TIF guidelines outlined for Davison County Commissioners
A new document outlining the guidelines for tax increment financing (TIF) districts was discussed at length during a meeting of Davison County commissioners Tuesday.
In a TIF district, financing is issued for infrastructure improvements, such as roads or sewers, through bonds to aid development within the district, and property tax dollars are diverted from local taxing entities to pay off the financing.
Assembled by Davison County Planning and Zoning Administrator/Director of Emergency Management Jeff Bathke, the TIF guidelines document shows the necessary steps to qualify and the purposes for TIFs. It’s the first time the county has put together a document for TIF guidelines.
“We kind of got caught off guard when the city said they no longer want to do any because we’re reaching our maximum bonding authority,” Bathke said in an interview with The Daily Republic after the meeting, held at the courthouse in Mitchell. “The point is to give enough flexibility to attract a business, but not give away the farm.”
One of the major discussion items on the document included the length of a TIF, which can be up to 20 years — the amount of time state law says a TIF cannot exceed.
Commissioner Randy Reider said each application for a TIF should be looked at on a case-by-case basis and not automatically given a 20-year TIF.
“Twenty years is a long time,” Reider said. “If it took it 20 years to be paid off, it wasn’t real successful and took it a long, long time to accomplish that.”
Added Commissioner Denny Kiner: “I think it depends on the size and the circumstance on each individual case. It’s one of those things where you have to look at each instance to see what the community benefits from the infrastructure and what tax revenue will be generated from it.”
The other major discussion point on the document was the discretionary tax formula that comes with new commercial businesses constructed on TIFs. The discretionary tax formula gives a tax break to new commercial businesses in Davison County for the first five years of their existence.
Commissioner John Claggett expressed concern that some people think those businesses are “double dipping” by getting too many incentives.
“With the discretionary fund formula, the first year you end up paying 20 percent of your property taxes; the second year 40 percent, third year 60; fourth year 80 and fifth year 100 percent,” Claggett said. “I think it’s a good thing. What that does on a TIF, it moves it a little farther out, but you’re still getting the project built and people are still eventually paying all their taxes. In that fifth year, they’ll pay their full tax all the way across. It’s an economic development tool.”
The 17-page document shows that a seven-member Planning Commission, which includes two Davison County commissioners, is the major hurdle that needs to be cleared to determine whether a district qualifies for a TIF. The other five members of the Planning Commissioners are citizens who are appointed by the Davison County Commission each January.
“They do the majority of the work,” Bathke said. “They’re the ones who make the big decision.”
The document also shows an approved use of TIF funds, restriction of TIF funds, application requirements mandatory criteria, variable criteria and funding for school districts.
Davison County has three TIFs on its books with the first being the Wild Oak Housing Development TIF that was approved in 2003. In 2013, the Westwood Addition — an apartment complex that’s being constructed on the southwest side of Lake Mitchell — was approved. The TIF for Edgerton Place, the apartments to the south of County Fair Food Store, was also approved last year.
The packet will be reviewed again at next week’s regular meeting on Tuesday with changes that were made from this week’s discussion.
In other business Tuesday, the commissioners:
• Heard Director of Equalization Kathy Goetsch discuss a new method of notifying county citizens of their 2013 real estate assessments, and state codified law that relates to county equalization offices.