A public hearing to discuss the possible creation of two Tax Increment Financing (TIF) districts within Somerset took place before the city’s council meeting, with economic development leaders informing the public on what TIF districts are and why they feel the city could benefit from them.
TIF districts are special designations given to areas by local governments that can be used to raise funds to revitalize those areas.
Some TIFs are used to build up lands that are not developed at all – empty properties that the government wants to attract new business to.
That describes what leaders are calling the Education and Convention Center Local Development Area TIF district, focusing on empty properties in and around the Center for Rural Development and Somerset Community College.
Other TIF districts are designated to revitalize areas which have already been developed but have deteriorated – “blighted” areas. To that end, leaders are hoping to establish the Downtown Prosperity Development Area TIF district, which would encompass the Cundiff Square area, surrounding buildings and features, and extend into the property in which the former Continental Refinery sits.
Both plans were presented to Somerset Council Monday night. Chris Girdler, President and CEO of Somerset-Pulaski Economic Development Authority, Mayor Alan Keck and TIF legal expert Jim Parsons from Keating, Muething and Klekamp PLL, led the discussion.
Creating a TIF District allows the government to pledge revenues that will go towards developing that specific area. The baseline tax revenues, the amount being collected at the time the TIF District is created, are collected and used in the same way as they always have been.
All revenue collected above that baseline amount is set aside in a special fund which can only go towards development within the TIF District.
Girdler explained, “TIF does not raise any taxes in any shape or form. The city and the community is not giving up anything that it currently has. The city and the community is not losing anything, and it does not cost anything. TIF does not create any restrictions on property, and it does not create any tax exemptions on property.
“What TIF does do, however, is it establishes a property value of what the value is currently set at, and it’s simply a way to capture that incremental increase in taxes that is created after new development, and after those taxes are paid you use a portion of those taxes to promote development within the particular development area.”
Girdler said the reason for creating the TIF district around the Center and SCC campus was to bring more dining, shopping and lodging options around the convention center to attract people wanting to host events there, as well as to entice more students to attend the community college.
As far as the downtown area, Girdler asked people to view the community as if they are seeing it for the first time. Those blighted areas, such as around the Cundiff Square area, are places that the city wants to fix.
It was announced last week that Cundiff Square is planned to be the future home of the University of Somerset, a four-year, nonprofit private college.
With that nonprofit status, some councilors questioned how the university could benefit from the special taxing district, and, alternately, how the university could add tax revenue.
Attorney Parsons replied that the school would generate occupational tax revenue, and that any raised revenues could be used to improve utility infrastructure, like water lines, gas lines or roadways.
In response to a question put forward by Councilor John Ricky Minton, Parsons reiterated that there will be no changes for those who currently own property.
“TIF is not a zoning. It’s not a restriction on the property. It doesn’t indicate what the individuals within the district can and can’t do,” Parsons said.
The council will still have final say in any property usage or zoning issues within the TIF district, he said.
“Property owners within the TIF district will not even know they’re in a TIF district. They’d pay taxes just like they’d otherwise pay,” Parsons said.
Minton still said he objected to the idea that homeowners could be placed within the TIF district without being notified.
The council held the first readings on both proposed TIF districts. A second reading and vote will come at a later date.