City of Stillwater revises TIF collections

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It was a hard-fought battle that embroiled community members in flame wars on social media and ended with dueling legal actions. But the City of Stillwater’s newest Tax Increment Financing District took effect in September after Logan County Judge Louis Duel threw out the ballot language from a referendum petition that would have forced the TIF’s creation to a public vote.

The TIF, officially known as the Stillwater (Re)Investment Plan, is meant to fund incentives and provide support to spur redevelopment in Stillwater’s Campus Link and Downtown Project Area, a corridor that extends from the area south and east of Oklahoma State University’s campus and through downtown.

Now that the dust has settled and developers are lining up to talk about projects in the TIF district, the City of Stillwater has returned to the bargaining table to make peace with officials from Meridian Technology Center and Payne County who denounced the City’s diversion of property tax revenues those taxing entities would otherwise have collected.

Municipalities are authorized under state law to establish TIFs as tools to encourage development.

The Stillwater City Council gave final approval Monday to an ordinance that changes how increases in property tax revenues within the district will be divided.

MTC Superintendent/CEO Doug Major addressed the Council and thanked them for making the change.

“We are grateful for the City Council’s willingness to reconsider the impact that the TIF would have on Meridian Technology Center and other taxing jurisdictions,” Major said. “We’re also grateful for the residents of the city of Stillwater who stood up to support Meridian throughout this process.”

Major stressed MTC’s role in local economic development, and said strong partnerships are the key to ensuring growth.

“As we move forward together, this compromise will serve our community well,” he said.

When the City Council originally adopted Ordinance 3407 in June, the City of Stillwater was to collect all increases in property tax revenues as properties within the district’s boundaries became more valuable, for 25 years or until the collections reached $32.5 million.

City officials said the actual term of the TIF could be as short as 8-10 years if things went well.

MTC, Payne County and Stillwater Public Schools would have continued to collect their current levels of property tax revenues on the properties in that area but all growth, including the increased value of two tracts of land that have partially completed, high-density student apartment complexes on them, would have gone to the City.

MTC and Payne County particularly objected to including those apartments in the TIF.

The City has agreed to allow MTC and Payne County to capture those apartments and the growth on any other property in the district that doesn’t receive public funding.

Because the City of Stillwater reached a separate agreement with Stillwater Public Schools, the City will still collect the school district’s portion of tax revenue growth on all properties in the district.

In exchange for making the revisions, the City of Stillwater will collect 100 percent of the growth on projects in the TIF district that do receive public funding. The ordinance originally allocated 12 percent of that growth to the other taxing entities.

Mayor Will Joyce said it’s always better to have everyone working together.

The original division was based on the idea that the City didn’t have a big project lined up and funds were needed to get the TIF started, he said. The success the TIF is already having in attracting interest among developers is the reason the City can afford to rework the deal with MTC and Payne County.

“If we had known, we could have done it that way in the first place,” Joyce said.

In a separate action, the City Council approved a formula for allocating sales tax increases to the TIF. The city has used sales tax for all prior retail and restaurant incentives.

Think tanks like the conservative 1889 Institute warn against using property taxes for retail incentives, saying property taxes should be used carefully and only for capital improvements and infrastructure.

The TIF includes provisions for both commercial and residential development as well as assistance for new development and improvements or expansions of existing businesses through a combination of property and sales taxes.

Twitter: @mcharlesNP

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