The HCA Deal and the Race to the Bottom. Maybe Stites was right.

On Tuesday night when the Council voted to lavish $66 million on HCA to entice them to move their headquarters all the way from Brentwood to Nashville and to develop a prime piece of property, only one Council member voted against the give-away deal, Josh Stites.

He argued that the city had just raised property taxes and now we were turning around and giving away massive amounts of money to one of the wealthiest corporate citizens in Nashville. He also argued that by exempting so many companies from paying taxes, that our tax collections would suffer and there would be insufficient revenue to improve schools. Quality of education he said, is one of the prime factors that cause companies to choose to move to a particular city, so while we are enticing companies with massive tax abatement giveaways, we are making our community less attractive to companies by insufficiently improving schools,

Stites also argued that giving such money to big companies was simply not fair and we should also provide the same incentive to small business.

I opined that while in principle I was sympathetic to Stites argument, that if I were serving in the Council, I would have nevertheless held my nose and voted for the deal. I wish we gave no financial incentive to TV and movie production companies, sports teams or companies. The truth is, however, that if we did not we would never get a TV show or movie, we would not have professional sports teams, and would probably loose the areas biggest employers.  Giving money to one company and not another is picking winners and losers and that offends me. I don't like the way we have to do business, but I am pragmatic enough to know we are in competition with other cities. To compete, we have to compete in giveaways and tax abatements.

I don't like it that sports teams or movies or companies can hold us hostage, but they can and they do. If the Country Music Hall of Fame was to announce that they planning to move to either Knoxville, Austin, Atlanta, or Lexington and started a bidding war to go or stay, how high would the bidding go?  How much should and would we pay to keep it?  I don't know, but I would want us to compete to keep it here.

In an editorial appearing in yesterday's New York Times called Race to the Bottom, the problem of cities and states using incentives to lure businesses is explored. The editors must have been listening to Josh Stites when they say, "The Times found that state and local governments are giving out $80 billion a year in tax breaks and other subsidies in a foolhardy, shortsighted race to attract companies. That money could go a long way to improving education, transportation and other public services that would have a far better shot at promoting real economic growth."


I would like to print the whole piece but respecting Fair Use, I am only posting a couple other excerpts:

• Though they promise that the subsidies are smart investments, far too often the jobs either don’t materialize or are short-lived, leaving the communities no better off. 

• The fact is, numerous studies show that such incentives result in only a small increase in jobs and that any gains usually come at the expense of other cities and states. 

• The senseless race to give away billions in subsidies is, of course, hard to stop when elected leaders think a pledge of potential jobs might help in their next election.

 You can read the whole article here. Also, the Times is doing an in depth three-part series exploring how cities lose by giving away money. Part one of that series can be found here.

Stites may be right. I just wonder how one can get off the giveaway treadmill while other cities are going full steam ahead.
 

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Highlights and summary of the 12/04/2012 Council meeting

HCA gets the Deal, Private property rights advocates speak against down zoning,

This council meeting is 2 hours and 16 minutes long. I am only highlighting those bills that I deem to be of a general interest or are especially controversial. In addition to the bills I highlight, there are other zoning bills on public hearing that are of interest to the neighbors who reside in the part of town where the rezoning is proposed.

Bills on Public Hearing:

BILL NO. BL2012-292 would permit home recording studios in residential neighborhoods. This is not uncommon in Nashville. Under this proposal a recording studio could have up to ten clients, customers, musicians, or other visitors come to the property per day. Currently they are only allowed to have one visitor. The noise ordinance would still apply.

Several prominent songwriters and musician speak in favor of the bill, including Bryan Cunnings who composed the instrumental "Do the Dog" and has a distinguished career including lead guitar player with ShaNaNa, touring with everyone from Al Jarreau to K.T. Oslin and has written a slew of song.

Less Kerr, another prominent entertainer also spoke in favor of the bill. Speaking in opposition was David Pomeroy, a prominent bass player and head of the musicians union. His argument is that the restrictions would be unenforceable and that a better bill needs to be drawn. The bill is deferred and referred to committee. Council Member Barry promises to get input of the music committee and work on improving the bill. (see 14:03-26:33)

BILL NO. BL2012-301 by Council Member Karen Johnson would down zone a piece of property, allowing only a two story building, where currently the Planned Unit Development on the property would allow a four story building. (see 26:34-58:00.)

