Sunday, August 31, 2014

TIF district is a tool, not a tax-free zone, officials say

By DOUG CARDER, Herald Senior Writer | 7/7/2014

A new Tax Increment Financing district created last week by the Ottawa City Commission doesn’t mean affected property owners will be tax free, city officials stressed.

City commissioners voted 5-0 Wednesday to create the 19th & Princeton TIF District, which includes an area from the point where Princeton Circle Drive and South Princeton Street split — south of East 21st Terrace — continuing north to 19th Street. The district — a mix of existing commercial property and land poised for commercial development — loosely forms an upside down triangle between well-traveled Princeton Circle Drive and South Princeton Street.

A new Tax Increment Financing district created last week by the Ottawa City Commission doesn’t mean affected property owners will be tax free, city officials stressed.

City commissioners voted 5-0 Wednesday to create the 19th & Princeton TIF District, which includes an area from the point where Princeton Circle Drive and South Princeton Street split — south of East 21st Terrace — continuing north to 19th Street. The district — a mix of existing commercial property and land poised for commercial development — loosely forms an upside down triangle between well-traveled Princeton Circle Drive and South Princeton Street.

A TIF district is a “finance tool used to target development in specific areas to capture new tax dollars to fund public improvements that otherwise would not have occurred,” Wynndee Lee, the city’s director of planning and codes, said. “Or, if we have known public infrastructure needs a TIF is a way to partner with development to meet those needs.”

“This is not an abatement,” Blake Jorgensen, city commissioner, said. “Property owners will continue to pay taxes.”

Lee reaffirmed Jorgensen’s assessment. The TIF collects the incremental tax dollars created between the current base property valuation and the increased property valuation as improvements are made, she said. The taxing districts — City of Ottawa, Ottawa school district and Franklin County — would continue to collect the same tax dollars from properties within the district.

“The increment [new tax dollars] is set aside and all taxing districts [city, county and school district] continue to receive what they get today,” Lee said.

The developer/property owner would continue to pay property taxes, Lee said. Once improvements are made through a TIF-approved development or redevelopment project, Lee said, the developer could become eligible to be reimbursed for some of those incremental or new tax dollars to cover certain expenses related to the project — which often can include public infrastructure improvements that benefit the city as a whole.

The Love’s Travel Stop TIF project, for instance, helped fund “the very high cost of putting in a sanitary sewer system” on the south side of I-35 to open future development in that area, city officials previously had said.

Anticipated work covered by the 19th & Princeton TIF District would include land acquisition, site preparation, street improvements including resurfacing, additional lanes, utility relocation and reinstallation as necessary, parking, landscaping, sidewalks and trail connections, Lee said in a recent memo to Richard Nienstedt, city manager, and city commissioners.

“The District is comprised of a mixture of existing commercial uses that will likely be in transition as redevelopment opportunities become available with improved infrastructure and traffic,” Lee said in her memo. “North of this proposed district is additional commercial/retail uses, and to the west and south. To the east of this district is primarily residential with some lots redeveloped in the southeast [of the district] to commercial.”

Though Wednesday’s public hearing was to address the establishment of a TIF district — and not a specific project within the district — a proposed supermarket development drew remarks from some audience members.

A 54,000-square-foot Price Chopper store is to be constructed in the northern portion of the proposed TIF district at 1921 Princeton Circle Drive. The supermarket — and ancillary retail space for small shops to adjoin the west side of the north-facing supermarket — would be constructed between Orscheln Farm & Home, 2008 S. Princeton St., Ottawa, and 19th Street, according to the site plan. Price Chopper and Orscheln would face back-to-back, with a deliver truck lane between them.

In addition to the retail space, the project would include a 320-space parking lot, landscaping, utility improvements, lighting, stormwater detention areas, and construction of 19th Street, between South Princeton Street and Princeton Circle Drive, city officials said. A portion of a triangular tract of land north of 19th Street would be used for a stormwater detention area, according to the site plan.

The new Price Chopper would be owned by the Queen family, which in April purchased Country Mart, 2138 S. Princeton Circle Drive. The Queen family converted the Country Mart space into a Price Chopper while waiting for the new store to be built. If all goes as scheduled, the family hopes to have the new store operational by next spring.

“Our goal would be to have it done a year from now,” Barry Queen said in early June.

Representatives of several commercial property owners in the area expressed concerns about their property taxes increasing and “shifting tax dollars” by moving the Price Chopper about “a half mile” from its current location in the former Country Mart building to its proposed new location. Some of the properties represented at the meeting included the center that houses the Dollar General, DIY and Goodwill stores, the Orscheln property, and the old Country Mart building, which is temporarily housing the Price Chopper until the new store can be built.

Lee told representatives of those properties that there would be no shift in tax dollars and that the TIF district does not affect sales tax.

“There’s not going to be a change to anyone’s tax structure — sales or property,” Lee said.

Rather, the new TIF district only would affect the incremental growth in new tax dollars inside the district, she said.

“I’ve heard [questions] about tax dollars shifting, and that’s not the case,” she said.

In addressing neighboring commercial property owners’ concerns about the Country Mart building standing vacant once Price Chopper relocates, Lee and Jeff Seymour, Franklin County Development Council executive director, said the city and development council do not want to see that building remain empty.

“We have pitched that property to several commercial prospects and will continue to do so and be aggressive in that nature,” Seymour said. He said the city and development council representatives would “work to bring a new tenant into that existing property, which is very crucial.”

City commissioners said the retail center where the existing Price Chopper building is located is vital to the city.

“DIY, Dollar General and Goodwill locations are good additions to our community that generate tax dollars and also add to quality of life here in the community by [offering] additional shopping opportunities,” Jorgensen said to representatives of that property.

Lee also pointed out that Orscheln was within the new TIF district and possibly could be eligible for a TIF project in the future for redevelopment or development, though Lee said she is not aware of any Orscheln projects at present.

Before the commission voted to establish the 19th & Princeton TIF District, Lee told commissioners city planning staff recommended approval of the ordinance.

In staff’s opinion properties within the district could be redeveloped or provide for new development, Lee said, which would create new jobs, increased sales tax revenue and provide for some needed public infrastructure improvements.

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