Council set to approve promissory TIF notes
Published: Friday, November 20, 2009
Updated: Wednesday, November 18, 2009 12:39 PM CST
Updated: Wednesday, November 18, 2009 12:39 PM CST
In 2005 the Farmington City Council and a Tax Increment Financing, or TIF, committee approved a plan to allow a developer to utilize future tax revenue to help subsidize construction of a new shopping center near the corner of Maple Street and Maple Valley Drive. Now the developer is asking for the first installments on that promise.
City council members discussed and heard the first reading of legislation last Thursday evening which would provide Gundaker Commercial Development with $8 million in promissory notes — leveraging a portion of tax revenue collected by the new shopping center well into the next decade. The council is set to take a final vote on the move during the Nov. 23 session.
What Gundaker is requesting is nothing new or out of the ordinary. TIF districts are formed with the sole purpose of capturing future tax revenue to be directed toward helping private developers or public entities create more opportunities than possible utilizing only private funding. In this instance, the portion of new taxes collected and directed through the TIF will not affect the local school district, ambulance district or other entities which rely on tax revenue.
The portion of tax funds directed back to Gundaker will be money which would have gone into the city’s general fund. However, without the new shopping center being built on the property that tax revenue would not exist. In that way TIFs can generate more tax revenue than they take back for the development costs, which makes them a popular tool to help create new developments — and ultimately new jobs and shopping opportunities.
As for this recent TIF funds request, Gundaker asked the city to issue promissory notes on the roughly $6,890,000 already spent on its hilltop development just east of U.S. 67. Had the development generated that much in sales tax revenue already, the funds could have been turned over as reimbursement. But at this point in time the development has not generated the nearly $7 million in TIF funds, so the city will issue promissory “notes” to Gundaker, which will then sign the promises of future payment over to the lender who put up the money for the shopping center initially.
City Administrator Greg Beavers explained that it will take years for the development to generate enough sales tax revenue to offset the expenses, or at least initial expenses. This way the developer can turn over the promissory notes to the lender to hold as collateral on the development loan. Once the promissory notes are issued, which is likely to happen after the council votes to approve the move later this month, the payment to fulfill that obligation will come in annual payments based on the amount of sales tax generated by the plaza.
The city is in no way obligated otherwise to fulfill the notes outside of paying a pre-determined portion of the sales tax revenue generated within the TIF district each year. The council was asked to approve notes in the amount of $8 million, Beavers said, because it’s likely the developer will come back with more receipts for reimbursement in the near future to be added to the $6.89 million already requested.
The city administrator said he has reviewed the receipts, in addition to having the city’s legal counsel for the TIF plan check them as well.
To date the Maple Valley Plaza has three tenants and several available storefronts for lease.
The council is set for a final vote on the promissory notes next Monday evening.
As for legislation approved by the group during last week’s council meeting, a measure to allow a special use permit for a property owner to rebuild some fire-damaged second floor apartments in a commercial building along Karsch Boulevard hit a wall. It was explained that the city asked the property owner’s legal representative to have some engineering documents back for review before the council moved forward on approving the special use permit.
During the October council meeting it was explained that the owner of a commercial building off Karsch Boulevard had asked to rebuild two fire-damaged upstairs apartments. Under current city ordinances the apartments are not legal in their current zoning. Therefore, the owner, Tony Pham, was asking for a “special use permit” to rebuild and continue renting the apartments.
The city administrator explained in late October that there were some structural and safety concerns with the residential areas of the commercial building, and that the council would likely want to see some documentation of how Pham intended to address those problems before he would be give the special use permit.
With the council’s failure to pass the special use permit Thursday evening, Pham will now have to begin the process again by taking his request to Planning and Zoning.
And it was reported that residents would soon be getting a letter in the mail regarding a temporary problem with the city’s public drinking water system. It’s seems that during the recent work to install a radionuclide filtration system at the water tower near Karsch and U.S. 67 some problems were discovered in the new filter piping.
Public Works Director Alan Welshon reported that it’s believed that during work on the radionuclide filter, at some point coliform contamination entered the water system. A water sample taken in that area in mid-October showed an unacceptable level of coliform. Subsequent sampling of nearby testing sites also showed higher than normal levels of coliform. About that same time it was discovered that there was a problem with some cracks in piping on the new filtration system at the base of the nearby water tower.
Welshon said the results of the test did not warrant a “boil water” order or any other corrective measure other than trying to quickly determine the source of the contamination. Issuance of the letter to customers regarding the October test is a requirement of the Missouri Department of Natural Resources. It’s believed the problem has since been rectified, and samples have improved. Additionally, the new radionuclide filter is back in working order.
