Council action earlier created a dedicated TIF fund, allowing the city to begin capturing the incremental tax value of these properties as development occurs. Establishing the TIF district positions the city to reinvest the future increased property value dollars to recover acquisition costs and help fund infrastructure improvements needed for development.
Council approval of the TIF district was with the approvals of the Tipp City Exempted Village Schools and the Miami Valley Career Technical Center. With the city schools agreement to the 75% TIF waiver for 30 years, the city estimates the schools will receive around $2 million over that 30-year period, said City Manager Eric Mack.
The next step is this legislation to establish a New Community Authority for these same three properties.
“Once both financing tools are in place, we anticipate the New Community Authority will be finalized by the end of the year, the city can begin moving forward with actual development while working within the existing lease constraints at the Tipp Plaza,” Mack said. With purchase of the plaza property, the city assumed leases with existing businesses.
Council also approved Oct. 20 the rezoning of the 920-980 W. Main St. Tipp Plaza property from Planned Development to a new Uptown (UD-1) zoning classification. This zoning will offer more options for developing the plaza property. The city is working with Woodard Development on exploring those development options.
Tax Increment Financing vs. New Community Authority
City Finance Director John Green explained the difference between the TIF and the New Community Authority, saying the TIF creates a property tax abatement but requires “service payments in lieu of taxes” that are in amounts as if the property tax had been assessed.
These service payments are used to fund the public improvements —or the debt related to the public improvements — made on the property. They typically term when the original improvements and/or the associated debt with those original improvements is paid off.
The New Community Authority creates a separate governing board made up of city and developer representatives (public-private partnership) with the ability to assess various “community development charges” related to business activities on the property, according to Green. These charges can take the form of real property tax, sales tax, lodging tax, etc.
The money raised by these charges is then used to fund the public improvements — or the debt related to the public improvements — made in the New Community Authority District, which can span multiple parcels.
The amounts raised in excess of the cost of the original improvements could be used for future improvements within the New Community Authority District. The New Community Authority payments can help reduce the term of the TIF agreements or can allow additional borrowing if the costs of the improvements exceed those supported by the TIF agreement.
Green provided the following example of possible use of the New Community Authority: The city purchased the Plaza property for approximately $7 million and will have to make a number of improvements to put it in a condition for redevelopment. Early calculations indicate that the TIF payments can support repayment of approximately $3.5 million of that original purchase price. The New Community Authority charges would step in to help cover the remaining city costs on the project.
City Council will hold a public hearing on the proposed New Community Authority at 7:30 p.m. Nov. 17 at the Government Center in Tipp City.
Contact this contributing writer at nancykburr@aol.com.
About the Author