Lewisville Granting Tax Abatements to Real Estate Speculators

I truly never cease to be amazed at how gullible that seemingly intelligent people can be. It seems that when "cutting taxes" is your only tool, every problem looks like a tax problem.

As those who live in Lewisville can attest, the taxes here are quite reasonable, given the level of city services provided. Unfortunately our city council voted this Monday night to rob the people of tax revenues on two speculative real estate developments.

Yes, you read that right: Myers and Crowe will be building a 240,000 square foot office building. There is no tenant lined up. Majestic Realty will build a 1.3 million square foot warehouse - also no tenant lined up yet.

So, what is the ostensible rationale? Usually in these things, it is to attract jobs and build the tax base. In this case, it can't be either. Since no tenants are lined up, this may or may not attract jobs. If it does, there is no guarantee that the jobs will be for Lewisville residents. There is no guarantee that they'll be good jobs. There is a pretty reasonable expectation that it could depress the prices for office space and warehouse space here in Lewisville. (So much for the "invisible hand of the market" when you have government ignorantly screwing with things.)

Tax abatements fall into the category of "The Prisoner's Dilemma". The Prisoner's Dilemma is a game in which the players, which should stand to benefit as a group - place a perceived self interest before that of the group, and thus all suffer. The story tends to go like this: Say you have a small group of criminals who have gotten busted for whatever they've done. The state doesn't have a strong case, but they know that they can get someone in the group to snitch. They separate the prisoners and the bidding begins. Each prisoner hears that if the case goes to trial, they'll be convicted and sent away for a long time. He also is offered a chance to snitch on the others in exchange for a reduced sentence. Each prisoner knows that if he doesn't hurry and be the first snitch, then the other guy might snitch first, and his deal will go away. Thus, as a group if they collectively refuse to snitch, they may all go free. But with self interest put first, the criminals give the state a case, and they all will do time.

It's very similar with tax abatements. Cities, if they grew organically and attracted business investment the right way, by providing excellent city services and a pleasant place to live and work, would always have a tax base able to support the budget. Instead, real estate speculators now know they can play for a bidding war between cities that have been suckered into thinking that development will not happen without them. City councils and mayors are scared to death of raising tax rates to handle changing dynamics (such as the cost of fuel for police cars) so they get into a mode of thinking that they must increase the tax base - whether or not it adds value for current residents. If all city councils limited tax abatements to truly economically depressed areas, such as reinvestment zones, then real estate speculators would be forced to do business based on the fundamentals of whether or not the investment works on its own merits.

Here in Lewisville, new development is going and will continue to go, regardless of abatements. I would challenge any of our city council members on whether the land in question would really remain undeveloped for 5 years if the tax abatements were not given.

I find it interesting that a local Republican activist with whom I disagree on many issues, got up and took the council to task for this. I must applaud him for standing up to this rip-off. That's exactly what it is, by the way. It's a rip-off for the taxpayers of Lewisville that the rules get to be different based on how much money one has to throw around. Small business gets the shaft, and big business get the breaks.

If any of the council members or mayor expect to be re-elected, they had better not accept any campaign contributions from any of these developers or their principals. We'll keep a watchful eye on the campaign disclosures and let you know. (If you know of anything, please let us know...) I want to believe that none of our council members would do that, but unfortunately every time I think that our representatives in government couldn't be capable of broad-daylight robbery, someone proves me wrong.

You may also find it interesting to know that the council declared these tax abatements to be an "emergency". This just means that they wanted to blind-side the taxpayers with it and avoid having to take any public discussion PRIOR to going ahead with it. I think our citizens deserve to have the council follow the normal rules, and dispense with this "emergency" bullshit. It was such an emergency that they just couldn't wait to give out corporate welfare. For shame.

For what it's worth, I don't oppose all tax abatements. I do think everyone should pay their fair share. If these developments were in Old Town Lewisville, which is somewhat blighted and needs an economic boost, then I'd be willing to listen to a proposal. Speaking of proposals, I've got some oceanfront property in Arizona. I'd like the city council to buy it from me and move it here to Lewisville to use as a park. I'm skipping the Parks Board and taking it straight to the Council. I think I'll find a more receptive audience there.