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Funds meant for libraries, parks to pay for roadwork

Tax dollars to go toward widening of Wilmington Pike, access for MVHS.

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By Jill Kelley, Staff Writer Updated 9:24 PM Thursday, January 5, 2012

CENTERVILLE — Millions of taxpayer dollars generated by levies that would have gone to local libraries, parks and human services will instead help pay for roadwork and infrastructure improvements near Miami Valley Hospital South.

The city’s decision to use tax increment financing (TIF) to divert funds from multiple levies has become a point of contention for community agency leaders, who say they were surprised by the move.

“Local resources are squeezed, but failing to communicate and cannibalizing each other’s incomes compromises the spirit of community cooperation and collaboration and does a disservice to us all,” Washington-Centerville Public Library Director Kim Paras said.

In December, Centerville Council approved a TIF that will divert property taxes from construction and development around MVHS. The money will go toward the widening and improvement of Wilmington Pike, the bridge and ramps at Wilmington and Interstate 675, as well as related roadwork and infrastructure.

Although this is Centerville’s first TIF, the practice is not uncommon. The Ohio Department of Development reports that there are 43 active TIF agreements in Montgomery County.

Joe Tuss, deputy Montgomery County administrator, said TIFs have been traditional sources of revenue for infrastructure improvements to support local developments. What is becoming more common is that more jurisdictions may look to TIFs as another funding option as state and federal revenue sources grow thin.

“The challenge now is that, in the past, these sorts of things did not have the impact that they currently have because of the overall drop in real estate values,” Tuss said. “The impact on every property tax-based levy is more significant now than it was five or six years ago.”

Although portions of the MVHS campus are nonprofit and will not generate property taxes, Centerville Finance Director Steven Hinshaw said the taxable portions are expected to yield about $7 million in today’s dollars during the TIFs duration, which is expected to be about 30 years.

“This TIF would generate money for the local share (of the project),” said Hinshaw, adding that the city has applied for federal funding that would cover 80 percent of the costs. “We want to build our local share first, because it helps us qualify for federal monies.”

The $7 million will come from property taxes diverted for 30 years from the Montgomery County Human Services levy ($3.6 million), the Washington Twp. Fire Department and rec center levies ($1.2 million), Sinclair Community College levy ($670,000), about $600,000 each from the Washington-Centerville Public Library levy and Centerville-Washington Park District levy, and $500,000 from the city.

Taxpayers will get the revenue from those levies at the value at which they were passed. Additional funds from the development will be diverted to the project until the TIF expires.

Nathan Cahall, Centerville’s economic development director, said the timing of the process was swift because the city had a finite window of opportunity to implement the TIF to its fullest financial effect.

“The TIF has to be in place before the new, improved value is recognized by county auditor,” Cahall said. “Sometimes they will do an interim reappraisal of property during construction.”

A TIF locks in a taxable worth of a property at the value it holds at the time that the legislation is approved.

The city structured the TIF in such a way that it does not divert taxes from Centerville City Schools, the largest recipient of local property taxes.

Local entities affected by the TIF agreed that the expansion around the hospital is welcomed, and that the city followed the letter of the law during this process.

But these closely entwined groups often discuss issues that have shared financial impact, such as the timing of levies, and some are upset with how the TIF was handled by the city.

“The frustration was there wasn’t any communication to do this until late November,” said Georgia Mergler, community relations manager for the library. “We completely understand that everyone is dealing with reduced revenue from the state, but we also worked hard to just pass a 10-year levy. No sooner than it’s passed, a TIF has the potential to cost library almost $600,000 over 30 years.”

Washington Twp. Administrator Jesse Lightle agreed that, given the economy, there is a greater sensitivity to decisions that have a financial impact. “In the spirit of cooperation, notifying someone that future tax dollars would be lost ... is important,” Lightle said, “and that’s not what happened.”

Centerville City Manager Greg Horn said the city has been accountable and transparent in its TIF process, and has followed state guidelines and the more stringent rules of the city charter. Horn said there cannot be growth at the hospital without the road improvements, which will benefit the entire community. “Any major project that involves significant infrastructure improvements, many will have TIFs involved ... ,” Horn said. “This is why the state legislature created that vehicle.”

Staff writer Jeremy P. Kelley contributed to this report.

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How TIFs work

Tax increment financing is an economic development tool that local governments can use to finance public infrastructure projects
If a TIF is enacted on a property today, the existing amount of property taxes continue to be distributed as always.
But when the property is improved, expanded or built out (and therefore increases in value), the increase in taxes is diverted away from the usual recipients and used to pay off the cost of the project.
This diverting of payments occurs for a set number of years, often 10 or 30. After that period ends, all taxes from the property are distributed as the community’s levies normally dictate.

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