Learn about Tax Increment Financing - http://en.wikipedia.org/wiki/Tax_increment_financing
At the heart of this dispute is a city councilperson who wants to use TIF money to pay down city debt, and another city council person who does not agree. This issue is not new to the City of Wall Lake.
We join the conversation as Dawn Potthoff presents the semi-annual report to the council updating them on the TIF committee’s activities.
This is a transcription of part 1 of the conversation as recording at the actual event. The video is included in this post at the end.
All stammering has been edited out for readability. Names have been inserted in ALL CAPS to indicate who is speaking. All instances of items that are between brackets, “[ ]” are insertions by the editor. Any place where it says [UNINTELLIGIBLE] it means that the editor could not make out what was being said on the reference video.
RAY BOECKMANN
Under new business then Dawn Potthoff on the semi-annual TIF update.
DAWN POTTHOFF
[UNINTELLIGIBLE]
Just to give you an update, the last time we were here or audit submitted was our July balance which at that time was twenty seven hundred dollars, and then we got our deposit from the city and you’ll see the bills that we paid since then.
The one thirty one balance that is what the balance was then but Cookies and Cook Siding’s checks haven’t cleared, so if you take that six off of there that leaves us with about twelve thousand.
So Cookies, Cooks, and Cornbelt, those are our annual payments on those amounts adjusted this year and those will be the same amounts that will get paid again in the June-July period. And Doc’s was the remaining funds that they had on fixing that storefront. That was finally completed.
So those are the only projects that we’ve done in that six months time period.
Then at the bottom, pending projects were [UNINTELLIGIBLE] Jamboree Foods is going to submit a request for a sign, and Cookies Food Products there hasn’t been any negotiations done on any rebate [UNINTELLIGIBLE] or anything on their new project yet, and we’ve given urban renewal aps. to Albright Oil and Westside Bank and we haven’t heard anything back from them, but that doesn’t mean that those still couldn’t be submitted. I think Albrights is still planning on submitting [UNINTELLIGIBLE] the sidewalk.
Then we have had some business requests, we just want to let you guys know about. We’ve had an Ag person come to us on a service and sales business, two commercial sales businesses, a residential service business and a light manufacturing business have approached us. Bottom line: no place to go with ‘em at this point in given time.
[REFERENCING REPORT] So if you flip over to the back…
The first thing, these are kind of things that we identified- our group identified as our goals. Whether they’re short term or long term. The first thing we did was we did amend our by-laws and we’re continually doing that and we added three additional people to our group. So Darin Boger, Dave King, myself, John Morrow, Kent [UNINTELLIGIBLE], [UNINTELLIGIBLE], Craig Brotherton, and Jeff [UNINTELLIGIBLE] are the people that are the representatives on our committee. We did vote though that the person serving on the city council has no vote in our group, okay so in this case, it’ll be John. He’s acting as the chairman of the group but he has no voting powers.
So those are what we’ve updated right now with the Secretary of State
The other thing we need to do is we talked about rezoning the properties especially in TIF district one pretty much because there’s been a lack of increase in the property taxation there. What happens is if these people are in that TIF district, for instance Cookies Food Products is an example of one, there’s only ten years left of that 20 year time period, so any new potential business that would go in that TIF district one, there’s only ten years left for us to do anything with them so if we remove some of the properties that right now aren’t supplying any sort of property tax base to us if a business is interrupted, We can put ‘e, back in the district and they would start at that twenty years again.
Also what we are trying to put together is that we have an application for the beautification part, and the urban renewal beautification process, which is the sidewalks, the storefronts, those sort of things, but we don’t have a good project application for the bigger projects that are submitted to us and lack of a lot of our current [UNINTELLIGIBLE] in town not being able to fit into the governing rules that we have. So we’re trying to expand some of those projects to possibly include a loan program. Just one type of thing that we’re doin’.
So we are meeting on a monthly basis and our group wants to accomplish a couple things. The first thing is we really need to educate the council and some of the other businesses in our community of what TIF is and how it functions and what it’s going to do for our community. It’s nothing that’s a day to day thing. It is a long term planning and what may seem to you guys at the moment [UNINTELLIGIBLE] we’re losing money with our taken away tax base, that’s not what’s really happening. And we’ve talked about a couple of scenarios; for instance, the airport hangar. Our group did purchase that, Roe Letter Building, I think it’s going to be almost three years now. Two and a half, three years ago?
RAY BOECKMANN
Actually it’s oh nine
DAWN POTTHOFF
O.K.
RAY BOECKMANN
It was in oh nine.
DAWN POTTHOFF
We purchased it, oh nine you did?
RAY BOECKMANN
Um-hmm.
DAWN POTTHOFF
O.K. We purchased it, talking with the council that a trade would be made that we would purchase that for the city and kind of take over the hanger so that we could do some development for some business and industry, and that really hasn’t happened yet, and we do know that that property, for us to use TIF funds, It needs to be owned by the TIF group and if we wanted to do any bonding through the TIF it has to be in TIF’s name.
So for instance, say somebody wants to develop out there, and we get everything up to specs, we know it’s in a flood plain, number one, so for a bank to financially stand behind anybody building down there could not happen. They would not get any financial backing because it is in a flood plain, so our intentions are to number one find out if this is a feasible project to do and then, all of the infrastructures already there, you guys have already invested in that. Everything’s there, gas, electric all that.
So we spend forty thousand dollars getting in dirt and bringing it up to where it needs to be and we sell a portion of that and somebody builds a two hundred thousand dollar building there and we’re going to get six thousand dollars a year, the city is on taxes, for twenty years. We didn’t take that money away, but we reinvested and increasing the tax base so it brings jobs to our community, people are going to spend all of their money there, and it is increasing your tax base and property values. So we want you guys to be aware, it’s not us trying to take the money.
