The Cole County Commission has approved a plan to correct issues with the Dunklin Street Tax Increment Financing District.
At Thursday's commission meeting, Jefferson City attorney Drew Hilpert presented the plan that has yet to be approved by the City Council and includes the Dunklin Street Properties LLC. The plan is meant to address chronic underpayments to a southside developer that happened because of an error in calculations.
In November 2009, the city created the Southside Redevelopment Area by ordinance and adopted the Southside Tax Increment Financing Plan for the purpose of redevelopment and elimination of blight. During 2009 and 2010 the development group, led by Larry Kolb and Steve Rollins, completed improvements such as work on curbs, gutters and sidewalks; lighting; landscaping; parking lot resurfacing and expansion; and stormwater drain repair on the 100 block of East Dunklin Street.
Around that same time, the city activated the Dunklin Redevelopment Area, which is within the Southside Redevelopment Area. City officials entered into a development agreement and tax increment financing contract with Dunklin Street Properties LLC to act as the developer for the project and the area.
The Dunklin Redevelopment Area consists of all property located within the 100 block of Dunklin. By state statute, when a TIF ordinance is passed, the county assessor is supposed to certify the values.
In December, the developers of Dunklin Street Properties LLC proposed amending terms to the Southside TIF, mainly because the sales and property tax revenues were falling short of projections.
Hilpert said, in digging into the TIF, officials discovered the baseline for sales and property taxes, used to determine the increment to be contributed to development costs, had been calculated using all of the South Side TIF, instead of only the 100 block of Dunklin, resulting in a skewed baseline and incorrect increment payments.
"Put it another way, the entire Southside Redevelopment Area was activated when only the Dunklin Street Redevelopment should have been activated," Hilpert said. "We're not sure why it wasn't noticed."
While some might think a larger area would provide additional sales and property taxes, Hilpert said that's not the case. The redevelopment on the 100 block of Dunklin worked well, he said, but not well enough to cancel out the surrounding area.
Under the agreement, several payments will be made to the developer no later than June 1. The city will pay the developer $17,762 for underpayments from 2009 to 2013, as well as an additional $40,381 for underpayments in 2014 and 2015; the city will pay the Jefferson City Public School District $19,707 for overpayment of property taxes; the county will pay $11,023 to the special allocation fund for underpayments from 2009 to 2013, as well as an additional $8,692 for underpayments in 2014.
County funds will come from the law enforcement sales tax and capital improvements sales tax, while Hilpert said city funds likely would come from the fund balance.
Hilpert said with this plan in place the developers think they will pay off the TIF as planned.