North Yellowstone TIF to retire a decade early
POCATELLO — The city is poised to retire the tax increment financing district it created to develop a business plaza anchored by Costco Wholesale and Lowe’s Home Improvement a full decade early.
The North Yellowstone Urban Renewal Agency was created in 2004 and was originally scheduled to expire in 2028.
According to Pocatello Development Authority, the entity responsible for managing the city’s urban renewal program, the TIF has been responsible for generating $76 million in value that will soon be added to the general tax roles.
TIFs can be structured in many ways, but in general, property values for general taxing entities are frozen at pre-development levels. Property tax revenue resulting from the added value of construction, called an increment, is diverted from the tax roles and used to repay investments in public infrastructure serving the area over a specified time frame.
Mayor Brian Blad believes Pocatello has the best track record of any city in the state at retiring TIF districts. Blad said state lawmakers hold up Pocatello every year as an example of how TIF should be used.
“This shows that in Pocatello we are very dedicated to using the tools the state has given us properly,” Blad said. “The only economic tool we really have in a municipality is the TIF districts, and we recognize it’s extremely important to get those closed as soon as we possibly can, because we want those on the tax rolls, as well.”
In the case of the North Yellowstone URA, PDA issued $7.1 million in bonds to fund infrastructure, including roads, curb, gutter, sidewalks, sanitary sewer, water lines, stormwater systems, lighting and traffic signal upgrades. Costco also received annual employment incentive payments of $122,000 for the first decade.
Melanie Gygli, who serves as PDA’s executive director and the city’s Planning and Development Services director, explained PDA is currently collecting and spending 2018 revenue, and the total value of the 2018 increment is $1.5 million.
In addition to returning the full increment to local taxing entities, she said PDA will return about $1.1 million in surplus revenue from its account. Gygli said there’s a surplus because the district is being retired early, and PDA won’t have to make another bond payment.
PDA approved a resolution Wednesday to close the district, and the City Council will adopt an ordinance officially closing the district within the next couple of months, once remaining bills and professional fees associated with retirement are paid.
Gygli explained the combination of property values rising faster than anticipated, creating larger increments, and a bond refinance that saved about $1.8 million in interest payments are the primary reasons the city will be able to retire the district so far ahead of schedule.
“I think this says bunches for how the city ... and the Pocatello Development Authority use TIF. They put it together appropriately for projects that have the potential to be a real boon for economic development,” Gygli said.
The North Yellowstone URA was named the state’s best planning project of 2005. It brought in several new businesses: Costco, Lowe’s, Dick’s Sporting Goods, Ross Dress for Less, Staples, Ashley Furniture, Bed, Bath & Beyond, Downeast Clothing, Jo-Ann’s, Texas Roadhouse, Buffalo Wild Wings, McKenzie River Pizza & Pub, Jensen Jewelers, Mattress Firm, AT&T, DL Evans Bank, America’s Best Contact & Eyeglasses, Big 5 Sporting Goods and Pizza Pie Cafe.
The city has created 15 TIF districts since 1988. Once North Yellowstone is officially retired, only four will remain in operation: North Portneuf, created to accommodate the failed Hoku Materials plant; Pocatello Airport, which serves companies such as Petersen Inc., Idaho Accelerator Center and Utah Helicopter; Naval Ordnance Plant, which serves businesses such as SME Steel and Virginia Transformer; and the new Northgate URA.
The Northgate URA, created to accommodate development of a large, multi-use development in the city’s northern corner, has drawn criticism from some residents who worry the city will have to provide additional services without revenue generated going toward local taxing entities.
Gygli emphasized it’s a low-risk project from the standpoint that rather than PDA issuing bonds to cover infrastructure, the developers will front the cost and use the increment to repay their investments in public infrastructure. She added that unrelated developments will also likely benefit from the infrastructure the developers will build, including major sewer and water line improvements.