In a move side-stepping over $1 million a year in outside borrowing, Plover amends three TIF districts, including the ill-fated “Aquaplex” property.
By Jacob Mathias
In an attempt to finance a floundering tax increment district, the Village of Plover is amending three different districts to help cut losses.
The Plover Plan Commission on Monday approved amending TIF districts 3, 4 and 5 in an effort to put District 5- also known as the “Aquaplex TID”- in a better financial position.
By making this move, the life of the district is extended another 20 years, allowing it to continue collecting tax increment until Sept. 21, 2045, which will offset debt of the district.
According to documents prepared by Ehlers, Inc., a financial firm hired by the village, TID #3 could provide up to $6.1 million toward #5, and TID #4 could add up to $10.61 million.
Tax increment districts allow municipalities to subsidize current improvement projects using projected future tax gains from those improvements. By extending the life of those TIDs, more of those gains can be used to cut losses in TID #5. Losses from that district are estimated around $10 million.
If the TIDs were not amended, the village would have to make debt service payments toward TID #5 in the amount of $1.1 million dollars per year, an amount that would likely require outside borrowing.
“It’s evident the do-nothing approach is not an option for us,” said Village Administrator Dan Mahoney. “We must move forward and make some changes.”
By extending each TID to its maximum 40-year lifespan, and projecting no future growth within the district, TID #5 would be able to terminate its status by 2039. But village officials say they do expect growth, which means it could close earlier.
“If you do have growth in District #5, you may not need as much sharing,” Dawn Gunderson, senior municipal adviser and vice president of Ehlers, Inc. “If it become quite successful maybe you wouldn’t need any sharing.”
The new Arby’s and Culver’s location as well as an apartment complex in the Village Park at Plover have yet to hit the tax rolls and will immediately increase increment within the next year.
How we got here
Prior to 2009, development in TID #5 provided enough increment to pay the debts and to install public facilities and improvements. The purpose of the improvements was to enhance the value of the district and make it more attractive to development.
According to the report by Ehler’s, “beginning in 2009, a series of events occurred including valuations, declines, developer bankruptcies and a foreclosure by Portage County due to delinquent property taxes on a portion of the lands included with in the development project, resulting in the property becoming tax exempt.”
The property commonly known as the ‘Aquaplex’ property- formerly Tree Acres Golf Course- stands at the heart of the problem. A new developer aimed at an ambitious new water park on the 400-plus acres defaulted on the property, and not long after that Portage Co. government took ownership of the land.
In March of 2015, Portage County put the property back on the market for redevelopment. Mahoney said there are three interested parties working on an agreeable arrangement but declined to elaborate further.
But something needs to happen soon.
“The reduction coming off the rolls and the decline due to the economy actually put the district in a negative situation,” said Gunderson.
She said since the beginning of 2015, TID #5 has had a negative increment value of $868,000 since very little of the district is producing tax increment.
By designating district #5 as distressed, the village cannot make any changes to the district’s planning nor adjust its borders, but Mahoney said the village thought well ahead when they planned the district, and plans already in place should be sufficient for any future needs.
“We really feel comfortable that basically we have appropriate projects and types of projects. Never say never, maybe we missed something, but the likelihood that we’d need to amend that project plan is unlikely,” said Mahoney.
The three TID amendments next go to the regular meeting of Plover Village Board on September 16 at 6 PM for final approval.