Will there be a TIF on the table?

      With the construction of the Iowa Renewable Energy (IRE) Biodiesel plant, the city has to make improvements to its infrastructure. In order to finance some of those improvements, the Washington City Council will consider if a Tax-Increment Financing (TIF) district is needed.

      City Administrator Dave Plyman said today that he does not believe the cost of paving East Seventh Street and extending the sewer to the plant will cost $1 million, or that improvements needed to the sewer plant to handle the flow from the biodiesel plant will be $2 million. He said because the city does not have an engineering cost estimate, he wanted to make sure to have enough money budgeted for the improvements, so those are the amounts he is using. He said the TIF, which allows local governments to retain increased property tax revenue in an area, could be used to offset the cost of the construction.

      "If I could figure out a way to do this without using a TIF, I would," Plyman said. "A TIF freezes everyone's property value, including the city's." He hopes that during discussion, the city can determine a way of offsetting the costs without using a TIF.

      A TIF district is one of the methods local government use to get involved in economic development. Normally when land and buildings are taxed, the revenue that is collected is divided among the city, the county, and the local public school district. A TIF freezes the amount of money that goes to these public entities at the amount it was prior to the development. The additional tax revenue from the development (tax increment) goes into a special fund the city uses to finance improvements. The increment can be distributed in an "up front" method in which the developer receives a certain amount of money from the municipality for development costs based on estimated increment; or a "rebate" method, in which tax money is returned to the developer. In fiscal year 2006, there were 2,358 TIF Districts in Iowa.

      Plyman said if the council decides to use a TIF, he believes the city will open it and close it as soon as possible, within two years rather than the 20 years that an industrial TIF can last before sunsetting. The TIF district would run along the streets from the biodiesel plant to the sewer treatment plant, Plyman said. He commented that the sewer plant is outside of city limits and the city will have to discuss including it in the district with Washington County.

      Due to the potency of the flow from the biodiesel plant, Plyman said the city might have to build a new cell at the plant. He said the city would probably have to improve the plant anyway, as he expects state standards to increase and because of reports that the plant is running at capacity with the amount of sewage it currently has coming in. He said the TIF would be used to fund the improvements to the plant that would be caused by the biodiesel plant, which he said is a measurable amount.

      If the council determines that a TIF is the way to go when it meets at 7 p.m. tonight in the Helen Wilson Gallery of the Washington Free Public Library, the first step will be to set a time for a consultation meeting with affected entities. Plyman plans to brief the finance committee on the proposal before the meeting, at 5:30 p.m. in Washington City Hall.