The most recent meeting of the Amery City Council saw the approval of TIF amendments. Why do you hear the words TIF Districts come up so frequently at city meetings?
Tax increment financing, or TIF, subsidizes areas by refunding or diverting a portion of their taxes to help finance development in the area. TIFs can be rather complicated, but they are important and are well worth understanding.
Many times, TIF helps to pay for infrastructure improvements (streets, sewers, parking lots) in the Tax increment district (TID). In some states, TIF can also be used for acquiring land, paying for planning expenses (legal fees, studies, engineering, etc.), demolishing and rehabbing buildings, cleaning up contaminated areas or funding job training programs.
How does TIF work? TIF is authorized at the state level and administered by local governments. The local government designates an area it wants to target for redevelopment as a “TIF district.” As businesses locate in a TIF district and the area redevelops, the property values rise. Rather than simply collecting the increased taxes from TIF district properties, the city splits the property tax revenues into two parts. The first part is set at the original amount of the property value before redevelopment, known as the “base rate.” This part continues to go where it did before. The second part contains the additional tax money generated by the higher property value, or the “tax increment.” This part does not go to the city or schools, but is kept separate and used to pay for the redevelopment
Dave Rasmussen of MSA spoke to the Amery City Council at the last meeting about a revised financing plan for TIF 6, which would help pay for the Industrial Park improvements for TIF 8. In order to accomplish this, a territory amendment needed to take place for 6.
“Along with the amendment, we would do additional projects to TID 6 and include projects within a half-mile, which would include the South Industrial Park improvements. We are also looking to get an extension of TIFF 6 by a total of seven years. It needs to be approved by the Joint Review Board, which is the four taxing authorities and a citizen member. If we were to do that, it could pay approximately $2M of the South Industrial Park improvement project,” said Rasmussen.
An amendment allocation for TID 7 was also looked at that evening, so that some of the positive tax incrementations in TID 7 could be allocated to the downtown TID 9 for the Keller Avenue project.
Council member Tim Strobush said he had some concern about tapping into their TIFs too much.
Rasmussen explain TID 6 had to have projects implemented by May 2026 and currently the Keller Avenue project was the only one. “I don’t know of any other projects that might be necessary in TID 6,” said Rasmussen.
Rasmussen also said these TIF amendments would enable a way to fund the industrial park considering they did not receive the grant money they were hoping to get for the project.
Rasmussen and Mayor Paul Isakson said the School District of Amery had been contacted about the possible TIF amendments and they seemed to understand the reasoning for changes. These changes would not affect the district’s state aid, but they would not get any taxes off of the increased value of the TIF.
Council member Chad Leonard said he knew there was someone interested in the industrial park six to eight months ago and asked if the party still existed?
“It is still reasonable. You can’t ever plan on someone speculating that they might build, but I think we have fair information that there could be a couple of fairly large buildings going on in Amery in the next few months, which will definitely help the tax programs. We done a great job. I don’t remember us going up in our tax base more than a few pennies either way,” said council member Rick Van Blaricom.
Council member Eric Elkin said he sees the TIF adjustment as a way to invest in the community’s future. “The Main Street project is going on and downtown is going to be a pretty good-looking place. People are drawn to places like this and an investment in the industrial park is a good reason. If we have the money available, it doesn’t seem like it is really going to hurt us as much as it will help,” said Elkin.
Mayor Isakson said this is probably the first thing the city has done to be proactive. “Creating an industrial park infrastructure that is ready to go,” he said.
The amendments to TIFs 6 and 7, which will be done by MSA, passed unanimously.