As cliché as the phrase may be that the only certainties in life are death and taxes, what is not cliché is how we as individuals, collectively and municipally, approach the given certainty of the need for tax revenue.
During my 31 years in commercial real estate in Tucson, 24 years as a commercial property manager, two terms as the President of the Building Owners & Managers Association, and a member of the City Budget Advisory 1990-1999, I joined numerous volunteers, including the late Judge John Molloy and Sonny Solot to create reports for possible revenue enhancement. These annual reports were withheld from the public for unknown reasons. Speculation was that our body of research and data exceeded the collective knowledge of elected officials and were at odds with the covert agenda of our city manager form of government.
My now retrospective view is that our city in its dire need to balance the budget is near bereft of creativity, experimentation, and solid research, as evidenced by the rather banal and indolent proposed 2% residential rental tax.
Is this as good as it gets? We are not in need of thinking outside the box—there are myriad revenue sources right inside our municipal container.
The onerous 5% state tax on commercial rentals was incrementally phased out by mid-1996 (HB#2209 40th Legislature) with the intention of clearing the way for an incremental increase in local commercial lease tax from 2.0% to 2.5%, an overall savings to tenants while increasing revenue. No elected official or city staffer followed up with this proposal, and to this day, office, retail, and industrial renters are a protected, near untouchable class. Is this fair and equitable when juxtaposed against the burden created by a residential renters’ tax? Why have we not seen a feasibility study examining the revenue stream from a 1.0% increase on office, retail, and industrial rentals? Many of these entities are out-of-state franchisees and foreign owners. Why should they be exempt from their fair share while their profits leave the city? The same question applies to land leases that are as much a subterranean source of revenue as the land itself.
Did you know that we have the only airport in the West that is not owned by the city it services? Tucson Airport Authority is essentially a sovereign nation. What’s up here? Why do we not benefit from the tax base of our own airport?
Lost in the sea of revenue is the entire underground universe of our municipal sale-leaseback program that is mediated and managed by Business Development Finance Corporation. Few citizens realize that the City is but a mere tenant at the City Court Building, the Police and Fire Departments, and the Tucson Covnention Center. Might anyone know who the landlord is? What we do know is that TCC has been refinanced numerous times, again with no input from elected officials. I challenge anyone to discover the exact rent amount in the City Budget and the exact rate of return that is given to these undisclosed investors.
My suggestion is that our city council appoint an independent auditor to examine the entire structure of the sale-leaseback program. In a financial climate where virtually every investment instrument is being retooled and renegotiated, does it not seem prudent to shed some light on this underground world of municipal dealings? The results of an audit may make a 2% renter tax look a bit foolish.
During my 31 years in commercial real estate in Tucson, 24 years as a commercial property manager, two terms as the President of the Building Owners & Managers Association, and a member of the City Budget Advisory 1990-1999, I joined numerous volunteers, including the late Judge John Molloy and Sonny Solot to create reports for possible revenue enhancement. These annual reports were withheld from the public for unknown reasons. Speculation was that our body of research and data exceeded the collective knowledge of elected officials and were at odds with the covert agenda of our city manager form of government.
My now retrospective view is that our city in its dire need to balance the budget is near bereft of creativity, experimentation, and solid research, as evidenced by the rather banal and indolent proposed 2% residential rental tax.
Is this as good as it gets? We are not in need of thinking outside the box—there are myriad revenue sources right inside our municipal container.
The onerous 5% state tax on commercial rentals was incrementally phased out by mid-1996 (HB#2209 40th Legislature) with the intention of clearing the way for an incremental increase in local commercial lease tax from 2.0% to 2.5%, an overall savings to tenants while increasing revenue. No elected official or city staffer followed up with this proposal, and to this day, office, retail, and industrial renters are a protected, near untouchable class. Is this fair and equitable when juxtaposed against the burden created by a residential renters’ tax? Why have we not seen a feasibility study examining the revenue stream from a 1.0% increase on office, retail, and industrial rentals? Many of these entities are out-of-state franchisees and foreign owners. Why should they be exempt from their fair share while their profits leave the city? The same question applies to land leases that are as much a subterranean source of revenue as the land itself.
Did you know that we have the only airport in the West that is not owned by the city it services? Tucson Airport Authority is essentially a sovereign nation. What’s up here? Why do we not benefit from the tax base of our own airport?
Lost in the sea of revenue is the entire underground universe of our municipal sale-leaseback program that is mediated and managed by Business Development Finance Corporation. Few citizens realize that the City is but a mere tenant at the City Court Building, the Police and Fire Departments, and the Tucson Covnention Center. Might anyone know who the landlord is? What we do know is that TCC has been refinanced numerous times, again with no input from elected officials. I challenge anyone to discover the exact rent amount in the City Budget and the exact rate of return that is given to these undisclosed investors.
My suggestion is that our city council appoint an independent auditor to examine the entire structure of the sale-leaseback program. In a financial climate where virtually every investment instrument is being retooled and renegotiated, does it not seem prudent to shed some light on this underground world of municipal dealings? The results of an audit may make a 2% renter tax look a bit foolish.
