County may pull its share of TIF District funding in 2030

Gary B. Gray • Updated Nov 17, 2016 at 4:20 PM

A resolution is headed to the Washington County Commission that would end the flow of county tax dollars to the tax increment financing district at end of 2029.

The resolution’s matter-of-fact language states “the county desires a plan for the orderly withdrawal of the county’s participation …”

“If you don’t, you’re going to make it very ambiguous as to when the TIF District ends,” Finance and Administration Director Mitch Meredith said at Wednesday’s Budget Committee meeting. “If you don’t have a date, all the increment dollars related to non-project dollars would continue to go to the Johnson City Development Authority. There’s no reason to continue to put tax dollars in the district once it’s been brought up from a blighted area.”

Meredith said commissioners approached him seeking clarity on the county’s obligations and future plans.

“It doesn’t mean we would not approve projects that go beyond that date,” he said. “It’s not shutting the door. It’s just saying we’re not going to have the county’s share of the increment go beyond that date.”

The TIF District is within the county, but entirely demarcated in Johnson City’s downtown area by the JCDA. Basically, TIF deals are meant to bring in higher property tax revenues as the value of a redeveloped site rises over the years.

After a plan is approved by the JCDA, City Commission and County Commission, the JCDA borrows money to provide an incentive for developers. The city and county agree to jointly make payments on the amounts owed from the incentives.

These agreements are aimed at increasing revenues from local option sales tax. Currently, the local option sales tax rate (excluding the state’s 7 percent) is 2.5 percent. Of that, half goes to Johnson City’s general fund, and the remainder is split between Washington County and Johnson City schools. 

“We now would have an end date for the TIF District,” said Dianna Cantler, Washington County Economic Development Council downtown development manager. “Right now we have The Pavilion at Founders Park and Northeast State Community College in the district. Everything else is a ‘project.’”

One of those projects is the Model Mill, which is expected to generate $7 million in revenue over 20 years. On Oct. 11, the Budget Committee approved a nearly $1.2 million tax increment financing incentive plan for the former Model Mill, a site expected to play a key role in development along the new West Walnut Street District.

The County Commission was scheduled to vote on a resolution regarding this deal Oct. 24, but it was pulled from the agenda. County Mayor Dan Eldridge told the Johnson City Press attorneys were still working on the details.

“When they (JCDA) were bringing the Model Mill project forward, they wanted a 20-year repayment period,” said Budget Committee member and JCDA board member Rick Storey. “But there was discussion between between city and county attorneys about whether that extended everything 20 years in the district, or in the form of a project.

“This (district) was never meant to be in perpetuity for the county. It was not meant to go on forever. You would hope that at the end of the various terms, sufficient taxes have been generated. If we don’t set a date, the city and county would never get that increment back.”

The County Commission would continue to consider TIF plans within the district if the terms end before Dec. 31, 2029. They also would continue to look at projects initiated by the JCDA after that point.

Email Gary Gray at [email protected]. Like Gary B. Gray on Facebook at www.facebook.com/garybgrayjcp. Follow him on Twitter @ggrayjcpress.

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