As you know the Harley school, a private school, where annual tuition for high school can run $17,000 per year, received a COMIDA benefit. What kind of benefit? Well, it wasn’t a sales or mortgage tax exemption, no, they’ve got something even better. They were accepted under the COMIDA umbrella and can now float municipal bonds.

What does that mean?

Well, Harley wants to expand and renovate so they need to raise capital. They could take a loan from a lending institution and pay a certain percentage in interest, or they could float a “corporate” bond (probably not the right term) where the purchaser of the bond receives an annuity in exchange for the investment.

Or the Harley school can take the path they are currently taking and float a bond - but not just any bond - a tax free municipal bond. COMIDA allows certain entities to float tax exempt bonds. From the press release….

The Harley School (Tax Exempt Civic Facility Bond)

In 2005, Harley completed a $12 million renovation and expansion project which included classrooms, theaters, the field house, swimming pool and libraries. The proposed $10 million project will included $3 million for modernization of the science wing, roof work and other renovations, and will refinance the existing $7 million debt for the 2005 project.

This project will impact 117 existing FTEs. The applicant is seeking up to $10 million in tax exempt civic facility bonds.

Got that? Tax Exempt Civic Facility Bond. They are borrowing $10 million dollars, refinancing existing $7 million in debt and using the $3 million to expand.

I asked the question in a previous post how much does it cost?

Well, this is what COMIDA is all about - a quasi governmental agency that reallocates tax dollars for supposed job growth. We have already learned how they reallocate local tax dollars like the Wellesley hotel award. This time it is State and Federal tax dollars.

If you borrow money say for a house or car - you are paying some lending institution interest, who is then reporting the interest as revenue. Do you have investments? Well, the 1099s you receive will tell you how much you owe in taxes.

What do those taxes do? Well, they fund the government in order to provide goods and services. Services programs which the State uses to fund public schools or Federal assistance provided to the State.

The point here is this - Harley’s loan via COMDIA takes $10 million dollars out of tax coffers. Because they are floating a tax free bond, investors don’t pay taxes on the investment. The government is deprived of tax revenue. Specifically, the taxes they would have earned on a $10 million dollars capital investment.

What are we getting in return?

We are ultimately getting, via this project and others like it, a reduced revenue stream, so those of us who actually pay taxes are asked to shoulder more of the tax burden.

We are shutting off the flow of monies to the same government that provides public community-wide goods and services.

I mean exchanging $10 million dollars worth of tax revenue to support 500 students at a private institution. How is this worth it?