Alice Pickering
Wyoming Reporter

Wyoming City Council on Wednesday, Nov. 7 learned that the city must come up with some ways to meet the future bond payments on Tax-Increment Financing District 3-1, the area of the Viking Commons Development.

Auditor Dave Mol of Tautges Redpath, Ltd. brought council up to date on the status of the two TIF districts.

District 3-2, is the one related to Regal Machine. Mol identified it as a pay-as-you-go TIF district.

The two notes remaining on it are for $400,000 and $85,000. The seven percent interest on the notes brings these to $439,000 and $119,000, respectively.

Mol said the notes are payable solely from available tax increments. The city is making payments on this obligation/bond, but the city obligations end on Feb. 1, 2010, according to Mol.

The city makes two payments year, each $24,000.

District 3-1

After the audit in July, Mol told the council that the debt in TIF District 3-1 was caused by not levying for the bonded debt. He said the city must begin levying to cover the debt.

The bonds were issued in 1999. The shortfall is $553,618.

In his report, Mol said the developer reimbursement part of the agreement, increments collected are split between the city/EDA and the developer. The first $1.3 million average market value will stay with the city/EDA.

Of the next $.3 million, the city keeps 60 percent and the developer keeps 40 percent. Of any amount over this, the split is 20 percent for the city and 80 percent for the developer.

The city has been making payments on them, mostly from unspent budgeted funds, but now these resources are nearly depleted, according to City Administrator Craig Mattson. To make future payments, the city must find the money.

The second district covers the Viking Commons project and is a combination of pay-as-you-go and TIF bonds.

The businesses in Viking Commons collectively pay $35,000 a year in tax increment. Under the terms of the developer’s agreement, a refund of $12,500 is divided among the businesses. He said the city should review the calculation of the developer reimbursement.

Mol also outlined possible options to eliminate the deficit. The first is to determine if a specific deficit authority applies to this situation.

Second, TIF District No. 1 has been decertified and has a balance of $170,000. It may be possible for the city to apply this to reduce the deficit in District 3-1. The balance here could be transferred to reduce property tax levies.

A third possibility is an inter-fund loan. According to Mol, District 3-1 is not scheduled to be decertified until the end of 2025.

If a loan is appropriate, tax increments collected after the 1999 bonds issues are retired could then be used to repay a loan.

Finally, it might be necessary to levy an additional amount on every taxable property in the city to make up the difference.

Mol estimated this to be about $260,000, beginning in 2009, with gradual reductions until 2015.

That means that there would be additional tax on every taxable property in the city, beginning in 2009, to raise the $262,657. The average amount to be collected each year is about $260,000 each year.

Mattson also indicated that the 1999 bonds could be eligible for refinance in 2008.

Selling the bonds at lower interest rates could save about $80,000 in interest, further reducing the city costs.

The solution is likely to be a combination of one or more of these options. The developer reimbursement terms indicate the increments collected are split between the city/EDA and the developer.

A more complete report should be ready by the Truth in Taxation meeting on Tuesday, Dec. 11 and make city options clearer.

Mattson believes there was not enough communication to city staff about the terms of the developer’s agreement and when budgets and levies were being developed.

All staff members need to understand the terms of these agreements so they can make informed decisions each year as the budget is developed and levy is proposed. Information should not be held by only one or two people, he said.

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