Council candidates differ on tax incentives, high school debt

July 11, 2012 By John Huotari 6 Comments

Chuck Hope

Trina Baughn

One candidate seemed more willing than the other to use tax incentives to spur commercial development in Oak Ridge, but neither appeared ready to build a senior center.

A difference also emerged between the two Oak Ridge City Council candidates, Chuck Hope and Trina Baughn, on paying off the debt on the $66 million renovation of the city’s high school.

Hope, owner of Chuck’s Car Care Center, called the question over whether higher Anderson County sales tax revenues should be used to help pay that debt the “800-pound gorilla in the room.”

“That’s our biggest divide,” he said. Sales tax revenues in Oak Ridge need to be increased to help solve the problem, Hope said.

But Baughn, a communications professional, said voter intent was clear in a 2004 referendum that raised the Oak Ridge sales tax rate by a half-cent. Voters wanted to use that money to pay for the high school renovation.

School officials expected Anderson County to also raise its sales tax rate—effectively taking away some money from the city—and they expected the new county revenues to also be used to pay down the high school debt, Baughn said.

In the past year, Oak Ridge school officials have argued that they should be able to keep the portion of new revenues collected from the Anderson County sales tax rate increase—rather than passing on that money to the city for high school debt payments.

Hope was appointed to fill former Council member Tom Hayes’ seat after he resigned in June 2011. He and Baughn will face off in the Aug. 2 special election. The winner will then serve through the regular Nov. 6 City Council election, when Hayes’ term expires. Then, the winner of the Nov. 6 municipal election will serve a regular four-year term.

The two disagreed on the use of tax incentives during a Tuesday night candidates forum in Clinton that was sponsored by the League of Women Voters of Oak Ridge.

Hope said he has supported the use of tax increment financing, or TIF. A $625,000 TIF is being used to help build the Woodland Town Center, which will include an Aubrey’s restaurant and Panera Bread on South Illinois Avenue.

A TIF uses new property tax revenues generated at a site to pay for improvements.

“It is one of the tools that we have with economic development,” Hope said. He said tax abatements—temporary reductions in property taxes—are another.

But Baughn said she doesn’t support tax breaks or using public money for private projects except in very limited circumstances. She has supported two of 12 tax incentive packages in Oak Ridge, Baughn said.

“We’re essentially talking about public-private partnerships,” she said.

Baughn said Oak Ridge supports close to a dozen economic organizations, and they should assume the liability on behalf of the city for tax incentives if the proposals are indeed risk-free.

Neither candidate seemed willing to build a new senior center. For years, some residents have said the current senior center on Emory Valley Road is inadequate, and they say the city promised them a new home more than a decade ago.

“Quite honestly, right now, the answer is no,” Hope said in response to a question on whether the candidates support a new center, which could cost a few million dollars.

Given current economic conditions, seniors and the city need to adapt, Hope said. Accommodating them can be done at a much more reasonable cost, he said.

Baughn said many non-paying non-residents use the senior center, and it is only used by a small percentage of Oak Ridge residents.

At the very least, the senior center can stay where it is, she said. Alternatively, seniors could make greater use of the Oak Ridge Civic Center, Baughn said.

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Filed Under: 2012 Election, Government Tagged With: candidates forum, Chuck Hope, Oak Ridge City Council, Trina Baughn

John Q Publius

Hope’s support of the TIF for retail is all I needed to know to make up my mind. Retail follows population growth, not vice versa. West Town came after West Knoxville grew. Turkey Creek came after Farragut/Lenoir City grew. All the retail in Lenoir City came after people kept moving West. No one builds retail hoping to attract home buyers, except in the minds of some of Oak Ridge’s “best and brightest.” Make Oak Ridge attractive for home buyers and retail will follow. I heard Terry Frank say that Lenoir City/Loudon County’s combined rate is lower than Oak Ridge’s property tax rate alone. Lenoir City has multiple times the retail of Oak Ridge. Coincidence? Hardly. Even at the state level, states with the lowest tax rates have far outgrown with the highest over the last couple of decades. Taxes are a burden. People will avoid them when they can. And, with Pellissippi Pkwy and plenty of cheap housing out West, that is easy to do, which is why 85% of of the people who work at ORNL/DOE live outside of Oak Ridge. Mrs. Baughn and Mrs. Frank are on the right track. Mr. Hope (and by extension Mr. Gooch, as I read he supports retail TIFs as well) is hopelessly lost on the same wrongheaded line of thinking that has mired Oak Ridge in a multi-decade long stagnant economy.
- B Smith
  
  I disagree with most of your homespun economic analysis, which is based on your anecdotal observations.
  
