Council OKs TIF district pre-app

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BROOKINGS – The Brookings City Council approved a tax increment finance (TIF) district pre-application for PEM Affordable Housing LLC to develop 32 lots in the Timberline Addition as affordable housing.

The Tuesday vote was unanimous with Councilor Ope Niemeyer absent.

There was no discussion during the council meeting, but Community Development Director Mike Struck later explained what the vote means and what comes next for the tax increment financing.

First step

The pre-application is “the very first step,” Struck said. “It’s just the developer submits an overall project idea/concept with some cost estimates, explains what he wants to do, why he’s requesting the TIF assistance.”

According to the U.S. Department of Housing and Urban Development, tax increment financing allocates future increases in property taxes from a designated area to pay for improvements only within that area.

The reason behind this initial step is simple.

“Through the pre-application process, we can kind of screen the project, make sure that it’s a good project and that it has the ability to benefit the community and, if so, then we move onto the full applications and there’s a lot more details that go into that,” Struck said.

“Until that point in time, it’s an idea, a concept. We don’t want the developer to incur significant expenses if it’s not going to be approved by the city,” Struck added.

Timberline location

The TIF district will be part of the Timberline Addition, which is located just west of Western Avenue and south of Eighth Street South. The current western-most edge of Timberline is Vail Avenue. 

Summit Pass will be extended west-ward to 16th Street SW, also known as 469th Avenue. 

The TIF district will be situated north of Summit and bordered by Steamboat Trail on the north, and Brighton Road on the east, which runs diagonally from northwest to southeast. Two cul de sacs – Crested Butte Circle and Silverton Circle – will be in the middle. A total of 32 lots are planned.

Nothing is developed yet, Struck said. The next step is to build up the lots for a gravity sewer to drain east-south-east. Streets will be developed when the lots are.

Lots to do 

The next step is to assemble the TIF review team.

“That’s an internal staffing team of employees in different departments, and we will start going through the full application, reviewing it,” Struck said.

There’s 17 items on the TIF application checklist, starting with a detailed project description. Some sample items are a list of project costs, financing plan, list of interested persons or entities, conceptual plans and sketches, development time schedule, and the $1,000 non-refundable application fee.

Once the TIF review team reviews everything, then it will start the process of establishing the district boundaries with the Brookings Planning Commission. 

“They’ll have a public hearing and provide a recommendation to the city council, then the city council would review and approve the district boundaries, if they decide to do so,” Struck said.

The approved resolution would go to the state Department of Revenue.

“They would need to certify the district with the Brookings County Equalization Office to establish the base for the TIF,” Struck said.

Risks and benefits

“This is a pay-as-you-go TIF, meaning the risk is all on the developer. The developer has to front 100 percent of the costs and the developer will only be reimbursed as increment is generated,” Struck explained.

“By state law, TIF districts can be a maximum of 20 years. If the project doesn’t develop out, fully or quickly enough to generate that sufficient increment over the 20-year time period, the developer doesn’t recoup his costs,” Struck said.

“Ideally, we want TIF districts to pay off sooner because when they pay off sooner, then all the other property tax entities then receive their share of property taxes,” Struck said.

In a TIF, the city, county and water development district forego their property taxes.

“The school district is adjusted so they are still able to capture property taxes,” Struck said.

Still lots of work

“There’s a lot of work that needs to be done in a short amount of time,” Struck said. 

“(Tuesday) they approved Step 2; there’s 14 more steps,” Struck said, adding some of the steps can happen quickly or concurrently. “We don’t wait until one step’s completed until we move onto the next.”

Ideally, the developer would like to start infrastructure in the fall, so they can start building houses in the spring. 

Timing is crucial, Struck said.

“The moment that the district is established, your 20-year time frame starts ticking. The biggest thing on that is, if you create the district in August/September 2018, but you don’t start infrastructure until the summer of 2019 – by the time the fall of ’19 rolls around, you’ve already lost one year of the grant, so it’s crucial to make sure that the timing of these are coordinated correctly so you can maximize the ability to recapture the increment,” Struck said.

Ultimately, it’s about what’s best for Brookings.

“The end goal is to get the best project that benefits the community,” Struck said.

Contact Jodelle Greiner at jgreiner@brookingsregister.com.

Courtesy image: The proposed TIF district will be part of the Timberline Addition on the west edge of Brookings. Summit Pass will be extended west to 16th Street SW, also known as 469th Avenue, which runs along the top of the graphic. Steamboat Trail, shown on the righthand side of the graphic, will border the subdivision on the north.