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Redevelopment answers disappoint City Council

Thursday's City Council budget hearing ostensibly was to examine the proposed 2013 budgets for the city's Community Development and Redevelopment departments.

But it was quickly apparent their $4.3 million and $597,000 budgets, respectively, were not what interested council members.

No, what council members wanted to hear about, in extraordinary detail, was the estimated $20 million in cash balances overseen by Redevelopment, a nest egg that would not only allow the council to eliminate property tax hikes this year without cutting spending, but patch a gaping hole in funding for streets and roads.

Thanks to declining gas tax revenues, city officials estimate they are behind in road maintenance by $60 million. They need to do $10 million to $12 million a year just to keep up, but can only afford to do about $2 million worth. On the property tax side of the budget, the mayor wants to raise taxes $4.8 million to avoid cutting essential services like police and fire, a move council members are loathe to support.

So hearing that there was $20 million generated by Tax Increment Financing districts that hasn't been used had members salivating at the possibilities.

But what Redevelopment Executive Director Greg Leatherman had to tell them was not what they wanted to hear.

Tax Increment Financing districts are special tax districts set up to encourage development, such as the construction of the Jefferson Pointe area. By making it a TIF district, the city could borrow money to build the roads, extend the sewers, install the water lines and put up the streetlights that made a major retail center possible. The new property taxes generated by that development – a thriving shopping center is worth millions more than the undeveloped farmland that was there before – is then funneled back to pay for the infrastructure that made the development possible.

But that money, Leatherman said, is restricted. It cannot be used outside that district. Even within that district, it can only be used for capital expenses.

And that $20 million in cash balances for 14 TIF districts? Almost all already spoken for, Leatherman said.

"What about the interest? How much interest is generated in a year, and can that be used for anything else?" asked Council President Tom Smith, R-1st.

Nope. The interest, by law, stays in the district.

What if a district were disbanded that had a cash balance, say $1million? Could that go to the city's General Fund, Smith asked.

Sorry.

How much, exactly, is uncommitted, asked John Crawford, R-at large.

"It ranges from nothing to just a couple of hundred thousand dollars," Leatherman said. In the rare exceptions where there are bigger balances, they're big because the bonds require a larger reserve or the money is being saved for a larger project.

What about ash trees, asked Geoff Paddock, D-4th.

Yes, Leatherman said, TIF money can be used to remove and replace dead and dying ash trees, but only within the TIF district, and most ash trees are in residential areas, not in TIF districts.

He assured council members that whenever possible, TIF money is used for roads or other projects that would otherwise come from funds they oversee, but members who had been hoping to feast went away hungry.

"Well, if you do have anything uncommitted, let us know," Crawford said.

dstockman@jg.net

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