Four  people, who are members of the community, speak for the bill. Speaking against the bill is one of the owners of Vastland, the company that owns the property and the developer of Nashboro village for about the last fifteen years. He explains that a large development such as Nashboro Village cannot be developed in a short period of time, and that just because time has passed since the plan was approved is not reason to change the zoning.

Next to speak was an investor in the project who explains that without certainty that one can develop a property the way it is zoned, then one cannot secure financing. He was explaining the complexity and the steps that must be taken and the factor that go into consideration in developing a piece of property, when his time expired.

Next is Daniel Lewis (see 43:51) chairman of the Davidson County Libertarian Party. He says this is a fundamental attack on private property and quotes John Locke and gives a good history lesson. (Not that I would always agree with him, but I wish we had Daniel Lewis or someone like him in the Council. If we did, then things like the unanimous support of limo price fixing and unanimous support of giving EPA dictatorial powers and things like giving eminent domain power to other governmental agencies would not occur. We need at least one dogmatic champion of liberty in the Council.)

Engineer and former Councilman Roy Dale (54:45) is among others speaking against the bill saying this is bad for business. Saying if this passes it sends a bad message to investors.

The vote is 28-8 by machine vote. Those voting against the bill are Tygerd, Banks, Stites, Claiborne, Baker, Langster, and Weiner. Robert Duvall was absent, but some of the other councilmen who I think of as the "good councilmen" disappoint me and voted for it. If I would have been in the Council I would have voted against the bill.

Other bills of interest are BILL NO. BL2012-309 (1:02-1:18:50) would rezones a piece of property to permit a used tire store and BILL NO. BL2012-291 (1:23:09- 1:44:05)   which amends the definition of “recycling facility” to clarify that it does not include the conversion of material into a fuel product or asphalt.

There are fourteen resolutions on the consent agenda. None are pulled. A resolution is on the consent agenda if it passed the committees to which it was assigned unanimously. Bills on the consent agenda are usually not controversial and tend to be routine matters.

There are two resolutions not on the consent agenda, RESOLUTION NO.RS2012-488.and SUBSTITUTE RESOLUTION NO. RS2012-489. These are part of the HCA deal. (see 1:48:55-2:00:27) 

Councilman Josh Stites takes to the floor (1:55:050) and argues against the bills saying we just raised property taxes and yet we are here giving a tax break to a wealthy company. He says he does not blame HCA for seeking the deal but says, "their obligation is to their shareholder; our obligation is to tax payers. It is a distinction we should not forget."

He makes a good argument against the bill. While I admire Stites for taking the lone stand against the bill and while I agree in principle that we should not be offering incentives for companies or movie or TV production projects or sports teams, we must compete with other cities that are offering such incentive. Unfortunately we are in an environment in which sports team, movies or companies will go somewhere else with their project unless they are bribed given an incentive. If I would have been in the Council, I think I would have had to hold my nose and reluctantly vote for the bill.

All Bills on First reading pass. Bills on first reading are considered as a group and are seldom discussed. First reading is a formality that allows the bill to be considered. Bills are not assigned to committee or analyzed by council staff until after they have passed first reading.

Bills on Second Reading all pass with little discussion. 

Bills on Third Reading: Third Reading is the final reading. If a bill passes third reading it becomes law unless it is vetoed by the Mayor, which has only rarely happened. Below are the bills of interest on third reading.

BILL NO. BL2012-294 by Councilman Duane Dominy simply brings a minimum level of accountability and oversight to the purchasing process. It would require all sole-source contracts over $250,000 be approved by the council. One of the few sole source contracts that come before the council is the city's contract with the Chamber of Commerce for the Partnership 2020 program.

Partnership 2020 is a public-private partnership developed by the chamber whose purpose is to recruit new businesses to the Nashville area. Metro’s appropriation for this program in recent years has been $300,000 a year. While the program serves a ten county area, Metro funds a greater share of the program than the other nine counties combined. Many feel that Metro funds the program, yet the bulk of new relocations to the Nashville area go to surrounding counties.

