Yesterday, I said that I was deferring opinion of the Plaza lawsuit, the deferral is over. The building was purchased by New York investors with what I call a New York City frame of reference. At the time of purchase, they had no idea that Reilly/Brown would be scheming up the NIZ. They paid top dollar for a premiere building, with a blue chip Fortune 500 tenant. Because they didn't pay NYC prices, although an associate referred to it as a Philadelphia price, they thought it was indeed a solid investment. It is a unique building, which was custom designed to accentuate PPL's promotion of energy efficiency. Although the center atrium facilitated natural daylight, it wastes an enormous amount of space. The grass on the roof and other high tech energy concepts of that moment, bring no added value for other tenants.
The KOZ was originally conceived to help cities draw businesses to brownfields. That concept was bastardized over the years to regular parcels, including the former prime address of Lehigh Valley, 9th and Hamilton. With the KOZ expired, PPL having spun off Talen Energy, and Reilly and Jaindl competing for their tenant, their investment does indeed look like a white elephant.
The NIZ certainly does create an uneven playing field, but so did the previous KOZ's, to a much less extent. If class A space like the Plaza cannot compete, older office buildings have no future what so ever. If we had anything more than moral and mental midgets in Harrisburg, perhaps they would have thought through the NIZ, in regard to the consequences to the greater marketplace.
link to companion post
I hate the NIZ and would love to see this lawsuit succeed.
ReplyDeleteAt the same time, you gotta love that the Plaza owners are arguing that the tax-subsidized NIZ is putting them at a disadvantage, now that THEIR tax subsidy has expired.
Karma, anyone?
Maybe one day Reilly, Butz and Jaindl will be crying foul after a different tax subsidy is invented in Harrisburg that guts the NIZ. Or I could hope that our legislators realize that ALL tax subsidies should be eliminated, and fairness will be restored.
While I don't think that will happen, it's far too easy to take potshots at our state legislators. They are merely a reflection of us.
We cry about needing jobs and for the government to do something about it, so we get the most expensive minor league arena ever built. Martin Towers can't just SIT there empty for God-sakes, so let's throw a CRIZ to them. It takes me too long to drive to my favorite store, so give me my taxpayer-subsidized Costco. I could go on and on.
Or maybe we hate the NIZ and know that's wrong, but we'd kind of like one of the other projects. So that one's different and we're willing to look the other way on that one. And we justify it by saying it's somehow not as bad, or makes up for the NIZ, CRIZ, TIF, KOZ, or LERTA that someone else got.
But they're all wrong. They're all ridiculous, inefficient, unfair and extremely costly - this is what government involvement looks like.
But until enough people are willing to look beyond the immediate gratification of the shiny new toy and look instead to the true cost of the government picking winners and losers, expect more of the same.
In today's economy everything is manipulated (look at the Zero interest from the Federal Reserve - destroys safe investment income for Seniors.) Large corps borrow 0% interest money, buy back their stock, stock increases in price, value of management teams stock goes up, company looks more profitable, has not hired a single employee. Purchase 1000 rental properties with 0% money. Then raise rents. Another scam.
ReplyDeleteThere is no more free market, special programs, kick backs, back room deals, cut the bottom off the sheet, sew it on top.
Nothing surprises me!
"....At the same time, you gotta love that the Plaza owners are arguing that the tax-subsidized NIZ is putting them at a disadvantage, now that THEIR tax subsidy has expired....."
ReplyDeleteThis is what happens when government gets into the real estate business. KOZ money to subsidize. NIZ money to subsidize. It all comes from you, me and everyone else.
Who paid for the Hess Brothers Building?
Who paid for the H. Leh & Company Building?
Who paid for the Whitehall Mall ? The Lehigh Valley Mall ?
The Comfort Stations under Center Square ?
Remember the days if you wanted to put up a building you went to a bank for the money? But then, that was back when a dollar was worth a dollar.
Doesn't Harrisburg have the power to exclude any new taxes from NIZ? How could they in good conscience increase more taxes on hard working citizens only to pump more $ into the NIZ? How could they in good conscience increase cigarette tax knowing the CigScam will take even more $ out of the State budget?
ReplyDeleteThe KOZ was a more benign urban renewal effort in the mold of Jack Kemp's original Enterprise Zones program. The NIZ was an inside game deal to benefit virtually one developer and one state senator.
ReplyDelete