There has been one citizen that has been writing email and calling me with the most frequency since the campaign began. I appreciate his tenacity in getting answers to what he feels are important questions as he decides who he may be voting for. His latest question is one that I thought I'd share my answer publicly by posting it here on MOCO.
I am leaving the state for the week end but your reply to how you will fund KC interchange is critical. Answer when you get caught up.
My reply follows...
This will have to be a two-part answer to the question.
The first answer is easy, if the developers on the north side of Kingman Crossing are so insistent on an interchange that will bring Interstate traffic to their development then they can pay for it. When only private funding is used, the developers can use the design/build method of construction and it will save them millions of dollars. I believe that if the developer wanted to provide this infrastructure and allow for access to the north side only, they should be supported to do so.
The developers shouldn’t be expected to grant access to the south side off the Interstate if they are paying the bill with no expectation of reimbursement or other means of public financing in return for their efforts. (To me all along, I've got the feeling that the developer is more interested in getting traffic from the Interstate to their project, not so much has been said about catering to the needs of the residents on the south side. Even the new hospital project underway has been quoted as saying they don't need the interchange to move forward)
Now that leaves future access to the south side up to the property owners on that side of the Interstate, those owners are the city of Kingman and the state of Arizona. The community can decide later on in the future if they’d like to have that access and could do something about it (i.e. pass bonds, set up improvement districts, or something else that puts the weight of the cost on the residents of Kingman).
Now for part two of my answer.
Since the beginning of the talk about an interchange at Kingman Crossing, I’ve felt that the biggest benefit to the community that would come from that interchange would be public safety and convenience. I am specifically speaking about traffic flows. A complete interchange that allows for full access with north and south egress and ingress would provide alternate routes for residents in most parts of Kingman and the surrounding area. We are seeing a hospital go in at the new development, and access that might save some lives of residents in the southeast part of Kingman will be impeded without the fully built out interchange. Other forms of emergency response will also be improved with the new access this proposed project can produce.
This is why I don’t have a problem with having a sit down with a party with a funding source to see if that funding source would be willing to provide all the funding up front with some promise to repay at a later time. Not only that but put the onus of risk on that funding source instead of the taxpayers in the community. Public/private partnerships offer the foundation for such things.
You asked how would I fund the project, well in this manner my best guess and favorable support would be to pay back or reimburse the funding source out of realized net add gains to the bottom line of sales tax collection. There are literally multitudes of ways to accomplish this, but the tough part would be in the details of any future negotiation of course. The following is what I’d consider a favorable way and one that I would seek if elected to the office of City Council.
The first thing that has to happen, according to state statute, for this kind of development agreement with a municipality is to have the city pay for a feasibility study. The economist that is hired to perform this function would investigate the potential revenue gains that would be uncovered by the scope of the project. This study would be the basis to use to begin negotiations between the city and the developer. This feasibility study could possibly even tell us all up front that the developers project wouldn’t create an increase in sales tax enough to warrant moving forward with this type of agreement. If that ends up being the case, the developer would be left to my answer number one -- pay for what they think they need on their own dime with no expectation of pay back.
I’m going to assume that this kind of study does in fact show a substantial net add in revenues. I’ll keep the numbers simple for this. Let’s assume that Kingman currently draws $100 total in sales tax returns from the current situation. Now the feasibility study comes back and says that if this project goes through and is successful that the projected return of revenue will mean that Kingman draws an additional net add of $10 a year (a new grand total of $110 dollars). Now both sides (the city and the developer) would have a basis to begin working towards an agreement in my opinion.
I would only be interested in reimbursing the developer for the up front costs of the infrastructure out of the net add revenues generated… in other words the additional $10 a year. Maybe $5 dollars of those $10 dollars a year is enough for the developer to accept for repayment. Maybe the city feels that reimbursing for the project should happen as fast as possible and decides to give all of the net add back to the developer until the cost is fully repaid. That would be a decision that the community should weigh in on… but only if we all get that far. Otherwise the project goes back to my answer number one.
I talk about shifting risk onto the developer and for this next part of the negotiation the city can do exactly that. Once again we will use my simple example from above, but we will assume that we are repaying the costs to the developer at $5 dollars a year. The agreement can be benchmarked that if ever the net add revenues do not exceed the $5 dollars, then the city does not have to cut a check that year for reimbursement. Now if an agreement cannot be reached at this point because the developer won’t take on the bulk of the risk, then the project goes back to my answer number one.
Now another consideration that would have be agreed on is what portion of the project would the city of Kingman reimburse the developer for IF the project is completely built out granting full access to both the north and south side off the Interstate. Some folks will want to reimburse only for half. As I stated earlier the full project would enhance public safety and convenience needs of the community. I believe the entire project (the infrastructure) belongs to the community and therefore if a party agreed to fund the entire project up front then this community would need to fully reimburse the funding source. After all, none of the funding would be coming from additional taxes on the Kingman resident. No sales tax percentage increase, no implementation of a property tax, and no bonding that lays the risk entirely on the community.
A fully built out interchange at Kingman Crossing also enhances the resident owned 168 acres that makes up the greatest economic asset that belongs to this community. The value of that land would increase significantly and could ultimately lead to many other benefits to the residents. It would also increase the value of the state owned land further to the south of the Kingman property and developers would have to pay a higher amount to acquire that property if they so desired for other future development. So in my opinion, the project is worth paying for fully and I believe that the infrastructure is our liability… but a liability that doesn’t carry all of the risk.
I can understand that all of this is based on assumptions, but the only reason they are assumptions right now is because the city and the community is not having meaningful discussions and working towards conclusions and solutions. I’m not worried that the critics will say something negative about my assumptions as some local voices have already made their own assumptions without even considering anything else. If the voters really want to have someone looking for real solutions, while at the same time clearly communicating the findings, and at the same time protecting the community – then I will be elected to serve for the next four years. If the voters choose others that have made negative assumptions based on zero data taken from zero discussions then I believe the community will be buying misguided hype based on zero facts.
What do we collectively know as facts right now??
The city had a plan to sell the 168 acres of Kingman resident owned property to partly pay for not one but two major infrastructure projects. The results of the November 6 election last year pretty much squashed those plans.
So since then the facts are…
A developer is proposing to the city a new interchange off of I-40 at Kingman Crossing. The developer approached the city about the possibility of pursuing a reimbursement type of development agreement. And as the Looney Tunes would appropriately say… “And that’s all folks”.
The next step of course is to get a feasibility study done. It will cost less than the actual INCENTIVE the city paid to Chrysler for some jobs in YUCCA and potentially the feasibility study could lead to returns back to this community many times greater than the Chrysler proving grounds EVER will. Again, we won’t know until we take the next step.
To me, at least, it sure beats waiting a year or longer before actually doing something.
I hope your out of town trip went well.
Thanks,
Todd Tarson
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