Letter to the Editor: Civic Center campaign ‘an unending series of distortions’

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Dear Editor:

The campaign for the Civic Center Campus has been an unending series of distortions since the 2008 decision matrix used to formulate reasonable alternatives left off obvious choices. Many other choices had been part of council discussions less than 12 months before the ceiling collapse used to justify demolition. (Please see the 2007-2008 Biennial Budget – Capital Improvement Funds and Property Counselors report dated March, 2008.) Because any group of citizens believed a single mega-project could transform downtown didn’t make it the only alternative.

Repeating the chronology of studies and reports about the aging building’s condition still doesn’t mean they recommend demolition. Nor do any of them mention the civic campus concept now being pushed as the only rational choice.

Since before the first $25 million ballot proposition, the city has also systematically misrepresented the comparison between renting and owning. They have skewed both columns in their popular graph making their argument an outright fabrication.

A 30-year stream of anything is not appropriately compared to a 50-year stream of something else. The rental stream lasts 50 years while the ownership stream only lasts 30. That is because the $25 million mortgage in the ownership column only lasts 30 years and they only want to talk about the mortgage (bond). The other costs of owning any building (insurance, utilities, repairs, maintenance, janitorial and such) do not disappear in either the 30 years the bond is in place or for the additional 20 years which must be added to measure a comparable cost of occupancy between renting and owning.

If they only want to measure 30 years without operating costs in the ownership column, they must also exclude those same costs in the rental column. They should also only show 30 years of renting. Without operating cost contributions included, the current rent is $335,695. The market rent, which they are guaranteed by their lease extension, is about $16.50/SF or about $280,000.

Start with that market rate number in 2014-15. Even escalated at their over-stated rental growth rate for 30 years, it doesn’t cost $43 million to rent for the same 30 year period. It’s barely $14 million. What this means (besides that they are trying to mislead you) is that, to be equivalent, whatever they build can only have a mortgage whose thirty year cost, both principal and interest, totals $14 million. That implies about an $8 million mortgage, which is about what they were talking about before the ceiling collapse in 2008.

Finally I have also provided the math indicating that a typical household’s tax bill, using their own $190,000 typical household value, is not $122. In the first year in which all three bonds are in place, 2015, it is $164.50. If, as the City Manager said earlier this year, the typical house is actually $208,000, the annual tax increase in 2015 will be $180.

Although the assumptions in their Levy Rates spreadsheet are interpreted by proponents to conclude an overall average of $122 annually per household, that conclusion simply does not follow from the data they provide. Deconstruct the very numbers presented rather than rely on what proponents tell you the numbers say. You’ll find the mathematical model upon which they hang their $122 hat doesn’t add up.

Compare the total assessed value for 2043, the last year of the bond to the year 2015 and compute the implicit growth rate. It isn’t 3% plus a “+5% every fifth year to account for some economic revitalization.” It isn’t even 3%. The implicit growth rate of our total assessed value over those years is less than 2.4%. If economic growth in the intervening years really averages 3% and our city costs of operation go up by that amount, each household will actually pay more than $164.50 (or $180) on average.

Based on their recent responses, I expect they’ll say that’s just a math error; we’ll get you the real numbers “during the design phase.” Don’t worry; your tax bite really will decrease. We know that’s true because we were told it was. Doesn’t anyone besides me think it is incumbent on our city to stop playing games with the numbers? At some point a continuous series of faulty comparisons and numerical errors, all bearing in the same direction, become more than just mistakes, especially when city resources are their primary source.

Leonard French

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 COMMENTS

  1. It is crazy that the city is trying to get us to pay 43 million dollars to own versus just 14 million in rent over the next 30 years. What are they thinking?

    The Herald article “Terrace to try again on city hall bond” appeared today, Wednesday the 10th, repeating the same misinformation from the city we have heard since January. That article states that a homeowner will pay $163.92 in 2015 and $121.56 thereafter. The city’s own spreadsheet shows that the citizens will be paying a levy rate of 0.86 cents per 1000 of the assessed value of their property in 2016. That means $162.04 in the third year of payments. Based on the 2015 levy rate the Herald is figuring a house value of $188,414. In order to pay $121.56 you would have to wait until 2029, and only if the value of your house did not increase in value in those 13 years!

    If the city has not removed their spreadsheet, it is available at http://www.cityofmlt.com/civicCenter/cVcCenterBG.shtml
    where all the recent MLT information is set out. Scroll down to 1/7/13 and click there on “Levy amounts and tax impact analysis”. The direct link is http://www.cityofmlt.com/civicCenter/pdf/130107/4_LevyAmountsAndTaxImpactAnalysis.pdf

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