EDITORIAL FOR JULY 24-27, 2015
I’m CAVE MANager Paul Lotsof. As I have explained in my last two editorials, my belief is that the Villages of Vigneto are way less of the boon for Benson than they are cracked up to be. Promoters of the massive housing project would like us to believe that if they build 28,000 houses, they all will sell and Benson will become one of the biggest cities in Southern Arizona.
The thinking seems to be that Benson will be the exact opposite of most boom towns. Historically when a community experiences explosive growth it is because a whole lot of jobs came to the community. The housing follows the jobs. Hardly ever do jobs follow the housing. Who is going to move to a community just because there are thousands of houses for sale? You need some way to make the payments on the houses. No developer with his head on straight builds massive numbers of houses in an economically depressed area.
In my previous editorial I also pointed out that El Dorado Holdings has a lot of competition from other developers who have designs on Benson. These include the San Pedro Partners and Diamond Ventures who both own vast tracks of land that are far more attractive than the land that El Dorado has acquired.
Perhaps the most troubling thing that El Dorado has proposed is the establishment of an entity called a “Community Facilities District”. No other developer in Benson has made this a requirement in order to get started. So why does El Dorado need this? The simple answer is that the community facilities district saves the developer millions of dollars in startup costs. Instead of having to pay for the costs of the roads and water and sewer lines and parks and libraries, the developer uses borrowed money raised by the district’s sale of bonds. So the developer doesn’t borrow the money and the developer doesn’t have to pay off the loans. If worse comes to worst, the district files for bankruptcy and the lenders get taken to the cleaners. Either that or the bond holders go after the city which set up the district.
A community facilities district is like a fire district or a school district or a hospital district. It has a board of directors and they have the power to levy property taxes on anyone who owns property in the district. The district goes on for the rest of eternity and so do the taxes. Those extra taxes can only make the real estate less attractive to buyers.
It turns out that there are two law firms in Arizona that specialize in forming new districts. Greenberg Taurig has already done a lot of work for the city of Benson and also for the Benson School District. On June 22, an attorney with Greenberg Taurig made a presentation to the Benson City Council and his remarks were filled with warnings about things that could go wrong with the district. If the city sets up the district, it will be necessary for the Benson City Council to appoint a board of directors to run the district, and El Dorado wants the city council to appoint their team of purported experts to run the district. Some of those directors don’t even live in Arizona. Greenberg Taurig employs an attorney named Mike Cafiso and he doesn’t like the idea of having a board run by people who don’t even live in Benson:
Voice of Cafiso: “There’s some questions in lawyers’ minds about whether’s it’s okay to have somebody who’s not a resident of the district of the City of Benson acting as a board member. There are some constitutional issues with that.”
Cafiso then added that the city could even get in trouble with the Internal Revenue Service by appointing El Dorado’s hand picked directors who don’t live in Benson and who might have conflicts of interest. He also cautioned that if the council appoints an independent board, the city’s present liability insurance won’t cover them.
Cafiso’s presentation was filled with warnings about problems that the district could cause. He illustrated what could happen if both he and the the mayor lived in the district and he didn’t pay his property tax:
Voice of Cafiso: “The mayor pays his taxes but I don’t pay my taxes. What’s going to happen? The mayor’s taxes just got doubled in my example.”
Cafiso’s presentation was filled with scenarios about what might go wrong. El Dorado’s Mike Reinbold didn’t like that presentation at all. Reinbold convinced our city council to hire the other lawfirm ,which El Dorado has used in the past. To sweeten the deal Reinbold even offered to pay Kutak Rock’s fees.
On July thirteenth, the city council gave the nod to the law firm of Kutak Rock in spite of City Attorney Gary Cohen’s suggestion that the council hold off on signing anything until precise terms could be hammered out. But Mayor Toney King would have none of that. He insisted on getting Kutak Rock started right away.
So that’s where things stand. Our mayor and council are convinced that El Dorado Holdings is God’s gift to Benson and we must play along with their game plan and get things started at the earliest possible minute. Then we just wait for Benson to mushroom and Benson becomes a boom town as the vineyards bear fruit. If you don’t believe that welcome to the club. My prediction is that big troubles are on the way.
I’m CAVE MANager Paul Lotsof and the opinions you’ve just heard are mine and not necessarily anyone else’s. If you’d like a copy of this editorial or my other two editorials on the Villages of Vigneto, go to the CAVE web site: CAVEFM.com. That’s CAVEFM.com