They can stretch for miles and are often located around population centers such as Charleston, Huntington and Morgantown, but remain unseen – and often unknown – throughout their lifetime, which can last for decades.
What they have helped to produce in West Virginia, however, can often be seen as clear: renovation of the Charleston Civic Center, new baseball and football fields in the Valley Park of Putnam County and, ultimately, a site for a new South Charleston shopping center.
Tax-enhancing finance districts are being set up and used by local authorities to focus some of the taxes within the district on a project also within its borders, the acceleration of economic development in mind.
John Stump, a Steptoe & Johnson lawyer who has assisted several municipalities in setting up TIF districts, called them "a very accurate tool for economic development" because the lines of the district can also be drawn precisely for the benefit of the project. to come.
"TIF is used to create a project that is marginal and workable, or to do a project that would be carried out on a smaller scale and optimize it, so in essence you get more development as a result of Tif, "he said.
The local government in West Virginia has not been slow with embracing TIF once the state has taken the road. The Department of Commerce had 35 TIF districts on their books in 2017, according to the annual report on West Virginia TIF districts.
"For the most part, I think they have [succeeded]"Said Todd Hooker, the deputy director of corporate and industrial development, of TIF districts." There are one or two who are struggling, but most have done their best. "
Assessing TIF districts submitted by local authorities is part of Hooker's job, as the state must approve them before they can take effect. In West Virginia, the proposed districts are often focused on financing the construction of infrastructure within them, Hooker said. This helps attract businesses that are looking for land that does not have to develop for their needs.
"We would like to see the TIF projects go to everything that can be considered as public infrastructure: water, roads, we will look at fiber, gas, electricity supply in sites and projects," he said.
But developing infrastructure or other projects through TIF is not as simple as setting up a neighborhood and celebrating immediate success: civil servants describe it as a careful process where the reward will only be clear years later.
How TIF works
Provincial committees must be able to finance projects designed to stimulate economic growth and development in geographic areas characterized by high unemployment, stagnant jobs, slow income growth, polluted property or inadequate infrastructure, says the West Virginia Code.
These characteristics are not impossible to find in the economically lagging mountain state, and TIF districts must be created as a partial solution. By country code it is one of their goals to help places with a "competitive disadvantage" when it comes to attracting private investment and development, and eliminating devastated areas.
So how is a TIF district created to do exactly that? In the beginning, the district area and the projects where tax money is to be determined. The basic value of his projects must then be assessed. The district must also receive support in its city or province.
"They have to go through all their local public hearings, usually the developers will have a meeting with the city or the county – that's usually a 90 to 100 day process," Hooker said.
Sometimes people are wary that the TIF district is going to install a tax increase for property tax – a common misconception, Hooker said.
But usually Stump said that public opposition would occur as a result of the projects themselves instead of TIF as their financing vehicle.
"There is concern about, in some cases, if the TIF is really needed, but I think it has generally been a very effective tool," Stump said. "We rarely have people come and show up to complain about TIF itself."
County commissions and some municipalities can apply directly to the Development Office for TIF approval. Other municipalities must be approved by their county commissions before they ask the development agency for approval.
"As soon as they send it here, we usually have a committee of people here looking at it," said Hooker, while he was on the committee himself.
If the TIF district passes the remaining regulatory hoops and achieves the status of the state, it will eventually settle down and start directing tax money to improvements therein.
Most Western TIF districts generate their resources through property taxes. The project financing comes from the difference between the estimated value of the real estate development and the value of the property after development – that difference is the "tax increase". The increase in turnover can only be used within the district.
The county or municipality where the TIF district is located will continue to collect the amount in funds they have spent on pre-development. As the estimated value of the property rises, those new tax dollars go directly to the desired project of the district or bonds / banknotes are issued for their financing. The new development itself is an easy way to increase the value of real estate.
Districts can not exist for more than 30 years and funding obligations can not expire later than the end date of an area, per state code. After the project, the assessed value then belongs to the tax districts of the project area.
Another option outside the TIF district taxes are sales tax TIF districts, a much rarer entity in West Virginia. These use new sales taxes in the district to finance projects. It has been used in the Cabela's near Wheeling and will soon be present in South Charleston.
Stump expects TIF district taxes to remain uncommon, as local officials focus on building infrastructure through property tax-TIFs to attract businesses that can be found just as easily in Ohio or North Carolina.
"For us to compete, we need to have shuffled locations," said Stump. "That is a term that is thrown a lot, but we have to have sites that are ready to be and that have access to water and sewage and road."
Current, future districts
West Virginia was relatively late to the TIF game, Stump said. But once the state appeared on the scene, Putnam County was one of the first in line to take advantage.
In 2004, the TIF district debuted the Greater Teays Valley, which stretched along Interstate 64 between the Teays Valley and Hurricane exits. The construction of water infrastructure was part of the district's goal, but it also sent dollars to improvements in the Valley Park, including new baseball and football pitches, wave pool repairs and the construction of a community conference center.
"It has really been a regional and local economic growth to get people to that area, and I think everyone will benefit from restaurants to stores, and so on," says Jeremy Young, Putnam county manager.
Putnam County also has a TIF district, recently established in its business park. Infrastructure expansion is the primary goal of that district. The yield that comes out is not as much as what was seen in the Greater Teays Valley district, but there is much more room for growth, Young said.
"There are several companies that have moved to the park and we hope that this will continue to grow," he said.
Charleston meanwhile set up a TIF district in the center to finance its Civic Center renovation project, which will be completed this year.
However, these districts in the Kanawha Valley have a good road before going to the north of Monongalia County. There are nine TIF districts within that province, whether they fall within the competence of the provincial commission or the city of Morgantown. The districts have contributed to the financing of projects such as the baseball field at West Virginia University and the development of an additional university center.
"It's a pretty explosive growth area," Hooker said about why Monongalia County and Morgantown house several TIF districts.
But perhaps none of the West Virginia's TIF districts are as ambitious – and complex – as South Charleston's district that would encompass a large part of the city.
Approved by the Legislature and the development agency in 2017, the TIF South Charleston district has two distinct parts: a sales tax TIF to draw income from new businesses and a property tax TIF for a future shopping complex on the site of the fly ash pond that was once owned by FMC.
South Charleston Mayor Frank Mullens – the TIF often a game-changer & # 39; for the city – said the idea came from a conversation he and city manager Rick Atkinson had with Paul Mattox when Mattox was Transportation Secretary.
"We are talking about the Jefferson Road [expansion] project and the development of the fly ash pond, and he said: & # 39; You have to check a TIF & # 39 ;, "Mullens said, noting that the Jefferson Road project offers a chance to use surplus stuff for other projects." drive back and I said: 'Rick, we have to do this, so let's start researching.'
It is expected that the two parts of the TIF district will finance approximately $ 155 million in various public projects, including an educational complex in the West Virginia Regional Park, the Thomas Memorial Hospital Wellness Center and an access road to the The Shops at Trace Fork shopping center. .
However, South Carolina City Manager Rick Atkinson said he might be the most enthusiastic about a project to build a sewer line on Corridor G.
"Infrastructure is hopefully the basis for new buildings and new opportunities," he said.