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OPINION | MIKE ORNDORFF: How to increase Little Rock's revenue

by MIKE ORNDORFF SPECIAL TO THE DEMOCRAT-GAZETTE | September 19, 2021 at 1:52 a.m.

I applaud Little Rock Mayor Frank Scott Jr. for his ambitious goal to increase city revenue through a sales tax increase. I saw his hard work at neighborhood meetings, while going for walks with constituents, having conversations on the radio, and sending personal text messages. Rebuild the Rock didn't come up short through any lack of effort.

And I appreciated his former opponent Baker Kurrus offering his insight on the proposed sales tax. It was helpful to see all sides of the revenue question.

One thing I never heard either of them mention was the $900 million in infrastructure-related requests currently pending on the public works department desk. To be fair, the sales tax would have only raised an additional $40 million over 10 years for public works if the city stuck to its plan.

So, while I hear voices like Kurrus stating we are overtaxed already and we have money already--even well-known car salesman Steve Landers says there are other ways to raise city revenue--no one is addressing the nearly billion-dollar elephant in the room.

I remember hearing a story once of an individual imprisoned in a Nazi Germany internment camp. Knowing he faced certain death, he began to ask himself: "How do I escape today?" For hours he meditated on the question until finally he took off all his clothes and dove into a pile of dead bodies. After being loaded up and dumped in a hole, he climbed out, then ran 20 miles through the night to Poland and freedom.

We have to start asking ourselves: "How do we raise city revenue today with what we have?" Are there, to quote Mayor Scott, "bold ways to envision the future of Little Rock" without raising the sales tax rate? The answer is a resounding 'Yes!' Here are a few ways:

• Implement a land value tax system. Homeowners would receive a small decrease in taxes on improved property. Vacant non-agricultural property owners would see a fair increase. An increase in taxes on vacant property would recognize public investments already made servicing the property and encourage development by imposing higher costs of doing nothing.

Alternatively, it would encourage the sale of vacant property, which makes development more likely. The city-funded snow plow didn't skip three dozen empty lots owned by land speculators before clearing our street, but the land speculator contributions to city revenues are next to nothing.

Decreasing taxes on homeowners and increasing taxes on vacant land owners doesn't change the tax base; however, making the long hold less profitable means a sale is more likely and redevelopment more likely. Infill developments use existing infrastructure at no new cost to the public and creates no new obligations for the city.

• Institute parking maximums. The Promenade at Chenal is amazing--lots of great stores and restaurants--with the prettiest parking lot in central Arkansas. Even the apartments next door look great, but there is no direct connection to the Promenade, and both are surrounded by seas of asphalt. Even on Black Friday you won't see 75 percent of the parking lot full.

Streets, sidewalks, curbs and gutters are a city's asset. Allowing box store after box store to develop in a way that is incredibly inefficient is poor land stewardship. The Promenade is a generation away from turning into a skating rink and a Burlington Coat Factory, but the streets that serve it will be here for much longer. We have to encourage more sustainable, efficient and productive development. Doing so will reduce city obligations for years to come while creating more land for development that would increase city revenue.

• Plan and zone in a way that nudges development to be more connected and walkable. Any money spent on gasoline for personal transportation is a complete loss. Very little of those tax dollars go back to the city, and almost none of the profits are returned to the local economy.

Encouraging more connected development with transportation options, such as walking and biking, reduces long-term city obligations. Reducing car dependency also increases disposable personal income.

The time of covid-19 has shown that staying close to home does not keep us from spending money. Instead, we spent money more locally. There has been a long debate about our oil dependency from foreign sources. We may not see the Keystone XL Pipeline built, but we can still do our part to end foreign oil dependency by developing in ways that make an automobile unnecessary to thrive. We did it for thousands of years. This is not a new concept.

The best dollar the city ever sees is the one it can tax over and over again. Any support of small businesses can help do this. The proposed ordinance concerning Airbnbs and Vrbos will raise the barrier to entry for new entrepreneurs. This is the entrepreneurship this city should want.

Anything a city can do to increase the incomes and quality of life of its residents should be a winner, especially when the opportunity comes at no cost to the city and instead generates new revenue for the city.

Much of the money spent for short-term rentals like Airbnbs comes from tourists and travelers. Since many hotels are not locally owned, those dollars are sucked out of the local economy. Short-term rentals offer an option as local as it gets. We should find a way to encourage locally owned short-term rentals, instead of proposing to kill them with red tape.

• The mayor has done a great job promoting all of the newly created jobs here in Little Rock. We are climbing toward 10,000 new positions in just the last two years. Permits for new single-family homes, however, numbered under 1,000. Those new jobs created are paying some other city's sales tax. For zero dollars, Little Rock Planning and Development can partner with local Realtors and email every contractor licensed in Little Rock lists of available, inexpensive lots, as well as the comparable sales prices for homes already being sold in every neighborhood.

• Quit annexing land. For 70 years, our population has remained relatively stagnant, but the geographic size of the city of Little Rock has increased 10 times over. We now have the same number of people to pay for 10 times the infrastructure.

The Little Rock mayor and board of directors have tough decisions ahead of them that will affect our livelihoods and quality of life. The city our kids inherit from us depends on decisions they will make now. The tax increase was not approved, but bold leadership that envisions a better future for Little Rock is exactly what we need, now more than ever.

"Work for the success of the city I have sent you to. Pray to the Lord for that city. If it succeeds, you too will enjoy success." -- Jeremiah 29:7

Mike Orndorff is a residential and commercial developer in downtown Little Rock.

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