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The Downtown II, or Research Park, tax-increment financing (TIF) district will retire at the end of this year, and the City is exploring options about what to do with the surplus funds. The amount of the surplus is estimated to be about $2.3 million, said Finance Director Martin Lyons at the June 22 meeting of the Administration and Public Works Committee. He also cautioned that, with the uncertain economy, it would not be wise to count on that full amount being available in December.
In a June 19 memo to Interim City Manager Rolanda Russell, Mr. Lyons said all funds remaining in the TIF after it has been closed must be distributed to all taxing bodies affected by the TIF. Since the distribution is pro-rata, based on each taxing body’s rate as a percent of the total tax, the City would receive about 20 percent of the total surplus.
Until the TIF closes, however, the City may use the funds for public projects within the TIF district or transfer them to another downtown TIF district to pay for public projects there.
Mr. Lyons’s memo stated, “The City would gain the most benefit from the TIF by spending all estimated tax increment revenues” and listed several proposed projects on which to spend about $1.8 million – roughly 78 percent. He suggested keeping a reserve of about $500,000 – possibly in escrow for up to five years – to cover potential tax-adjustment expense, since after the TIF closes, the City alone is responsible for the full amount of refunds and tax adjustments that arise for any taxing body.
Among the projects that have been suggested are public art, improvements to the Maple Avenue garage and other parts of Maple Avenue within the TIF, and police equipment – totaling about $1.8 million in all.
As an alternative, Mr. Lyons suggested transferring $1.8 million to the Washington National TIF, to help pay down the bonds issued for the Sherman Avenue garage.
“This escrow is not covered under TIF statutes and would be deemed ‘extra-legal,’” Mr. Lyons’s memo said, adding, “Staff is working with our consultants to determine the final form of such an escrow and will report back to the Council upon completing this research.”