I am not really for or against the city’s approval of using a TIF structure for the two proposed downtown projects. I like the idea of Columbia becoming more attractive and as a commercial real estate professional I always welcome the opportunity for free government money in a project (actually not free money, it costs approximately $40,000 in prep work according to Assistant City Manager Tony St. Romaine). On the other hand these new projects compete with most of my client’s projects and I am fiducially obligated to protect their interest. I am merely perplexed and in awe of how things have transpired.

Here are some things that I learned from the City’s introduction of the TIF portion of the meeting:

1. The Sasaki Plan is still the handbook for the City of Columbia.
2. Approximately $40,000 can get you $1,785,000 (in regards to Tiger Hotel)
3. But for a developer makes money, he will not develop.

I was really blown away by number 3. In my experience the council is typically not concerned with the developers return on investment. However, last night the city spent a lot of time explaining the “But For” analysis. The gist of things is that without the tax benefit the developer would achieve about a 6.8% internal rate of return. With the TIF the developer will achieve about a 9.2% internal rate of return. I believe the whole reason for this elaborate Investment 101 lesson is because they can’t simply come out and say “if we don’t give them money they won’t do it and the Sasaki Plan says we need it”.

You can check out the council video at the link below.

City of Columbia council video

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