Winsted-Lester Prairie Journal, Aug. 2, 1999

Winsted implements TIF district

The Winsted City Council passed a resolution creating a Tax Increment Financing (TIF) district at the city's industrial park in a short meeting Tuesday evening.

The TIF district will allow the city to divert property taxes from the industrial park to pay for infrastructure costs for any commercial developments at the site.

Part of the process was to notify the Howard Lake-Waverly-Winsted School District and McLeod County, since their portion of the property tax money will be used to cover the infrastructure costs, as well as the city's portion.

City Administrator Aaron Reeves said both parties had waived their right to a 30-day waiting period to consider the proposal, and the city is free to move ahead with its plans.

On hand at the meeting was Joanne Foust, an associate with David Drown Associates, whom the city hired to execute the TIF district. Drown answered questions from the council and addressed recent changes that the state requires for implementation.

Foust said one aspect that the city had to complete was to show some kind of local contribution to the development of projects within the district.

In the case of RAM Builders, Inc., the district's first resident, the land the city donated covers that local contribution for the next 11 years, the time period of the TIF district.

The city will also be required to hand in annual reports on the district, as well as prove that the development within the district could not have been done without the creation of a TIF district.

For RAM, the city provided a letter from the owners stating a need for the district to bring the business to Winsted.

Foust added that the state auditor's office has added staff to enforce this provision more stringently than it has in the past.

Another requirement for TIF districts as of August 1 will be the need for the city to require a minimum number of jobs created by the industry.

Foust said that the goal should be realistic, and include a wage minimum that is considered to be a "living wage." That figure is to be determined by the council.

In a previous development agreement with the city, RAM said they would create five jobs in two years.

While the district includes the whole of the industrial park, the city has actually created a larger development district that surrounds the TIF district, as required by state law. The assumption is that development will most likely occur in the area of the TIF district, and creating a general development district will make it easier to create future TIF districts.

The city will pay for the initial infrastructure costs out of its enterprise fund. It will then reimburse itself with the diverted tax money, or increments.

During the life 11-year life of the district, the city will receive nine yearly installments of increments, estimated at about $4,500. That amount could change as RAM develops its site, adding value to the property.


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