TIF dissolution a timely windfall for Janesville
A total of $1.67 million will be distributed within 30 days.
The school district would gain the most at $648,167. Its 2011-12 budget is nearly balanced, but that happened only after cuts, layoffs and fee increases.
Keith Pennington, chief financial officer for the school district, on Monday said the district is excited about the prospect of the money but won’t plan on what to do with it until the TIF is dissolved.
Although the school board has been wrangling with its budget for months, the city, which faces an estimated $2 million loss in state aid and other revenue, won’t begin its budget season until this summer.
City Manager Eric Levitt said he hoped to use a portion of the TIF money to balance the budget next year. He said some money might need to be diverted to the snowplowing account, which is nearly depleted with November and December yet to cover.
State law requires that a TIF be dissolved when all of the TIF costs have been recovered or within 27 years of the TIF’s creation.
TIF 14 was created in 1994 to develop the business park on Janesville’s east side. Businesses that benefited included Lab Safety Supply (now W.W. Grainger), BJ Electric Supply and Bliss Communications.
Municipalities use TIFS to spur economic development. When a city creates a TIF, it improves the value of the district by building infrastructure such as streets and water and sewer mains.
The municipality then offers sites in the district to businesses for free or at great discounts to draw development. As the district’s property value rises because of the new investment, the increases in property taxes are used to repay only the municipality’s costs. When the costs are paid or the district’s life expires, the new property taxes are distributed among all taxing jurisdictions, such as school districts and the county.
During the life of a TIF, taxing districts such as schools receive the same property taxes they did before the new investment raised the property value.
Over the life of TIF 14, the city invested more than $4.2 million in capital expenditures compared to a budget of $4.9 million. Administrative costs were $102,071 compared to a budget of $98,120.
Since its creation, the TIF district generated $5.2 million in new property taxes and $23,483 in interest income, said Vic Grassman, city economic development director. The taxable values of the district increased from a base value of $26 million in 1995 to $49 million in 2010.
TIF revenues exceeded TIF costs by $1.67 million. The money will be returned to the overlying taxing jurisdictions in the same percentages as those jurisdictions contributed to TIF revenues.
Taxing jurisdictions and the money they will receive are:
-- Rock County, $412,345.
-- Janesville School District, $648,167.
-- Blackhawk Technical College: $120,857.
-- City of Janesville, $427,121.
-- Janesville Public Library, $57,625.
With TIF 14 gone, the taxing districts will get the higher amount of property tax revenue every year.
“Everybody can use these dollars,” Grassman said.
The city has a policy of dissolving TIF districts as soon as the bills are paid, “and we waited a little big longer on this one because, quite frankly, it is a hot area and there is still land to be sold,” Grassman said.
Grassman acknowledged financial pressures from other entities. He said closing the TIF is a “win-win” for all.
“It’s kind of hard for us to justify sitting on this and not closing it,” Grassman said.
Levitt said the city could simply create a new TIF if a business is looking to locate here.
This is likely the only TIF to be closed this year because the city must submit paperwork by the end of May.
The city has created 34 TIFs. Eighteen are active.