Joint Review Board approves sharing revenue for Colfax TIF districts 3 and 4

By LeAnn R. Ralph

COLFAX —  The Joint Review Board for the Tax Increment Financing Districts in Colfax has approved a resolution to share revenue from TID 4 with TID 3.

The Joint Review Board, consisting of Scott Gunnufson (village); Steve Rasmussen (Dunn County Board); Dan Lytle (CVTC); Bill Yingst (Colfax school district) and Jeremy Klukas (public), met October 31 to consider the resolution.

The Colfax Village Board and the Colfax Plan Commission approved the resolution at their meetings October 10.

The Joint Review Board held an organizational meeting October 10 to receive information about the proposal to amend the project plan for TID 4.

The Colfax Village Board is planning two separate projects costing $240,000 and $165,000 in TID 3 that could be financed by using revenue from TID 4.

Although Sean Lentz, the village’s financial consultant with Ehlers & Associates, mentioned the project amounts at the Joint Review Board meeting, there was no discussion indicating what the projects would be that could end up costing the village a little over $400,000.

A tax increment district has a base property value when the district is formed. Each of the taxing authorities receives their share of the property taxes from the base value in the TID for the life of the district. When improvements are made within the tax increment district, the property taxes that would have been paid on the improvements, instead of being paid to the taxing authorities, goes into a special fund for the village. The village can then use those funds to make further improvements in the TID, such as street projects.

Tax increment districts are set up for either 20 or 27 years.

Rasmussen, chair of the Dunn County Board, said he generally is supportive of tax increment districts.

In this case, the revenue from TID 3 has been sufficient so far to cover the cost of projects already done in TID 3, but the revenue most likely will not be sufficient to pay for additional projects in TID 3, resulting in the idea to use income from TID 4 to pay for projects in TID 3.

Rasmussen wondered if the village would do those projects regardless of whether TIF funds are available.

“Yes,” Gunnufson said, noting that the village has been working on budgeting for projects.

Borrowing money for street projects is not sustainable, and using TID funds for pay for street projects also is not sustainable, he said.

Lagoon project

In addition to street projects, the village will have the lagoon project coming up, Gunnufson said.

The lagoon project will stabilize the banks of the Red Cedar River to minimize the possibility of the village’s wastewater treatment lagoons washing out into the river.

The project is being designed by the Army Corps of Engineers, and while federal money will pay for much of the project, the village also will be expected to pay around $400,000.

The amount of money the village will set aside for future projects is part of the budget discussion this year, Gunnufson said.

Residential street projects would either be in TID 3 or 4, but the rail spur in the industrial park would be in TID 4, he said, adding that the amount of money needed for a rail spur would depend on whether grant money is available.

Rasmussen said he did not fault the village for looking at alternative ways to fund projects.

County officials recently finished the 2017 budget, and “it was just brutal,” Rasmussen said.

Some could argue that Colfax is fixing the streets “on our dime,” he said.

The existence of TID 3 and 4 means that Dunn County does not collect property tax on the improvements in the two districts during the duration of the TIDs.

Allocations

TID 4 has an income of $22,000 per year. If the money were not spent on an eligible project, when the tax increment district closes out, the school district would receive 40 percent, the village and county would each receive 25 percent and the technical college would receive 10 percent, Lentz said.

The tax increment districts neither help nor hurt the school districts. When the TIF district closes out, the amount of money received by the school district is deducted by the state from state aid, he said.

Businesses in the industrial park in Colfax want to expand, but they need a rail spur for expansion, Gunnufson said.

A conceptual design for a rail spur was presented to the businesses, he said.

The Colfax Village Board has not discussed authorizing a conceptual design for a rail spur in Colfax.

Gunnufson did not specify who had generated the conceptual design.

A company called Star Blend wanted to locate in Colfax, but there was no rail spur available, so the company put up a $6 million facility in Lake Wissota, Gunnufson said.

Star Blend did not make a presentation to the Colfax Plan Commission about building a facility in Colfax, and a request for a rail spur did not come either to the plan commission or to the Colfax Village Board.

Approving the resolution to share TID 4 revenue with TID 3 puts the decision to actually share the revenue into the hands of the Colfax Village Board, Lentz said.

Instead of receiving a financial statement annually, a recent change in state law means that the Joint Review Board will have to meet every year to review the financial statements for tax increment districts, Lentz said.

The Joint Review Board unanimously approved the resolution amending the project plan for TID 4 to allow revenue to be shared with TID 3.