School administrators question scope of proposed TIF district near future elementary school

School administrators question scope of proposed TIF district near future elementary school

With a new elementary school set for construction this spring for Guthrie Public Schools in southern Logan County, traffic concerns could be an issue in the unincorporated area of the county. The Logan County Local Development Act Review Committee discussed a variety of concerns, including financing, about a proposed tax increment financing (TIF) district.


The seven member committee met for the first time as a complete body, including Logan County District 2 Commissioner Mike Pearson, Terry Hamilton (Guthrie EMS), Superintendent Dr. Doug Major (Meridian Technology Center), Superintendent Dr. Mike Simpson (Guthrie Public Schools) and at-large members Eddie Lynn, John Yoder and Jerry Ball were present. The lone member absent was Stacy Maroney (Logan County Health Department).

The complete audio of this meeting can be found at the conclusion of this article.

Ultimately, the three member Board of County Commissioners will have the final vote of approval or disapproval.

Last October, Pearson proposed a TIF district to pave two miles of road on Charter Oak Road in his district to help with traffic concerns with the addition of Charter Oak Elementary, which will be built east of the intersection of Charter Oak and Douglas Blvd., increase in homes, future commercial businesses and a new fire station for the Woodcrest Fire Department. Related article: Committee selects final members for proposed TIF project

Related article: Review committee to discuss adding possible TIF district in Logan County

The project would extend east from I-35 to Douglas Blvd. on Charter Oak with an estimated cost of $820,000 ($20,000 for attorney fees) for the current two lane road. However, on Friday, Pearson said he changed the scope of the project to include three lanes (on Douglas) along with curbs, guttering and sidewalks built in the right of way in hopes of addressing the traffic flow.

Engineer Jeffrey Dixon says he would expect the project to now range from $1.5 million to $1.8 million.

How to pay for it?

It appeared everyone agreed traffic would be a concern, but paying for the project, as expected, was the featured topic of the project.

Dan McMahon, who is serving as the attorney for TIF proposal, informed the committee members that the TIF district (not yet identified) repurposes tax revenues levied for one purpose and levy for another purpose.

“Idea of an increment is that we are not affecting any existing tax revenues that are going to the tax entities, but the only thing that we impact would be the increase in ad valorem taxes that is generated for new private investment that occurs within the district,” McMahon said.

He added, “(This is) not adding any new taxes, or increasing rates.”

In other words, if the TIF district was approved, any additional increase in property value would go to help pay off the TIF instead of going towards Logan County, County Health Department, EMS, Guthrie Public Schools, County Schools and Meridian Technology Center.

Pearson says the capture period would not be more than five years.

Major passed out documents to show that if the TIF was approved for what was an estimated $826,200 project would cost the Guthrie school district (GPS) approximately $475,490 and Meridian Technology Center $130,645. In addition, all county school districts would see some decrease in ad valorem if the TIF were to be approved (estimated $35,000 in total cost). Major said you would need to double the costs with the scope now doubling in size.

“In my case, the project scope has changed completely from the very first meeting that I attended,” Major said. “I don’t think it’s fair to ask GPS to take services away from kids in order to pay for a road in front of the school that not all the students are going to benefit from. I think it’s a lot of money and it is diverting funds. I just have a hard time with that.”

Pearson says Logan County simply does not have the money to fund the road project.

“The County just flat-out does not have the funds. We are in the same condition as you guys are at the school. We have to compete for federal funding,” he said.

Pearson added if they attempted to seek federal help the cost would triple and take much longer to complete.

“I have seen (federal funded) projects take seven years before construction gets going. If we did a TIF district we could get that done in a year.”

Major responded by saying, “I sympathize with the county’s position because their budget is strapped just like every school budget is strapped. Everybody’s budget is strapped.”

TIF district could cause hardship on current school bond

In May 2015, the Guthrie school district passed a $16.2 million bond issue after failing seven consecutive bond elections. Simpson says there would be an increase risk of a higher mileage rate for property owners than what was promised during the bond election.

“I am very concerned about that,” Simpson said.

Simpson says the school district built in an assumed growth rate (estimated three percent) and said that ad valorem tax would then go towards paying off the TIF.

“The growth rate includes the appreciation of property that would be in this (TIF district) area as well as growth. And by doing that, it increases the risk that we would actually have a higher millage rate for our property owners than what we promised them,” Simpson said.

He continued, “I feel like that because we have chose to put a school down there, we are being forced into a scenario where we have no other option but to do that, potentially, with what our sinking fund mill levy would be. Maintaining the trust of this community is paramount to our mission.”

Related article: School board members oppose proposed TIF to fund county road

Blighted or not blighted

In addition to cost, Major provided dialogue to the group by asking if the TIF district area was even qualified for TIF funding.

According to the Local Development Act, it stipulates that in order for a TIF district is to be formed certain criteria must be met to reverse economic stagnation or decline, serve as a catalyst for retaining or expanding employment, attract major investment in the area or to preserve or enhance the tax base or in which fifty percent or more of the structures in the area have an age of thirty-five years or more.

“I have driven the area to see this as an under developed area,” Major said. “There are housing divisions already in place, everything is platted, (a land owner) is going to sell his property for commercial development and so it’s hard for me to see this project meets the ‘but for’ test – would development have occurred but for this particularly TIF. So on that one I’m completely out because that just doesn’t fit.”

Simpson agreed with Major on the capture area already being developed and questioned the possibility of supplanting funds to the would be TIF district.

Simpson said, “The tools of this act be used to supplement and not supplant or replace normal public functions and services. Is that not supplanting? If we already have a tax by Logan County for roads and bridges, isn’t that supplanting? When I deal with federal funds at the school level that would not meet the smell test.”

Simpson made reference to the county sales tax that passed in Aug. 2014, in which, a quarter of a three-fourths cents sales tax goes toward to help maintain roads and bridges for 10 years.

Pearson said the traffic in the area is going to triple because of the school, which Major responded by saying that also that development in the area with the number of increased student population in the southern portion of the county was initiating the creation of the school.

The committee is expected to meet again in May but no date or time was established during the 98 minute meeting.

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