Comment 56288

By A Smith (anonymous) | Posted January 13, 2011 at 23:21:53

Jason >> Personally I like the ratio of $130 million from the city, resulting in $1-$2 billion from private business and developers.

Here'a a low risk way of doing this for the taxpayer...

Assuming that the city gets new assessment of $2 billion from this $130 million LRT line and further assuming that the tax classes would be about be 40% business, 60% residential, that means that the city should get an extra $2 billion * 2.56% = $51.2 million every year in taxes.

Instead of having taxpayers underwrite this investment, tell property owners along the LRT line that if they finance it, the city will only charge taxes based on existing assessments ( adjusting for city wide average increase or decrease for 5-7 years). That way, the city doesn't lose any revenue that it already collects, but it will give property owners 5-7 years of tax savings * $51.2 million a year, a savings of $250-350 million.

These tax savings represent the taxes they would have had to pay had their assessments reflected their higher value due to the building of the LRT and the much increased consumer demand.

The city wins because it gets the all benefits of LRT, save the first 5-7 years of higher assessment tax revenue and it doesn't have to risk any taxpayer money. Property owners win because they enjoy higher property values/rents, plus they don't have to pay higher taxes for on their now higher assessment properties. It would be as if these property owners got a tax rate cut.

The only reason why property owners wouldn't do this deal would be if they don't believe an LRT line will bring the added assessment that would make the investment pay off. However. as long as they believed they could get tax savings of $250-350 million from a $130 million investment, they should jump at this opportunity.

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