By ROBERT PIERCE
• Leader & Times
Signs of growth can be seen all around Liberal, with new businesses popping up and others expanding.
Monday, Liberal Economic Development Director Jeff Parsons presented Seward County commissioners with a tool that could bring in even more business.
“We have been presented with an incentive package,” he said. “One of those incentives is called tax increment financing (TIF), which is an incentive that to my knowledge that has never been used in Liberal or in Seward County.”
Parsons said tools such as TIF are necessary for communities like Liberal to experience continued growth.
“If you want to go from a bare lot to something that’s built up and developed, you have to do some incentive work,” he said.
Parsons then explained how the economic incentive works.
“What TIF does is it captures the increase in property and sales taxes in a defined district and uses those taxes to pay for eligible improvements within that district,” he said. “It’s been available around the country and in Kansas. There’s actually 47 states and the District of Columbia that use TIF. It’s used in a lot of different variations.”
Parsons said money generated from TIF districts can be used to pay for some redevelopment costs.
“Those costs would include land acquisition, demolition and clearing, any dirt work that needs to be done,” he said. “If there are any buildings on that property that are going to be rehabilitated, we’ll pay for those rehabilitation costs and costs to do public improvements. Those would be water and sewer lines, streets, public parking lots. Some different professional costs would be architectural engineering and legal fees.”
Parsons said under TIF, the amount of tax being collected now would be frozen.
“That amount of tax includes any valuation increases on that and will be frozen for the life of the TIF,” he said.
As buildings are built and as sales taxes are collected, Parsons said the TIF will increase, and that increase will be returned to the developer for the life of the TIF to pay for eligible expenses.
“These are tax dollars that do not exist now,” he said. “Those structures aren’t there. Business isn’t occurring on that piece of property.”
Parsons said all taxing entities collect a base tax, and under TIF, that tax would continue to be collected by all local entities, including the City of Liberal, Seward County, USD 480 and Seward County Community College.
“We’ll continue to collect what we’ve been collecting,” he said. “The increment, the part that will be generated from the development, that will be returned to the developers to pay for those eligible expenses.”
Parsons said the maximum length for a TIF is 20 years, and revenue will be 100 percent of the increments less any expenses. He said the TIF process has actually begun in Liberal.
“Since it’s going to be within the city, they have applied to the city for the TIF districts,” he said.
The Liberal City Commission will host public hearings next week for the creation of TIF districts.
“Once that hopefully that ordinance is passed creating those TIF districts, there’s a waiting period for the taxing entities to say ‘We don’t want to participate in this,’” Parsons said.
During that waiting period, taxing entities have three options – either to let the waiting period expire, thus becoming a part of the TIF package, declare that they don’t want to be a part of it or say yes to the increment plan.
“Once that waiting period has expired, they will present a redevelopment plan,” Parsons said. “That will be presented to the Planning and Zoning Board. The planning and zoning board will then recommend for approval or not to the city commission, and it will be voted on by the city commission. It’s a fairly lengthy process.”
Parsons re-emphasized the need for programs like TIF to bring business into a growing community.
“In today’s economy, it takes public participation to make these kind of projects work,” he said. “In order to do the retail development that they want to do, they’re going to have draw in a big box retailer.”
Parsons said the trend currently being seen in Liberal should continue as more business comes to town.
“Development begets development,” he said. “You see some development begin, other people become interested, and you get increased volume. We’re seeing that right now.”
Parsons said likewise, there are spinoff benefits from the TIF plan.
“You’ll get increased shopping in Liberal,” he said. “Those people who are driving through Liberal to go to Garden City or Dodge City, hopefully, we’ll get them to stop here. They’re not going to just shop in this one development. They’re going to shop in other places.”
Parsons said no city dollars will go to the project, nor does the City of Liberal back it in any financial way.
“There’s no bonds taken out,” he said. “There’s no guarantees made by the center. Essentially, we’re granting them the use of those incremental tax dollars for the use of this. All revenues will be taken on a pay as you go basis.”
Parsons said incentives like TIF make it feasible for communities such as Liberal to go after national retailers.
“This will be a great project which will really set off the north as the entrance to Liberal,” he said.
While TIF is somewhat new to Liberal, it is similar to a housing package used by the City of Liberal – Rural Housing Incentives Districts – and Parsons said using tax increments is essentially not breaking new ground.
“It’s just a little bit of new ground for Liberal,” he said. “This method of financing has used successfully in the past, and that project up there continues to grow.”