Officials noted that in order for the plan to work and realize public sector improvements, there must be a great deal of private investment in the TIF district.
“Most of the income in a successful TIF project comes from redirecting sales tax funds that would have otherwise gone to Frankfort,” said Farris. “Without some retail spending in the TIF district, there is no new sales tax revenue to pay for the improvements.”
Farris said that communities respond positively to TIF set-ups when they understand the benefits. “The states often times will match the local revenue in taxes 5- or 10-to-1,” he said. “So, the sales tax is the big Kahuna, sometimes generating enough dollars to help pay, whereas the local taxes are smaller.
“You’re really using money that’s created here in Somerset, rather than sending it to Frankfort and diverting it all over the state ... it comes right back into the area.”
Farris’ study will help the DSDC determine the feasibility of a TIF district, the possible boundaries, and how much money could be expected under certain conditions.
“First, you want to look at the tax generation that’s going on now; that creates the baseline,” said Farris. “Then you want to look at what redevelopment opportunities are, if it will fit within the statute. Also, what are the potential new revenues to come out of that? There’s excitement with the new laws passed (in Somerset) with the ‘wet/dry’ issue that there could be some more establishments open downtown. So we’re going to model that out and look at potential tax revenue sources from new entities.”
Officials expect the initial phase of the work to take three months. At that time, the DSDC will decide whether or not to proceed by the response from state and local governments, which will be asked to support the concept.
Still, the DSDC has reason to be optimistic about the future of the TIF strategy.
“I think, just at first glance, (downtown Somerset) looks ripe for redevelopment,” said Farris. “The Virginia is a central part of that but it won’t be the only part of that. I think we’ve identified a five-block area we want to look at closely and see what components will be most feasible.”