The Oregon Village Board approved the transfer of up to $615,000 from one village Tax Incremental Finance district to another as a way to reduce the impact to taxpayers of last year's borrowing for the downtown project.
"It would decrease the village tax bill for village purposes, because we'd be transferring money from TIF 2 into TIF 3," explained village administrator Mike Gracz. "In a sense, we're kind of giving TIF 3 increment to pay part of its debt service, because it does not have enough increment to cover the debt service for 2008."
TIF 3 is the downtown redevelopment district and TIF 2 is the industrial district in the northwest portion of the village.
The Village Board voted to amend both tax increment districts Monday, but for the increment transfer to occur, the Joint Board of Review must also approve the amendments. The Board of Review was presented with the details of the plan on Oct. 1 and will meet Thursday to consider the proposals.
The Joint Board of Review is composed of a representative from each of the four taxing jurisdictions that are part of the TIF district - the Oregon School District, the Village of Oregon, Dane County and the Madison Area Technical College - along with one citizen member.
The village borrowed $5.07 million last year to finance the redevelopment of downtown Oregon, including replacing the 72-inch storm water culvert at Badfish Creek. The downtown TIF district does not have a big tax-producing project that would help the village pay for the borrowing, which is why village officials are seeking authority to do the increment transfer.
"In a perfect world, you don't do that type of major renovation work until you have some increment built up in your TIF," Gracz explained, "but the timing didn't work out for the county."
Dane County paid nearly $300,000 toward Oregon's downtown street improvements, but gave the village a deadline of 2008 to complete the road work. That deadline, along with the need to replace the storm water culvert after the flooding of August 2007, prompted village officials to go ahead with the project earlier than it otherwise might have, Gracz said.
"It was a combination that we couldn't wait to replace the culvert and couldn't risk losing the county funding, so we had to proceed with it," he said.
Finance director Renee Hoeft prepared a document for village trustees that showed how the increment transfer would affect the village portion of residents' property taxes. She took the actual tax bills for two properties - one with an assessed value of $226,500 in 2008 and the other assessed at $430,000 in '08 - and determined the difference in taxes with and without the increment sharing.
With the increment sharing, the home valued at $226,5000 would see a decrease of $15.20 in 2009 taxes; without the revenue sharing, the tax bill would decrease by $3.71.
The home valued at $430,000 would see an $8.13 increase in 2009 property taxes with the increment sharing and an increase of $30.34 without the revenue sharing.
"It's about a $12 savings for a home valued at $226,500 and it's about a $22 savings for a home valued at $430,000 last year," Hoeft said. "But there's no guarantee, because every house is different. It depends on where you live, whether it's an older home or a newer home, and whether you've done any improvements" that would affect the assessed value.
