Boone County Commission candidates talk tax incentives

Wednesday, July 25, 2012 | 8:16 p.m. CDT; updated 11:55 a.m. CDT, Tuesday, July 31, 2012

COLUMBIA – While many of the candidates for Boone County Northern District commissioner want more information on specific tax incentive programs, some are more supportive of tools such as enhanced enterprise zones than others.

Two Republicans, Don Bormann and Lance Robbins, are running in the Aug. 7 primary for Northern District commissioner. The winner of that contest will run against one of four Democratic candidates — Janet Thompson, O.J. Stone, Brian Dollar and Darin Fugit — competing for their party's nomination. Skip Elkin, the incumbent, is not seeking re-election.

Two tax incentive programs are already in use in Boone County. The county has offered Chapter 100 bonds to a few companies, including IBM, but only ABC Labs accepted the incentive. Chapter 100 bonds allow counties to issue bonds to companies that plan to expand, making the projects public and therefore exempt from some property taxes.

Columbia has approved tax-increment financing, or TIF, for two projects under way in the city. The construction of a new DoubleTree Hotel and the Tiger Hotel renovation are partially funded by TIF. A public discussion about establishing a larger TIF district in Columbia received negative reaction from some county officials and residents in June.

Tax-increment financing is intended to act as an incentive for developments that otherwise would prove too costly. When developers repair or redevelop properties, the taxes on those properties normally rise with the increased value. But with TIF, the extra taxes those owners would pay are instead funneled into the project or used to pay for accompanying infrastructure. Commercial TIF developments also can invest a portion of the sales taxes they collect into the project.

Two cities in the county are working to create enhanced enterprise zones, or EEZs.

EEZs must be approved by the state. Qualifying businesses that expand or locate with an established zone, invest a minimum amount and create at least two jobs can receive local property tax abatement of at least 50 percent and qualify for state tax credits.

Centralia created an advisory board that voted earlier in July to draft an ordinance for the board of aldermen and the Boone County Commission to approve. Columbia's EEZ has met with opposition from citizen groups concerned about the blight designation required for areas to qualify and about the potential loss of tax revenue. 

The Columbia City Council re-established the EEZ Board in May, and the board continues to work on detailing recommendations to the council about an EEZ in Columbia. Earlier this week, the board voted to recommend that companies create a minimum of 10 jobs to be eligible for EEZ incentives.

Thompson said that tax-incentive programs have the potential to help bring businesses to Boone County but that she would have to be persuaded that the county is getting more revenue than it is giving up through EEZs, TIFs or Chapter 100 bonds.

"It always makes me uncomfortable to give money away," she said. "Show me that we would not have the growth absent giving the incentive."

Having all the affected taxing entities involved in the process is also important, Thompson said. She said she thinks one of the reasons the Columbia EEZ faced so much backlash is that not everyone had a seat at the table.

"If we're going to utilize these kinds of tools, it's important that every taxing entity that's impacted has a seat at the table," Thompson said. "If they're structured correctly, they can be very useful."

A Columbia EEZ that includes a portion of Boone County would gain her support, Thompson said, if she were persuaded that it makes sense for the community and if all of the taxing entities agree they'll get more than they give up.

“I think you have to do due diligence,” Thompson said. “Everybody has that tool, and companies know it.”

Fugit said he, too, would have to see more evidence about the impact of a Columbia-Boone County EEZ before deciding whether it's a good idea. He said St. Louis'and Kansas City's experience with tax incentives makes him concerned about their effects.

"Unless they could come up with some numbers on how it's going to impact schools and the other taxing entities, I can't say I would vote for it," Fugit said.

Fugit said he's also concerned about the impact of new or expanded businesses on infrastructure.

"It seems like a quick, easy fix that in the end we're going to have to pay for," he said. "Is it going to affect our roads, our ability to provide infrastructure, our schools?"

Fugit said he wants to be the "ambassador of jobs for the county" and put together "a high-tech packet" showing all Boone County has to offer businesses. He said he's not completely against using tax-incentive programs to attract businesses.

"I'm not totally opposed, but I'm also not for making wide swaths of the county eligible because you're giving away tax base," Fugit said. "It has its drawbacks."

Stone said that while EEZs and other incentives can be useful, they also can be overused. He said such programs are a mechanism for growth and could be part of a structure to encourage economic development in Boone County.

"We need to set up a structure that's conducive to development," Stone said. "I just want to make sure those processes are put in place and we plan for the long haul."

Stone said public safety, which he defines as including the quality of roads and schools as well as good law enforcement and fire departments, is just as important to economic development.

"You have to remember that every time you do a tax abatement, someone has to pay for the infrastructure," Stone said. "You have to make sure that you have a solid plan in place to make sure that you're not overreaching and at the same time you don't want to shut down development ideas."

Both Stone and Dollar said they would need more information before deciding whether to vote for a Columbia-Boone County EEZ.

"It's probably most important to be open-minded," Dollar said, adding that a commissioner should gather information about an issue. "If you have an opinion before that process, you're doing it the wrong way."

Although he's keeping an open mind, Dollar said he thinks tax abatements and other subsidies usually benefit the wealthy.

"It's well intentioned, but people are clever," Dollar said. "The argument is somehow in the future you'll make up the difference, but in fact that doesn't always happen."

Robbins supports establishing an EEZ in Columbia and said he would vote to approve one that included part of Boone County.

"I think people want economic growth," Robbins said. "I see EEZs as a responsible way to attract a business, and it also supports the ones we already have."

However, Robbins does not generally support the use of TIFs and is wary of Chapter 100 bonds after what happened in Moberly with Mamtek. He said a TIF district could be used to fund infrastructure in the area around the new Battle High School, which he described as an "emergency situation" because of the lack of money available for roads there.

"I believe that TIFs in general are detrimental," Robbins said. "It really does erode the tax base."

Robbins and Bormann agreed tax incentives are necessary to attract new businesses because companies know those programs exist and want to use them.

"That's what we have to do to compete," Robbins said. "I don't want my children to have to leave this area to find good jobs."

Bormann said that while he doesn't like the idea of having to offer tax incentives, it would be up to the state or federal government to get rid of them.

"It is the way the game is played," Bormann said. "Without them, you're not going to get businesses to even consider you."

As a Centralia alderman, Bormann voted to begin the process of establishing an EEZ there by creating an advisory board. He said he probably would vote to approve an EEZ in Columbia as a commissioner.

"I think that there's enough benefit to it that it's worth thinking about," Bormann said.

James Pounds, the Republican candidate for Southern District commissioner, opposes the use of most tax incentives but said the commission should work to attract businesses without them.

"I don't believe that it helps," Pounds said. "Honestly, if a business is good enough to make it in the free market, then that's the way it should be handled."

He said the way to attract businesses is to make it cheaper for them to come to Boone County through less regulation and lower taxes.

Pounds is unopposed in the primary and will face Karen Miller, the current Southern District commissioner, in the general election in November.

Miller said she has not decided whether she supports the use of EEZs and TIFs.

"I'm just listening to what people have to say," Miller said.

She said one issue with TIFs is that, if a company already in the county moves into a TIF district, the county and schools will lose tax revenue.

She said she favors Chapter 100 bonds over other tax-incentive programs because of the more rigorous process and the requirement that all the affected taxing entities approve the project.

Supervising editor is Scott Swafford.

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