County Commissioners voted unanimously to reject an intergovernmental agreement with Farmington that would have used TIF funding to acquire a site to build a county annex downtown.
Commissioners said the agreement omitted a guarantee that the city would pay the promised $140,000 each year and that they could not put the county’s finances in jeopardy.
Presiding Commissioner Jim Henson outlined the timeline of events in discussion prior to the decision. He said the county was approached by the city and asked to keep its annex downtown in a March 2002 meeting with Jim Dismuke, Greg Beavers, Dan Combs, Herb Sheets, Matt Sebastian and Victoria Hayes. This meeting is noted in the minutes of the Downtown Development Organization.
The commissioners at the time were Ron VarVera, Bill Bradley and the Presiding Commissioner was Mark Hedrick.
The county already had five acres where it could build an annex near the county jail. Acquiring a downtown site and demolishing buildings for construction could be very costly. Not only that, but a downtown annex would need to match its sister building, which also adds to the cost.
The county said it could agree to build the annex downtown if the city would acquire and prepare the site for construction. In 2003, at the request of city representatives, the county contracted with a St. Louis architect for a study and cost estimates. The city in the same year entered into a Tax Increment Financing agreement which mentions the annex as a “cornerstone.”
At some point along the way, it was suggested there might be legal issues with the city acquiring a site to give the county, so it was suggested that the county buy the site, do the work and the city would pay the estimated $2 million costs out of the TIF district money.
This is how TIF districts work. In the year prior to a TIF’s establishment, the amount of tax revenue from the defined area is noted. For the next 23 years after that, tax revenues above the base year amount are put into a special fund to be used for economic development projects. It has been estimated by Southeast Missouri Regional Planning Commission employees that Farmington’s TIF will generate $14 million during that time period. About $6 million of that is from county tax sources, the rest is from Farmington sources.
Having the county finance the site’s acquisition and preparation would put additional financing into the picture, but the county did obtain bond financing figures that included this cost. However, since this additional cost would be stretching county finances by quite a bit more, the commissioners asked the city to “guarantee” the yearly payments from the TIF.
The city would pay any shortfall plus the current rate of interest in subsequent years – but only if the money was available.
It is the omission of that clause which commissioners say causes them to reject the intergovernmental agreement.
“On July 8 we came to a tentative agreement,” Henson said, “We had a carry-over clause, and it has disappeared from the agreement.”
Henson noted wording attached to the intergovernmental agreement indicates it is based on the tentative agreement of July 8, but he added it does not mention the omission of the clause.
“I recommend against this agreement,” Henson said. “If the city wants to acquire the site and prepare it, the county will do what it said it would do, and we could go back to the table on this.”
VarVera made a motion to reject the agreement and Bradley seconded it.
A short time later in the discussion, commissioners also made and seconded a motion to shift their attention to building an annex near the county jail. There were no objections to that motion, and Henson said he would begin work on that as soon as possible.
****Is there enough money in the TIF*********
Some city officials have claimed there may not be enough money in the TIF to make the payments to the county, and that the carry-over clause would just exacerbate that problem.
At the Thursday Commission meeting Henson released total tax revenues for the TIF district, obtained from the county treasurer.
For the base year of the TIF district, tax revenues were $213,932.07 For the first six months of this year, tax revenues for the TIF district have been $294,932.27.
That is a difference of $80,155.20. Doubling that figure ($160,310) shows that the TIF district at the six-month mark is more than one-half of the way to the $140,000 the county requested be paid to them annually for 20 years. The TIF will last 23 years.
“Lowe’s is on target to be a $24 million business,” Henson said. The Presiding Commissioner acknowledged there is always risk associated with such things, but added they would be taking that risk as well. If the TIF district tanked after a few years, 40 percent of nothing would still be nothing.
******What is on the table now********
Bill Stewart, a businessman in Farmington, asked for clarification on the Commission’s decision after the conclusion of the meeting. Stewart wanted to know if the county would agree to build the annex downtown if the city put the carry-over clause back in the intergovernmental agreement.
Presiding Commissioner Henson said that option is now “off the table” and said the only way the county would now agree to building an annex downtown is if the city goes back to the original 2002 agreement in which representatives of the city said they would acquire and prepare the site for the county.
“If the city will do what it said it would, then the county will do what it said it would do,” Henson said. “Otherwise, we are going to build at the jail.”
Henson added that he has heard the phrase many times that the TIF money is city dollars. “That’s not true, it is tax-payer money.” Henson said people from Farmington, Bonne Terre, Park Hills and throughout the county spend money inside the TIF district.
Henson said that the TIF district would take in 45 percent of revenue that is from county tax sources. The county asked the city to pay them $140,000, not to exceed 40 percent, annually. The city would be keeping a portion of county tax dollars for its TIF, Henson said.
Henson was disappointed by the Farmington mayor’s response to a question asking why other cities weren’t being asked to pay for some of the cost of building the annex. The mayor responded that they hadn’t been asked.
“We have spent $80,000 on this,” Henson said. “I do not think the city’s intentions are honorable. I do not think they will do what they told the commission they would do in 2002.”
VarVera concurred with Henson’s assessment. “I think we have been deceived,”
VarVera said. “I am not going to spend one dime of St. Francois County money on a deceptive plan. We can build at the county jail much cheaper.”
Commissioner Bill Bradley asked Stewart, “Would you rent me a place if I told you I’d pay you when I could? If I have it, I’ll pay you?”