Taxpayer advocate: City should be careful with business incentives

Carson City must be sure its redevelopment projects are necessary and benefit small businesses, the head of the Nevada Taxpayer's Association said at a business meeting Wednesday.

The state's redevelopment law is for "blighted" areas, Carole Vilardo said, but has been used throughout the state to promote economic development in areas that might not fit the traditional definition of blight.

"Does it make sense when you look at what statute allows?" she said. "It's perfectly legal to do what has been done. Is it morally correct in all cases? That's definitely questionable."

A blighted area used to be defined as a place that attracted crime and demanded a disproportionate amount of government resources, she said, such as police and firefighters.

Vilardo, for instance, wasn't convinced the former South Carson Wal-Mart building should have been called blighted, said City Manager Linda Ritter, who spoke at the Carson City Chamber of Commerce luncheon with Vilardo.

The city used incentives to get a developer to attract Burlington Coat Factory and Sportsman's Warehouse to the former Wal-Mart building. Both businesses are scheduled to open this year.

Carson would rather not use incentives such as up-front payments and sales tax sharing agreements, Ritter said, but it has to get businesses to chose the city over the Douglas County shopping center to the south.

"It's what we have to do when we're faced with the competition we're faced with," she said.

Limits on property taxes have forced local governments to become reliant on sales taxes, Vilardo said, and that pushes them to use redevelopment to attract business.

Using redevelopment to attract business is "an important tool," said Ronni Hannaman, Carson City Chamber of Commerce executive director, but the city is "overly-dependent" on sales taxes.

Sales taxes revenues are a large part of the consolidated tax that makes up almost half of the city's main fund.

Revenue from auto sales makes up about 40 percent of sales taxes.

Vilardo's most specific criticism of the city's redevelopment policy is that it sometimes rewards developers but not small businesses.

For instance, a project can get to 20 percent or $100,000 from the city, but that all goes to the owner who makes the improvements and who usually doesn't run the business in the building.

Ritter said the city will look at changing that policy.

• Contact reporter Dave Frank at dfrank@nevadaappeal.com or 881-1212.