Continuously serving Kosciusko County since 1854
The Warsaw Redevelopment Commission will look at decreasing the city's take of the property tax revenue within its Tax Increment Finance district in 1999.
"We received $104,147 from the June 30 increment payment, leaving a reserve balance of $72,752," said city planner Jeff Noffsinger. "Assuming $104,147 will be received on Dec. 31, we could get the reserve down to $65,000 and fulfill our promise to the school board of getting the percentage of the increment down to 50 percent."
Tax increment financing is an instrument local governments use to encourage commercial and industrial development. The concept behind the process is to have new business development pay for the streets, sewers and water service improvements that are required for having it locate in a particular area.
In establishing a TIF district, the local taxing body freezes property values within the district. Bonds are then issued to make the necessary infrastructure improvements needed to encourage and promote the development, which in turn leads to higher property tax revenues. The increase in revenue is captured and used to repay the bonds and the interest on them.
For example, a given piece of property, with an assessed value of $1,000 and an annual tax bill of $100, is declared a TIF district. The city spends $90,000 to improve sewer, water and streets to make the property suitable for a manufacturing facility.
After the factory is constructed, the assessed value of the property increases to $100,000 and the tax bill is then $10,000. The city "captures" the "tax increment" increase of $9,000 to repay the bonds used to make the improvements that brought the industrial development.
Typically, however, the city will not capture all of the tax increment, but a decreasing percentage of the increases tax revenue, allowing other taxing entities, such as the school district or library, to receive a portion of the increases in tax revenue received.
The issue the commission is considering - the city keeping only 70 percent of the 1999 revenue increase to use to repay the bond - would allow the other entities in the district to share the remaining 30 percent.
According to Noffsinger, the city established the TIF district in 1991. It is bounded by Canal Street on the north, Center Street on the south, the east side of Detroit Street on the east and the alley between Buffalo and High streets on the west.
"The TIF district has provided some very good things - Central Park and the facilities around it - in terms of the common good," said Warsaw Schools Superintendent Lee Harmon. "If we (the school district) are now going to start receiving some tax dollars from it, we couldn't be happier."
The sum of development spawned by the TIF district included the Zimmer administrative headquarters, the Warsaw Community Library renovation and the Revco drug store, Noffsinger said.
The commission will decide on the allocation reduction at its Oct. 5 meeting, Noffsinger said.
