Asheville River Arts District Ponzi Scheme

$250 Million Investment in River Arts District 

$26 Million from the City of Asheville (taxpayers);
$20 million from NCDOT and other grants 
PLUS 200 Million in PRIVATE INVESTMENT (public/private partnerships)

And, let's not forget.  Projects of this size and scope ALWAYS end up costing more than they estimate -  never less.
We've done this because, as with any Ponzi scheme, new growth provides the illusion of prosperity. In the near term, revenue grows, while the corresponding maintenance obligations — which are not counted on the public balance sheet — are a generation away.
  1. City of Asheville will invest $26 million (at least) in taxpayer dollars
    • As touted by their plan, the City expects an increase in tax revenue from this development.  This is how they plan to repay its debt.
    • The City does not expect increase in revenue or the tax base from these development plans for at least 3 to 5 years.
    • The increase in tax base will NOT cover the long term debt which will result in having to get more debt to pay off the old debt. 
    • We are shifting today's debt to later generations of Asheville Taxpayers
  2.  Private investors will invest $200 million 
    • City will enter into public-private partnerships where the City will give tax breaks and development incentives to build in the RAD.  This is estimated at $200 million in private investment.  
    • When the area floods again, who will pay for the cleanup?  A hotel is planned on the river. 
  3. Expected increase in revenue will NOT cover the debt expenses.
    • Our City of Asheville can't even balance its own budget.  Last year they had to increase taxes in order to balance it. What will it take to balance the budget of this debt in the coming years?
WOW! $50 Million of Public and $200 Million of Private Investment dollars in 2.2 Miles
The City of Asheville is touting a lot of wonderful perks to this development - mainly better bike and walk paths and connecting neighborhoods; a boat ramp and a transit center.  How does that cost $250 Million? We are promising HUGE RETURNS for what?

When the area floods again (as we have experienced two major floods in the last 100 years), who pays for that?

Growth Ponzi Scheme
Read the article "Growth Ponzi Scheme" from Strong Towns, a nonprofit, nonpartisan organization founded in 2009 for the purpose of "understanding the intersection between local finance and land use. How does the design of our places impact their financial success or failure?"  

Land development occurs in three stages and the City of Asheville is in the process of doing all three along the river:

1) Transfer payments between governments: where the federal or state government makes a direct investment in growth at the local level, such as funding a water or sewer system expansion.   DONE & DONE! US ECONOMIC DEVELOPMENT & CLEAN WATER MANAGEMENT TRUST FUND

2) Transportation spending: where transportation infrastructure is used to improve access to a site that can then be developed. DONE & DONE... RADTIP

3) Public and private-sector debt: where cities, developers, companies, and individuals take on debt as part of the development process, whether during construction or through the assumption of a mortgage.  DONE & DONE & WILL DO SOME MORE!

Read the entire Strong Towns "The Growth Ponzi" article.  It is very enlightening!

No comments:

Post a Comment