Letter To The Editor:
At the Wood River City Council meeting of March 3rd, the City had to admit that it had violated the terms of City agreements and ordinances that caused unauthorized payments totaling tens of thousands of TIF funds to developers. Instead of taking action to assure compliance with its agreements, ordinances, policies, and procedures, the City chose to make changes to the agreements so that these failures simply disappeared, as if nothing happened.
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The more important issue that an unauthorized $40,000 TIF payment to a developer after the City Manager had a TIF agreement altered without City Council approval was dismissed as irrelevant. The explanation given was that someone forgot to inform the City Council that there were additional changes to the agreement, and the City Manager was simply fixing the mistake to save the City Council the trouble of voting on the changes again. There was no explanation why the City Manager signed the agreement when only the mayor was authorized. In a meeting on February 17th between the City Attorney, Councilmember Ayres and myself, he admitted that the $40,000 TIF payment should not have been made at all because none of the developer obligations under the agreement were satisfied.
In addition, five TIF agreements were amended to eliminate the developer default provisions which now makes the City obligated to make payment to each developer whether property taxes are paid, the property is transferred to a new owner, or the building is vacant and not adding to the economic development of the City. These, and other restrictions, were standard provisions previously included in our TIF agreements. The reason given for removing these provisions was that they were too restrictive and difficult to administer. However, during Citizen Comments, a speaker quoted TIF agreements from two area communities which contained similar provisions as those that were removed.
Finally, the real risk to these amended TIF agreements is the possibility that the City may have TIF payment outflows that exceeds property tax income. Four of the five TIF agreements amended last night are front loaded, one even had a $240,000 upfront payment provision. These agreements call for City payments upfront, usually over 5 years, but the City has to collect our payments spread out over about 20 years. There is no guarantee that the City will collect all the property taxes that we agree to pay the developer. This arrangement could go very badly for the City if there isn’t a business operating in the building. To my knowledge, we have not had a new business that opened within the last two years that survived in downtown for over one year.
Bill Dettmers
Wood River City Council
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