County board shows up for city TIF hearing

Photo by Deb Gau Marshall City Council member Glenn Bayerkohler asked a question during a hearing at Tuesday’s council meeting.

MARSHALL — A public hearing on a proposed Tax Increment Financing district in Marshall brought out an unusual audience for the Marshall City Council. The full Lyon County Board attended Tuesday’s council meeting, and while county commissioner Charlie Sanow said the board had no problems with TIF, they thought Marshall should reconsider how it uses revenue generated by TIF districts.

“We believe TIF is a good tool,” Sanow said. But, he said, “When you misuse tools, things get hurt.”

All five Lyon County commissioners were in attendance at the council meeting. It was a move that required the county administrator to post notice of the meeting last week.

Tuesday’s public hearing focused on a proposed TIF district that would help finance infrastructure improvements, ahead of anticipated development in the Marshall industrial park. Terri Heaton, of financial advisers Springsted, explained some of the background of how TIF worked. Tax Increment Financing, Heaton said, captures new local taxes and uses them to finance public improvements related to development. The “tax increment” in TIF is the difference between property taxes without new development, and property taxes with new development. TIF is captured in a district for a set amount of time, and then the development is added back to the tax base.

Cities can use TIF for a few different reasons, Heaton said — including to encourage development or job growth where it wouldn’t otherwise happen. Heaton said that is known as the “but for” test.

Heaton said the proposed TIF district in the industrial park would have a duration of eight years. It would capture an estimated $3.42 million in tax increment revenue to repay bonds for the infrastructure improvements.

Sanow said county commissioners had some concerns about the TIF proposal. It wasn’t that the project or the use of TIF was bad, he said. It was that the city of Marshall has continued to collect tax increment for other TIF districts, even after they recovered the funding they were made for.

The city is currently “sitting on” $4.4 million in excess revenue from four decertified TIF districts, Sanow said. Sanow said that included $696,000 from a TIF district decertified last year, and $3 million from the Parkway III addition in Marshall.

In response to questions from city council members, Marshall city finance director Karla Drown said Sanow’s figures were correct.

Sanow said he thought some of the unused TIF revenue could help finance the improvements instead.

“I certainly share your concerns,” said council member Glenn Bayerkohler. Bayerkohler said he wasn’t sure the proposed TIF project met the “but for” test criteria, either. Other council members expressed doubts about the proposal, too. James Lozinski said the proposed eight-year TIF arrangement had a high interest rate.

After the public hearing, the city council voted 4-3 in favor of establishing the new TIF district. Council members Bayerkohler, Lozinski and Steven Meister cast the votes against.