When Hillsboro City Council voted to create a tax increment financing district in December 2008, it was supposed to include the former AMPI building and Hillsboro Business Park, between AMPI and U.S. 56.
But the legal description didn’t include the business park, Marion County Commission told Hillsboro City Administrator Larry Paine on Thursday.
County mapping coordinator Deborah Bowman reviewed the legal description of the district while showing it on a map.
Paine said he thought the intent had been to include the business park. Commissioner Dan Holub said he thought that should have been spelled out. Paine agreed, but conceded it hadn’t been. He said he didn’t know where the oversight was made.
The boundary of the district is an issue because the city plans to finance infrastructure improvements in the business park — some of which have already been completed — with funds raised by the district. The city spent about $400,000 building a street and other improvements necessary for Midway Motors’ new location in the business park.
TIF districts allow a city to collect increased property tax revenues created by development within the district — including other government entities’ share of the increased taxes — and use them to defray expenses of development. Without Midway Motors in the district, the city would be unable to redirect the increased taxes on the new building.
Commission Chairman Randy Dallke said the county and city will need to work together to sort those issues.
After the meeting and double-checking the information presented, Paine said the commission’s conclusion was accurate. He said Hillsboro Business Park was unintentionally cut from the legal description somewhere in the process of creating the TIF district.
It seems likely that the city would have to go through the entire district creation process again if Hillsboro City Council decides to add Hillsboro Business Park to the TIF district, Paine said. Part of the process is a 30-day period where other taxing entities affected by the district could protest its creation. In the case of Hillsboro’s TIF district, the city, county, and USD 410 are affected.
But that would still leave the city without tax revenue generated by Midway Motors. Paine said he didn’t think the city would be able to use the assessed value of the undeveloped area as the base value for the TIF district.
The city paid for the project with cash from the capital improvement fund. The city planned to reimburse the fund by issuing bonds and paying those bonds with revenue generated by the TIF district. Revenue was expected to come from taxes on the valuation increase on Midway Motors’ facility, which was built on a vacant lot.
Paine said he wasn’t sure what action he would recommend the city council take. He was waiting for a call from the city’s bond counsel.