One down, two to go.
A $1.6 million proposed tax increment financing district passed through the first of three city boards on its quest toward approval Tuesday.
Several business ventures could bloom out of the plan that on Tuesday received approval from the TIF Financing Committee, including additions to Klock Werks and Patzer Woodworking, construction of up to six twin homes and installation of up to 62 townhomes in south central Mitchell.
The project, which would be the TIF No. 22 in Mitchell, if approved, has now been sent to the Planning Commission for further review at noon Monday.
Unlike most of the TIF's established in Mitchell, the $1,634,531 TIF would be furnished through the city rather than the developer. The funds would later be repaid through future taxes on the properties within the district.
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The $1.6 million TIF would be used to fund necessary infrastructure improvements along portions of East Hackberry Avenue, East Juniper Avenue, East Ivy Avenue, South Lawler Street and South Kimball Street. If it passes through both the Planning Commission and the City Council, it would pave gravel streets and install storm sewers to address long-standing drainage issues in the area.
"This is really the type of TIF that, because these folks are willing to develop, it gives the city an opportunity to do some road construction work that should be done anyway," said Attorney Don Petersen on behalf of the various developers involved in the project.
If approved, the TIF is expected to spark substantial investment in the area, including a $600,000 standalone addition to the Klock Werks grounds, a $300,000 addition to Patzer Woodworking, $114,300 per each twin home built and $7,086,600 for the 62-unit townhome project.
Without the TIF, Petersen said Klock Werks would not likely pursue an expansion at its current location.
"They basically said, 'We aren't going to do an addition, a $600,000 addition, to our building if we don't have streets,' " Petersen said.
No committee member shared any objections to the proposal as far as rule violations were concerned. The committee found the project fell in line with of the guidelines outlined the the city's TIF ordinance, including application requirements, mandatory criteria and discretionary criteria.
The TIF even went above and beyond the criteria needed for approval, according to the committee. Under section four of the mandatory criteria portion of city law, a TIF must meet two of six criteria, but the proposed TIF met four criteria, according to the committee.
"I would say without questions, 'b' and 'e' are met, and we only need two," said City Attorney Justin Johnson.
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The committee agreed the project has demonstrated it is not economically feasible without use of the TIF, would eliminate actual or potential hazard to the public, would bring new or expanded employment opportunities and would result in additional redevelopment in the TIF district.
According to City Administrator Stephanie Ellwein, Mayor Jerry Toomey is also supportive of the plan.
"The mayor did want me to relay also that he's in favor of this project," Ellwein said. "We see that as a way of improving the streets in the area and addressing the known maintenance issue that we have."
Ellwein said the drainage issues in the area, which would be addressed by storm sewer upgrades under the TIF, have required the city to dispatch workers to unplug sewage lines in the area after rain storms.
Although the storm sewer would provide an upgrade over the current infrastructure in the area, Public Works Director Tim McGannon warned the developers the project may not end all existing drainage and flooding issues.
"The developers need to understand, especially Klock Werks, that they are built in the bottom of the bowl in that area," McGannon said. "A major event, a 4- or 5-inch rain in that area, probably is not going to be solved every time."
If approved, both the Klock Werks addition and the townhome project could break ground in 2016.
