City organizes a TIF Commission for future

Wednesday, June 25, 2003

Nevada's Tax Increment Financing Commission held their first meeting Tuesday and are now ready to get down to the business of helping developers finance new projects in Nevada. The TIF Commission, which was established in February 1995 and had never been formally organized until Tuesday, serves as an advisory panel for the city council, concerning tax increment financing proposals from developers. The city can use tax increment financing to underwrite redevelopment project costs that would otherwise make a redevelopment project economically not feasible. These projects can use up to 50-percent of new tax revenues generated by the development to cover a part of the cost of the project. This would include increases in property tax due to property improvements and increases in sales taxes from new sales. It should not have an impact on the current amount of property tax revenue that goes to the school district or sales tax that goes to the county or city. The state statues that established tax increment financing calls for the commission to have 11 members, six of which are appointed from the city, two from the school district, one from affected taxing districts other than the city and school district and two members appointed from the county. Currently the commission has the six members appointed by the Nevada City Council: Jesse Ornelas, chairman; Jack Bastow, vice chairman; Aaron Rains, treasurer; Mike McCaffree, secretary; Jeff Tweten, assistant secretary and Bill Denman. Craig Hubler, city manager, told the commission that as far as he knows the only other taxing districts in the Nevada city limits are the Vernon County Ambulance District and the Washington and Center township road districts. "You're kind of the front line where developers come with their plan," Kevin Bird, an attorney with Armstrong, Teasdale LLP, Kansas City, said. Bird has been helping the city work out the details of setting up a TIF commission. Bird told the commission that one of their primary responsibilities is to make sure the interests of all the various taxing districts are taken into account and protected. "You should not view a submitted plan as set in stone," Bird said. The commission can ask the developer for more information or suggest different funding mechanisms, he told the commission. "This is a chance to not only consider a plan, but to refine the plan that will be presented to the city council," Bird said. It is ultimately up to the city council to accept or reject any plan, Bird told the commission. There are three types of property where TIF can be used: blighted areas, conservation areas and economic development areas. According to Bird, a blighted area could be nothing more than property that has been improperly platted or vacant property without any sewers. However, it could also have an inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements or the existence of conditions, which endanger life or property by fire or other causes. In addition the existence of one or more of these conditions must either: retard the provision of housing accommodations, constitute an economic or social liability or constitute a menace to the public health, safety, morals or welfare. A conservation area is an improved area in which 50 percent or more of the existing structures are more than 35 years old, which is not yet blighted but detrimental to the public health, safety, morals or welfare and may become blighted. Bird told the commission that an economic development area is an area that is not a blighted or conservation area, but the city has decided needs some special attention to keep businesses from relocating, increase employment or preserve or enhance the city's tax base. In most cases, TIF is used to cover the cost of building roads, sidewalks, water and sewer lines. In some cases in blighted areas and conservation areas, TIF can be used to construct buildings. In economic development areas, a TIF can only be used for infrastructure.

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