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County says no to second Farmington TIF

The County plans to vote no on a TIF district at a meeting of the Farmington TIF Commission Monday night.

County commissioners voted unanimously Thursday morning to reject a second TIF district in Farmington.

Presiding Commissioner Jim Henson said that he is not against TIF Districts in general, but that the county just has too many of them and he believes having any more will cut too deeply into the county’s growth revenue from taxes.

“I supported the TIF in Bonne Terre, I supported the one in Farmington, but enough is enough. The county has six TIF districts already. There isn’t another county in the state with so many TIFs.”

Henson and his fellow commissioners say the effects of Tax Increment Financing Districts are more far-reaching than many voters realize.

TIF districts were created to address the chicken-egg dilemma that economic development often faces in a blighted or under-developed area. If infrastructure is put into an area, development is often very likely, but finding the start-up capital to do such work can be difficult.

TIFs have helped some communities solve that dilemma by borrowing against the future tax growth a particular development plan is expected to bring in, and putting it to work in the here and now.

A baseline level of taxes continues to be paid to the taxing entities so that their revenues do not disappear, but 50 percent of the growth revenue in the defined area is captured for the TIF financing.

No business can afford to give up 50 percent of its growth revenue and still function, Henson said. And this county government cannot afford to do that either.

Henson said TIFs have now become so widespread that a large portion of U.S. 67 is already in one TIF or another. The whole highway is going to be one big TIF on both sides if this keeps up, he said.

He was particularly critical of the Farmington TIF District, noting its proximity to the already developed Maple Valley.

“That is not a blighted area,” Henson said. “You do not need a TIF district to develop that area. Chip Peterson didn’t have a TIF to build Maple Valley.”

Henson said the county is able to provide its current level of services, but noted expenses are increasing all the time. In addition, the county’s population is putting it on track to be a First Class County in the near future, which will mean automatic increases in salaries for county employees, as well as a mandatory increase in certain services.

Some procedures will have to change as well, which will incur additional expense, Henson said.

According to a study by the University of Missouri Extension, at its current revenue levels, the county will be unable to pay all of its bills in the year 2011.

“That isn’t any secret,” Henson said. “We are going to run out of money in 2011. We are depending on growth revenue to meet our obligations in the future.”

Another issue the commissioners have with TIF districts is that a portion of tax money is being diverted from the destination voters had in mind for a different purpose – economic development.

They believe the TIFs could result in a smaller roll back for the Ambulance District, which has said they will roll back their property taxes by 50 percent of the sales taxes taken in. At the time of the issue, ambulance district officials said that would likely eliminate the property tax, which takes in about $770,000 annually. A half-cent sales tax for the county last year took in $3.1 million, which is well over double the property tax.

In addition, a new store in a TIF district is sometimes a huge draw to customers who would have shopped outside it, the commissioners said. That reduces our growth income even further, Henson said.

Another objection the commissioners have to the TIF District set up is that they are stacked decks, with a majority of the representatives appointed by cities.

Farmington’s TIF district has six city appointees and five from the other taxing entities. That means that even if the other entities vote against the TIF they are outnumbered.

But it doesn’t matter any way, because the final decision rests with the city council, Henson added.

Every member of the TIF Commission can vote against recommending the TIF and the city council can still vote to approve one anyway.

These are just some of the problems Henson said have to be addressed at the state level. He plans to testify to the state legislature on the matter in the near future.

The commissioners pointed out that cities get a capital tax that they can present to voters for economic development, to see if that is what people want. But those issues are often difficult to pass, and a TIF does not require an election. All the positions are appointments.

“They are circumventing the will of the people,” Henson said, “and something has to be done about it.”

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