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By LeAnn R. Ralph
COLFAX — Tax Increment Finance Districts 3, 4 and 5 in Colfax are doing well, and the next big project will be Balsam Street in TID 3 at an estimated cost of over $600,000.
Josh Low of Ehlers, Inc., the village’s financial consultant, reported on the TIF districts at a meeting of the Joint Review Board and at the Colfax Village Board on November 27.
The Joint Review Board, which includes representatives for the taxing authorities (village, county, school district and technical college district), met prior to the village board meeting.
State law requires the Joint Review Board for a municipality’s TIF district(s) to have one annual meeting and to meet as needed on any other issues requiring approval from the Joint Review Board.
The expenditure period for TID 3, which is classified as a “blighted” district, ends September 1, 2024, Low said.
TID 3 includes the part of the southwest side of Colfax, extends north to include Main Street, includes a central part of the village on the east side of Main Street, and part of the northern side of Colfax (south of University Street).
For the Balsam Street project, with an estimated cost of over $600,000, if the village wants to take advantage of TIF District 3, the Colfax Village Board must either have an accepted bid for the work by September 1 or must have arranged to borrow the money, Low said.
Since TID 3 is a blighted district, Colfax could ask for a four-year extension to recover the costs, and an extension would have to be approved by the Joint Review Board, Low said.
TID 4 shares revenue with TID 3, and the village board will have to decide on a plan to finance Balsam Street and how to pay back the general fund for the work done on Cedar Street this year, he said.
Rebuilding Cedar Street was a $350,000 project.
Balsam Street is two blocks east of Main Street.
TID 3 was created in 2002, and TID 4 was created in 2006, and the end of the expenditure period for TID 4 was in 2021. The final revenue year for TID 4 will be 2026.
The fund balance in TID 3, on December 31, 2022, was $237,917, according to information that Low provided to the Joint Review Board and the village board.
The increment value in TID 3 for 2024 is $5.86 million, and at a tax rate of $20.28, the increment value will be close to $119,000 for 2024, with expenses of $69,000, and a cumulative balance of $290,872 at the end of the year, according to the information provided.
TID 3 will receive from TID 4 nearly $54,000 this year, will receive $20,700 in 2025, and will receive $24,000 in 2026, according to the information Low provided.
At the end of the final revenue year, if the valuation remains the same and the tax rate remains the same, TID 3 is expected to have a balance of $963,664.
If Balsam Street and Cedar Street are financed through TID 3, the balance would be zero in 2030.
When asked how much of the $2.5 million increase in valuation for TID 3 was due to increased equalized value and how much was due to additional development in the district, Low said he was not sure, but that some of the increase is due to an increase in equalized value.
The Village of Colfax experienced an increase in equalized value this year of about 25 percent.
In a Tax Increment Finance District, which has a lifespan of about 20 years, the taxing authorities (village, school district, county and technical college district) continue to receive property taxes based on the base value of the district when the district was created.
When the valuation of the district increases because of new development, the additional property taxes generated go into a special fund that the village can then use to pay for infrastructure in the district, such streets and sewer and water service.
After the final revenue year for the TIF district, any money remaining in the fund is distributed to the taxing authorities.
TID 5, which overlays TID 4 (southeast side of Colfax), was created in September of 2021, and will have a final revenue year in 2040.
TID 5 is “mixed use,” which includes residential, industrial and commercial development, and has a valuation of $1.99 million for this year.
Dunn Street and the East View residential development are included in TIF District 5.
The village paid for Dunn Street projects with general fund cash in 2022, and repayment to the general fund assumes an interest rate of 5 percent, Low said.
Additional development and project costs are expected to occur in 2025, he said.
The tax increment is projected at $4.44 million in 2024, and TID 5 is expected to have a balance of $252,472 in 2040, according to information Low provided to the village board.
Additional construction projects that are expected to be built in East View will add to TIF District 5’s tax increment.
Low also pointed out to the village board that an “affordable housing extension” is allowed for TIF districts.
The maximum life of the TID is extended by one year, so the additional year of tax increment can be used for affordable housing, he said.
A total of 75 percent of the tax increment from the additional year must be used for affordable housing which means housing that costs a household no more than 30 percent of the household’s gross monthly income, Low said.
The remaining portion of the money must be used to improve housing stock. The funds can be used anywhere in the community, and the funds do not have to be spent in one year, he said.
In other business, the Colfax Village Board approved a temporary picnic license for Colfantastic/Christmas in the Village on December 2 that will be used in conjunction with the Blind Tiger.