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The Victoria

GAZETTE

VICTORIA MODIFIES DOWNTOWN TIF DISTRICT #4

DOWNSIZING DISTRICT INCREASES THE INCREMENT

         Council held its very last meeting of 2011 on Monday evening, December 19th.  Main purpose of the meeting was to conduct a public hearing and subsequently modify the Tax Increment Financing Plan for the downtown redevelopment district identified as District #4.

         At the end of the hearing, Council voted 4-0 to modify TIF District #4.  Councilmember Tom Strigel was absent.

         District #4 consisted of several parcels in downtown Victoria including Fresh Seasons Market.  As Shanonn Sweeney, Victoria's TIF consultant with David Drown Associates, stated that evening, "The purpose tonight is to reduce the number of parcels in District #4.  The rationale is that some parcels are seeing a reduction in value."

         This reduction in value of some properties in the District resulted in a reduction of tax increments generated by that District.  One of the properties in District #4 saw a reduction of $507,400 in valuation for taxes payable 2011.

         According to Mr. Sweeney, when District #4 was created, it contained approximately 52 parcels across much of the entire Central Business District of Victoria along the entire stretch of Stieger Lake Lane, from 78th Street on the east to the Dairy Queen on the west.

         "Approximately 48 parcels are being removed by the modification," according to Mr. Sweeney, "and four of the parcels were consolidated into the Fresh Seasons project.  Before the modification, TIF District #4 included about 40 acres.  The parcels removed are no longer in a TIF District."

         Stated Mr. Sweeney, "This seems to be the only way to solve the problem permanently.  It's not certain that it will be effective for 2012.  We feel the county has the ability to make this effective for 2012 so our conversations with the county will continue."

***

         Tax Increment Financing is a tool that captures and redirects a portion of property tax from new development that occurs within a city.  It is used by a city when absolutely necessary for a redevelopment project to occur.  If not for the TIF assistance, the project would not be able to financially happen, and that includes Fresh Seasons Market, for which construction was completed in 2008.  The county and school continue to receive taxes on the property's frozen value, but the city receives all the new property taxes on the added improvement value.
         The difference in property taxes between the original (frozen) value of a property and the new (due to improvements) value of that property is called the increment.  All of that increment is received by the City of Victoria (and none of it goes to the county or the school district) and must remain in the TIF District to help pay for things in that District like public infrastructure or a public parking lot, for example.

         How are the TIF dollars used by Fresh Seasons?  Mr. Sweeney pointed out, "Mostly through demolition and site preparation, which are considered to be the 'added' costs associated with redevelopment."

         Past valuations of properties in TIF District #4 meant an increment of $22,000 received by the City of Victoria for public use (redevelopment) in that TIF District.  However, because of the large $507,400 decrease in valuation of a property in District #4, the tax increment decreased from $22,000 to $7,000 for 2011. 

         Those properties in TIF District #4 that were valued over $500,000 in the year 2009 include Timberwall Landscaping, Spread Enterprises, City of Victoria, and the 1600 Arboretum Blvd Office Building.

         As Mr. Sweeney pointed out, "Fresh Seasons alone should have generated about $22,000 in increment for 2011 -- the first year of increment collection -- if it were not for the reduction in value of other parcels."

         How does Carver County affect Victoria's TIF issues?  Replied Mr. Sweeney, "The County is very involved in the administration of the property tax system and, therefore, the administration of TIF.  The County also benefits from the added tax base resulting from successful TIF projects without incurring any of the upfront risk associated with the development process."

 

***

         "We've had numerous discussions with the county staff and the County Commissioner," said City Administrator Don Uram on December 19th, with the hope of making a smaller new TIF district and a larger increment possible for 2012.

         Stated Councilmember Kim Roden, "I do know budgets are tight and budgets have been adopted, but it seems like a bureaucratic road bump or speed bump."

        

Click here to continue Downsizing the TIF District.

January 2012

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