Update: The words "debacle" and "bailout" were used by the Clarion-Ledger and Madison County Journal about in their headlines about the bill. Parkway South has not defaulted on the TIF bonds.The Galleria TIF has not failed and is producing. The county is restructuring the bonds so as to match payments with revenue. The TIF included tax-exempt property, which obviously is self-defeating. The original post was based upon what was reported in the two newspapers. More information will be added if it becomes available. County sources said county officials did not ask for the legislation nor did anyone ask the legislature to draft the bill.
State Sen. Joey Fillingane said as the result of a recent “debacle” concerning an economic development project in Madison County, Trustmark Bank has pulled its participation from similar projects in the state.Uh-huh. Translation: The Madison County Board of Supervisors fell for a Bob Montgomery special, the deal blew up, and now they want to be able to bail out everyone involved with your money. This bill will make it easier to put local governments on the hook for private development projects. TIF's use future revenues from a property and business associated with that property such as sales taxes. If the governments are going to backstop these deals as Senator Tool intends with his bill, then TIF bonds should instead be called subsidy or government bonds because that is exactly what they will be. The relevant part of SB #2550 states:
Fillingane, R-Sumrall, said that’s what prompted him to author Senate Bill 2550, which allows (but does not mandate) cities and counties to use general fund or other taxpayer money to make tax increment financing bond payments when in danger of defaulting.
TIF bonds are a financing option that allows counties and municipalities to borrow money to fund an economic development project based on the taxes the project would generate in the future. The payments are made off taxes from the property itself and adjacent lands, not regular taxpayer money.
In October, Madison County was unable to pay its November bond payment of $90,000 for its Galleria/Parkway South TIF bond. The county made the decision to restructure the payments in order to avoid default.
“Because of that debacle, the bank is protecting itself and saying, ‘We don’t want to get ourselves or our stockholders back into that situation again,’ ” Fillingane said.
Trustmark did not directly answer whether it has made any such decision or whether the Madison County project affected any others in the state.
“Trustmark has a long history of participating in the Tax Increment Financing market in Mississippi. The method of financing is not the issue; it’s the underlying, individual project that determines if Trustmark has an interest,” Barry Harvey, Trustmark’s executive vice president and chief credit officer, said in an emailed statement. “We will continue to look at each Tax Increment Financing transaction on its own merit and participate in the projects we feel are viable.”....
Commercial real estate attorney Ron Farris said Trustmark’s reported decision not to participate in TIF bonds in the state has hurt two major projects in Hattiesburg.
“It has impaired and hurt people in two major projects in Hattiesburg in terms of delay, cost and unmet expectations,” Farris said. “It’s a big threat to the commercial real estate industry in Mississippi.”
Farris was involved in the proposed plan for the Galleria TIF in its early stages.
Fillingane’s bill would also mandate county and city officials be provided separate tax rolls that identify any changes in valuations for properties associated with bonds so as to prevent a property’s valuation and thus its tax revenue from being decreased.
The bill has passed out of the Senate Finance Committee and will be voted on by the Senate. Rest of article.
7) If the assessed value of property included in a tax increment financing plan is reduced and the debt service on the tax increment bonds issued under the plan cannot be satisfied when due by the revenues payable to the municipality pursuant to the tax increment financing plan, the governing body may elect to pay from the general fund of the municipality the difference between the amount of the revenue payable to the municipality pursuant to the tax increment financing plan and the debt service payment that is due. SB #2550One can imagine there are quite a few other banks that would love to see this legislation become law. It would not be a stretch of the imagination to think Balch & Bingham, Butler Snow, and Baker Donelson would like to see it passed as well. It brings to mind this quote:
What I am saying is, we have now what we have always needed, real partnership with the government.
It looks like the developers and bankers of Mississippi will finally get Hyman Roth's deal. The Mississippi Tea Party and Bigger Pie is always raising hell about crony capitalism. This is a bill worth raising hell over: bailing out banks when TIF projects blow up. The developers get paid, the banks get paid, the bond lawyers got paid, and the taxpayers get screwed. Period. Perhaps Senator Tool should add language to the bill that if a local government has to cough up the money to pay off the bonds, it can seize the assets of the developer. Can't have that now can we, no...., not in Mississippi, the most corrupt state in the Union.
The most corrupt state in the nation should not make it easier for banks, developers, and politicians to take our money and blow it on poorly conceived "economic development" projects.