Renaissance Village approved
a pair of 11-to-two votes County
Council authorized issuance of up to $20 million of
interest-free bonds to help the Commonwealth-Setting joint
venture pay for infrastructure for Renaissance Village.
months of discussion about the appropriateness of using
new-to-Delaware methods of financing, the only issue remaining
as Council prepared for the vote on Sept. 16 was obtaining
assurance that, if the project should go sour during the 30-year
life of the bonds, county government and its taxpayers will not
have any obligation to make good on the debt.
the measures' sponsor, John Cartier, who represents eastern
Brandywine Hundred, maintained they did not represent a bailout,
but would set a precedent to spur redevelopment of blighted
areas of the county. Elsewhere in the nation, he said, tax
incremental financing and special development districts are
"often used to stimulate, enhance and encourage redevelopment."
In an unrelated
matter at a meeting of Council's finance committee earlier in
the day, acting chief financial officer Edward Milowicki said
the county's fiscal situation has continued to deteriorate and
revealed that a consultant has been hired to come up with idea
for tapping new sources of revenue.
Cartier appeared to
have satisfied his colleagues that the financing methods are a
fiscally safe way to go.
"[That] has been
made clear [in] numerous ways," George Smiley, co-chairman of
the finance committee, said at its meeting a few hours before
Council voted at its plenary session. In authorizing the county
to proceed, "the Delaware legislature has properly vetted the
legislation restricts the
financing to the area defined as the Claymont 'hometown' zoning
overlay, which includes Renaissance Village. It has been pointed
out, however, that the debt obligation applies just to property
owners within Renaissance Village.
Smiley called upon
Milowicki for a final bit of assurance. Milowicki replied
unequivocally that the bonds will carry "no obligation to the
taxpayers of New Castle County."
William Tansey, the
finance committee's other co-chairman, however, voted against
both the resolution establishing the special tax district and
the ordinance authorizing the bond sale, "for philosophical
reasons." He said he objected to financing "a private for-profit
entity" when Council rejected an "opportunity to issue bonds for
the Delaware Military Academy." That charter school, he said,
"had to go out of state to [obtain] conduit financing."
denied that Council had turned down the school. "That issue
didn't come before this Council," he said.
that the request "was stuck in somebody's drawer" and not
allowed to reach Council.
Street cast the other negative votes on the resolution and
During the public
comment portion of Council's plenary session, three members of
the public spoke against the measures. One did so at the
Speaking on behalf
of the Civic League for New Castle County, Charles Weymouth said
that organization believes the financing method "will burden us
with more bureaucracy and, in the future, additional financial
liability and, in all probability, more county-sponsored
The ordinance on
which Council voted was a substitute for the original version of
Cartier's ordinance. No copies of the substitute were readily
available to the public at the session. Comparison of the
original with a copy of the substitute which Cartier provided
Delaforum appeared to reveal that the only substantive change
was specifying that both storm and sanitary sewers are included
as infrastructure and the addition of the phrase "and
acquisition of land therefor" to that clause.
Tax increment financing requires
county government, during the life of the bonds, to forego
collecting ordinary property taxes on the amount by which the
assessment increases as residences and commercial facilities are
built on the now-vacant tract which formerly was the Brookview
apartments complex. Brandywine School District will continue to
receive proceeds from taxes on the full assessment.
Property owners in the special
development district will be obligated to pay an annual surtax
-- initially a little over $1,000 per residential unit and
comparable amounts on other properties.
Proceeds from both sources will
go into a county-administered fund to pay interest on, and
eventually retire, the bonds.
Cartier repeated a previous
observation that the amount of tax county government will forego
will be more than offset by increased amounts of realty transfer
tax received as the properties are bought and sold over the
course of years. Moreover, he said, Brookview generated only
$32,500 in annual revenue for the county, which was considerably
less than the cost of providing police services in what became a
for Delaforum the accuracy of Cartier's statement as well as
William Rhodunda's comment that the firm's current tax
obligation on the cleared land is $5,000.
"There is no doubt in my mind
that it is worth it," Cartier said.
The enacted ordinance empowers
County Executive Christopher Coons to determine details of the
bond issue in negotiating a private deal with Bank of America,
which is specified in the legislation as the underwriter. County
bond counsel Timothy Fry said providing for such deals is common
practice with government bond issues.
Fry declined at the committee
meeting to make an unqualified claim that this bond issue will
be free of risk.
"There is no debt that doesn't
carry some risk to it," he said. But, he added, these bonds will
be sold to "sophisticated institutions familiar with real estate
During his quarterly update on
county government finances during the committee meeting,
Milowicki said that, on the basis of two months experience
during the current fiscal year, he has written down expected
revenue from the realty transfer tax during the full year by
$5.7 million. Projected revenue from that source is now $26.2
million, down from $32 million in fiscal 2008.
The county now expects to have to
dip into reserves, other than the so-called 'rainy day' fund
earmarked for emergencies, to make up what otherwise would be a
$23.7 million shortfall. If so, the reserves will be down to
$37.8 million on June 30, 2009.
Philadelphia-based Public Financial Management, has agreed to
provide "a broad revenue inventory that identifies ... potential
revenue sources" by November. Included will be suggested steps
county government can pursue to emulate what Wilmington city
government did to get its financial house in order.
"I hope they figure out how we
can do it before the state [legislature] hijacks it," Smiley