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Pros and cons of TIF Districts
The old County Mart building along with the new Country Mart are part of Park Hills’ TIF District No. 4.

Editor’s Note: This is the second part of a three part series about TIF Districts in St. Francois County. 

The pros and cons of Tax Increment Financing vary widely depending on which side of the fence a person sits. Cities claim TIFs are necessary in order to generate economic growth while the taxing authorities claim they are losing out on money they are entitled to.

The City of Desloge first created a TIF district on April 28, 1997. The TIF plan was later amended. According to the report, the city's tax base increased as a result of the TIF district and new commercial opportunities were created as a result of the district. Economic activity was accelerated as a result of the redevelopment area. 

City Administrator Greg Camp said bond proceeds from the TIF District were initially used to purchase the parcels of property where the Walmart Supercenter is currently located.

The original Walmart in Desloge was not in the TIF area. When Walmart moved to the new property that was purchased by Desloge, the retailer became part of the TIF. Camp said Walmart purchased the property from the city at the price the city paid for it. Camp said there were a couple of reasons the city purchased the parcels of land from the property owners instead of Walmart buying it directly. 

“The city had the option of using condemnation if it needed to,” Camp said. “Luckily, we never had to do that. The other thing was if a property owner knew they were dealing with Walmart they would have asked for the moon. Instead of $2 a square it would have been $10 a square.”

Camp said the only monetary benefit Walmart received from proceeds of the TIF District was the demolition costs associated with the old Walmart building. He estimated those costs at about $500,000 and said they were paid by the TIF. 

“It was in our best interest to keep Walmart in Desloge,” Camp said. “Walmart generates about half of the city's sales tax revenue. If you take that out of the equation, we are looking at no more free trash service for our residents, layoffs, police and fire departments are in jeopardy and the list goes on.”

According to the county collector’s office, $1,661,916.52 has been captured by the TIF in real estate taxes. Of that, $1,330,962.96 has been captured that normally would have gone to the North County School District. Other taxing authorities that have been impacted include Mineral Area College $149,717.87, the county $11,033.96, the road fund $77,336.51, the health fund $29,676.69, the ambulance district $21,113.25, the handicapped fund $29,676.69 and the senior fund $12,398.59.

Park Hills currently has three TIF Districts within its city limits. At one time Park Hills had four TIFs, but District No. 1 no longer exists. City Administrator John Kennedy said in order to encourage major development, a city must offer some sort of incentive to lure a “big box retailer.”

“Without those incentives (TIF money) you have little chance of attracting investors,” Kennedy said. “You have to have at least one major anchor or you won’t get the add on restaurants and other retail shops. It’s very unlikely development will occur without incentives from the city.”

Kennedy believes without the TIF Districts in St. Francois County, the county and other taxing authorities would be worse off than they are now. He said without a TIF, Lowes would not be in Farmington.

“Half the sales tax is better than no sales tax,” Kennedy said. “The question is do you believe a development would have occurred without a TIF.”

Central School District Superintendent Dr. Desi Mayberry said his district supported Park Hills’ TIF District No. 4. He said as school districts face shortfalls in state funding in years to come, it is going to become increasingly difficult for schools to sit by quietly and let cities use their tax revenue to better the community.

Like most school districts in the state, Central is deficit spending this year and will probably deficit spend next year. Current proposed legislation suggests Central would have a 2 percent reduction in funding through 2012. Mayberry said that is about a $185,000 loss to the district. 

“The funding situation really starts to complicate things,” he said. “If the revenue doesn’t turn around, school boards will become more vocal in opposition of TIFs. As things get tight, school districts will not be in favor of anything that withholds revenue.”

Since the first TIF in St. Francois County was formed, the Central School District has lost $288,232.14 in real estate tax revenue to TIFs.

Chauncy Bucheit, of Southeast Missouri Regional Planning, has had a hand in writing all of the TIF plans for St. Francois County other than Park Hills District No. 1. He said TIFs are a necessary finance mechanism for rural communities.

“Most of the TIFs in St. Francois County were formed to provide infrastructure incentives to developers,” Bucheit said. “There isn’t a whole lot of other assistance available. Most communities do not have the means to make these improvements without a TIF. In rural areas, TIFs are the only incentive tool to utilize.”

Bucheit gave the example of Fredericktown using TIF revenue to construct a bypass for Highway 72. He said the city would not have had the funds to construct the bypass if it had not been for the TIF.

“The TIF provided a financing mechanism,” he said. “Now when the water comes up and it floods, Fredericktown will be able to get to its water plant and industrial park. It also opened up quite a bit of property.”

Chris Cline is a reporter for the Daily Journal. Contact him at 573-431-2010, ext. 114 or at ccline@dailyjournalonline.com.

 

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