« Newly and truly blighted | Main | It's the Mall or not at all for Med Mart, convention center »
February 9, 2009
Complicated deal, powerful partner
Forest City Enterprises is accomplished, but hit by torrent of bad news
Las Vegas Sun
by Sam Skolnik
Forest City's bid to build a new city hall in Las Vegas provides a jumping-off point for an exploration of the company's mastery of the public-subsidy game.
As the city hall project moves forward, Forest City’s record — both positive and negative — is coming into better focus.
Though the developer is rightly known for building high-quality projects, observers say, it also routinely and effectively uses the strength of its name to gain huge subsidies and tax breaks from local governments.
...One of the company’s ongoing projects in Albuquerque, called Mesa del Sol, may hold lessons for Las Vegas. The project ultimately will comprise a 12,900-acre tract of land, four town centers and 100,000 residents.
Forest City has been extolled for concentrating on bringing a wide array of businesses to the area.
...And yet there has been a serious downside to dealing with Forest City, he said — its bulldozer approach to taxpayer financing. Forest City demanded it, and got it. The company pulled together a powerful team of lobbyists to get a new tax increment law passed, which allows future gains in tax revenues to finance the improvements that will create those gains.
...By winning approval to float $500 million in infrastructure bonds — backed by the revenue from significant shares of future state and local taxes — Forest City will make hundreds of millions of dollars over a 25-year period, Nims said.
Forest City lobbyists “rewrote the law to favor themselves entirely,” Nims said. “We’re now struggling to close some loopholes and reform the legislation.”
(That Forest City subsidiary, called Forest City Covington, plus its officials and members of their families, donated almost $300,000 to New Mexico Gov. Richardson’s campaign committees over a six-year period, according to news reports. Richardson later supported the Forest City bond deal.)
NoLandGrab: The Forest City game plan will come as no surprise to Brooklynites, who are watching now as the company tries to step up its game to the Federal subsidy level.
Forest City watchers can also be sure that the utter complexity of the proposed Las Vegas deal — good luck trying to figure it out — is designed to benefit the developer at the expense of the city's taxpayers.
Posted by eric at February 9, 2009 10:01 AM