MT. VERNON — The Downtown Tax Increment Finance District received a boost on Monday after the city council decided to loan $250,000 to the district.
“This is not an uncommon practice,” said City Manager Ron Neibert. “Many communities, especially when a TIF district is just getting started, will put funds in to kick start the district. In this instance, the council wants to keep momentum in a successful district.”
Since its inception, the Downtown TIF has induced $11.9 million in total investments in the district, with $2.3 million in TIF funding.
Although the $250,000 is worded as a loan in the resolution, to be paid back “upon funds becoming available within the Downtown Tax Increment Allocation Fund and upon Council authorization for said repayment,” Councilman David Wood said the funds may never be paid back to the general corporate fund.
“When we first spoke of doing this, it was not a loan,” Wood said. “We have presented it as possible to be repaid, but this is not a loan in the traditional sense; this is a longterm commitment to the Downtown TIF. ... I doubt this will ever be repaid. ... We shouldn’t try to present this as anything that it isn’t or tell ourselves or the public it is a traditional loan. ... This could have just as easily been done as a permanent transfer.”
At this time, there are $1.6 million in requests for TIF funding outstanding. The TIF Review Board is slated to meet later this month to review the 12 outstanding applications for TIF funds.
Wood also said the operating fund of the General Corporate Fund had about $3 million in it prior to the loan.
“Our policy calls for $1.2 million held in reserve at all times,” Wood said. That leaves about $1.5 million still sitting in this fund, not assigned, with no designated use.”
Wood said he wants the council to hold a workshop to discuss how to use the $1.5 million.
“We’ve taken it from the taxpayers and not using it is bad fiscal policy,” Wood said, adding the extra funds have been used previously to offset lower sales tax receipts caused by the Interstate construction.
“This is a lot of money and needs some thoughtful contemplation on how to use it,” Wood said.