July 24, 2017 at 3:53 p.m.
City conducts review of TIF districts
City conducts review of TIF districts
TIF districts allow a municipality to recover infrastructure and other development and improvements costs in a designated area from the property taxes generated on the increased value of the property after the creation date of the district. The tax on the increased value is called a tax increment.
Rhinelander currently has six TIF districts, the oldest created in 2000 and the most recent in 2013.
The city may collect the tax increments in a TIF district until the net project cost has been recovered or until 27 years after its creation date, whichever comes first. If the improvement costs are not recovered from the tax increments by the date the district is dissolved, they must be absorbed by the city. Additional costs may be added to a district until five years before its termination date.The benefit of using TIFs is the city attracts businesses into those districts and the increase in assessed property value funds improvements that benefit everyone in that district. Once the TIFs reaches its termination date, the increase property taxes go straight into the general fund in their entirety.
Interim city administrator Keith Kost quickly ran through how the six districts did for the calendar year 2016 based on reports prepared by the accounting firm of Baker Tilly. These reports also contain the financial information on the performance of each district since they were created.
Kost said that district No. 1 is referred to as a environmental TIF, but it was created to aid in the development of Lake Park Condominiums on Boom Lake.
"It used to be a paper chip factory and HH Distributing," Kost said. "And that one is in the red, that one is losing money."
Since its creation in 2005, TIF 1 has produced $909,342 in tax increments, with $101,997 last year. However, the costs associated with the improvements of the district have run $199,949 over revenue over its life and $23,341 last year. It's current fund balance is also the $199,948 to the negative.
However, he said the future is looking up for that district in the near future.
"It will be in the black, by my estimate, when they start to put up the next set of condos," Kost said. "As far as I know, everything out there was sold, and that was the plan that there was going to be another set of condos."
TIF district five was created for the job center, and that one is firmly in the black since its debt was paid off when the county bought the center, Kost said. He added the city may look to end that district early because of this.
"That one made about $14,000 last year and it has a fund balance of a little less than $50,000," he said.
TIF District six covers the airport business park and was created to help entice the current occupants to locate there with upgraded infrastructure.
"That one cash flowed a little bit last year, that's ABX and Speedy Delivery," Kost said. "When I looked at the numbers, that one may end up being a loser unless we can get some more businesses out there."
Since its creation, TIF 6 has generated $341,430 in increments, with $82,168 last year. It showed an excess of $12,953 in 2016 but since its creation, it is running a negative balance of $23,948, which is also its fund balance. It still owes $1,264,247 on its long-term debt.
He said while there has been no interest in businesses locating in the district lately, there has been some interest in use of the railroad spur.
"That could be positive because that runs right through that TIF," Kost said.
TIF district 8 covers part of the downtown area, and Kost said it has been losing money since it was created in 2010.
"It's not a very big TIF, it started at $280,000," he said. "And the assessment evaluations continue to go down."
There were no increments captured in this district in 2016 and it has generated just $63,037 in the seven years it has been in existence and it currently has a positive fund balance of $31,936. However, he said there is strong interest in a development in that district in the near future.
"What that would do to the assessed valuation would be tremendous," Kost said.
District nine covers the new Printpack building on the State Highway 17 bypass.
"This one is doing very well," he said. "We have a fund balance of $2.5 million and there is still $5.4 million owed on that TIF, but that TIF should be fine."
He said if Printpack builds a second building as it has stated it wants to, "everybody will be happy."
Since its creation in 2012, TIF 9 has generated $1,212,296 in increments with $588,747 in 2016 alone. It's fund balance sits at $2,257,507.
The last district, TIF 10, encompasses the Toyota dealership on Stevens Street and is the youngest of the six, having been created in 2013. Since it's creation, it has generated $227,787, with $128,790 in 2016 and has a fund balance of $195,187.
"It's got a positive cash flow, there is only $371,000 and some change owed on that," Kost said. "And there's also talk of expansion of another business out that way, fairly set in stone, and that might lead to an amendment of that TIF."
Jamie Taylor may be reached at [email protected].
Comments:
You must login to comment.