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By LeAnn R. Ralph
COLFAX — The Colfax Village Board has approved a resolution to create Tax Increment Finance District 5.
TID5 will make future development possible in the areas covered by the new TID, said Josh Low of Ehlers, the village’s financial consultant, at the Colfax Village Board’s September 13 meeting.
Revenue from new construction in TID5 can be used to pay for the utilities that will make the new development possible, he said.
If a certain section in TID5 is paying $1,000 in tax revenue right now, with new construction in TID5, the new tax revenue could be $25,000, so that in 20 years, instead of collecting $1,000 in property taxes, the village would be collecting $26,000, Low said.
TID5 includes the area east of Dunn Street and also includes an area on the west side of the village.
In a Tax Increment Finance District, the base property tax on what exists in the TID when it is created is still paid to the taxing authorities, which include the village, the school district, the technical college district and the county. Property taxes on new development in the TID are paid into a special fund kept by the village and used to pay for infrastructure in the TID, such as sewer, water and streets.
After 20 years, when the TID is closed out, any money remaining in the TID fund is paid out to the taxing authorities according to their portion of the property taxes.
The advantage of a TID is that the property taxes generated by new development pay for infrastructure rather than the cost of the infrastructure being put on the tax levy for the taxpayers to pay.
Colfax has had four TIDS to date, and TID3 and TID4 are still open, although TID4’s expenditure period expired a few months ago, Low said.
The Dunn Street projects can be paid for by TID5 rather than taking the money out of the general fund or raising taxes for village residents, he said.
If the village board chooses, money in TID5 could also be used for development incentives paid in cash, Low said.
For example, if a family wanted to build a house in TID5 and had an 18 percent downpayment saved up but needed a 20 percent downpayment, TID5 could fill in the gap and pay the remaining 2 percent of the downpayment as an incentive to help the family build a house, he said.
Nothing that is in the plan for TID5 is approved unless the village board specifically approves it, Low noted.
One village board member asked about “putting someone else’s property” into a TID.
The East View development along Dunn Street is village-owned property, but the remaining land in the TID is privately owned,
Just because land is included in the TID does not mean that the landowner is committed to developing the property, Low said.
Land being located in a TID, however, could also provide development opportunities for the landowner — or opportunities to sell the land — that would not exist if the property were not in a tax increment district.
If development occurs in TID5 over the next 20 years, there is the potential for an estimated $12.1 million in new property value, Low said.
The total tax increment is projected to be $4.3 million during the life of TID5, he said.
“It will not necessarily shake out this way but there is (potential for development),” Low said.
Any debt that is associated with TID5 will be approved by the village board, said Gary Stene, village trustee.
The increase in property value and the property taxes generated will pay for the debt service on money borrowed for assisting additional development, he said.
All future borrowing is subject to approval by the village board “and that’s the key … it’s got to make economic sense,” Stene said.
“If the TID is created and nothing happens — then nothing happens,” he said, adding that the village board is not required to borrow money if nothing happens in the TID.
Another village board member asked about industrial development in the TID.
The state of Wisconsin does not want too much value tied up in the TID, Low said.
If more than 12 percent of the value of the municipality is in the TID, then the municipality cannot do any more development and will have to close the TID or take other value out of the TID, he said.
The Joint Review Board for the proposed TID5 has recommended that the village board approve the resolution, said Lynn Niggemann, village administrator-clerk-treasurer.
The plan commission has reviewed the proposal for TID5 as well, and if the village board approves TID5 it will go back to the full Joint Review Board for final approval, she said.
The Joint Review Board is made up of representatives for the village, the Colfax school district, Dunn County and the Chippewa Valley Technical College.
The members of the Joint Review Board have reviewed the proposal for TID5 and are willing to sacrifice the taxes for the next 20 years, Stene said.
The Colfax Village Board unanimously approved the resolution to create TID5.
In addition to Stene, Village President Jodi Albricht and Village Trustees Mark Halpin, Carey Davis, Jen Rud, Jeff Prince and Margaret Burcham voted in the affirmative.