Citizens Oak Ridge

Letter to the editor

Submitted to the Oak Ridger on June 1, 2007.

To the editor:

As an article in Wednesday's paper reported, I do not remember how I voted in the mall bond referendum in 2002. The reason I do not recall my vote is that I was conflicted over the decision ­- I was torn between my enthusiasm for the proposed downtown area redevelopment and my concern that this benefit would come at much too high a cost. (Since I was not a candidate for City Council at the time, I did not feel obligated to take a public position on the issue.)

Because I recall my 2002 decision as a difficult one, I believe I appreciate the difficulties that some Oak Ridgers have faced this year in making up their minds about the proposal for public funding for the proposed Crestpointe (Target) shopping center. Crestpointe has been promoted as both a source of substantial tax revenues and a solution to the city's very real need for additional shopping opportunities, but the proposal also has drawn extensive criticism. Sadly, the voters' dilemma has not been made easier by this newspaper's unbalanced coverage of the issue and unwillingness to investigate or report on several serious questions raised by critics of the Crestpointe proposal.

My analysis of this year’s proposal has convinced me that the costs of the Crestpointe proposal ­- both financial costs and long-term detriment to the community -- clearly outweigh its benefits. Here are just a few of the reasons for my conclusion (for details and more extensive commentary, see my website at http://ellensmith.org/blog/):

* By choosing to sink city resources into developing Crestpointe, Oak Ridge would be abandoning the city’s established goal of redeveloping and revitalizing the downtown area (including that mall property we were so enthusiastic about just 5 years ago). The 400,000 square feet of new retail space currently projected for Crestpointe would fully absorb any need for retail growth here, and Crestpointe would be too isolated from existing Oak Ridge businesses to give them additional retail traffic or otherwise boost their retail traffic. If Crestpointe is built, we can look forward to continuing and worsening blight in the area that we used to think of as Oak Ridge’s commercial center.

* Subsidies to new out-of-town retail businesses, particularly in an isolated location that lacks both zoning and infrastructure for retail, are harmful to existing business owners who have invested here without special incentives and who count on the city to maintain a predictable business environment and to follow through on the announced goal of redeveloping the downtown area.

* City projections of how much the new center would increase Oak Ridge retail sales (and thus sales tax revenues) are not supported by information on the buying power of Oak Ridge and its market area. Instead of analyzing data on buying power, city officials are assuming that companies that choose to build or lease stores here have determined that their new stores will achieve the average sales of similar stores in the nation or region. That's not a safe assumption -- growing retail companies that expand by adding stores in smaller markets (like Oak Ridge) have to expect the new stores to have lower per-store sales than the averages in stores they already operate in bigger markets. It is very possible that the new shopping center could be successful for its owners and tenants without achieving the level of success necessary to provide the sales tax revenues now being advertised.

* Almost all ($8.9 million) of the $10.5 million that the city would contribute would be used to continue the herculean task (begun several years ago by the landowner) of turning a mountain into flat land (by removing much of the utility infrastructure already installed there, blasting and moving 1.7 million cubic yards of rock and soil, and building a massive 50-foot retaining wall around the perimeter of the site). If residents are eager to spend a large sum of public money on a development project, I can think of many other projects that would provide more long-term value to the city, such as redeveloping the failed mall as a shopping center, restoring the Alexander Inn as an historic inn and restaurant, or jump-starting the project to turn the site of the K-25 building into a heritage tourism destination.

* The much-touted projection that property taxes from the shopping center would pay off the city’s contribution in just 15 years sounds too good to be true, because it IS too good to be true. First, taxpayers should be aware that the city bonds would not be revenue bonds backed by a dedicated revenue stream, but they would be general obligation bonds backed by the "full faith and credit of the city" (that's all of us and the taxes we pay). Additionally, careful examination of the city's spreadsheet and discussions with city staff reveal that this projection requires that (1) $8 million of the city’s contribution comes from “reserve funds” (much of which seems to be accumulated revenues from the sales tax that voters approved on the condition that it be dedicated to the high school rebuild project), (2) the city need not include imputed interest costs on this $8 million when calculating the amount necessary to “pay it back,” (3) the city can keep all of the local property taxes on the development (both the county’s share and the city’s share), (4) combined city and county property tax rates will be 14% higher in the first year after development than they were in FY 2006, and (5) property taxes on this property will go up 3% each year for those 15 years (people who expected Crestpointe to prevent property tax increases may be unpleasantly surprised). More realistic accounting indicates that, after subtracting out the costs for building it, the city and our schools would get just about enough tax revenue from Crestpointe to replace just one of those 3% annual property tax increases.

Yes, Oak Ridge needs more retail diversity, but Oak Ridge can and should be able to obtain that retail diversity on terms that are better for the community. For example, there have been many indications that Target wants to be in Oak Ridge, and Crestpointe is not the only available site where the company would consider locating a store.

Voting no on the bond issue does not even eliminate the possibility of using bonds to support a retail project (if a good project is presented) since City Council could call for a new bond issue just 90 days later.

Vote "no" for the future of Oak Ridge!

Ellen Smith
Oak Ridge


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