Tuesday, December 8, 2015

Mayor says Midway Station tax-increment financing plan will have to exclude payroll taxes

By Adrian Rudd
University of Kentucky School of Journalism and Telecommunications

Midway Mayor Grayson Vandegrift told the city council Monday night that he would ask for an amendment to the ordinance that would finance redevelopment of Midway Station through the increased tax revenue from the development.

The tax-increment-financing ordinance, approved by the council last December and the Woodford County Fiscal Court in August, authorizes 80 percent of the new property and payroll taxes generated at Midway Station to go towards the estimated $31 million needed to redevelop its public infrastructure. With this new amendment, the ordinance would apply only to property taxes and not occupational taxes, or payroll taxes.

According to Vandegrift, the property meets all but one state requirement for a full-scale TIF, that the property is “blighted.” The property, with streets, curbs and utilities, has sat almost entirely vacant for 20 years but doesn’t meet the usual definition of blight, Vandegrift said in an interview after the council meeting. He said state officials told him they would probably not approve the plan as proposed.

“This is no skin off our back, really,” Vandegrift said. “We want to work with the developer but now the bookkeeping aspect will be so much simpler for us, because we’re going to be the ones managing all these funds coming through and disbursing them back out.” The city collects payroll taxes quarterly, property taxes annually.

The new approach may also help Dennis Anderson, the prospective developer. He would start getting reimbursed for the estimated $31 million in public facilities once he has invested $10 million, significantly less than the $20 million he would have to invest under the current TIF plan.

Vandegrift said he didn’t know how the different TIF plan, which would generate less money for reimbursement, would affect Anderson’s private financing.

The council also heard discussion on the deal between the state and American Howa Kentucky Inc., a Japanese company that will make textiles for automobiles at Midway Station.

“The state has worked out the incentives directly with the company,” John Soper, chairman of the Woodford County Economic Development Authority, told the council. “We won’t be coming back to you for the portion of the payroll tax, which is a big benefit to the city.” Some industrial incentive packages also involve local payroll taxes.

Since the plant will be built on the former Roach property that adjoins Midway Station, not on the original industrial park, it essentially means Midway taxpayers will not be funding the construction of the factory.

Soper said he anticipates a closing on the property between EDA and American Howa Kentucky to come in mid- to late January, and construction to begin no later than mid-February. Soper says the company will be the program’s first industrial client and the third U.S. plant for AHK.

“I think it is in our best interest to work with EDA and create jobs in Midway,” said Vandegrift, who expects the creation of AHK to ultimately bring other factories and about 250 well-paying jobs to Midway. Also, Soper said, “We think this will lead to more commercial things in Midway Station.”

Other business: The council voted to amend its agreement with a former Kentucky State University professor who is fish farming at the old sewage-treatment plant, to allow him to use the main building and to sell fish there from 9 a.m. to 1 p.m. on Saturdays, with 5 percent of the "gross profits" to be paid as rent in addition to the current $50 a month.

Council Member Libby Warfield said the fish farmer should clean up some scrap metal at the property, and Vandegrift said he would get that done.

Vandegrift said he would not sign an easement for Columbia Gas of Kentucky to build a new regulator station on the south edge of town until the company fixes a poor paving job at the intersection of North Winter Street and Northside Drive, in front of Midway Grocery.

Council Member Dan Roller reported that the Blighted Property Committee met with county Planning and Zoning Administrator Pattie Wilson and the new building inspector, and will be sending letters in the next 30 to 45 days to property owners who need to repair or demolish structures.

Council Member Bruce Southworth reported that the Sidewalk Committee met without making much progress and decided that individual members should develop their own ideas and get together again after the first of the year. He said deciding new policies and procedures for fixing sidewalks "is going to be an arduous process."

The council agreed to cancel its Dec. 21 meeting, making its next meeting Jan. 4.

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