Wednesday, September 26, 2007

Commercial Street TIF

I would like to thank John Taylor for this insightful article into the Commercial Street TiF, however some of this article is quite disingenuous. I'll use the following for an example,

"The way they want to do it could also divert tax dollars earmarked for public schools, parks and libraries for the next 23 years".

In the normal scheme of things a properties assessed value goes up at a moderate rate which means the government services listed above really don't see that much of an increase in there operating budgets. Unless of course if the mindnumb masses fall for the tagline "it's for the children" and decide to up our taxrates.
The argument goes that the school system is LOOSING money since a half of one percent(property tax and sales tax revenue) is being turned back into the community for various city listed beautification projects which are supposed to bring higher property values to the building owners and higher sales tax revenues to the area due to increased sales from consumers visiting the area.

During this meeting the powers to be had a graph of how much revenue could be generated on an annual basis starting with year 2008 on display. In year 2008 a little over 38 Mil is to be generated via property tax, starting with year 2009 a little over 72 Mil is to be raised via property tax. Double in one year??

My problem with this is that NO previous years were listed so these figures could've been pulled out of thin air.
My biggest concern is over-inflation of property values in this area which will generate revenue at a rate which can and probably will cause the properties assessed value to exceed the actual value.

I saw this very problem in my next door neighbors home which had an assessed value of almost 90K however the home could only generate 48K for a resale value. An assessors job is to assess property based on the area and the general sales revenue of homes in that area, however one home which sells for a HIGH asking price can bring up the home values in an area that is depressed causing higher property tax rates.

"For the first time, taxes generated in that area can be spent in that area," said Collette. "For the first time, having very little retail can help."

This statement actually blows me away. How dare the people of that area expect that the money generated in that area go to benefit that area. Ms. Collette your logic of how monies should be spent by elected officials is quite humorous

Commercial Street redevelopment: Worth a TIF?

Tax increment financing, a tool used to stimulate growth, requires trade-offs with other civic interests.

John Taylor

Revitalizing Commercial Street would create jobs, increase tax revenue and improve safety, supporters say.

The way they want to do it could also divert tax dollars earmarked for public schools, parks and libraries for the next 23 years.

City officials recommend forming a tax increment financing district for a 10-block section of the historic street, where many buildings are more than a century old. A once-bustling hub, the strip became home to many of the city's homeless in recent decades.

"This TIF under the best circumstances could be another jump start to the economic engine for Commercial Street," said Lyle Foster, owner of Big Momma's Coffee and Espresso Bar at 217 E. Commercial.

Entrepreneurs are moving in, giving the buildings a facelift and opening new businesses. Supporters say TIF — which uses tax revenue collected from new development to fund projects beneficial to the public in that district — could speed that progress.

On Commercial Street, improvements could include more parking, improved lighting and outdoor stages. A list of projects will be included in a redevelopment report that will be made public Thursday.

A decision could come as early as November.

Why do you love your job?
Foster and others have reservations. He isn't convinced TIF is the only answer but if it's used, he wants every step to be taken in public. Eminent domain should not be used, he added, and projects should be based on maximum public benefit.

"We need to be an exemplary model," Foster said, urging the city to study other TIFs to see the pluses and pitfalls.

The Price

A TIF district comes with a price — and some wonder if it's worth it.

Real estate taxes collected in the district that are now shared by the city, county, library, Springfield school district and Ozarks Technical Community College would not increase for the next 23 years — the life span of the TIF.

PGAV Urban Consulting, a firm hired by the city to study the feasibility of a TIF district on Commercial, estimated those increases in real estate tax revenues would exceed $5.5 million during that span.

The TIF will also capture a portion of any increase in sales tax revenue, which could mean an additional $5 million or so over that 23-year period, PGAV estimated.

"TIFs make me nervous," said Debbie Tolliver, who represents the Springfield school board on the city's TIF Commission.

She is in favor of development, however.

Tolliver said she would have to weigh the potential benefits to the community against the potential harm to the school district before deciding whether to support it.

Joel Doepker, OTC's director of media relations, said the college doesn't have a position on the proposed TIF district.

