COLUMBIA — The plan to finance improvements to the city's downtown electric and wastewater systems has encountered government opposition.
The Boone County Commission, one of five taxing entities that could be affected by a proposed downtown tax increment financing district, rejected the city's plan. The three members of the commission are elected and oversee county government.
In a letter to city officials, commissioners questioned whether the city needs to move so swiftly, the necessity of public financing for infrastructure needed to accommodate private developers and the amount of tax revenues diverted for downtown infrastructure.
Tax increment financing laws allow local governments to freeze property and sales taxes within segments of a city. Government officials can then reallocate any additional taxes, gained from property improvements or growth in sales, to a fund for infrastructure or other projects. Tax increment financing districts can last for as long as 23 years.
The county commission's letter is the first official opposition to the proposed taxing district, though members of the Columbia City Council and members of the Columbia Public Schools Board questioned the proposal last week.
In an interview on Friday, City Manager Mike Matthes said the final plan would ensure that the county would not be harmed and that the proposed financing district would make up only a small percentage of the county's tax base.
The commissioners also criticized how quickly city officials have pushed the plan through, asserting that the city was not giving interested parties enough time to study the plan.
"The TIF process underway is being rushed," the county commissioners wrote to Matthes, Mayor Bob McDavid and members of the council.
The commission also pressed city officials on the question of why tax revenue should be diverted to cover infrastructure needed to support a flood of private high-density residential development.
"There has been no public discussion about why these business enterprises need a bailout of taxpayer funds," the commissioners wrote. "Private development is clamoring to build downtown, and private capital must be part of a solution to fund the infrastructure that their private development requires."
Those comments mirrored those made by Third Ward Councilman Karl Skala at a meeting Tuesday evening about sharing the costs with developers. City officials have maintained that without a downtown taxing district to pay for electric and sewer projects, developers won't build.
"A TIF is meant to fund projects that the market won't," Matthes told the council last Tuesday. "If projects were going to happen anyway, a TIF would be foolish."
The county commissioners disagreed, saying that the eagerness of developers seeking to build downtown makes it unlikely they would abandon projects if a financing district was not established.
"With all of the private development interest in the downtown area, it is doubtful the 'but-for' test of a TIF can be met," commissioners wrote.
The commission has asked city officials to terminate the current tax increment financing plan and consider other financing options.
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