Archive for IDA

No Vig for Hillsborough

Posted in Economic Development, Hillsborough County, FL with tags , , on January 30, 2011 by verbumsapienti2

Vigorish is an interesting Yiddish word for the bookmaker’s “take” in handling betting transactions, regardless of the outcome. We mostly hear it used as simply “the vig”.

In investment banking, “vig” is sometimes used to describe profits from advisory and other activities.

In Hillsborough County, vig is paid to lawyers and brokers every time tax-exempt municipal bonds are created and sold to private investors.

County government seems to have turned a blind eye to the enormous profits going to everyone except Hillsborough taxpayers, without who’s acquiesce, none of this would be possible.

The County is leaving money on the table for others to scoop up, by the bag full.

This is being done as a result of the Hillsborough BOCC at one time or another abdicated oversight of  certain “authorities” they helped create.

One recent example is the approval by the BOCC for the Hillsborough County Housing Finance Authority (HFA) “finance plan” to create up to $250,000,000 in new tax-exempt bonds to buy home mortgages, bundle them up into securities which are then sold to private investors.

Not only does the County not get any vig on these transactions, the County taxpayers  also miss out on collecting mortgage transfer fees. Nationwide, this represents a multi-billion dollar loss to counties.

For those of you who are also Federal taxpayers, remember that these are tax-exempt. The wealthy private investors who buy these security bonds PAY NO FEDERAL INCOME TAX on the interest income. This may go a long way to explain the size of the current Federal budget deficit.

Next up for BOCC consideration is Commissioner Mr. Ken Hagan’s proposal to somehow turn the little known and independent Hillsborough County Industrial Development Authority (IDA) into some “supercharged” economic development engine.

Since 1989, the IDA has quietly issued $2 BILLION in tax-exempt bonds to fund construction of not only private schools and hospitals, but also for-profit manufacturing facilities and TECO pollution controls.

While all these programs can somehow be justified as in the public interest, County taxpayers make no money on the transactions. Federal taxpayers make up for the lost tax revenues.

Commissioner Mr. Hagan has not reveled any details on how this (so far, half-baked) new economic development proposal would actually work, except that the IDA would be encouraged (enabled) to vastly increase the creation of yet more tax-exempt municipal bonds to be sold to private investors.

While no one questions the importance in investing in Mom, Apple Pie and The American Flag, we should all question who is getting “the vig” while Hillsborough (and Federal) taxpayers take it in the wallet.

<IMHO> Fred Jacobsen