This bill fails. The vote is 18 for and 15 against, 3 abstentions and 4 members absent. The bill failed. It required 21 votes to pass. (see 2:08:24) This was a good bill. I commend Councilman Dominy for trying. It is tough to go up against the Chamber.

BILL NO. BL2012-295 establishing rules for handling the eggs and keeping chickens on school property is withdrawn. The sponsor explains that the issues necessitating this bill had been resolved administratively.

BILL NO. BL2012-297 is part of the HCA deal. Again Josh Stites takes to the floor to argue against it but again is the lone dissenting vote. (2:11:53)

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Report on the 12/04/12 Metro Council Meeting: HCA gets deal, oppositiion to down zoning

HCA gets the Deal, Private property rights advocates speak against down zoning,

Check back for a summary, the location in the video to see the highlights of the meeting, and my commentary. 

From the Tennessean:
HCA gets $66M tax break for midtown Nashville towers 

by Joey Garrison,12-5-2012, The Tennessean- With only one dissenting vote, the Metro Council gave final approval Tuesday for a $66 million incentive package to healthcare giant HCA, paving the way for two soaring headquarters midtown high-rises and 1,750 new jobs in Davidson County. (read more)

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Update on what's on the Council Agenda for 12/4/2012

You can get your own copy of the Metro council meeting agenda at this link: Metro Council Agenda. From the agenda you can link to the analysis.

Council meetings can be really, really boring if you don't know what the Council is voting on. With an agenda and analysis, they are just really boring.

Bills on public hearing: Bills on public hearing are usually zoning bills and interest to no one except the immediate neighbors of the proposed rezoning, but code text changes and some other things may also be on public hearing, which can be important. There is one resolution on public hearing concerning the minimum distance for a beer permit and thirteen bills on public hearing. Below are some bills of interest on public hearing .

One of the bills (BL2012-291) amends the code changing the definition of “recycling facility” to clarify that the conversion of material into a fuel product or asphalt is not a permitted function as part of a recycling facility.

Ordinance BL2012-292 amend the code to permit home recording studios to have up to ten clients, customers, musicians, or other visitors come to the property per day. Currently they are only allowed to have one visitor. This being Music City, we should be friendly to the music industry. This seems like a reasonable bill.

Councilman Karen Johnson has several bills concerning Nashboro Village. I have not bothered to fully understand them fully, but anything having to do with Nashboro Village can create controversy. One of the bills would change property zoned residential to a commercial zoning. One would change property now zoned residential to allow a day care facility. It also would change the zoning to allow only a two-story house instead of a four-story as currently zoned. Councilman Johnson apparently is attempting to rezone this against the wishes of the owner, which the Council seldom does. (Read more about this.)

BL2012-313 adds provisions to the code to ensure that the Metropolitan Government is providing adequate accommodations to persons and organizations under the federal Religious Land Use and Institutionalized Persons Act (RLUIPA). Basically, if I understand this, it says we will not enforce our zoning ordinances that are inconsistent with the fair housing act or RLUIPA. The impact of this is that we cannot use local zoning to stop someone from building a group home in a neighborhood. That could be a group home for people that are disabled, such as a drug rehab home or home for the mentally challenged. These type homes often run into neighborhood opposition.

There are fourteen resolutions, all of which are on the consent agenda. A resolution is on the consent agenda if it passed the committees to which it was assigned unanimously. Bills on the consent agenda are usually not controversial and tend to be routine matters, such as accepting grants from the Federal or State Government or authorizing the Department of Law to settle claims against the city or appropriating money from the 4% fund. However, sometimes things that should be controversial do slip through on the consent agenda, most often bills endorsing some national liberal policy such as urging strict enforcement of the EPA’s regulation of Co2, or bills praising students for demonstrating in favor of gay rights.

Resolutions on the consent agenda are passed by a single voice vote of the Council rather than being considered individually. If one is present and does not ask to be recorded voting "no" then they are assumed to have voted "aye." However, any member of the body may have a bill pulled off of the consent agenda.

Resolution No. RS2012-488 on the consent agenda is part of the sweetheart deal with HCA and that provides $500 per new HCA employee, employed at the new HCA facility to be build on West End.

