TIF agreement sent to taxing districts
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Proposal surpluses part of increment back to districts
By DENNIS ROSENBERGER
stceditor@salemtc.net
SALEM — Work continues to try and finalize an intergovernmental agreement between the City of Salem and the other taxing districts that have property in the city’s new TIF #4 district, as the city council gave approval last week to the agreement in its current form, with the understanding that changes could still be made.
The agreement outlines the process of surplussing some of the tax increment that will be collected from the residential properties in the TIF district and returning those surplus funds back to the taxing bodies, rather than keeping them in the TIF fund.
Economic Development Director Leah Dellicarpini explained that the intergovernmental agreement was developed as a way to try and alleviate concerns expressed by some of the taxing districts about the size of the TIF #4 district and the large number of residential properties included in the district.
“An idea was formed that would put an intergovernmental agreement in place that would surplus the majority of the TIF to the taxing bodies on a yearly basis,” Dellicarpini explained. “Any property in TIF that had the tax code for an improved residential property will be surplused to all of the taxing bodies yearly.”
“The agreement surpluses that incremental growth. It allows for 108 percent of growth. There was some negotiation on that with (the taxing districts),” Dellicarpini noted. “It will be in place for the lifetime of the TIF. It does list all the taxing bodies in one agreement, stating that all of the taxing bodies have to adopt the agreement in order for it to be valid.”
She added that the agreement also requires the taxing districts to provide a letter of support for the extension of the Downtown TIF, which is set to expire soon.
Dellicarpini noted that the agreement does include language intended to address the city’s concerns that the taxing districts may try to increase their property tax levies in future years to capture the funds they feel they are losing out on due to the TIF, despite potentially having the surplus agreement in place.
“They do have the option, on a year-to-year basis, to opt to raise their levies or receive the increment, but they cannot double dip,” she explained. “If you’re included in the growth of the properties, you should not need to increase your levies. But if you do need to increase your levies, then you do not need the surplus (from the) properties. So, they get to make that choice on a year-to-year basis.”
Mayor Nic Farley noted that with approval from the city council, the taxing districts now have 45 days to review and approve the agreement as currently presented. If the agreement is not approved, it will not affect the TIF district, since the TIF was approved and established by the city council back in July, but the surplus increment from the residential properties would stay in the TIF fund rather than going to the taxing districts each year.
Councilman Frank Addison questioned whether the taxing district will now have a chance to request additional changes to the agreement, once they have a chance to review what the city approved last week, if the current agreement is not to their liking.
“If we pass this tonight and they come back with a counter offer, can we amend the agreement,” asked Addison.
“100 percent, yes,” responded Farley.
Councilman Gerald Molenhour opposed approving the agreement in a form that may still be changed and asked to table the agreement until the taxing bodies have a chance to review it and decide whether it meets their approval as presented.
Farley noted that negotiations on the agreement have been ongoing since April or May and expressed a desire to “get the ball rolling” on the eventual final approval of the agreement.
The other council members agreed with the mayor, as a motion from Molenhour to table the agreement failed to receive a second.
A motion to approve the intergovernmental agreement in its current form was then passed by the council and mayor by a vote of 4-1, with Molenhour casting the lone vote against the agreement.
