Wednesday, December 3, 2014

Council gets down to the nitty-gritty of tax-increment financing, looking to pass ordinance before year's end

By Jackson Reams
University of Kentucky School of Journalism and Telecommunications

The Midway City Council is really getting down to the details of the proposed tax-increment financing for Midway Station to try to get an ordinance passed before the end of the year, before a big turnover in city government.

TIF pledges future gains in tax revenues in a district, in this case Midway Station, to fund the infrastructure for its redevelopment.

To reach the goal of passage by the end of the year, the council welcomed Doug Martin, a lawyer in city attorney Phil Moloney’s firm and former general counsel for the state Economic Development Cabinet, to continue to educate the council about the process of creating a TIF district.

Martin distributed a summary of the proposed Midway Station TIF Ordinance that briefly highlighted the main points. The largely vacant industrial park, owned by the Woodford County Economic Development Authority, would be redeveloped by Anderson Communities of Lexington into a commercial, residential and industrial area.

“We really don’t see any major problem with getting this approved . . . as far as getting all the major statutory requirements fulfilled,” Martin said. Those requirements, according to the summary, are:
  • “There has been substantial loss of commercial or industrial activity at Midway Station;”
  • The area’s “public improvements and public infrastructure are inadequate” and
  • “A combination of factors substantially impairs and arrests growth and economic growth of the area as well as impedes the development of the property due to its present condition.”
Those conditions are why the TIF district wouldn’t include the adjoining Roach property, 37 acres adjoining Georgetown Road and the west side of the Station, said John Farris of Commonwealth Economics, consultant to Anderson.
Midway Station plat: Purple-outlined area was recently rezoned back to industrial; Roach property is at upper left.
The Roach property is undeveloped, unlike almost all of the Station, which is to be redeveloped. EDA has an option to buy it, but there is a different process to make a TIF district out of undeveloped land, so it will not be included in the TIF district, Martin said.

Martin continued with the city’s proposal that Anderson pay certain fees that come with applying to the state for TIF. While the proposal was included in the summary, Martin said, “We haven’t had a face-to-face with Mr. Anderson yet.” The city is asking Anderson to pay the city’s cost of the TIF application, including a $1,000 application fee to the Kentucky Economic Development Finance Authority; a KEDFA administrative fee of up to $50,000; a $60,000 fee to KEDFA for an independent consultant who judges the viability of the proposal, and legal fees for the city’s attorneys and “any state legal fees.”

This would require Anderson to make financial commitments outside of just what the company would do at Midway Station and the revenue it would be guaranteed, Martin said.

Martin read Anderson’s request that the city pledge 80 percent of new property taxes (excluding fire and school districts) and occupational taxes and fees generated in Midway Station to fund “redevelopment assistance” for it. The ordinance summary says, “Anderson Communities’ financing costs and interest will not be included in redevelopment assistance.”

Midway would keep 20 percent of new incremental revenues and 100 percent of other local taxes. However, Council Member Bruce Southworth said that those other local taxes could amount to no money at all.

Another question is what agency would oversee the district and handle the money. The summary said it would be the city clerk, but other options mentioned included the Economic Development Authority or the Woodford County Fiscal Court.

The county has yet to be involved in this process but its participation would help, because more money would come in through use of its occupational tax. Farris said Commonwealth Economics has “initiated conversation but we’ve held off” pushing for action because the county wants the city to take action first.

A couple other points in the discussion were the $30,000 annual fee that would be paid to the city or other agency, a number both Council Member and Mayor-elect Grayson Vandegrift and Mayor Tom Bozarth thought was low; and the fact that only three audits are required for TIF: when TIF officially starts, once $20 million has been invested; when there is a request to reimburse public infrastructure costs; and when the district ends after 20 years. Bozarth suggested yearly audits, which Farris said could be “very expensive,” but Martin said Bozarth was not talking about a full-blown audit every year, just an audit of revenues.

The council set another meeting to discuss TIF Tuesday, Dec. 9 at 9 a.m. and a special meeting to go over the city’s annual audit at 8:30 a.m. Thursday, Dec. 4.

Versailles Mayor Brian Traugott presented
outgoing Midway Mayor Tom Bozarth with
a key to Versailles at the council meeting.
In other business, the council:

• Appointed Phil Keppler to the Midway seat on the county Architectural Review Board.

• Agreed to sign a temporary contract for emergency management that would run through March 2015 in hopes of a new deal being signed with the county, and pay the county $1,005.50, reflecting five months of the increased fee the county imposed on Midway and Versailles. “It buys us time,” Vandegrift said, noting that Versailles had taken the same steps. “We’re going to have to hold our nose on this one.” Bozarth said he, Versailles Mayor Brian Traugott and County Judge-Executive John Coyle agreed to appoint a committee after Jan. 1 to come up with a solution to the dispute, with two representatives from each government.

• Accepted a $3,000 check from the Iron Horse Half Marathon, held in and around Midway in October. Race coordinator Chuck Griffiths provided Bozarth with a framed poster commemorating the event, Bozarth’s involvement in bringing it to Midway and coining him the “honorary race director.” Griffiths said, “One of the anchors of this event is that it is here in Midway, that the participants really enjoy coming to the community and they enjoy the scenery.” John Sensenig of John’s Run-Walk Shop, the race sponsor, said, “We do a lot of foot races and this is everybody’s favorite.”

• Heard Council Member Sharon Turner report that Girl Scout Maggie Hagan’s project to get accurate numbers on every dwelling in Midway had found 15 addresses not in compliance, and that nine of those have been corrected. Hagan is also promoting sign-ups for the EverBridge alert system. “Both these projects are going to add to the public safety and welfare of all Midway citizens,” Turner said.

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