School officials worry over financial effect of TIF district

Cape Girardeau's proposed tax-increment financing district was the topic of discussion Wednesday at a Cape Girardeau School Board special work session, where members expressed concerns about how the downtown district would affect the school district financially.

Tax-increment financing is a method of encouraging redevelopment in a blighted or conservation area, as defined by Missouri law, and establishing a TIF district would give the city another tool to help developers with rehabilitation costs and possibly breathe new life into some of downtown's vacant or deteriorating buildings, supporters have said.

TIF allows the master developer -- in this case, the city of Cape Girardeau -- to collect the increment gained in property taxes between the current value and the improved value, plus 50 percent of the economic activity taxes, including sales taxes and taxes on utilities.

The city takes the revenue and invests it in approved developments such as parking, lighting or other infrastructure.

An 11-person TIF Commission was formed and held its first meeting in August. Superintendent Jim Welker and board president Kyle McDonald serve on the commission; two representatives from the local school district is required by state law.

"I believe that economic and community development is important and certainly support that and think we want to be good partners with the community," Welker said Wednesday. "At the same time, we have fairly tight budgets, and I think my concern is that most of our revenue comes from local property tax -- about 60 percent. So, we have to count on growth in assessed value, growth in property tax, for our budget each year as our expenses go up."

At the school district, the amount of revenue at the current property tax rate received from within the TIF district area is $968,000, officials said, with an assessed value of $23 million.

The TIF district is expected to increase the area's assessed value, but the amount of revenue received by the school district from local property taxes would remain at the current rate during those 23 years.

"So, my concern is that we're going to need at least some of this in terms of continued growth and revenue for the school district," Welker said. "I'm not sure that we can really afford to give up that much for economic development ... Somewhere there's a balance there, and it doesn't seem this is balanced, to me."

A recommendation Welker said he might ask the TIF commission to consider is giving 50 percent of the increment gained in property taxes back to the taxing entities, same as the setup for economic activity taxes.

"The question they have to prove to me is that the taxpayers basically voted and allowed us to set a tax rate to use to bring in revenues for our district, and we have to do what's right with that money," McDonald said. "So, they have to prove to me that they need that money more than our schools, and these improvements will benefit our community better than what we can use the money for in our school district."

The plan specifies five project areas within the TIF district's boundaries that cover 305 acres. It's roughly outlined by Mason Street and Highway 74 on the north and south and Sprigg Street to the Mississippi River on the east and west.

School board members questioned inclusion of the Isle Casino Cape Girardeau's parking lot in the TIF district, citing the possibility of plans that are underway to construct a hotel.

Projects are determined to be eligible if they pass the "but for" test, meaning they would not be possible but for the assistance of TIF.

So, members questioned whether the hotel would be constructed regardless of whether the TIF district exists. If so, that area should not be included, members said, allowing entities to benefit from the increase in assessed value.

The TIF commission has a meeting at noon Thursday at the Osage Centre to discuss the plan, but no action will be taken. Welker and McDonald said they will ask questions about the concerns mentioned during Wednesday's board meeting.

"Obviously, making sure that we understand this and that we have input into it is crucial, because it could really affect us," Welker said.

klamb@semissourian.com

(573) 388-3639

Pertinent address:

301 N. Clark St., Cape Girardeau, Mo.