Not willing to let rest the issue of using Tax Increment Financing to fund improvements to Fifth Street, Concordia City Commissioner Darrel Hosie's concerns turned a routine meeting into a heated debate, Wednesday night.
At the Jan. 20 meeting, the Commission voted 3-2 to use TIF dollars to help pay for the replacement of two blocks of Fifth Street. At that meeting, Hosie and Joe Jindra voted against the measure, while Mayor Greg Hattan and Commissioners Cheryl Lanoue and Charles Johnson voted for it.
The Fifth Street project has been on the horizon for a number of months. Originally, $425,283 in federal stimulus funds were to pay for most of the project, and the City was to chip in approximately $200,000. But, storm sewer problems under the street turned the venture into an $850,000 project, with the City needing to come up with $520,656.
To find that money, Ron Copple, public works director, had said he would use $278,000 from the capital improvement fund by opting to forego the street slurry seal and overlay programs for 2010. The remaining $242,656 could come from the TIF fund.
Last night, during the Commissioner comments portion at the end of the meeting, Hosie sprang a motion on the Commission to not use TIF funds for Fifth Street, which was quickly seconded by Jindra.
Hosie said he was not in favor of using up most of the available TIF funds over the next 10 years on this projects and others. He cited an article in the Kansas City Star that reported on a lawsuit filed by Jackson County against Kansas City over the use of TIF dollars. He said the issue had been resolved by the Kansas City Council’s voting unanimously to give full voting rights to all taxing jurisdictions in the TIF district.
The taxing jurisdictions the article referred to were Jackson, Clay and Platt counties – all of which are in Missouri.
When Hattan asked what Hosie's rationale was for making his motion, Hosie said there are differing opinions as to whether it is appropriate to use TIF dollars for the 5th Street project.
"I don't think it's a very good business decision to finance this project by taking most of the future income from the TIF fund," Hosie said.
Hosie said if there were a dramatic decrease in property values in the TIF district, it would leave no funds to pay for 5th Street. He also said he didn't want to put the City in a position where it could be sued.
"The cost of using TIF funds is very great if you consider what may happen over the next 10 years and harming our working relationship with the other TIF partners," he said. "It's disabling the TIF program for future development."
Hattan said he had talked to leaders of all three entities involved (college, school district and county), and said the idea of harming the City's working relationship with them was "completely blown out of proportion.” He also called Hosie's assertion that the TIF fund would run out of money "bologna." Revenues in the TIF fund, Hattan said, will increase naturally because property values go up.
"To approve and sign a contract with the state (for 5th Street) and then pull back and say that money isn't available is improper," Hattan said. "Honestly, I don't even see why we're revisiting this issue. It's been approved. A contract has been signed."
Hosie said property values going up is not always true. He said the current housing crisis was caused by falling property values. He said he thought the Commission should have a public hearing about using the TIF funds, get public feedback, and then make a decision –not after the commitment has already been made.
"What is the purpose of having a public hearing on the use of TIF funds if you've already made the commitment to use them? It's a joke," Hosie said.
Hattan said this wasn't the first time the Commission had committed TIF funds to a project before having a public hearing. He said Commissioners committed money to the construction of the Walmart Supercenter before TIF was even approved. City Manager Larry Uri confirmed that Hattan's comment was correct. Uri also said the process to use TIF funds had only just begun, and a public hearing would have to be held.
Lanoue said she thought nearly every TIF project had funds committed to it before a public hearing, because a development agreement was signed. Uri said sometimes a development agreement refers to using TIF funding. In this instance, Uri said that legally, the Commission is not in violation of the law.
Hattan said the public has had ample information about the Commission’s intending to use TIF dollars for Fifth Street. He said that the Commission doesn't have a public hearing before beginning the budget process. Instead, the public hearing is held after the budget is completed.
After the 3-2 vote, which defeated Hosie's motion, he pointed out the total cost of the project. For two blocks of street, he said, the total was $1,031,283, of which $425,283 would come from federal stimulus dollars. The total city cost, Hosie said, was $606,000, and $50,000 of that came during 2009. That meant the City's commitment this year was $534,000, which hadn't been budgeted for.
Lanoue said Hosie's comment that the project hadn't been budgeted was somewhat true. Copple, she said, had told the Commission several times that he would give up the slurry seal program, for $230,000, and the street overlays, for $120,000, to help pay for the project. Those two projects cannot be completed this year, anyway, she said, because of the recent winter weather.
In actual business items, the Commission expressed its intent to issue Industrial Revenue Bonds in the amount not to exceed $4 million for the Concordia Tractor expansion in the north development.
The Commission also received word that CTI received $2 million in recovery zone facility bond authority. The program, Uri explained, is part of the American Recovery and Reinvestment Act. The interest is tax exempt on the $2 million in bonds available to investors. This, Uri said, will give CTI a more favorable interest rate on the bonds.
Approval was also given to signing an engagement letter with Jarred, Gilmore and Phillips for the City's annual audit. Cost for the audit will not exceed $12,450. Amber Farha, finance director, said auditors will be at City Hall on Feb. 22.
The Commission also re-appointed Ellen Anderson to the Housing Authority.
Later, during Mayor/Commissioner comments, Hattan reported on the trip to Washington D.C. he and Uri took last week. The two met with staff members of local Congressmen to discuss the City's need for a new dam. Hattan said everyone they talked to was very well informed about Concordia's project, and said they felt it was a worthwhile project.
All the staffers said the City is doing what it needs to do to receive federal funding. On a lighter note, Hattan said that Lanoue had told them not to come back without money, so he handed out faux $1 million bills to each Commissioner.
The Commission adjourned to a study session to discuss the north development electric franchise and the airport capital improvement plan data sheets.