  I can remember when, soon after its development and in the early 80s, West Town Mall was surrounded by open area, and the sparse nearby population was clustered around Kingston Pike. The developers picked that spot for the mall not because there was a population boom in the area but because it was adjacent to I-75 and site preparation involved bulldozing farm land. (The sister development, East Town Mall, followed the same formula.)
  
  Likewise, the Turkey Creek development was more than a response to population growth. Turkey Creek owes much more to the completion of Pellissippi Parkway, the widening of the entirety of Lovell Road, and the reconstruction of the interchange at I-40 and Lovell Road than it does to population growth in Farragut and Lenoir City. In short, it’s the easy access to Turkey Creek from population centers in every direction that is making it so successful. And the city of Knoxville played a large part in jump starting the development by spending about $4M to build Turkey Creek Drive from Lovell to Campbell Station. I’d say that was one of the best $4M investments in the history of Knox County. (If Leonard Abbatiello had been on the Knoxville City Council he would have no doubt torpedoed that investment on principle.)
  
  So what is Trina Baughn’s plan for making Oak Ridge “attractive for home buyers”? Providing a better school system? Creating the highest paying jobs in the Knoxville Metropolitan area? Establishing a full-service local government? Nope. We already have those things. To the contrary, she’s the gadfly to the Oak Ridge Schools. She’s an unemployed (by choice, I suppose) “communications professional”. And she’s looking to reduce the size and cost of local government through micromanagement of the municipal and school system budgets. (Every *penny* does count, after all.)
  
  For more than 30 years now the creation of new jobs in Oak Ridge has NOT led to population growth in Oak Ridge. And the recent tactic of holding constant the local property tax rate has had a null effect on increased home buying by out-of-towners. Like it or not, we are faced with multiple obstacles to growth, not the least of which is that there is very little retail shopping opportunity in Oak Ridge. The stores we do have tend to cater to lower-income citizens here and in the surrounding areas. Even the Belk store has a very limited selection of clothing, accessories and housewares when compared to other Belk stores in the area. If you need toiletries, groceries or fast food you can get it in Oak Ridge, but if you want a nice dress or a suit, a decent pair of shoes or sporting equipment beyond ammunition you’ll have to drive to Knoxville. (Sad to say, it wasn’t always this way.)
  
  Knee-jerk opposition to TIFs for retail development and “public-private partnerships” is not helpful. You can vote against Chuck Hope on principle, but the sad history of standing firm on anti-business principles in Oak Ridge is that it has not been a successful tactic for economic development.
T J

Well said JQP. I would add that jobs bring homeowners here.
John Q Publius

Lovell Road is widened in its entirety? News to me since I lived there nearly 15 years. The population growth around Turkey Creek pre-existed the development by 30 years. The only way “investing” made sense was due to that pre-existing customer base. Additionally, the taxpayers “invested” and the people who profited were those who sold the development for $131m. Must be nice to have friends pay for the infrastructure while you reap the “public-private” rewards. What was the size of your refund check on your “investment” as a Knox Cty taxpayer? Probably the same size as mine. Zero. If a $4m investment is a great investment, why do the taxpayers need to foot the bill and assume the risk? How did Crown America’s $60m investment in OR work out? Would we have been more “business friendly” if we had absolved them of the risk while letting them enjoy all the reward? If you’d lke to point to a study which shows retail TIFs to be a solid investment, I’m all ears.