"We support whatever is best for the city of Springfield," he said.

Assessed value

Boundaries of the proposed TIF have not been set.

Borders suggested in a city report, however, are the Burlington Northern Santa Fe railroad on the north, Sherman and Texas to the east, Pacific and Blaine to the south and Douglas to the west.

Those boundaries encompass a greater area than what was suggested in PGAV's report, which was released in April. That report focused on the six-block Commercial Street Historic District and a few adjacent properties.

At that time, the assessed values of properties in the historic district were $1,966,960. The adjacent properties were valued at $224,430, which raised the total to $2,191,390.

The assessed values of all those properties has since climbed to $2,549,520, according to the latest information from the Greene County Assessor's Office.

If a TIF district went into effect today, property taxes collected on that real estate would be about $147,000. That would also be the total the school district and other taxing jurisdictions would split annually over the next 23 years. The total does not include a state tax of 3 cents per $100 of assessed value.

According to the PGAV report, additional money collected on those properties during the final year of the TIF could exceed $428,000 because of increased value.

Mike MacPherson, senior city planner, said PGAV tried to be conservative in its estimates and revenues could be even higher.


The potential increases in property values have some Commercial residents leery of a TIF.

Hing Wah Hatch, whose home there doubles as an art studio, said she was worried a TIF would increase the price of buildings so much that only the wealthy could afford to buy them. That would change the character of the district, she said.

There are examples on Commercial now of how redevelopment can cause a spike in property values.

In the PGAV report, the assessed value of the building at 514 E. Commercial St. was listed at $7,130.

That building was empty until attorney Shawn Askinosie opened a chocolate factory there in May. The value has since quadrupled, according to the assessor's office.

Askinosie said some cities abuse TIF, which is supposed to be used in blighted areas. The deteriorated conditions of many of the buildings on Commercial make the use of TIF appropriate, he said.

"I heart this TIF," he said. "The only thing I need to make sure of on Commercial Street is places like the Missouri Hotel aren't forced to move," Askinosie said of the homeless shelter.

Bill Stalnaker, CEO of The Kitchen, which operates the Missouri Hotel, said, there had been no indication the shelter would be forced out.

"We get nothing but wonderful feelings from the city," he said.

Stalnaker is looking forward to new development, which could provide jobs for Kitchen clients.

He said most of the women who stay at the shelter do not have their own transportation.

New restaurants and shops on Commercial could provide valuable work experience for those women if the businesses were open to hiring them.


Without the TIF incentive, the county could be collecting taxes on vacant lots, MacPherson said.

He acknowledged there has been some development on Commercial without a TIF, but he said more than half of the buildings in the district need rehabilitation.

"They're vacant," he said. "They're in a state of disarray."

Many of those buildings are more than 100 years old and have historic value, he said.

TIF money could not be used to restore them, but it could be used to purchase them to sell to private investors. MacPherson said buildings would be bought only from willing sellers. He has stressed eminent domain will not be used.

The district must meet the state's legal description for "blighted" before a TIF is formed, but MacPherson said that term is also an accurate physical description.

According to state law, Commercial only needs to meet one of the criterion to qualify for TIF assistance.

A blight study, which will be released Thursday with the redevelopment plan, lists more than one. Among the evidence of blight outlined in the report:

- No access exists to the rear of the buildings on the north side of the street because BNSF Railway owns the property abutting the buildings;

- Broken and buckled sidewalks;

- Sixty-one buildings would be dangerous to occupy in their current condition;

- Structural disrepair creates a potential for falling bricks; and

- The water-delivery system is insufficient to fight a major fire.

City Councilwoman Mary Collette said now is the right time for a TIF because of recent interest from developers.

Collette, who owns property on Commercial, has recused herself from past council votes that affect Commercial and does not plan to vote on the TIF when it comes before the council.

The city and others who receive a portion of the property tax — as well as sales taxes — stand to gain more in the long run because TIF will accelerate the pace of development, she said.

"For the first time, taxes generated in that area can be spent in that area," said Collette. "For the first time, having very little retail can help."

No comments: