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Future of Jackson Blvd. TIF district unknown

December 29, 2017

SPEARFISH — Whether tax-increment financing (TIF) district #5 around Jackson Boulevard would be utilized now depends on whether any amenities fit in the designs currently being reconfigured to keep Jackson Boulevard four lanes, since the reason for the district’s creation was to pay for those amenities “above and beyond” the basic roadway and utility improvements.

“That’s what tax-increment financing is for … those things that if not for the tax-increment district, would not happen, and in this instance, it was the upgrades, the landscaping, the street furniture, the bike paths, etc., but now, because the engineer obviously has to go back to concept-level design again and try to figure out … going to the four-lane configuration, what space do we have left to fit those other things in. We won’t know that for a while … until they re-present their new plan,” City Planner Jayna Watson said Tuesday.

The Spearfish City Council in October set the boundaries a block off Jackson Boulevard to Kansas and Illinois streets, from Exit 12 to University Street, for TIF district #5, meant to finance amenities above and beyond the roadway, water, and sewer improvements planned for the upcoming Jackson Boulevard redesign project.

After months of discussion and three public meetings, the Spearfish City Council Dec. 18 voted 5-1 to change course from the previous preliminary designs that showed three driving lanes, with right- and left-turn lanes at intersections, to keep the current four-lane configuration. Other design components shown on the previous designs included a roundabout at the intersection with Ames Street; bicycle lanes from University to Fifth streets; medians, as designed per the engineer’s recommendations; and more, which would have qualified for the TIF district financing. How these components would be affected at this point is unknown, as the cross-section of the roadway may not have the space for these features. They were able to be included in the design due to the three-lane configuration creating more space in the right-of-way, and the city council’s decision only specified the move to four lanes.

“We just don’t know,” Watson said of what items still might be included in the future designs that would qualify for TIF district financing. That would all depend on what can be included in the new designs for the roadway. “That design — four lanes takes quite a lot of right-of-way.”

Watson explained that a TIF district is a public financing system that uses future increases in property tax to reimburse the costs of public improvements built within a designated TIF district boundary. It is not any kind of new tax; it simply redirects tax revenue already being collected. The premise relies on the fact that as real estate value increases within the TIF district boundary area, due to the improvements created during the project for which the TIF district was created, higher tax revenues result. That “tax increment” is then used to refund the costs of public improvements created to support the project, paid back to the source, which in this case would be the city of Spearfish.

Property taxes are generally split between the city, county, and school district, but within the boundary, while a TIF district is in place, that revenue is paid to the source of the construction funds. All taxing entities continue to receive their base revenue from property taxes, and that base is set at the formation of the TIF district.

The Spearfish City Council in October set the boundaries for TIF district #5, which is one part of creating a TIF district. The request is first reviewed by the TIF Committee, which consists of the city administrator, economic development director, mayor, city planner, and one planning commissioner. Once that committee makes a recommendation, a proposed boundary is presented to the planning commission, which then makes a recommendation to the city council, and if approved, a project plan is created that describes the improvements to be paid for by the TIF district, their locations, and cost. The plan also presents a statistical assessment of the financial impact to the various taxing entities, including the city, county, and school district, and the project plan is then submitted for review. It is shared with the county and school district, who offer their input, and then the plan must go through the planning commission and city council for approval before the TIF district is created.

City Finance Officer Dave Dutton said Wednesday that the city has not received official notification from the South Dakota Department of Revenue regarding the setting of the base valuation of the district; once the department receives the TIF district boundary information, it sends the information to Lawrence County Equalization for the best valuation, and once the county replies, the Department of Revenue sends the city an official memorandum informing the city of the base value.

He added that no funds would be directed to the city from TIF district #5 until a project plan is approved, and there are several steps that would have to occur before that happens.

“However, once the base is set, any new growth will be what the tax increment is based upon,” Dutton said. “Getting the base set early is key.”

Watson said that the law provides a five-year window after a TIF district boundary is formed in order to get a project plan approved.

City Engineer Kyle Mathis said that there is not an updated timeline for when new concept designs would be presented back to the city council featuring options with the four-lane configuration.

While there was about $40,000 remaining of the $304,513 engineering services proposal the council approved in October 2016 from Advanced Engineering and Environmental Services, Inc. (AE2S), for the Jackson Boulevard project when the council changed course on the design, Mathis said this would not cover the design work that remains, now that the project has been revised significantly.

“We have been waiting on that final, final, final decision from council to have them (design engineers) proceed in an extended design contract now,” Mathis said, explaining that the existing funds remaining in the current contract would be used to come up with some preliminary concepts, and once the council solidifies the final direction of the designs, they would be asked for a new design contract to cover the work that remains.

The expectation at this time is that the project would be ready for bid at the end of 2018, with construction beginning in 2019, but these estimations are preliminary, Mathis said.

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