However, there is going to be circumstances, we are working right now on a possible exchange of some land. Is there somebody on all four side of us right now that owns property. This community cannot expand. No one wants to sell any of that property to us, but we may be able to persuade one of those people to exchange that property for a different property somewhere. Who’s going to pay for that exchange to happen? The city? Or, that’s what the TIF funds are there for.
RAY BOECKMANN
I’d like to interrupt you for a minute here if I could. It says, you say the TIF funds are for everything [UNINTELLIGIBLE] This ordinance that we passed here, ordinance number two thousand four dash one provided the general property taxes levied and collected each year on certain properties located within the two thousand and four addition to the Wall Lake urban renewal area commercial industrial of the City of Wall Lake, County of Sac, State of Iowa, by and for the benefit of the State of Iowa, City of Wall Lake, County of Sac, Wall Lake View Auburn Community School District and other taxing districts to be paid to a special fund for payment of principal and interest on loans. Money is advanced into indebtedness including bonds issued or to be issued incurred by said city in connection with the two thousand four addition. This TIF was set up already for paying the bonds, the principal and interest on loans. I got this from county auditor’s office and county auditor’s certificate. This was redone in two thousand and nine by the city council. And the original one said the same thing as far as the ordinance amending and all that.
JOHN MORROW
May I see it?
RAY BOECKMANN
The original tax increment debt certificate was the amount of debt it said for Cooks siding, two thousand three hundred eighty one dollars, for Wall Lake School for Cookie’s Food Products was eighty six hundred and fifty one dollars, and for the Wall Lake Economic Development Committee, twenty five thousand.
DAWN POTTHOFF
I don’t know about the twenty five thousand, I don’t know about those, but the other ones are to pay the indebted, the taxes back and a form of reimbursement to Cookies and Cooks-
RAY BOECKMANN
And who was this set up by?
DAWN POTTHOFF
The council years ago are the ones that approved the TIF.
RAY BOECKMANN
That’s what I’m just showing right there that what was recorded.
JOHN MORROW
This is a two thousand and four district, I assume because it says two thousand and four addition to the Wall Lake Urban Renewal Area [UNINTELLIGIBLE] industrial-
RAY BOECKMANN
That’s the update. that was when we redid it in two thousand and nine. We amended it in two thousand and nine.
ROB GERMANN
Well, in two thousand four one is the district going out south
DAWN POTTHOFF
Um-hmm.
RAY BOECKMANN
Then there’s another one. There’s a file at the county auditor.
JOHN MORROW
[UNINTELLIGIBLE]
DAWN POTTHOFF
What I’m informing you, Ray, of is what the state of Iowa rules that I have learned.
RAY BOECKMANN
Okay. You may have learned some things but there something here, you cannot take out of one district and pay in another district. That come out of Ahlers and Cooney and also, (what’s the other one?) [UNINTELLIGIBLE]
JOHN MORROW
Dorsey and Whitney?
RAY BOECKMANN
yeah, Dorsey and Whitney.
[READING FROM A PIECE OF PAPER IN WHICH A QUESTION IS AKED AND ANSWERD] It says that if a city or county has more than one tax increment area it may funds from any area to be spent in any other area? Funds must be spent from the tax increment area from which they are derived, and if there is no more than one tax increment area, the funds from one area may not be spent within another area.
I asked ‘em up at questions and answers on tax increment. Come from Dorsey and Whitney
JOHN MORROW
Are you asking a question here?
RAY BOECKMANN
No but we can’t be taking funds from one district to another district or whatever the TIF district.
DAWN POTTHOFF
You guys can discuss that later, that’s not why I’m here, I was just to report what we use, so.
RAY BOECKMANN
I’m just saying that we should be using some of this money on paying down debt, ‘cause we have got debt out there. Right now we’ve got principal and interest of a hundred and ten and interest of thirty three so a hundred and forty three thousand dollars we got coming due this year on-
DAWN POTTHOFF
Well, we will barely have enough, we would not be able to fund anything else the rest of the year except the next round of payments, so our groups done then for the year.
RAY BOECKMANN
It’s still the city council that controls what happens with the TIF money. They’re responsible for-
JOHN MORROW
What number you just threw at us about the bonded interest?
RAY BOECKMANN
Right there. [GESTURES TO PIECE OF PAPER]
DARYL POTTHOFF
[UNINTELLIGIBLE]
RAY BOECKMANN
Top ones, the first total up there are twenty one [UNINTELLIGIBLE] Fitness center [UNINTELLIGIBLE] take care of that [UNINTELLIGIBLE] pay it off or whatever. the bottom three, which is our natural gas, electrical lines going out south, then the well and sewer. Well out there.
JOHN MORROW
Well I, you know, I just want to educate the council on this that there’s a new electric line that says Hallotts but [UNINTELLIGIBLE] sixty five thousand dollars. That’s our bonded interest payments for sixty five thousand dollars for this year.
I didn’t actually analyze this because we’re in a little bit difficult, and secondly, I didn’t really have the time to do it.
DAWN POTTHOFF
Can I politely be dismissed? Can I be done? Do you have any more questions for me?
JOHN MORROW
yeah.
DARYL POTTHOFF
You’re done.
RAY BOECKMANN
[UNINTELLIGIBLE]
DAWN POTTHOFF
K
RAY BOECKMANN
Thanks.
JOHN MORROW
[UNINTELLIGIBLE] Are you done?
DAWN POTTHOFF
I’m done with what I have to say because I’m not going to get in the middle of anybodies pissing match here ‘cause that’s not my job [UNINTELLIGIBLE] I’m just here to inform people.
To be continued…
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