By LeAnn R. Ralph
COLFAX — The Colfax Village Board has approved amending Tax Increment Finance Districts 3 and 4 to share funds to pay for the Third Avenue street project.
The question is whether TIF 3 can handle the debt payments for work that will be done on Third Avenue this summer, said Lynn Niggemann, village administrator-clerk-treasurer, at the Colfax Village Board’s July 11 meeting.
At the June 27 meeting, the village board had discussed sharing the funds between the two districts and whether the $380,000 street project could be paid off in five years.
Niggemann consulted with Sean Lentz, senior municipal advisor with Ehlers and Associates Inc., the village’s financial consultant, to find out whether five years was a feasible time period.
If the village board combined the funds from the two TIF districts and approved a five-year payback period, the last year would be result in the general fund providing $25,000 for the debt payment, Niggemann said.
To avoid having to borrow from the general fund, Lentz is recommending a seven year payback period, she said.
“Five years has a better interest rate, but we could not make the last payment,” Niggemann said.
According to information provided in the village board packet, a five-year debt term would carry interest rates of 1.89 percent from Bremer Bank and 1.68 percent from Dairy State Bank compared to 2.02 percent from Bremer for seven years and 2.01 percent from Dairy State.
A Tax Increment Finance District is a form of public financing that diverts property taxes on improvements in the district to be put toward an economic development project or a public improvement project.
Instead of the tax increment going to the Colfax school district, Chippewa Valley Technical College and Dunn County, the village retains the money.
When the TIF closes out, the other taxing jurisdictions receive the difference in the remaining funds.
TIF 3 is a “blighted district” and includes much of the downtown area, the area of East Third Avenue to Dunn Street north to the railroad tracks, along Main Street south of the railroad tracks to the village limits and part of the industrial park.
TIF 3 was created in September of 2002. The final expenditure year is 2024, and the final revenue year is 2030.
The current value increment for TIF 3 is $2.69 million.
According to information from Ehlers and Associates, TIF 3 would make a cash contribution to the street project of $201,145, and the projected debt would be $178,855.
TIF 3 is already carrying general obligation bonds of $1.3 million from 2013 and a general obligation note of $350,000 from 2015. A total of $22,366 would be needed from TIF 4 to carry the additional debt payment for Third Avenue.
The advantage to using TIF funds for the Third Avenue project is that the tax levy paid by village residents will not increase, Niggemann said.
The Colfax Village Board unanimously approved a motion to amend the TIF districts to share funds.
Voting in favor were village trustees Mark Halpin, Carey Davis, David Wolff, Annie Schieber, Casey Rihn and Keith Burcham.
Scott Gunnufson, village president, was absent from the meeting. Halpin chaired the meeting in Gunnufson’s absence.
The Colfax Village Board also unanimously approved a seven-year term for the loan.
In addition, the Colfax Village Board approved financing with Dairy State Bank at an interest rate of 2.01 percent.
Burcham abstained from voting on the motion to finance with Dairy State Bank.
In other business, the Colfax Village Board:
• Approved bartender operators’ licenses for Sophia Amick and Tucker Hovde for Kyle’s Market.
• Learned that the village mailed out 245 healthcare facility surveys and distributed 150 surveys to local businesses. A total of 101 surveys have come back. The village also will be mailing out a second set of surveys to surrounding municipalities. The additional 1,220 surveys will have a deadline of July 22.