Council pursues first state TIF

Springfield City Council Aug. 21 passed three bills pertaining to tax increment financing, said Tom Finnie, Springfield city manager.

One brought the city code into compliance with recent revisions to Missouri law pertaining to appointments to the Tax Abatement and Tax Increment Financing Advisory Commission. Another approved Mayor Lee Gannaway's recommendation of six members to serve on the commission. The third authorized Finnie to file a precertification application with the Missouri Department of Economic Development regarding the tax increment financing redevelopment plan for Jordan Valley Park. Finnie said this is the first time the city has participated in the state TIF program

"What's called a state TIF is fairly unusual in the sense that most TIFs ... are limited to property taxes. A so-called state TIF makes you eligible for one-half of the state sales tax, but there are additional requirements that are primarily geared toward downtown redevelopment," he said.

"Let's say there's a restaurant on Walnut Street and it produced $10,000 of sales tax revenue this past year, and if it has a 10 percent growth because of all the wonderful things happening in Jordan Valley Park, that would be a $1,000 increase. The TIF would get half of that $1,000 increase. It's only half of the incremental new sales tax, not the current sales tax," he said.

Sales tax is the biggest revenue source for state TIF funds, Finnie said. The TIF also gets funds from incremental increases in property taxes, but the method of property tax assessment does not change.

"There's no change in the taxes that an individual pays, and no change in the tax that a business or a property owner pays. They pay the exact same thing. The only difference is that half of that tax that they're paying over last year's goes back to Springfield center city, versus going to Jeff City," he said. "Property owners pay the exact same thing they would have paid regardless."

Finnie said once the TIF plan has been recommended to City Council by the commission, the council must approve it and send it to the Missouri Department of Economic Development, where the plan will be reviewed. The DED would then make a recommendation to the governor regarding the amount of incremental sales tax the TIF plan would create, and the funding would become an annual appropriation in the governor's budget.

"The money does go into that separate pot. It's administered by the city, but it can only be used for those projects that were formerly identified in the TIF plan. They can't be used just for anything you feel like doing in that area," Finnie said.