As for the tax rate, I lived through the 10 consecutive years of tax increases until the recent lull. Our tax rate is still considerably higher than our neighbors. Not continuing to raise the CODB is not exactly an accomplishment when your neighbors continue to offer a lower CODB. But, by all means, continue to beat a dead horse. I’m sure he’ll get up any time now and start pulling that plow.
- B Smith
  
  Lovell Road has been widened to four lanes from Pellissippi Pkwy to Kingston Pike, which is the part that really matters for Turkey Creek. The remaining section, which runs from Pellissippi to Middlebrook Pike is of little consequence, although the intersection with Middlebrook was entirely rebuilt nearly 10 years ago and that does facilitate traffic from west Knox County to Turkey Creek. I followed the development of Turkey Creek from start to finish and I can tell you that its proximity to Farragut or Concord or Lenoir City meant very little to the developers in comparison to its siting next to I-40/I-75. As a matter of fact, the entire development was contingent not only on the building of Turkey Creek Road but on the fact that Knox County directed nearly all its federal highway dollars over the course of a few years into re-doing the interchange at I-75.
  
  It sucks that there is so little retail in Oak Ridge. Talk about beating a dead horse; you CAVE-ers love to tell and retell your version of the decline of the Oak Ridge Mall as if it was a morality tale for the ages. Get over it. Businesses come and go, with and without public assistance. The era of the mall has passed like the earlier passing of the Main Street in a small town. Those that are so fond of the “glory” days of the Downtown Shopping Center conveniently overlook the fact that the AEC gave Guilford Glazer the land on which to develop the shopping center. The history of business development in America is replete with incidents where businesses large and small took advantage of free or subsidized land. Ever been to Crossville and to see the Homestead Act homes there? Ever been to Disney World in Orlando where the Disney company, through real estate intermediaries bought farm land on the cheap before the locals knew what was happening? I’m surprised that the people in Orlando aren’t up in arms over that swindle. Practically every interstate interchange in America has all four corners developed with retail. I guess you’re pretty upset that the federal government paid for those expensive highway and allowed savvy land owners and speculators to reap big profits from the developments.
  
  There are many reasons why so many people working in Oak Ridge don’t live here, and perhaps the property tax rate is one of them, but if it is it’s pretty far down on the list.* The number one reason I hear is that they were living somewhere else nearby when they got a job here and they just didn’t feel like moving. Maybe the job is uncertain or maybe their spouse can’t find a job in Oak Ridge or maybe they just like living in their ancestral neighborhood. The number two reason is that there’s not much selection in shopping. Name the category (other than fast food) and Oak Ridge has a limited number of choices to offer.
  
  *The people most affected by the higher property tax rate in Oak Ridge are the working poor, not the professionals or business owners. IMHO, Oak Ridge does not need to increase its population by attracting more poor people. We have more than our share. Ten families with twenty children in an Applewood Apartment that provides about $7000 per year in property taxes is a major burden on our ability to adequately fund the city services and the school system, considering that those 20 children require about $100,000 in local funds if they are enrolled in the schools.
John Q Publius

There is a difference between building an Interstate network, which serves a purpose beyond facilitating massive theme parks, and building a 2 mile extension which serves nothing but the developer. How many subdivisions have their roads paid for by the City or County? Any? The buyers pay for that development with their lot prices. The price for renting in Turkey Creek was $25 a foot. Why the high price? Construction costs? Hardly. Demand? Damn straight. Who profited? Did the developers take advantage of a pre-existing road, as per your analogy? No. It was purpose built. For them.

As for the mall, or its past incarnations, it matters not a whit to me. The point is that Crown spent upwards of $100m trying to bring retail here and we have Wal-Mart left to show for it. Would it have been any greater success if the public had subsidized it? Was it lack of 4-lane highways? Spending $25m to build Target a home only puts Kmart and Sears out of business. Whoops. Too late. Ok, Kmart. Does it increment business here? Will it sell more homes when they can buy more and pay less off of Yarnell Road?

Additionally, how many strip malls are empty on K-pike now that T-Creek is there? The three major ones before T-Creek came in are empty. How much longer will the BBuy on Cedar Bluff last? You are simply churning cash for the developers. The public invests, the privateers profit, and the sprawl continues. If retail TIFs are so great, I’m sure there are a half dozen independent studies proving it.

So, back to the issue at hand. Is Woodland a “very good idea?”

TK Wheeler’s retail development in OR is 60% occupied. Yet we extend a TIF to put in another unneeded red light, road, and sewer extension. For what purpose? What will that investment return taxpayers in OR?

As for business owners not being affected by property taxes, thats some serious circular logic. We need to grant TIFs to spur business development but property taxes have little effect on whether businesses want to locate here.