Marysville City Council has given final approval to an agreement to revise the city’s Tax Increment Financing (TIF) agreement with the school district.
At its Monday meeting, council unanimously agreed to create a two-year window — from the start of 2024 to the end of 2025 — for the school district to pass a property tax increase and receive 100% of the increase on residential properties, even those already in a Tax Increment Financing (TIF) district.
A TIF is an economic development tool that diverts a property’s tax payments from things like schools, libraries, mental health and other entities that rely on property tax revenue, to the city for projects related to that property. While the property owner pays its full tax bill, the money goes to the city rather than those other entities.
Under the new agreement, if the school district passes a new property tax, the city will continue to get the same millage it already receives through the TIF agreement, but the school district would receive the entire amount of the newly passed increase.
City and school officials said the agreement is the result of a series of meetings between the full council and school board as well as work sessions between a smaller subgroup.
City Manager Terry Emery has said the two-year window works best because leaving the agreement open-ended could “handcuff” future city councils.
Even so, Emery and Marysville Superintendent Diane Allen agreed the city could choose to extend the new agreement or reinstate it in the future, depending on the city’s financial condition.
School district officials have expressed hesitancy to make a final decision on any new levy options until the agreement was finalized.
Allen explained that as the school board looks at future money requests — property tax, income tax or a mixture — the city agreement will “influence some of that thinking.”
City officials have explained that when the residential TIFs were implemented between 2006 and 2008, the city needed to build a wastewater treatment plant.
The city placed residential TIFs on all or part of Adena Pointe, Walker Meadows, Keystone Crossing, Chestnut Crossing, Links Village, Woods at Mill Valley, Scott Farms and The Legends.
As the school passes property tax increases, the additional money in those areas continues to be funneled to the city.
Most of the TIF agreements expire in or near 2037, depending on the exact agreement.
School supporters have argued that with increased property values, the TIFs generate far more money than the city needs to service their portion of the intended debt.
In 2022, between commercial and residential TIFs, the city collected about $8 million approved for the schools. The city returned about $3.1 million of that revenue to the school district.
School district Treasurer Todd Johnson has said residential TIFs have cost the district approximately $13 million over the last five years, while bringing as many as 1,000 additional students to the district.
School Board President Sue Devine, who also sits on the city-school working subgroup, was in attendance at the meeting Monday.
“As we, city council and the school board, know, the city and the schools have committed to an improved partnership, which is why I am here tonight,” Devine said.
She said there has been “a lot of great teamwork.”
Emery agreed, noting it has been “very productive.”
In addition to observing the TIF agreement legislation, Devine said she wanted to express the school board’s appreciation for the cooperation between the schools and city. She specifically referenced the Connect Real Estate project planned for Marysville’s Uptown. Connect is in the process of requesting an agreement to move forward with developing more than 16 acres in the city’s north end area around the city’s former water treatment plant, the Heritage silo site and several other commercial properties. The company wants approval to build a $100-millon development, titled “The Silos at Marysville,” that would include 250 to 300 apartments, corporate housing, entertainment sites, a co-working area, a fitness center, public parking, a community arts area and a variety of restaurants and bars. The developer has said they will pursue a 30-year, 100% TIF for the project.
“We understand and appreciate the need for the revitalization of that area of our community, however the financial incentive package will need to be presented, carefully reviewed and voted on by the board, just as you all will do,” Devine said.
She said school officials met with Connect several months ago to review the project.
“Potential incentive packages that may be needed to make the project feasible were shared,” Devine said. The board president said that while there were “no specific dollar amounts or figures provided at this time, we do anticipate receiving specific financial information at some point after the first of the year.”
“From the school district lens, each project is considered on its own merits, benefits to the community, financial impact to the school district and potential shift of tax burden to the larger community,” Devine said.
Council president Henk Berbee said the apartments in the Connect development are mostly studio and one-bedroom. He said, in the past, the smaller apartments were not “a big student generator.”
Devine agreed, but said the district wants to have some safeguards.
“If all of a sudden you would see a lot of students coming in there, you would want to have some kind of assurance that there is some kind of compensation connected with that,” Devine said. “But again, I think that goes back to our strong partnership. We have been having our small group meetings. We will continue having those.”
Devine said decisions on projects like the Connect development “are never taken lightly and require careful consideration by all entities involved, which is the reason that cooperation between the city and schools is vital and requires open and honest dialog.”
Devine said the board is grateful to be part of the decision making process.
“We look forward to receiving the financial incentive package for further consideration,” Devine said. “I just wanted to really let you know how much we appreciate being brought in early, having some of those conversations and having a seat at the table.”
The Connect project will go before council for a final vote on Dec. 18.