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Commission delays decision on Hillsboro TIF district

Staff writer

Marion County Commission delayed a decision on a tax increment financing district in Hillsboro until Monday.

Commissioners met with City of Hillsboro bond counsel J.T. Klaus and Andrew Kovar of Triplett, Woolf & Garretson LLC of Wichita, City Administrator Larry Paine, and Mayor Delores Dalke Tuesday to discuss how to remedy the unintentional omission of Hillsboro Business Park from the TIF district.

TIF districts allow a city to collect increased property tax revenues created by development within the district — including other government entities’ share of the increased taxes — and use them to defray expenses of development.

The city approved the formation of a TIF district covering the business park and the former AMPI building in 2008. But in December, the county discovered the business park had been left out of the legal description.

Klaus said the words “The Hillsboro Business Park, Hillsboro, Marion County, Kansas, and” were omitted from the beginning of the legal description. He characterized the mistake as a scrivener’s error.

“Everybody always knew Hillsboro Business Park was part of this district,” he said.

Every time the city published a description of the district, it included a map that showed the business park in the district.

Klaus suggested that the city should pass an ordinance correcting the legal description. If necessary, he said the city would approve an agreement requiring county approval of any additional TIF projects in the district. Otherwise, the city would have to go through the process of expanding the district. That would require giving the county and USD 410 the opportunity to reject the expansion.

Commissioners Dan Holub and Randy Dallke said they were skeptical that such an agreement would be enforceable.

Klaus also said he wanted to correct misconceptions about tax increment financing in general and the Hillsboro district in particular. Although Midway Motors was the first business to develop in the business park, the project wasn’t specifically for that business, and none of the funds raised would directly benefit the business. Improvements in the district have included improving drainage and adding a street, both of which would benefit any business developing in the area.

Holub and Randy Dallke said they made the mistake of not following through with questions they had about TIF in 2008.

“We have nobody to blame but ourselves,” Holub said.

Randy Dallke said that if he had known in 2008 what he knows now, he would have opposed the creation of the district.

Holub said he was concerned about future revenue increases lost to TIF, not just in Hillsboro, but possibly in other cities that could follow Hillsboro’s lead and create TIF districts. The commission rejected a proposed TIF district in Peabody on Jan. 10.

“The problem is bigger than this little area,” Holub said.

Delores Dalke said that before the city had even considered tax increment financing, an out-of-state developer told her that they would like to locate a retail business in Hillsboro along U.S. 56, but that there weren’t any useable lots, so the city — and the county — lost out on that development.

“We don’t get any taxes of those people that didn’t come,” she said. “We’re missing opportunities because we’re not ready for them.”

The TIF project in the business park is a way of preparing for future opportunities, she added.

Randy Dallke said he was hesitant to make decisions that would tie the hands of future commissioners. TIF districts can continue up to 20 years.

Commissioner Roger Fleming said the development along the highway is good for the city and county. He urged commissioners to support correcting the legal description.

“We’re at this point right now; an honest mistake was made,” Fleming said.

Holub said he considered adding the business park as a significant change to the district, and said he wanted to see the process start from the beginning, and made a motion to that effect.

Klaus said that if the county wanted the city to start over just so they could reject the district to tell him now and save him a lot of work. Holub said he wouldn’t automatically vote one way or the other if the city started over.

Randy Dallke said he wanted time to speak with his constituents about the proposal and make a decision Monday.

“There’s just no easy answer to this,” he said.

Holub withdrew his motion following Randy Dallke’s request.

Last modified Jan. 19, 2011

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