COLUMBIA – Downtown Columbia Leadership Council member Randy Gray and City Manager Mike Matthes emphasized community input at a panel discussion on tax-increment financing, or TIF, districts on Tuesday night.
Though no decisions were made at the meeting, community members were given the chance to ask a panel of city officials and experts questions about the TIF process and provide input on it.
“There’s no deadlines, there’s no race to any outcome,” Matthes said. “It’s not the last public meeting we’ll have.”
Gray said the council is interested in getting public input and support early in the process “because if we don’t it will be screwed up like the EEZ thing.”
Two TIF projects are already underway in Columbia. The Columbia City Council approved the use of TIF for The Tiger Hotel project in 2009 and the 2011 Regency Hotel redevelopment.
The use of TIF means a business' property tax is frozen at the baseline value before any redevelopment takes place. Any additional assessed value the properties gain as they are developed can be reinvested into the project, and a portion of the new sales tax revenue generated can also be used to offset the cost to the developer.
What is tax-increment financing? This short animated video will help explain it.
One requirement for an area to become a TIF district is for the city to declare it a blight or conservation area. A blight area, generally, is one that is a liability or a threat to the public's health or safety. A conservation area is defined as having 50 percent or more of the buildings in the area 35 years or older.
Another requirement for projects within a TIF district is a “but for” test. It requires the developer to certify that, if not for support from the TIF, the project could not take place.
Establishing a TIF district is different from approving individual projects for the program. Laura Radcliff, a senior vice president at Stifel Nicolaus and panel member, said districts are more useful for funding widespread public infrastructure projects. Incremental TIF revenues gained from a TIF district can be used anywhere within the district for public improvements or infrastructure.
TIF districts can capture up to 100 percent of any property tax revenue increase beyond the baseline as well as up to 50 percent of additional economic activity taxes such as sales and utility taxes.
Ken Christian, a consultant who worked on the development of Grand Center, a TIF district in St. Louis, said the TIF district was used to control pressure in the area for the development of student housing. He said using TIF allowed for the development of an arts and entertainment district instead.
“You’re going to grow organically if you don’t plan,” Christian said. “That’s really the core of this – trying to control your own destiny.”
Gray recapped some of the work done by the Downtown Columbia Leadership Council and showed images from the Charrette Report. The report identified the area around Broadway and Providence Road and the North Village Eco-Arts District as two priority areas for redevelopment.
Gray said those areas were also in need of public infrastructure improvements because of stormwater problems.
“I can’t sit here and say today that if you do a TIF district you’re going to have ample funds to solve those problems,” Gray said. “But you could get a start.”
Two county officials attended the meeting and expressed concerns about the loss of tax revenue for schools and other public services that depend on property taxes if a TIF district were approved. Boone County Clerk Wendy Noren said while she thought development planning for Columbia was a good idea, she didn’t support using a TIF to shift money around to pay for public infrastructure projects.
Boone County Assessor Tom Schauwecker said a TIF district would take money away from schools and that he did not support shifting the burdens and risks of development from businesses and lenders to taxpayers.
Matthes said a TIF does not take away any tax dollars from schools because it only supports projects that would not have happened otherwise.
“You’re making a straw man argument,” Matthes said. “To say we’re taking money away from children – who would do that?”
Some questions from the public concerned what a TIF district would cost the city. Mark Flakne, president of Keep Columbia Free, cited a Wall Street Journal article which called the Power and Light District in Kansas City a “budget hole.”
Matthes said such budgetary problems for cities usually occur when a city borrows against future gains from a TIF district.
“It’s a complex tool and it’s pretty easy to misunderstand,” Matthes said. “In my experience, I’ve been blessed to work in cities where it’s worked well.”
Another public discussion of TIF has not been announced, but Gray said the issue would probably come up at the next Downtown Columbia Leadership Council meeting on July 24.
Supervising editor is Ann Elise Taylor.