A trial date has been set for a battle between St. Francois County and three cities over an administrative fee the county has been charging to pass along tax money to the TIF districts within its jurisdiction. The parties are to meet in court Aug. 25 before the Honorable Scott E. Thomsen.
The county has been collecting a 4 percent administrative fee to divvy up TIF money to the county’s seven special allocation districts since 2004. County officials say the county has so many TIF districts it has required an additional employee to handle all of the paperwork. Presiding Commissioner Jim Henson said state statute allows counties to recoup expenses when it renders such services.
However, three cities have cried foul and in a suit filed in December said the county’s collection standards do not meet state statutes. The cities are Bonne Terre, Desloge and Farmington.
Park Hills has a TIF district as well, but is not party to the suit. That city has a different bond counsel than the other three cities. City officials there said they could not comment further on the pending litigation.
The administrative fee the county is charging totaled $29,000 in 2004, according to county officials. The fee has been estimated to be about the same for 2005.
County officials say they will continue collecting the fee unless ordered not to by a court. So far no such orders have been forthcoming.
In previous interviews, city officials expressed concern that the administrative fees will cut into the economic development power of their TIF districts.
Bonne Terre City Manager Ron Thomure said the collection of such a fee could add up substantially over the lifetime of the TIF District and hamper the ability to pay off TIF obligations.
Desloge City Manager Eric Wiederhold estimated that Desloge’s TIF would bring in $8 million over a 23-year lifespan. A 4 percent administrative fee would add up to $320,000 over the life of the TIF.
Farmington Mayor Charles Rorex pointed out that cities lose out not only on the fee, but interest off the fee over time.
According to Rorex, a similar suit was filed in Jefferson County and it was found that such fees are not legal. &#8220I don’t understand why they’re fighting us on it,” Rorex said.
TIF Districts are supposed to help land that is not going anywhere economically and help it develop. They might include brownfields, which carry the stigma of environmental concerns, such as the TIF Districts in Bonne Terre.
Generally, TIF district planners will include some easily developable land to help get things started and create a future tax revenue stream. The future taxes are estimated and used to borrow money to help address the chicken-egg dilemma attached to many blighted areas.
The money can be used to build such things as water and sewer lines, roads and other infrastructure necessary to get the ball rolling. The rules also allow entities to build facilities that serve the general public.
However, county officials believe TIFs are undermining their financial solvency, as well as posing important questions for other entities such as the St. Francois County Ambulance District and the St. Francois County Sheriff’s Department.
&#8220TIFs were a good idea when they took property that was truly blighted and turned it into something,” Commissioner Bill Bradley has said in previous interviews about the TIFs. &#8220But now they take just about any property they want to develop and turn it into a TIF.”
Commissioner Ron VarVera said TIFs are a &#8220good idea gone awry” and said he felt people are getting &#8220greedy” with them.
Henson said the fundamental flaw in TIFs is that they allow a tax voters approved for one governmental entity to go to another without that entity’s consent. Cities planning a TIF get to appoint six of the 11 seats for the TIF commission. The vote of that body is not binding, either. Even if its members all recommend against a TIF, a city can implement one anyway.
A state commission has been reviewing TIFs and legislation is presently pending in the General Assembly. Most of the legislation, however, has focused on a stricter definition of blight, and on eminent domain issues.