Why Is the Old Mall Project Receiving a Triple Subsidy?
Back in 2007 the Barrie Tilghman administration, in conjunction with Mike Dunn led Salisbury City Council, pushed through the TIF bonds for the old Salisbury Mall project and the Collector Road project / subsidy for the Aydelotte Farms subdivision. Now it’s early 2008 and we’ve learned a few things about the old mall TIF bond.
Despite all claims to the contrary by Tilghman and her minions, the TIF bond is a subsidy. Remember back to December, 2006. Mike Dunn was expecting to receive a blanket endorsement of TIF’s from attorney Keenan Rice and was shocked when Mr. Rice stated the old mall TIF was a subsidy. That’s SUBSIDY NUMBER 1.
The next subsidy comes in the form of interest paid. It seems that the terms of the bond permit the developer - Salisbury Mall Associates, LLC - to use bond proceeds to pay interest on the bonds until they are able to sell some condos, some offices, some storefronts, etc. Then those folks will be paying off the bonds in the form of property taxes. REMEMBER - the old mall project will be receiving city services, but the vast majority of the property taxes paid will be used to pay off the TIF bonds. SUBSIDY NUMBER 2.
Now here’s the kicker. This is what makes the old Salisbury Mall a trifecta of what’s wrong with economic development subsidies. Guess who bought the bonds. No, it wasn’t a bank. It wasn’t some insurance company. It was … (drumroll please) … Salisbury Mall Associates, LLC!
That’s right folks. The same people who are receiving the subsidy, while you (if you are unfortunate enough to be a Salisbury taxpayer) receive double digit tax increases, are collecting the interest from the bonds. Now follow this again, because it’s too surreal:
When the condo owners, storekeepers, etc. are paying taxes, the taxes will be going to the developer. SUBSIDY NUMBER 3!
But that’s not all, loyal vassals of Barrieland. One of the arguments made against the subsidy back in 2006 was that this didn’t seem economically sound and that the city could end up eating bond. We all know that these aren’t general obligations, but no one from the Tilghman administration would go on the record and categorically state that this could not happen.
The response was that if the project wasn’t sound then the “institutional investors” who would be buying the bonds would not buy them. Not true. We now know that it was always planned for Salisbury Mall Associates to purchase the bond. We know this because there was no prospectus / offering memorandum prepared. They knew that the project was not in shape to be offered to the public (meaning outside investors). Why was this deliberately hidden from the public?
It’s another beautiful day in Barrieland.
Technorati Tags: Maryland, Salisbury, politics, Salisbury politics, Barrie Tilghman, Mike Dunn, Gary Comegys
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