Last week, the DeWitt City Council spent the lion’s share of its regular session discussing tax incremental financing, aka TIF.
It is a government tool that subsidizes businesses by refunding a portion of their property taxes to help finance development by those businesses. In exchange, the city sees bigger tax coffers on the horizon.
TIF is designed to spur economic growth through development. It can be used to woo new employers to the area and build shiny-new office buildings or fix up new ones. It can be used to encourage existing businesses to expand.
In this day and age, cities are waving TIF money at prospective employers who will develop properties, paving the way for job growth and boosting the tax base.
The trick, however, is not to give away the farm, said DeWitt City Administrator Steve Lindner. Cities that are desperate to increase their tax rolls might fork out too much in incentives, while others might offer the equivalent of a breath mint.
“It’s hard to know what ‘that number’ is that companies are looking for,” said Lindner, who added that it is usually not the decisive factor that woos companies to a new community.
As the year draws to a close, the city needs to certify the total amount the city will pay out for TIF arrangements in the district. The council certified the debt for the city’s tax-incremental financing (TIF) at $2.3 million.
The significance of this figure is that a miscalculation can have a ripple effect across the community. The difference between what the city can collect and chooses not to collect — upon consideration of a variety of factors — then flows through the school district and the county like regular tax revenue. The city wants to avoid large swings in the amount of money flowing through the community.
Accounting for projected growth of the TIF district over time, the city has been able to methodically increase the TIF debt figure from $1.3 million in 2009 to $2.2 million last year.
The city has increased the payment pool by a $100,000 increment every year outside of 2017, when it jumped by $200,000. After much deliberation, the council decided to stay the course and bump the certified debt to $2.3 million.
The city also updates the status of each TIF agreement for the benefit of the council, which votes on whether to approve each payment.
The council voted to:
• Approve obligating TIF funds to Tom Tiefenthaler for the Cobblestone Estates subdivision. The estimated payout for the seventh year of a 10-year residential TIF agreement is $95,000.
• Approve obligating TIF funds for the eighth and final payment to Custom Pak for the construction of a 250,000 square-foot building on Lake Street. The estimated payout is $100,000 for this year.
• Approve obligating TIF funds to Diamond Rock for the development of the Jacobson Farms subdivision. The estimated payout is $45,000 for the fourth year of an 11-year agreement.
• Approve obligating funds from the TIF fund to reimburse the DeWitt Development Company (now the DCDC) for the additional taxes paid on the spec building lot in Crossroads Business Park after the zoning was changed on that property. The estimated payout for the fourth year of a seven-year extension is $5,000.
• Approve obligating TIF funds to Maschio Gaspardo for the purchase and improvements to a building located at 112 Third Avenue East. The estimated payout is $3,000 for the fifth year of a 10-year agreement. As a result of the 10% rollback mandated by the state on commercial property, the current value of the property might be less than the base value, so it’s possible there might not be any increment to rebate.
• Approve obligating TIF funds to Expander Americas as a result of improvements to a building located at 223 Industrial Street. The estimated payout is $5,000 in the fourth year of an eight-year agreement. As a result of the 10% rollback on commercial property, the current value of the property might be less than the base value, thus there might not be any increment to rebate.
• Approve obligating TIF funds to Latham Pool for the purchase of and improvements to a building located at 818 East Industrial Street. The estimated payout is $15,000 for the second year of a seven-year agreement. In the previous year, no rebate was paid on this property because the state tax rollback reduced the taxable value to a point that no payment was due. However, due to improvements to the property, the assessed and taxable value have increased on this property.
• Authorize and obligate (via separate readings) an internal advance of $25,000 from TIF funds to cover the administrative and legal costs for dealing with urban-renewal projects.
• Authorize and obligate (via separate readings) an internal advance of $40,000 from TIF funds to the Department of Public Works for improvements to the city’s sanitary sewer system, including manhole cleaning and reconstruction, to reduce the inflow and infiltration of storm water into the sanitary sewer.
• Deny obligating TIF funds to Laura Selby pertaining to a proposed assisted-living facility, which is about half completed. Because the terms of the agreement have not been met, the city has not paid any rebates on this project and will not until the project is completed and the required number of employees are hired.
The council also voted to:
• Approve the certification of the city’s Fiscal Year 2019-2020 budget after soliciting oral and written comments on the city’s proposed budget amendment, which incorporates unanticipated expenditures and revenues that came up over the course of the year after the budget was set. No one from the audience addressed the council, and city hall received no verbal or written comments.
• Approve extending phone lines that have been installed in city hall but have not yet been connected to the alarm system for a cost of no more than $300.
• Approve closing a First Central State Bank checking account and moving the remaining balance into a money market account.
• Approve payment of wages to fall soccer coaches.
• Approve the second reading of ordinance amending the 2015 Code of Ordinances by amending provisions pertaining to operating budget preparation.
• Authorize a reserve officer to carry weapons.