Tax Dollars Pay for New Development on Broadway
If you have been to downtown Nashville recently, you have surely noticed the gigantic pit where construction has recently started on the creatively named Fifth + Broadway complex just down the street from Beacon’s offices. The building will offer retail, dining, residential and office space, plus a museum.
Though that may sound nice, the problem is that this building is a bad deal for taxpayers, not just because it has shut down a lane of traffic and a sidewalk for what seems like decades, but also because we are paying for this extravagant project with our tax dollars.
The same city that cannot even meet its budget obligations has decided to commit about $60 million in taxpayer money to the development of this public/private undertaking in the most desirable part of downtown, which includes a garage owned by the city. While buildings in the downtown sector are selling for tens of millions of dollars, the city of Nashville is using our tax dollars to “incentivize” businesses to come to one of the hottest areas in the entire country with no real explanation for why we are spending our tax dollars on development that would almost certainly happen anyway.
The fact that we are subsidizing this gigantic private complex with tax dollars has left many residents fuming, and things just got worse. According to the Tennessean, the developer of the Fifth + Broadway building now wants the $25 million taxpayer handout from the city in the form of a tax-exempt bond, which leads to a few questions. Did they not stay on budget? Can they not secure a loan in the private sector? People associated with the project say that it is to get a better rate than is publicly available, which makes sense. But the fact that they different disclosure requirements for a tax-exempt bond is a problematic flaw with the system.
In discussing why the project’s developer OliverMcMillan could be asking for this TIF handout, Matt Fabian of Municipal Market Analytics told the Tennessean, “A bank would be able to spot problems on a developer’s balance sheet, for instance, that wouldn’t have to be revealed in a public bond offering.” This sentence should terrify every last taxpayer and exposes one of the major problems with corporate welfare and (the lack of) transparency. The government is “investing” our tax dollars without having any real idea of the problems or potential risks associated with our “investment.” This would never fly in the private sector, but it’s a lot easier to spend other people’s money, I guess.
This overall project shows many of the different issues with corporate welfare. First, we are giving tax dollars to private companies that will give them an unfair advantage over their direct competitors. Second, it isn’t like we are giving tax dollars for this company to build in a bad part of town or an area that needs economic development, which is the very purpose of TIF loans to begin with; we are paying for them to build on Broadway, for God’s sake. Third, there is very little transparency surrounding this deal as in most corporate welfare deals. We don’t know how many jobs are actually going to be created, how much we expect to get back in tax dollars for what we are handing out, the developer’s balance sheet, and whether or not the incentive was even necessary to lure this project to the city (hint: it wasn’t). Finally, the government is investing in something without vital information that a bank would need in order to determine if it was actually a good investment or not.
Ultimately, this corporate welfare deal stinks to high heavens, and at a time Nashville has a gaping budget deficit, you have to wonder why it is necessary to spend tens of millions of tax dollars to develop a private mixed-use project on one of the most prime pieces of real estate this side of the Mississippi River.