TIF taxes take off

Revenue has increase by millions in the last few years; city and schools benefit
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The City of Marysville and the Marysville Exempted Village School District have each seen an increase in revenue coming from areas covered by tax increment financing (TIF) agreements.
According to Union County Auditor Andrea Weaver, the City of Marysville has TIFed eight residential developments and two commercial developments. She said that for 2013, Marysville TIFs collected $3.04 million. By 2016, collection had increased to $4.9 million.
“If tax year 2017 collects in the second half all that was billed, then the full year collection will be in excess of $5.5 million,” Weaver wrote.
Todd Johnson, treasurer and CFO for the schools confirmed that, “our TIF revenue went up approximately $500k compared to last year.
TIFs are used to help pay for land to be developed. TIF payments are used to pay for infrastructure improvements, such as roads, to help the area develop more quickly, creating economic opportunities for the community.
But why the increase?
“The only ways to increase are either with the tax rate or with an increasing improvement valuation,” Weaver wrote. “Since tax year 2013, both of those things have happened in varying degrees.”
City officials say the simple answer is that because of the TIFs, the properties have developed and entities are seeing more revenue as a result.
“We are going strong now because we are benefitting from the development that is going on,” said Marysville Finance Director Justin Nahvi.
And that development, officials say is the result of the TIF.
“TIFs allow us to do projects, to put in infrastructure that makes an area conducive to development,” Marysville City Manager Terry Emery said.
Nahvi added that, “unfortunately, if you don’t offer some of these incentives, development doesn’t happen.”
Emery specifically mentioned the Coleman’s Crossing development.
“What would have occurred if the city had not entered into the TIF in the Coleman’s Crossing area, potentially that infrastructure doesn’t get built and it would have just sat there,” Emery said.
The proof, city officials said, is in the receipts.
“We are, through development, finally seeing the benefits from those investments. We are seeing why TIF’s work,” Emery said.
Eric Phillips, Executive Director of the Union County Community Improvement Corporation, said a recent regional economic impact analysis proved what city and school leaders are saying. He said the study revealed that the county’s economic development strategy, which includes TIF’s as well as tax abatements and other incentives, has created or retained thousands of jobs and has created significant revenue in Marysville and throughout the county.
“Results of the new study show that these tax incentives have been highly effective in strengthening the Union County economy and increasing employment,” Phillips wrote in a statement. “In fact, the results show how the incentives have created a ripple effect, spreading business growth and job creation beyond the businesses that received the incentives.”
He added, “This study is clear validation of our decision to make tax incentives an economic development tool in Union County – to stimulate business growth, create and retain jobs, and further enhance the quality of life in our communities.”
City officials said they trusted the investment would pay off, but there were times when it looked iffy.
“Because we had a period of time when the economy was not doing as well, we weren’t seeing the benefits as quickly as we would have liked,” Emery said.
He said that when the economy began to return, the city was positioned to move quickly. Even so, city officials said they have received push back.
“TIFs, in today’s environment, can sometimes be controversial,” Emery said, explaining that many agencies that receive property tax — things like 911, the health department, the board of developmental disabilities as well as others — get cut out of any increase because of the TIF agreement.
The state requires that in most circumstances, the city or county receiving the additional payments make an agreement with the local school district. The city of Marysville has an agreement with the Marysville School District, which receives between 33 and almost 50 percent of the increased revenue.
Johnson said school officials intend to apply the additional revenue to the district’s stadium project. He said that by applying the increased revenue to the project, which will be partially financed through a loan.
“The plan is to pay off the loan in five years to minimize interest costs,” Johnson wrote. “Depending on how bids come in, this will reduce the amount of money that we need to fundraise.”
In Marysville, TIF money received on residential development is used to pay off the debt on the wastewater treatment plant. Money received from commercial development TIFs is used nearly exclusively for road improvements that will benefit the city, but specifically the development.
Emery said recent results have showed that when applied appropriately, a TIF agreement creates a win for the city, the school district and ultimately, the community.
“I think, at the end of the day, they are a positive,” Emery said.