Some city officials, and a few residents, got a refresher course on the state’s Tax Increment Financing program on Tuesday afternoon.
At the request of Alderman Andy Lester, the city invited Mike Weber and Adam Stroud of PGAV Planners, which specializes in the TIF program and other municipal services, to give that course.
Mayor Rick Gottman said that city officials wanted Weber and Stroud to talk about such things as how TIF funds can be spent and the establishment of rules and regulations that “help this governing body make decisions.”
The TIF program was developed by the state, Stroud said, to “induce private development where it might not otherwise occur.
“Obsolete property is transformed back to productive use,” he said.
Through the program, municipalities make agreements with other taxing entities, and new property taxes generated through TIF projects going into the city’s TIF fund.
“TIF is not an added tax,” Weber said. With property improvements, whether there is a TIF district or not, he said, “you will be paying the same tax bill you would have paid otherwise.”
The difference with TIF districts is that additional tax money generated that would otherwise go to entities that have agreed to participate in the program goes into the TIF fund.
The end result, Weber said, is “eventually we will have a larger tax base – that’s the goal.”
The TIF funds can be used for municipal infrastructure projects, property acquisition and site preparation, job training, environmental remediation (such as the removal and cleanup of underground fuel tanks), building demolition or rehabilitation, Stroud said.
In working with private developers on projects, a municipality can provide grants or loans for projects to make improvements in the community.
“Private investment creates the tax increment,” Stroud said.
In considering whether a project is worthy of TIF assistance, Weber said city officials can ask themselves, “Would these projects have happened (with that assistance)?”
Weber explained that by law, TIF districts have a lifespan of 23 years, though they can be extended through requests made to the state legislature.
Weber said that he can tell that TIF is making a difference in Vandalia.
“You folks have been using it,” he said. “I notice a difference.”
Asked whether the city can or should require a private developer to have two or three bids for facets of the project, Weber said that it can, but it’s not required to.
In some cases, it’s not possible to get more than one bid, because of the type of work required, developer Mike Wehrle said.
Asked about an instance where a developer is doing the work himself or herself, Weber said, “I would want them to keep track of their hours” or have some other kind of measure that supports the bid amount.