Closures would allow new Tax Incremental Districts for development
By Bert Lehman
The Clintonville City Council approved closing four of the five Tax Incremental Districts over the next year that are currently open in the city.
The council made its decision at its May 9 meeting. It was the recommendation of Ehler’s, the city’s financial advisor, to close TIDs 4, 5, 6 and 7 over the next year.
• TID 4 includes the Highway 45 corridor west of the Highway 45/22 intersection out to the city limits, including Klein’s Chevrolet dealership, the former Stolen Apartments and the school bus facility.
• TID 5 includes the Angelus Assisted Living development (now Aster).
• TIDs 6 and 7 include FWD and Seagrave properties.
Maureen Schiel, CIPMA financial specialist II for Ehlers, presented the recommendation to the finance committee the day prior to the council meeting. The committee recommended the council approve the recommendation.
She said the closure of the four TIDs would first impact the 2018 budget.
First it will allow for an increase in the city’s allowable levy of about $46,000. The increment from each TID will also be added to the city’s tax base for the 2018 budget.
Ehler’s also recommends that next month the council approve closing TID 3. TID 3 includes the city’s north side Industrial Park extending from 15th Street along both sides of Industrial Avenue east to SSG Warren Hansen Drive all the way to the city’s north city limits along Commercial Avenue to its intersection with Highway 22 South.
If the council decides at its June meeting to close TID 3, that would first impact the city’s 2019 budget. This would allow an estimated increase to the city’s allowable levy of about $150,000. The TID 3 increment would also be added to the city’s tax base for the 2019 budget.
Schiel said once TID 3 is closed, the city will be able to create a new TID.
“There is a certain limitation as to how much tax increment you can have in a TID before you can create a new district,” Schiel told the Finance Committee. “By closing all five of these districts you’ll be able to create the new TID. You will also be able to receive a distribution from the excess revenue in TID 3. So in 2018, when all the TIDs have been closed, there will be a disbursement to overlapping taxing jurisdictions.”
In addition to the city of Clintonville, disbursements will also be made to the Clintonville School District, Fox Valley Technical College and Waupaca County. The city’s distribution is estimated to be about $370,000 in 2018, Schiel said. These funds can be used to pay for outstanding debt and capital projects.
Along with closing the TIDS, Ehler’s recommended paying off the 2004 Wisconsin Redevelopment Authority Lease Revenue Bonds associated with TIDs 3 and 7. This would result in the city saving about $100,000 in interest over the life of the issue.
The council approved this action at its meeting.
One final recommendation by Ehler’s called for the city to prepay the Tax Increment District portion of TID 5 General Obligation Promissory Notes. These notes are first eligible to be paid off on March 1, 2018. The council doesn’t have to act on this recommendation until the fall. If approved, this recommendation would save the city around $22,000 in interest over the life of the issue.
Clintonville City Administrator Chuck Kell told the Finance Committee that the negative TID fund equity is primarily due to TID 4. He said the Stolen project was not entirely repaid to the city.
“There was about $275,000 of incentive money that was approved by the city for that project,” Kell said. “Mr. Stolen passed away and all his assets were liquidated and there was no way of recovering that money that the city had authorized for the project.”
The committee noted that this took place in the 1990s.
“Otherwise the TIDs for the city have done real well,” Kell said.