Marysville City Council has rejected a plan to extend a local Tax Increment Finance agreement through 2067.
City council recently voted down legislation that would have extended the Tax Increment Finance (TIF) agreement for the City Gate/Coleman’s Crossing areas. In a 4-2 vote, only council members Deb Groat and Mark Reams voted to extend the TIF. Council member Aaron Carpenter was excused.
The area already has a 30-year TIF agreement that will expire in 2037. The legislation would have extended the TIF another 30 years after the original agreement expires.
A Tax Increment Financing agreement diverts property tax payments, approved by the voters for things like schools, libraries, mental health and other entities that rely on property tax revenue, to the city for projects in the area.
City Finance Director Brad Lutz explained that by extending the TIF, the city would have been able to divert money from the health department, library, county and several other entities to have money to make infrastructure improvements to accommodate the expected growth in the area.
In an email to council, Lutz wrote that, “given the growth expected to impact this area, having the resources in the future to allow for continued infrastructure upgrades in that area is providing future councils the ability to not worry about how to pay for those projects and risk taking money away from other parts of the City.”
During the extension, local schools would have received the full property tax revenue they could expect to receive without the TIF.
Council member J.R. Rausch said the point of a TIF is not to raise money for the city, but to help bring businesses to the community by helping them create and pay for infrastructure the business will need. He said the extension will not be about luring new businesses to the community.
“I am against doing this, even though it does give future councils flexibility,” Rausch said.
Council member Alan Seymour said the original TIF “served its purpose and I don’t think we need to extend it.”
Council member Henk Berbee said council needed to consider “other partners in the community that are affected by it.”
Reams stressed that it is difficult to anticipate what city needs might be more than 40 years from now. “If we do not take advantage of extending it, we would be tying one hand behind the back of whoever is sitting up here,” Reams said.
He added that if at some point the city doesn’t need the additional money, it can choose to rescind the TIF extension.
“Passing it allows us to have that flexibility,” Reams said. He added, “I don’t know that we are going to need it and hopefully we don’t, but I can’t tell eight, 10, 12 years into the future.
Groat said she wanted to choose “the most flexible path forward.”
Lutz told council that the most recent state budget created an opportunity for communities to extend commercial TIFs that meet certain revenue criteria. Communities could offer an extension of up to 30 years, that would begin when the current TIF expires.
Lutz said the City Gate/Coleman’s Crossing TIF is the only agreement that meets the state criteria.
Lutz said that in addition to making schools whole, the TIF would have also helped the local school district because it would lower the overall property value the state uses to determine how much money it will give a school district.
“So, they would receive more money from the State as the overall value of property in the district would be lower than it would be if the TIF’s expired,” Lutz wrote in an email to city council.
At the legislation’s second reading and public hearing, it received criticism from a variety of county officials and residents because while the extended TIF would make the school district whole, all of the other entities would continue to lose revenue.
Lutz said the state’s window to extend the TIF closes at the end of the year though the state legislature could choose to extend the period or create another similar opportunity in the future.