TIF & Property Taxes

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    01-Jun-2015

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<ul><li> 1. A strategy to provide property tax relief in East St. Louis 200 N. Broadway Suite 1000 St. Louis, MO 63102 (314) 231-7318 By Mike Weber, Director PGAV URBAN CONSULTING</li></ul> <p> 2. 3. </p> <ul><li>TIF is designed to induceprivate sector investmentin redevelopment projects. </li></ul> <p> 4. 5. 6. 7. 8. How TIF Works </p> <ul><li>TIF district is established by City Ordinance(the City has 7 TIF districts covering almost the entire City) </li></ul> <ul><li>Property taxes are then distributed in two ways: </li></ul> <ul><li><ul><li>Tax on base assessed value goes to taxing districts </li></ul></li></ul> <ul><li><ul><li>Tax on gains on assessed value goes to special TIF fund </li></ul></li></ul> <p> 9. 10. How TIF Works(graphic illustration) 11. Streets, Sewers and Other Public Improvements 12. TIF &amp; Public Works </p> <ul><li>TIF funding for new streets &amp; other public works should be in support new private development. </li></ul> <p> 13. TIF &amp; Public Works </p> <ul><li>When possible TIF can fund street improvements in existing neighborhoods. </li></ul> <p> 14. TIF &amp; Public Works </p> <ul><li>TIF is NOT intended or designed to serve as funding source for normal maintenance and reconstruction of streets and utilities. </li></ul> <ul><li>While the need for new streets and sewers is enormous, TIF can only cover a small portion of the costs(see next chart ) . </li></ul> <ul><li>TIF dollars must be spent within the TIF district generating the TIF dollars. </li></ul> <p> 15. 16. Why are property tax rates so high in East St. Louis? 17. Property Taxes </p> <ul><li>Property tax rates are determined by dividing the tax levy request by the rate setting equalized assessed value (EAV) within the taxing district. </li></ul> <ul><li>The higher the rate setting EAV, the lower the tax rate. </li></ul> <ul><li>If there is no growth in EAV over time, tax rates will tend to go up. </li></ul> <p> 18. Tax Rate Computations </p> <ul><li>1986 Tax base (assessed valuation): $50,000,000 </li></ul> <ul><li><ul><li>1986 levy request: $1,000,000 </li></ul></li></ul> <ul><li><ul><li>Tax rateto generate levy request: $2.00 /$100 AV </li></ul></li></ul> <ul><li>2006 Tax base: $50,000,000 </li></ul> <ul><li><ul><li>2006 levy request: $1,800,000* </li></ul></li></ul> <ul><li><ul><li>Tax rateto generate levy request: $3.60 /$100 AV </li></ul></li></ul> <ul><li><ul><li>*The 2006 levy request reflects inflation between 1986 and 2006. </li></ul></li></ul> <p> 19. Property Taxes(a comparison) </p> <ul><li>A $75,000 home inEast St. Louiswould pay in the range of$3,100 to $3,500in property taxes. </li></ul> <ul><li>InFairview Heights , the same home value would result in$1,700in taxes.1 </li></ul> <p>1based on tax rate for tax code 08040 20. Contributing Factors to High Taxes </p> <ul><li><ul><li>Population loss of 9,400between 1990 &amp; 2000. </li></ul></li></ul> <ul><li><ul><li>Loss of 1,880 occupied housing unitsbetween 1990 &amp; 2000. </li></ul></li></ul> <ul><li><ul><li>ALL INCREASES IN PROPERTY VALUE BENEFITS PRIMARILY THE TIF FUNDS. </li></ul></li></ul> <ul><li><ul><li>More than of the City containstax exempt or vacant lots . </li></ul></li></ul> <p> 21. 22. 23. 24. Contributing Factors to High Taxes </p> <ul><li>Exemptions &amp; TIF Constrains Tax Base: </li></ul> <ul><li><ul><li>Total Assessed Value $170 million </li></ul></li></ul> <ul><li><ul><li><ul><li>Less exemptions 33 million </li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li>Less TIF Increment Value 89 million </li></ul></li></ul></li></ul> <ul><li><ul><li>Net Taxable Value $48 million </li></ul></li></ul> <ul><li>Only 28% of the Citys assessed value is available for normal taxation. </li></ul> <ul><li>Between 2003 and 2006, the Citys net taxable value has dropped by nearly $900,000 </li></ul> <p> 25. 26. Dissolve &amp; Reduce TIF Districts </p> <ul><li>Over 50% of the Citys tax base is dedicated to the various TIF funds. </li></ul> <ul><li>By dissolving and reducing the size of the TIF districts more of the tax base will be available to generate revenue for all affected taxing districts. </li></ul> <ul><li>With a larger rate setting EAV, tax rates should go down. </li></ul> <ul><li>Expected property tax savings:19% to 26% </li></ul> <p> 27. 28. Effect on $75,000 Home </p> <ul><li>Current: </li></ul> <ul><li><ul><li>2006 tax rate for tax code 01099 12.9186 </li></ul></li></ul> <ul><li><ul><li>Total property tax bill $3,230 </li></ul></li></ul> <ul><li>Move$31 million EAV from TIF Districts: </li></ul> <ul><li><ul><li>Tax rate with added tax base 10.4677* </li></ul></li></ul> <ul><li><ul><li>Total property tax bill $2,617 </li></ul></li></ul> <ul><li><ul><li>Savings of$613 </li></ul></li></ul> <ul><li><ul><li>*Assumes all taxing districts keep levy requests in line with recent trends.Also assumes loss of School District GSA is made up by increased levy. </li></ul></li></ul> <p> 29. 30. Effect on $75,000 Home </p> <ul><li>Current: </li></ul> <ul><li><ul><li>2006 tax rate for tax code 01099 12.9186 </li></ul></li></ul> <ul><li><ul><li>Total property tax bill $3,230 </li></ul></li></ul> <ul><li>Move$50 million EAV from TIF Districts: </li></ul> <ul><li><ul><li>Tax rate with added tax base 9.673* </li></ul></li></ul> <ul><li><ul><li>Total property tax bill $2,418 </li></ul></li></ul> <ul><li><ul><li>Savings of$812 </li></ul></li></ul> <ul><li><ul><li>*Assumes all taxing districts keep levy requests in line with recent trends. Also assumes loss of School District GSA is made up by increased levy. </li></ul></li></ul> <p> 31. Actions Required &amp; When Effective </p> <ul><li>City Council needs to pass ordinances dissolving and reducing size of TIF districts. </li></ul> <ul><li>If accomplished in 2007, it will affect tax rates in 2008. </li></ul> <p> 32. Other Considerations </p> <ul><li>The City will continue to use TIF to induce private development and redevelopment projects. </li></ul> <ul><li>If needed, new project-based TIF districts will be created. </li></ul> <ul><li>The effectiveness of property tax relief is predicated on all affected taxing districts cooperating with the City in this effort! </li></ul>