News/PRCouncil begins process of TIF incentive for ABX expansion
February 19, 2020
By Lori Adler, reporter
Northwoods Star Journal
Rhinelander Common Council began the approval process to provide a $600,000 incentive from TIF (tax increment financing) district #6. The incentive will help ABX with an expansion project that is expected to significantly increase their business.
When a TIF district is created, tax levels in that district are held at a set amount for a period of years. As property values increase, the additional tax money generated by the increase is placed in a fund that is used to incentivize development in the district.
City Administrator Daniel Guild explained, “The tax rate that is on the property where TIF 6 is, which includes ABX, was frozen at the date of creation so the amount of money the four taxing jurisdictions [city, county, school district and Nicolet College] collect was frozen at that time and then any subsequent increase in taxable value/assessed value that happened in that district was captured by this fund, TIF 6 fund. So what we do when we do a financial analysis on this is we look at the expansion. We look at how much tax base that expansion will generate. We obligate the business to meet those tax base obligations through a developer’s agreement, and then it’s through that additional tax base, taxes that are collected, which pays back the loan on the incentive.”
In order to begin the process, three resolutions were presented to the council for consideration. Several resolutions were needed because there is not enough money in TIF 6 at this point to provide the incentive so money will need to be temporarily transferred from other funds.
The first resolution therefore was to create an internal investment policy. This policy will allow the council to move money between funds as needed for opportunities such as this one. This policy will apply to the ABX incentive as well as any future needs of the city. While the policy will allow any such movement of funds, the movement itself will still need council approval. This policy will not change anything the city does now as these moves have been made in the past without a policy. However, it is now recommended that cities have a policy like this one in place.
The second resolution involved the moving of the money to cover the ABX expansion needs. $300,000 from the water utility fund and $300,000 from the wastewater utility fund would be moved to the TIF 6 fund to provide enough money in that fund for ABX. The city will then borrow $600,000 to replenish the utility funds within 90 days. Borrowing could be in the form of local lenders, the state trust fund or general obligation. The borrowing aspect of this will be discussed and approved at a future meeting, but all options are being considered at this time.
The third resolution allows for the release of the draft developer’s agreement to council members and ABX representatives. This is only the release of a draft document to give everyone a chance to review and bring back comments and concerns. Once finalized, the developer’s agreement will be brought before the council for final approval. The document will ensure ABX is able to generate enough of a tax base increase to pay back the $600,000 incentive. No monies will be released to ABX until the final document is approved.
After a thorough explanation of TIF districts and the three resolutions was provided by Guild, the council went on to approve all three resolutions unanimously among all present council members (alderpersons George Kirby and Dawn Rog were absent).
At the end of the meeting, the council went into closed session to consider collective bargaining agreements with IAFF Local 1028 and WPPA Local 38 (Rhinelander fire and police departments). Upon returning to open session, the council announced that no agreement was reached and asked that negotiations be reopened.
The next meeting of the Rhinelander Common Council is scheduled for Monday, February 24, at 6 p.m. at city hall.