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Special district gets approval to redirect tax revenue

Taxes pay for improvements at business park

Staff writer

Hillsboro Community Planning and Development Commission approved a plan Thursday that would redirect property taxes in Hillsboro Business Park to finance infrastructure improvements in the area.

In 2008, City Council approved creation of a tax increment financing district extending from the former AMPI building to U.S. 56. Such districts have been used in Kansas for about 30 years, although more are used in urban than rural areas, City Administrator Larry Paine said.

When the district was created, base values for all properties in the district were established. When the area is developed, the amount property values increase is called the increment.

The district allows the city to redirect city, county, and a portion of school district property taxes on the increment to a special fund. With that fund, the city can finance infrastructure improvements within the district.

Recent infrastructure improvements for Midway Motors’ new site cost about $400,000, but the increased value of the property is expected to generate about $480,000 of property taxes over the 20-year life of the district.

Commission Chairman Gaylord Goertzen asked Paine to clarify whether the current property tax revenue would continue to go to the city, school district, and county. Paine said they would. Only the increased revenue would be deferred.

The district allows improvements to be financed without increasing property taxes in the city, Paine said.

Commissioner Cynthia Fleming said further development in the district probably wouldn’t be as costly because a lot of the work has already been done.

The cost of any new developments would depend largely on location, Paine said. Development immediately south of Midway Motors wouldn’t be as expensive, because the road and utilities are already there. Construction on the east end of the business park would be more expensive, though, because the road would have to be extended.

Fleming noticed a slim risk for the city: if the Midway Motors building was damaged and unusable, and the company didn’t rebuild, the increased property taxes would evaporate, but the city would still have to pay for the improvements.

The commission approved the plan for City Council consideration.

Planning Commission meets as needed on the last Thursday of the month.

Last modified Oct. 7, 2010

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