Supervisors to decide about use of TIF on Thursday

The Greene County supervisors expect on Thursday to make what may be one of the most consequential decisions for the county in decades.

The board agenda for the Feb. 8 meeting includes discussion and a decision on whether to proceed with using the 120-plus wind turbines built by MidAmerican Energy in the eastern part of the county for the basis of tax increment financing (TIF).

The supervisors have discussed the wind turbines and potential TIF since the Beaver Creek Wind Park was first proposed 18 months ago. The supervisors have taken a lot of time to make a decision because TIF requires the county to go into debt, something the supervisors have been very reluctant to do, and because they’ve received different information from experts they’ve consulted.

The city has used the expertise of Bob Josten of Dorsey & Whitney law firm in setting up TIF. The supervisors met with Josten separately in Paton the first week in December and then again at a special meeting Dec. 13.

Josten provided “TIF 101” for the supervisors and several members of Greene County Development Corporation board who were present.

Simply stated, tax increment financing allows a city or county to capture the additional property tax revenue generated when improvements are made to a property, with the “captured” revenue used to pay for specific projects in the area in which the property is located.

For example, the city of Jefferson is using tax increment financing to pay for the new water line that was needed for the new Hy-Vee store. Because the property on which the store is located has more taxable value now than it did before the store was built, the property taxes have increased. The amount that was paid before the store was built still goes into the city’s general fund, but the additional amount – the increment – goes to paying for the water line. After the water line has been paid for, the entire amount (higher) goes into the general fund.

Several steps are required to set up TIF. A TIF area must be established that meets certain criteria showing that economic development or urban renewal is needed there. An urban renewal plan has to be written with objectives and specific projects planned within the area. A public hearing has to be held, a resolution has to be approved, and an ordinance has to be passed.

The 10th of 12 steps Josten outlined is to incur debt. Tax increment financing cannot be used to build a fund for an eventual project. TIF is used to repay over time bonds that have been sold to pay for a project.

If the supervisors take the steps to place the wind turbines in one or more TIF areas, they would designate projects to be done with the increment in each area.

County engineer Wade Weiss has reminded the supervisors several times that many counties with wind turbines use TIF to fund secondary roads projects.

In December, Josten and Zach Mannheimer, the principle in the Vision 2020 plan, encouraged the supervisors to create a TIF district that would allow the increment to be used to assist in financing a rental housing project in Paton. Direct economic development grants or loans to private companies as an incentive for them to locate or build in an area is an allowed use, Josten explained.

Josten said the supervisors could create an urban renewal area that included every small town in the county, name housing projects to be completed in each town, and then use TIF for each one.

Board chair John Muir later said Josten “made it look like the sky’s the limit” for TIF. Josten also said TIF could be set up within two months if the legal descriptions of every turbine site were available. (That information has already been compiled in the process of permitting the turbines.)

Nathan Overberg of Ahlers & Cooney also met with the supervisors twice, the second time on Jan. 18, after the supervisors met with Josten.

The two attorneys provided different information about the possible uses for TIF and the ease of using it for housing.

According to Overberg, tax increment financing funds can be used for infrastructure (water, sewer, streets) to support housing, or for low income housing. He said using TIF the way it was suggested for a workforce housing project in Paton, not targeted for low income persons, is technically allowable but falls in a “grey area” of the law.

He said that putting agricultural land into an urban renewal area requires the signature of every owner of more than one-tenth of an acre, and that it took one year to get consent for multiple owners of an area that amounted to 2,000 acres.

The wind turbines on which the increment is collected must be in the same urban renewal area in which the improvement is being done. He said the county roads could be considered as connectors to create a district that would encompass county towns, but that would be “a significant project, not your run of the mill project.”

Overberg spoke of risk involved with tax increment financing. Bonds would be sold to pay for a project, but there is no guarantee the increment would be large enough to meet the bond payments, particularly in the first years of the TIF. If there were a shortfall in the increment, the supervisors could possibly need to increase the levy rate to make the bond payments.

He said it would be possible to put all the county towns into an urban renewal area and that he could see a political advantage for the supervisors to do so. He suggested, though, limiting it to make a project more manageable.

“It would be visionary to include all the towns, but very complicated,” he said.

Jeff Heil of Northland Securities accompanied Overberg to the meeting. The two men and their two firms often work together on TIF projects, with Overberg handing the legal aspects and Heil handing the sale of bonds.

Heil suggested the supervisors consider starting with a “simple” project like roads and bridges, and said that could be accomplished by next Dec. 1.

Any firm involved would charge for its services in setting up the urban renewal area and the tax increment financing. Muir has since learned that Region XII Council of Governments could do some of the work at a lower cost. County auditor Jane Heun is confident the county staff could work through much of the process, and without adding staff time.

The supervisors plan to make a decision Feb. 8 because it is one of the few meetings in February all of them will be able to attend. They realize a need to decide whether or not to proceed so the process can be completed before the added value of the wind turbines is on the tax rolls.

In conversations over the past several weeks, Muir and supervisors Dawn Rudolph and Peter Bardole has spoken in favor of using TIF, although they haven’t named a preferred project. Tom Contner has said he is not in favor. Mick Burkett said at the outset he is opposed, but more recently has said he would consider it for secondary roads.

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