FAQs
| Q | Why does the City need additional revenue, since the main sources appear to be strong? |
| A |
The City’s main revenue sources have remained steady or declined in recent years. Income tax revenues are an important part of the City’s revenues, comprising approximately 39% of the General Fund budgetary revenues. Economic downturns are currently adversely affecting the net profits portion of this revenue source. Local Government Funds have been consolidated, and the related revenues, which are tied to State revenue collections, are currently in decline. Property tax revenue decreased slightly in 2007 over the previous year. Tax on personal property will be phased out after 2009, and the current “hold harmless period” reimbursements will be eliminated. Estate tax revenues are volatile and under the threat of elimination.
Meanwhile, the cost of doing business continues to rise. The City’s Unreserved, Undesignated General Fund balance at the close of 2007 was $20,568,623 under Generally Accepted Accounting Principles (GAAP), which represents approximately 73% of the City’s annual General Fund expenditures. For this same period, the City’s GAAP General Fund balance has designated approximately $6.5 million to support capital improvements and other important projects, or the repayment of debt associated with such projects. In addition, the General Fund provides $750,000 of support annually for capital projects. |
| Q | What is meant by the term "mixed use"? |
| A | A project that includes more than one type of typically zoned property is called "mixed use." Over the past 50 years, single-zoned sites — ones that are all retail stores, or all office space, or all apartment buildings — were the trend. Today, communities are seeing that a mixture of uses is a key to a vibrant community and is helpful in stabilizing the tax base. A typical mixed-use project may have retail shops on the street level with offices or condominiums on the upper levels. |
| Q | Why is mixed use important? |
| A |
Retail, restaurant and service businesses are desirable because they contribute to the fabric of our community, providing convenient shopping, service, dining, and entertainment options. However, retail businesses and restaurants typically provide lower paying jobs, which translates to lower income tax revenues for the City. Professional and medical businesses typically have much higher paying jobs and have more employees in a smaller space, thus creating more income tax revenue. Residential uses provide the critical mass for the retail stores at the same time they provide convenient housing for employees of the local businesses. When these uses are combined, a well-used, energetic center is formed.
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| Q | What does the CIC hope to see in the City's redevelopment projects? |
| A |
With the City, the UACIC has set requirements for the types of redevelopment projects that are eligible to receive fiscal incentives from economic development monies. In short, we are looking for ...
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| Q |
What is a TIF? |
| A |
A TIF — Tax Increment Financing — is authorized by state law to serve as a financing tool for improving infrastructure (roads, water lines, etc.). This tool uses previously
unanticipated future property tax revenues as investment to spur further growth of the community. Most of the time, communities choose to use TIFs when they feel the funding is needed
make improvements that directly benefit the public as well as the project at hand. By helping a new project get off to a good start, a TIF therefore improves the chance that the project will
be a successful addition to the community. TIF revenues, which come from the "payments in lieu of taxes," are collected from property owners just like any other real property tax is collected. When these payments are received by the County Auditor, these previously unanticipated revenues are distributed to the City to be placed into a restricted fund. The use of these funds must go toward the infrastructure outlined at the time the TIF was approved. Used strategically and with great care, a TIF can be an indispensable tool for expanding the tax base for our community, schools and county. They also are a good way to fund infrastructure improvements. |
| Q |
Why are TIFs important and useful? |
| A |
In short, TIFs help guarantee the success of a new or re-development and is used only when the City feels there will be a good return to the City from the enhanced services and/or additional
revenue of the development.
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| Q |
What is the difference between a TIF and a tax abatement? |
| A | TIFs share some commonalities with the more well-known form of incentive — tax abatements. Both tools exempt the project from paying a portion of the property taxes for a pre-determined percentage and timeline. The difference is that a property owner who receives a TIF must make “payments in lieu of taxes," which are typically equivalent to the taxes that would have been paid without the TIF. In other words, project owners still pay their fair share. |
MAIN TOPIC :: BENEFITS OF ECONOMIC DEVELOPMENT
WHY ECONOMIC DEVELOPMENT IS IMPORTANT