SUBSTITUTE RESOLUTION NO. RS2012-489 is another bill which is part of the HCA deal. It appropriates a million dollars to the HCA deal. The justification for this is that the corporate relocation of HCA is going to create jobs and those jobs are likely to be filled by individuals residing in the “pocket of poverty.” The pocket of poverty includes the proposed HCA West End development site. This site is just west of Union Station Hotel, just north of Music Row and just northeast a couple blocks from Vanderbilt University. Maybe some of the people who will go to work at the new HCA headquarters will be Vandy graduates, so maybe they are residents of this “pocket of poverty.” I don’t know.

If I was an inquisitive Council member I would want to know the boundaries of this "pocket of poverty." I would want to know if this is money that was supposed to combat poverty but is instead being used to subsidize a well-connected wealthy company that is not likely to hire any really poor people.

None of the other resolutions on the consent agenda appear controversial.

Bills on First reading almost always pass. They are considered as a group and are seldom discussed. First reading is a formality that allows the bill to be considered. Bills are not assigned to committee or analyzed by council staff until after they have passed first reading. Here are bills of interests on first reading.

BILL NO. BL2012-320 by Councilman Claiborne is a follow up to his recent failed attempt to end lifetime subsidized health insurance for future former council members. This bill would not end it but would drastically reduce the subsidy. (read more)

Bills on Second Reading: It is on Second reading, after bills have been to committee, that discussion usually takes place. Below are bills of interest on second reading.

BILL NO. BL2012-293 is Councilman Duane Dominy’s bill that would require the fair board to issue a request for information (RFI) to gauge interest from the private sector to see if there is a private sector investors that would be willing to preserve our Fairgrounds for current uses and improve the fairgrounds if given a Twenty-Five (25) year lease. I happened to know that there is, in fact. at least one entity that would like to take over and preserve and improve the fairgrounds. The deck is being stacked to destroy the fairgrounds. This bill needs to pass. Those who want to save the fairgrounds should turn out in force to support this bill, but I don't know of any effort to encourage a big turnout. For more on this issue see here and here.

ORDINANCE NO. BL2012-314 provides for a one-time early retirement incentive to employees of the Metropolitan Government eligible to retire before February 28, 2013. The incentive would be a one-time payment of $700 for each year of employment with the Metropolitan Government. As I understand it, metro cannot effectively reorganize and restructure because there are employees in jobs that need to be abolished, combined or redesigned. Also these are the more highly paid Metro employees. If these position were vacant, metro would have more flexibility to restructure and replace higher paid employees with employees with a lower starting salary. This seems to make sense.

Bills on Third Reading: Third Reading is the final reading. If a bill passes third reading it becomes law unless it is vetoed by the Mayor, which has only rarely happened. Below are the bills of interest on third reading.

ORDINANCE NO. BL2012-Bill 294 by Councilman Duane Dominy simply brings a minimum level of accountability and oversight to the purchasing process. This is a bill to watch. It would require all sole-source contracts over $250,000 be approved by the council. Last meeting, after having been defeated in the B & F committee, it passed the Council by a vote of 23 "ayes," and 14 "nos." If this passes, one of the few sole source contracts that would have to come before the council is the city's contract with the Chamber of Commerce for the Partnership 2020 program.

Partnership 2020 is a public-private partnership developed by the chamber whose purpose is to recruit new businesses to the Nashville area. Metro’s appropriation for this program in recent years has been $300,000 a year. While the program serves a ten county area, Metro funds a greater share of the program than the other nine counties combined. Many feel that Metro funds the program, yet the bulk of new relocations to the Nashville area go to surrounding counties. The Chamber has an enormous amount of influence over some council members. It was a tremendous feat that Dominy was able to get this bill through second reading. See if he can push it over the finish line.

BILL NO. BL2012-295 establishing rules for handling the eggs and keeping chickens on school property. On second reading it caused several members take to the floor to speak. However, the bill passed by voice vote so I doubt it will be debated on third reading, but this is a bill of which to be aware. I know it sounds unimportant and boring but apparently it is the basis of some discord between Council members Charlie Tygard and Bo Mitchell. I don't know the real story of what this is all about.

BILL NO. BL2012-297 is part of the HCA sweetheart deal. To learn more about this, see what happened in the B & F committee and what happened on second reading.

There are no memorializing resolutions on the agenda.

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