Council approves stopgap funding for TIF districts

by Emmitt B. Feldner of The Review staff

PLYMOUTH – The city will turn to reserves – their own and Plymouth Utilities’ – to tide over shortfalls in two tax incremental finance districts.

The City Council Tuesday approved the transfers to cover revenue shortfalls in the TIF 5 and 6 districts.

One transfer was for $290,000 from the city reserves for TIF 5, which stretches from Masters Gallery Foods on the south side to Mill Street.

The other was $464,923.13 from the Plymouth Utilities reserves for TIF 6, which was created for an expansion at the Sargento Foods campus.

What was good news for property taxpayers was bad news for the city’s TIF districts, City Administrator Brian Yerges told the council.

“Overall revenue was down in the TIF districts,” Yerges explained.

He attributed that in part to decreases in the property tax levies for the school district and the technical school district.

TIFs utilize tax revenue generated by improvements in the district to pay off money borrowed to finance improvements within the district.

The biggest levy decrease came for the technical school district, which under a new state financing formula was able to decrease its levy by more than half, Yerges said.

Yerges added that TIF 4, which includes the east side industrial park and commercial developments, will also have a negative cash flow this year. He said that the city does not need to address that immediately, but will need to come back to that in the future.

“Four or five years ago when we looked at this, we predicted a defi- cit in TIF 4 in 2014,” Yerges related.

But by refinancing several debt issues at a lower interest rate, the city had been able to push that out to 2016, only to have the decreased school levies and resultant revenue declines move that back up to 2015.

There are several new businesses being constructed in the industrial park in TIF 4, Yerges added, along with other developments, but it is too early to tell how much tax revenue that will generate. The new industrial projects will not be assessed and paying taxes for another year, at least, according to Yerges.

“There will be an increase in revenue,” in TIF 4 with the new industrial buildings, Yerges said. “At this point, we can’t project what value is going to be placed on those buildings. Hopefully it will be a significant amount, though my gut tells me it isn’t going to completely fix the problem.”

The city could meet the TIF shortfalls with its own reserve funds, utilities reserve funds or by placing the amount on the property tax levy.

Yerges recommended using utilities reserves for TIF 6 because much of the money spent in that district was for various utilities-related projects. He emphasized that he did not want to see any of the costs put on the property tax levy.

Both transfers are considered loans to the city and will be repaid out of future TIF revenues with interest – 3 percent for the TIF 5 money and 1 percent for the TIF 6 money.

“There’s not just an easy answer,” Yerges conceded.

But he added that the state Legislature is considering some changes in TIF law in light of the impact of state-mandated decreased school levies, which have impacted TIF districts and municipalities across the state.

One of those would allow municipalities to seek an extension of the life of existing TIFs that have been impacted by the decreased tax revenues, according to Yerges. That would enable municipalities to stretch out repayment of loans and decrease annual debt payments to bring them more in line with decreased tax revenues.

The council approved both transfers unanimously, but Alderman Jim Faller took the opportunity to again castigate his colleagues on the council for their vote last year to contribute to the construction of a Food Science and Agriculture Center at Plymouth High School.

“That’s pretty sad,” Faller said of the TIF fund transfers, “because our illustrious Finance Committee gave away $100,000 to a group that didn’t even need it. Where the hell is the fiscal responsibility of the Finance Committee and this City Council?”

Mayor Donald Pohlman announced that the state Commissioner of Railroads has scheduled a public hearing on the proposed closing of the North Milwaukee Street railroad crossing.

The hearing will be held in the Fire Department training room in City Hall Wednesday, March 18, at 1:30 p.m. and 6:30 p.m.

The commissioner has ordered that the rail crossing be closed. Both the council and the Plan Commission have voted to oppose the closing.

“Public comment (at the hearing) is encouraged from businesses and citizens,” Pohlman stated.

Library Director Martha Rosche updated the council on plans for the celebration this year of the 100th anniversary of the current library building.

“We’ve planned a lot of public events for this month. We’ve tried to plan something for almost every month,” Rosche reported.

The big kickoff for the celebration will be next month, she said, with a quilt show and display.

That will be followed by an antiques appraisal event in April, a button club display and show in May, and landmarking of the original 1915 library building by the Plymouth Historical Society in June.

“Stop in the library – come visit us and help us celebrate,” Rosche told the council members.

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