By LeAnn R. Ralph
COLFAX — Although the Colfax Village Board is borrowing approximately $350,000 for the Fourth Avenue street project, Tax Increment District No. 3 is expected to cover the cost of the loan.
The Colfax Village Board approved amending the TID 3 plan and borrowing the street project money at the June 9 meeting.
TID 3 is a blighted TIF, and the money generated by the district can be used to rehabilitate buildings and pay for the cost of street projects, said Patrick Beilfuss with Cedar Corporation.
The Colfax Plan Commission has recommended amending the TID 3 project plan with language allowed by the state to include projects within a half mile of the TID boundary, he said.
In the past, if a municipality wanted to do a project outside of the TID, the municipality had to amend the boundary, Beilfuss said.
Rational for the state legislature to allow TID project plans to extend the boundary for projects within a half mile revolves around effectiveness and convenience.
For example, an industrial park area may require a road upgrade or improvement somewhere else in the community, Beilfuss said, noting that perhaps a turn lane is needed for heavy truck traffic headed for the industrial park.
By adopting the language that includes the half-mile extension, the village board would not have to go through the procedure again to amend the TIF boundary for another eligible project, Beilfuss said.
Beilfuss asked Brian Reilly, the village’s financial consultant with Ehlers Associates, to review the finances for TID 3.
The current new value in TID 3 is a little over $2 million, and the tax increment for the new value is $62,500 annually. The base value of TID 3 is about $1.6 million.
In a tax increment district, the taxing authorities — the village, the county, the school district, and the technical college district — do not receive the taxes generated by the new value after the TID is formed. Instead, the money goes into a TID account and can be used to pay for eligible improvements within the district.
The taxing authorities still receive the property taxes generated on the base value.
The final year for TID 3 is 2029.
The current payment on a loan for TID 3 is $25,600 annually, leaving nearly $37,000 left over.
The estimated payment on a loan of $350,000 for the Fourth Avenue project would be around $30,500.
“Even if TID 3 generates no new value until 2029, (the village) would still be able to pay off current debt and would be able to pay off Fourth Avenue and would still have over $300,000 left over,” Beilfuss explained.
“Your finances for this are in good standing. You are sitting well,” he said.
Beilfuss pointed out that Reilly was being extremely conservative in basing the numbers on the assumption that there will be no appreciation of value in TID 3 until 2029 and that there will be no new value added to the district.
TID 3 most likely will gain additional value over the next 15 years, he said.
The process for amending a TID includes a meeting of a joint review board made up of representatives from each of the taxing authorities.
The first meeting with the joint review board was May 28, Beilfuss said.
“In general they were supportive of it,” he said.
After the village board approves the TID 3 project plan amendment, the joint review board will have the final say on whether they approve or deny the amendment, Beilfuss said.
“Our initial analysis was that they are in favor of it,” he said.
Before meeting with the joint board again, the village’s attorney will have to send a letter indicating he has reviewed the proposed amendment, that it meets all of the criteria in the state statutes, and that the village board has reviewed and approved it, Beilfuss said.
The Colfax Village Board unanimously approved the proposed amendment to the TID 3 project plan.
In a related agenda item, the Colfax Village Board approved borrowing $330,000 from Dairy State Bank at 2.8 percent interest for ten years to pay for the Fourth Avenue street project.
Generally the interest rate on the state trust fund loans is lower than what the banks will offer, but in this case, the bank interest rates were better, said Jackie Ponto, village administrator-clerk-treasurer.
Bremer Bank offered an interest rate of 3.24 percent interest over ten years on $352,000.
The state trust fund interest rate was 3.5 percent for a ten-year loan.
The Colfax Village Board unanimously approved borrowing the money from Dairy State Bank for ten years at an interest rate of 2.8 percent.
In other business, the Colfax Village Board:
• Approved 49 bartender operators’ licenses; eight liquor licenses; six tobacco retailers’ licenses; and two temporary Class “B” picnic licenses for the Colfax Commercial Club for July 17 through July 29 for Tom Prince Memorial Park and for Main Street from First Avenue to Railroad Avenue for the Colfax Sesquicentennial Celebration.
• Scheduled a public hearing for August 11 at 7 p.m. for a tree abatement at 707 Oak Street. The tree is split and has a high likelihood of going down in a wind storm. If the property owner has the tree taken down before the scheduled time for the public hearing, the hearing will be cancelled.
• Approved the purchase of two 20-foot by 20-foot event tents with sidewall kits for a total of $1,097.98. The tents will be used by the American Legion at the Colfax Free Fair for the beer tent. Renting a tent would cost about a $1,000, Ponto said. The tents also will be useful for the Colfax Sesquicentennial, for the Colfax EMS Association’s EMT event in October and for any other groups that might need to rent a tent, she noted.