Of Tiffany’s, Tiffs, and TIFs

We had been thinking about this post for a few days, and were about to address the current tiff over the TIF for JHR development, and their plan to build an Inn on the Maine Street Station property.  Other Side is always distressed by discord in the community, and was determined to reach out to the relevant parties to facilitate a ‘coming together’ in the interest of shared destiny. 

We have, to be modest, an innovative proposal for a win-win-win solution.  It grabs the dilemma by its horns and wrestles it to the ground.  Side’s achievements in such challenging circumstances are a matter of record, yet we have never sought compensation for our heroic efforts.  That’s because we are givers, not takers.

As fate would have it, before we sat down to draft the post, an opinion piece from yesterday’s Wall Street Journal appeared over the transom.  It’s by Daniel Henninger, and entitled “Bring Back the Robber Barons.”

The subtitle is:

There's a big difference between entrepreneurs who make a fortune in the market, and those who do so by gaming the government.

The essay illuminates the differences between “market entrepreneurs” and “political entrepreneurs.”  I heartily suggest you read the item, and I’ll tempt you with this passage:

Market entrepreneurs like Rockefeller, Vanderbilt and Hill built businesses on product and price. Hill was the railroad magnate who finished his transcontinental line without a public land grant. Rockefeller took on and beat the world's dominant oil power at the time, Russia. Rockefeller innovated his way to energy primacy for the U.S.

Political entrepreneurs, by contrast, made money back then by gaming the political system.

This helped to crystallize our thoughts on the tiff over the TIF, and in a broader sense, the recent hoo-hah between the MRRA, the Brunswick town council, and F. Lee Bailey and Oxford Aviation.  Then our signature irreverence kicked in, and “Breakfast at Tiffany’s” came to mind.

Wikipedia carries these pithy words about the original Truman Capote short story and the movie’s central character:

Holly Golightly (age 18-19) is a country girl born in fictional Tulip, Texas, turned New York café society girl, who makes her living coaxing dollars off of rich, older gentlemen. 

Hepburn's portrayal of Holly Golightly as the naïve, eccentric gold digger is generally considered to be the actress's most memorable and identifiable role.

And this, dear readers, provided the catalyst to pull our thinking on this post together.  Brunswick’s circumstances, especially when redevelopment of our beloved Naval Air Station is factored in, are emblematic of the two syndromes just discussed.

At this point in history, Brunswick and the MRRA, perhaps to a greater degree, personify all the vulnerability and desperation of a wealthy old maid seeking a romantic suitor who will satisfy her needs, and with little concern for what the consequences might be tomorrow, next week, or next year. 

Send in the pony-tailed, gold-chained lounge lizard; or the articulate and polished Denny Crane barrister type; or the successful young Brahman blue blood ‘nice young man’ with ties to the local Ivory Tower.  All have charms of one sort or another that play to the frailties and specifics of the moment, and each can lure the needy damsel into behavior she might regret in more ordinary circumstances.

But these are not ‘ordinary’ circumstances.  Like Christine in “Phantom of the Opera,” tempted by the haunting ‘Music of the Night,’ our damsel is all too willing to step through the smoke and mirror into the unknown that lies on the other side.

(We hope readers can appreciate the poetry and imagery of the moment.  We seem to be having a ‘creative economy’ inspiration, and you’ve got to write while the water is shining.  And more than that, we’re laughing as we type.)

Wow….we’ve gotten long-winded; but that’s why you keep coming back.  Right??

To the point, I don’t think anyone would deny that Oxford Aviation has stayed in business through skilled application of the principles of ‘political entrepreneurism’ as discussed in the WSJ column.  Or that F. Lee Bailey has added another layer of ‘finesse’ in mastering the chase for taxpayer dollars. 

The MRRA is a creation of state government, and as such, is an ipso facto political entity.  Chasing CDBG grants through Brunswick’s town council is an overtly political tactic.  Fine, you might say; that’s the system we’ve put in place.  We get what we deserve.

Now to the Maine Street Station JHR TIF and the tiff over it.  The three parties directly involved are the town, the developer, and Bowdoin College.  The town, at this point committed to the TIF, still has a sizable business and private citizen crowd that believes the TIF is inappropriate, or worse, for a variety of reasons.  If nothing else, the town has already gone well beyond original estimates of how much taxpayer money we’d have to put into the development, not to mention the essential gift of the land and the need to replace the lost 55+ facility.

Bowdoin reportedly has a strong interest in having the new Inn built to house visiting parents, potential major donors, and intellectual and cultural luminaries like Angela Davis when they drop in for a visit.

The developer, one J. Hilary Rockett, Jr., of the Marblehead and Salem, Massachusetts Rocketts, apparently inherited a real estate development empire begun by his father.  The empire encompasses a number of waterfront properties including wharfs, etc, in extremely desirable and valuable locations, and Rockett is the second highest property tax payer in Marblehead.

To put it mildly, Rockett doesn’t seem like he’s lacking in net worth, nor would an Inn in Brunswick seem like a step up compared to his other holdings and interests.  One would assume he has easy access to development capital from any number of sources; besides government, that is.  You’d almost expect him to be embarrassed to be sticking his hand out to local authorities, but times have changed, haven’t they?

It doesn’t hurt, here in Brunswick, that he’s also a Bowdoin graduate.  Which makes him a member of a very small group that would think nothing of buying their class rings from Tiffany’s.  At times, one could imagine Bowdoin grads named Holly believing Tiffany’s owes them such a trinket, just because of who they are.  Perhaps when the development is complete, Tiffany’s might consider opening a small shop here in town to service the entitled and titled.

There I go being petty, and while it can be fun, it isn’t becoming, so I’ll get back on track.  On to the win-win-win solution I tempted you with at the start.

It goes like this.  Bowdoin College, in a manner of speaking, is the beneficiary of the MOAT – the Mother of all TIFs.  And it’s an eternal TIF.  What do you think the assessed value of all of the College’s holdings must be?

My guess is that it’s somewhere between $700 million and $1.5 billion, which means that if they were added into the town property tax base, it could come close to doubling.  And if they were taxed on that value like the rest of us, that could lower our property taxes by nearly half.

But they aren’t taxed like the rest of us, because they are considered a “non-profit,” even though they have earned as much as hundreds of millions a year on their huge endowment.  Oh, they pay the town some sums “in lieu of taxes,” in the few hundred thousand dollar range, if I recall, but that’s token change compared to what would be a tax bill in the $20 million range.

This, in a manner of speaking, has the same effect to the College as a TIF would.  Local taxpayers subsidize their operations.  When they build a $25 million ice arena, or spend the same amount remodeling their art museum, local taxpayers are effectively paying a very large share of that bill.

So here’s the deal.  J. Hillary won’t build the Inn without someone else chipping in.  Bowdoin wants the Inn built.  Town residents and existing business owners are unhappy about disparate use of tax breaks for favored entities.

The answer, my friends, is blowing in the Bowdoin Pines.  Instead of the town taxpayers coughing up the coin to subsidize J. Hillary’s Inn, the College can take the dollars out of their sizable stash and give it to their Alumni looking to make good in town.  It will amount to a rounding error for the College, and could create a little good will amongst town residents unhappy with the current plan.

The College gets the high tone Inn they want just steps from the Campus; Rockett gets his development; and taxpayers catch a break.

WIN – WIN – WIN, like I said.

And it didn’t take Rockett science to come up with the solution.

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