The city had not had an unacceptable coliform sample violation in more than 10 years, Welshon said, and there’s no reason to believe the problem stemmed from anything except bringing the new filtration system online and the problems that were incurred at that location.
City council members discussed and heard the first reading of legislation last Thursday evening which would provide Gundaker Commercial Development with $8 million in promissory notes — leveraging a portion of tax revenue collected by the new shopping center well into the next decade. The council is set to take a final vote on the move during the Nov. 23 session.
What Gundaker is requesting is nothing new or out of the ordinary. TIF districts are formed with the sole purpose of capturing future tax revenue to be directed toward helping private developers or public entities create more opportunities than possible utilizing only private funding. In this instance, the portion of new taxes collected and directed through the TIF will not affect the local school district, ambulance district or other entities which rely on tax revenue.
The portion of tax funds directed back to Gundaker will be money which would have gone into the city’s general fund. However, without the new shopping center being built on the property that tax revenue would not exist. In that way TIFs can generate more tax revenue than they take back for the development costs, which makes them a popular tool to help create new developments — and ultimately new jobs and shopping opportunities.
As for this recent TIF funds request, Gundaker asked the city to issue promissory notes on the roughly $6,890,000 already spent on its hilltop development just east of U.S. 67. Had the development generated that much in sales tax revenue already, the funds could have been turned over as reimbursement. But at this point in time the development has not generated the nearly $7 million in TIF funds, so the city will issue promissory “notes” to Gundaker, which will then sign the promises of future payment over to the lender who put up the money for the shopping center initially.
City Administrator Greg Beavers explained that it will take years for the development to generate enough sales tax revenue to offset the expenses, or at least initial expenses. This way the developer can turn over the promissory notes to the lender to hold as collateral on the development loan. Once the promissory notes are issued, which is likely to happen after the council votes to approve the move later this month, the payment to fulfill that obligation will come in annual payments based on the amount of sales tax generated by the plaza.
The city is in no way obligated otherwise to fulfill the notes outside of paying a pre-determined portion of the sales tax revenue generated within the TIF district each year. The council was asked to approve notes in the amount of $8 million, Beavers said, because it’s likely the developer will come back with more receipts for reimbursement in the near future to be added to the $6.89 million already requested.
The city administrator said he has reviewed the receipts, in addition to having the city’s legal counsel for the TIF plan check them as well.
To date the Maple Valley Plaza has three tenants and several available storefronts for lease.
The council is set for a final vote on the promissory notes next Monday evening.
As for legislation approved by the group during last week’s council meeting, a measure to allow a special use permit for a property owner to rebuild some fire-damaged second floor apartments in a commercial building along Karsch Boulevard hit a wall. It was explained that the city asked the property owner’s legal representative to have some engineering documents back for review before the council moved forward on approving the special use permit.
During the October council meeting it was explained that the owner of a commercial building off Karsch Boulevard had asked to rebuild two fire-damaged upstairs apartments. Under current city ordinances the apartments are not legal in their current zoning. Therefore, the owner, Tony Pham, was asking for a “special use permit” to rebuild and continue renting the apartments.
The city administrator explained in late October that there were some structural and safety concerns with the residential areas of the commercial building, and that the council would likely want to see some documentation of how Pham intended to address those problems before he would be give the special use permit.
With the council’s failure to pass the special use permit Thursday evening, Pham will now have to begin the process again by taking his request to Planning and Zoning.
And it was reported that residents would soon be getting a letter in the mail regarding a temporary problem with the city’s public drinking water system. It’s seems that during the recent work to install a radionuclide filtration system at the water tower near Karsch and U.S. 67 some problems were discovered in the new filter piping.
Public Works Director Alan Welshon reported that it’s believed that during work on the radionuclide filter, at some point coliform contamination entered the water system. A water sample taken in that area in mid-October showed an unacceptable level of coliform. Subsequent sampling of nearby testing sites also showed higher than normal levels of coliform. About that same time it was discovered that there was a problem with some cracks in piping on the new filtration system at the base of the nearby water tower.
Welshon said the results of the test did not warrant a “boil water” order or any other corrective measure other than trying to quickly determine the source of the contamination. Issuance of the letter to customers regarding the October test is a requirement of the Missouri Department of Natural Resources. It’s believed the problem has since been rectified, and samples have improved. Additionally, the new radionuclide filter is back in working order.
The city had not had an unacceptable coliform sample violation in more than 10 years, Welshon said, and there’s no reason to believe the problem stemmed from anything except bringing the new filtration system online and the problems that were incurred at that location.
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