The Tuesday night Redevelopment Authority meeting on Tuesday night dealt with a review of the tax increment numbers for the Badger Coach renovation and what these numbers might mean for the future--specifically for the planned restoration of the Old Ace Hardware building.
The details are difficult to follow sometimes but worth the digging. I have included four audio posts that cover this portion of the meeting and would like anyone at the meeting that has additions to post comments to help with this written summary.
Under the TIF agreement entered into between the developer and the city, the property that was assessed at $56,587 would be assumed to have a resulting equalized valuation of $206,587 after all the renovation was completed. However, after investing over $200M in the project(only $24,000 was TIF money), when the assessor did the assessment, it came in at $143,443. That is $63,000 below what was expected. Under terms of the agreement, if this happened, the developer would pay back a proportional part of the TIF money to the city.
The developer asked that he pay the "amount" whether in "tax" or in "offset" that equalled what he agreed to pay as opposed to a repayment of any TIF money. The Redevelopment Authority agreed to "cure" the agreement with the developer to allow this.
The bigger issue in the discussion was the implication of all this to the new proposed project for the Ace. In the Badger Coach case, because of low assessments and valuation of commercial buildings in the downtown, after investing $200M in a building, only half of that was delivered in value that would be measured for tax increment purposes---or in otherwords, in terms that the taxpayer would benefit from.
Because the "equalized" valuation made the numbers even starker than anticipated, even the Observer was stunned to see how difficult tax increment benefit would be to achieve in the downtown. Listeners can hear Mr. Hagen wonder what the point is of having invoices sent to the Redevelopment Authority if they bear so little relationship to the final valuation.
Mr. Otterstein stated that it is legal for a developer to agree to pay an "offset" to guarantee a stream of income to a city even if the assessment is below what would be necessary to make the numbers add up on an increment basis for the taxpayer. However, if the new Ace restoration did have an assessment of 1.4 million, it would appreciate only at 2% per year and it would be a long time till it reached the 1.9 that had been the cost.
In cases of central business decay, it is also the case that an objective of restoration is to avoid an even worse scenario----even lower commercial valuation of even worse decay.
Mr. Decker commented that the Badger Coach example was so clear that with a similar situation but larger numbers coming with the Ace restoration, developers were certainly on notice of the difference of "equalization" definitions and could not plead ignorance for future agreements where the issues were the same.
This is a developing story. The numbers were so stark on the Badger Coach case that the issues that the discussion raised will be part of the continuing story covered by The Observer. This is the dollars and cents discussion The Observer had called for and I am pleased to see it begin. Stay tuned.
Saturday, March 04, 2006
The Badger Coach surprise; RA struggles with tax increment, low commercial assessment environment; "Equalized Value" vs. "Assesed Value" noted
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I really feel these tif districts are very questionable and walk a real thin line, any time there is a tif issue it needs to go to a city wide vote. It seems anytime a local contractor extends their hand
ReplyDeleteup pops a tif district, surprise, surprise... I could mention names of the contractors that are continously back asking for tax payer money, but I won't they know who they are
I think that the problem with BC is not with the Project or the allocation of TIF monies. I think the problem is that a completely new (inside and out), 4 unit apartment building on the outskirts of our historic district appraises at a paltry 144K. I'm sure that there are some homeowners in E'ville that are raising their eyebrows.
ReplyDeleteI was driving out of town today and saw what ringhands had posted on there sign, Welcome to Bedroomville ? I believe thats what is says, or close. To me bedroom town, simply means, small, not alot of business, nothing wrong with that. I came from a small town, to this day our house values are great, taxes are reasonable, and there are not a certain group of people trying to create tif districts, at tax payer expense. Bedroomville? What does that mean, they want a walmart???
ReplyDeleteThen you really screw the taxpayers because those tif districts will fail, you don't get to have it both ways.
You know it is my opinion that regardless of this big box committe and all the work they have done, if walmart came knocking, Evansville would open the door. I believe the big box ordinance would be much like the smart growth plan, changeable. ALSO if it is a ordinance from what I have been told, all it takes is two alderperson to request a ordinance change, I have not yet met a alderperson who has voted NO to any business proposal brought before them.
ReplyDeleteI don't know why you would vote YES for a new bed and breakfast when the one we had on the corner of of Church and third? wanted to do different things and you would not let them, and they were already established. O.K. Mr. Connors in the almost 10 years I have lived here, thats only 2 times they have said no. I am not convinced they would say no to a big box type store. I think the reason they said no to d&d was because what a "awful" place for residential growth between the pig and stoughton trailors with the coop on the other side. I was at that meeting. Plus their were questions of traffic problems coming out on to 14. So I am not impressed by the two examples you give of the planning commisoion saying no.
ReplyDeleteWhat I noticed as well in Mr.Connor's post was he did not deny that we could end up with a big box store being the ordinace regarding these could be changed by a mere two alderpersons signing on for the change. Mr. Connors is this correct? If you don't reply I will take this as a YES, it could be changed at any time.
ReplyDeleteso even though this is not a ' ordinance' it can be changed.??
ReplyDeletewhich like was stated before makes these tif districts very dangerous risky things. I have no doubt that if a big place like walmart etc, wanted in they would vote to let them in. There goes the tif districts. There goes our tax money
What you said is it can be changed.
ReplyDeleteYou have to have 5/8 vote in favor of change, correct?? No big deal I have watched that council and planning commission vote things in with very little discussion considering some of these projects are considerable, so it wouid not be a big thing for 5/8 to vote for what ever project - walmart or what ever.