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REVIEWING TAX INCREMENT FINANCING
FOR PUBLIC PURPOSE IN DOWNTOWN VICTORIA
Victoria Councilmembers learned or relearned the fundamentals of Tax Increment Financing at a 5 p.m. workshop on May 25th. Shannon Sweeney of David Drown Associates gave the presentation.
TIF becomes part of the discussion in Victoria at this time because of the recent downtown redevelopment proposal from Mary Meuwissen. There are already three TIF Districts in the City of Victoria that include other land parcels.
District One was created in 1990 and brings $13,126 to the District each year until 2017. It includes, among four parcels, the Cal Haasken apartments at the end of Commercial Avenue.
District Two was created in 1998 and brings $46,454 each year to the District until 2025. It includes, among 11 parcels, the Cabin Fever complex and the new city bridge.
District Three was created in 2002 and brings $126,068 to the District each year until 2029. It includes, among 123 parcels, the Clocktower building and the Wensmann Condos. The annual TIF in-crement increases as all the condos are sold.
"Tax Increment Financing is a pretty useful tool," said Mr. Sweeney. "It cap-tures and directs new property taxes from a new private development to promote development which would not occur but for assistance."
"TIF is a redirecting of tax revenue for some public purpose," he said. "The developer pays taxes just like everybody else, but they're redirected. By and large, TIF users are using it for public infra-structure."
He said that Victoria's use of TIF for the Wensmann condos was an excellent way to help pay for new downtown infra-structure in Victoria.
He explained that the increase in property taxes on new downtown devel-opment, due to the increase in value, is called the "increment." That increment stays within the TIF District to help pay for public improvements.
The City of Victoria at large and Carver County continue to receive property taxes from the development, but only at a frozen amount that doesn't include the increment. That increment can be captured for a public purpose for up to 26 years.
"It generally takes 60 to 90 days to create a Tax Increment Finance District," said Mr. Sweeney. "The TIF District must be in place before a building permit is issued."
He said that 50% of existing buildings in a TIF District must be substandard or blighted, and 90% of the increment must be spent in curing the blighted conditions. It can be spent on streets as long as they're in front of the blighted buildings. It cannot be spent on City Halls or cultural or recreational facilities.
"You can capture the increment from luxury housing," he said in replying to a question, "but you can't subsidize luxury housing."
"You can use TIF to develop public parking or subsidize a development to build public parking," he said, adding, "It would be hard to convince a developer to build parking to solve a citywide prob-lem."
He repeated, "If you intend to capture the increment on a new project, be cautious about tearing down old buildings or old houses because then you have vacant land, not blighted property ... Do not create a new district until a new project is imminent."
It costs around $7,500 in paperwork and inspections to set up a TIF District.
CHANNEL-ING TOWARDS A LAWSUIT
VICTORIA COUNCILMEMBERS DISAPPOINTED
On May 25th Victoria councilmem-bers unanimously authorized city staff to negotiate an agreement with Metropoli-tan Council Environmental Services for reconstruction of the Smithtown Road culvert using funds from the Metropolitan Council.
Stated City Planner Eric Zweber, "We received a permit from the Minne-haha Watershed District to reconstruct using Metropolitan Council funds. It will eliminate two lift stations in the City of Victoria and significantly help in resolv-ing the odor issue."
He reviewed that the DNR chose the minimal impact culvert option; it does not increase navigation through the channel.
Mayor Jerry Bohn reminded people, "The city did offer three options to meet the needs of our residents." In speaking to residents attending this council meeting, Mayor Bohn welcomed them to the podium but stated, "Don't try to convince us that another option is better. That's not our authority."
Gene O'Brien, a resident on Lake Virginia who was seeking greater naviga-tion at the channel between Lake Minne-tonka and Lake Virginia, stated, "I am a riparian property owner. This affects our fundamental property rights. We will bring an injunction against the city if you authorize this plan."
Stated Tom Sheehan, president of the Smithtown Bay Association, "We have riparian rights too, that will be damaged if you increase the navigation."
Summarized Victoria Councilmem-ber Kim Roden, "I think we've heard it all and know our obligation and the issue. Unfortunately we have to disappoint one of the groups, but that's what we some-times do here. Most of us have sat through hours of meetings."
Added Councilmember Richard Tied-en, "I originally thought it was an exciting idea to open up the channel, but we've talked to the various agencies and learned a lot, also from our city attorney about riparian rights. I want you to know we've done the best we could. I'm disappointed to know you plan on suing the city."
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