project was given a $38,280 Grant. There are more, too many to list.

Developers outside the urban renewal district don't get hand-outs. They pay for the infrastructure themselves, and still must turn a profit. And no one pays them interest on their money! This all sounds unfair to me. It may be a dream come true for some favored developers within the districts but it's a nightmare for the taxpayers, our government, schools and other businesses.