NLR moving to end school suit

4 on council favor disconnecting 3 TIF districts merged in ’08

— The aldermen who were present when the North Little Rock City Council spent New Year’s Eve 2008 piecing together three tax increment financing districts said last week that they are in favor of reversing that decision at the first council meeting of the year.

The North Little Rock School District filed a lawsuit against the city in February 2009, claiming that the council’s rushed and convoluted connection of the three tax increment finance districts downtown did not follow state guidelines. The lawsuit is still pending.

Mayor Joe Smith, elected in a Nov. 27 runoff to replace his former boss, Patrick Hays, announced at his swearing in ceremony Tuesday that he plans to introduce an ordinance to end the lawsuit at the first council meeting he will oversee next Monday.

The lawsuit hung over Hays’ sixth term and also clouded Smith’s election campaign. His opponents tried to connect him to every city kerfuffle because of his 22-year role as the city’s commerce and governmental affairs director under Hays.

Tax increment financing districts, or TIFs for short, divert property-tax revenue resulting from increases in property value and use the money to pay for improvements benefiting the TIF district. Such a diversion is usually opposed by the affected school district, which is the main benefactor of property tax revenue.

The city’s plan at the time was to use its portion of the TIF revenue to build a public parking deck next to a privately built high-rise hotel downtown. Neither project could go forward because of the lawsuit.

In the years since the City Council combined the three TIFs, the property-tax revenue held up in escrow has grown to $270,403.82, according to the Pulaski County treasurer’s office last week.

The plan to end the lawsuit, City Attorney Jason Carter said, is to have the council reverse the action it took four years ago.

“The easiest way is just to revoke the project plan or the combined districts in their entirety,” Carter said. “That would end the primary part of the lawsuit. The last instruction given to me [by Smith] was to start working on that.”

The council’s 5-2 vote in 2008 merged three TIF districts in downtown North Little Rock by connecting them via adjoining streets, though the properties aren’t adjacent to one another. The action was taken on Dec. 31 that year so the city could capture a major portion of the tax money based on the increase in property values that would show up on 2009 reassessments.

The four remaining city aldermen involved in the 2008 decision will support Smith’s plan, they said, adding that they’re ready to put behind them both the lawsuit and any bad relations the city has with its school district because of it.

“I am assuming we’re giving up our rights on assembling that property,” said Murry Witcher, one of the four aldermen, and one of the five “yes” votes that were needed to create the TIF. “At this point, we haven’t gone forward [with any development]. We might as well let it go.”

Aldermen Charlie Hight, Linda Robinson and Debi Ross are the three remaining council members from the 2008 meeting. Hight and Robinson, like Witcher, voted to approve the TIF. Ross voted against it.

“I was hoping that was what would happen,” Ross said when asked about Smith’s plan.

“I voted against it [merging the TIFs] to begin with, so I never was in favor of that. I don’t see the votes not being there [to end it].

“It has been strained,” Ross said of relations between the city and the School Board because of the lawsuit. “It’s time to move on.”

Robinson agreed that the lawsuit needs to come to a close.

“I don’t have a problem with us ending the lawsuit,” she said.

“It’s the district who filed the lawsuit. If the district agreed to end their lawsuit, I’m OK with it.”

Hight called Smith’s move “a good idea.”

“I think doing away with the lawsuit is a way for the new administration to say, ‘we want to play ball with you guys,’” Hight said. “I think it’s going to improve the relationship. It can’t hurt it. It’s probably been strained somewhat by it. I intend to support the mayor’s legislation ending that lawsuit.”

Witcher maintained that the city has remained a good partner with its school district despite the lawsuit, paying for improvements on school athletic fields, building sidewalks near elementary schools and paying for school resource officers - police officers who work inside schools.

The cost of having six veteran police officers stationed in schools is about $293,000 annually, said Assistant Police Chief Mike Davis.

The funds cover the officers’ salaries, Davis said, and come out of the Police Department’s budget, which is part of the city’s general fund.

The public image, however, is that the city isn’t a good partner with its schools, Witcher said, mainly because some School Board members harp on the lawsuit and the city’s TIF action as being detrimental to the schools.

“That was one of the things mentioned on a regular basis during the campaign, the need to help improve those relations,” Witcher said of the lawsuit. “While I didn’t think that one item was that significant, it’s a good symbolic gesture, I think.

“I’ll vote for it to end.”

Arkansas, Pages 7 on 01/07/2013

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