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TIF trick: City gets more revenue while residents pay less

By Dominik Stallings
The proposed tax levy for Tuscola is 25 percent higher than last year but would result in a lower tax rate due to the retirement of two tax increment finance (TIF) districts. With the ending of the TIF districts, $16 million in additional property value (equalized assessed valuation) will be going back on the general tax rolls. Thus, while the levy is higher, it is spread across a much larger property valuation.

Drew Hoel, city administrator, explained that some city services (including part of his own salary) has been paid out of TIF funds since the city administers the TIF districts. Without the TIF funding, those expenses will need to be paid from general city funds. So, increasing the levy “captures” the increase in EAV while reducing the tax rate overall. But because the levy will be increasing more than 5%, the city will be required to hold a truth-in-taxation hearing. 

The City Council approved a formal estimate of the property tax levy Nov. 14. The estimate would lower the property tax rate by 4.65% if approved by the Council in the Dec. 12 meeting. They would also have to publish a public hearing notice before the Nov. 28 meeting.

“The growth and reinvesting in that area– it snowballed. All of that growth is back on the books,”  said Hoel, referring to the new property value being available to general funding. Other taxing districts, including the school district, also will be able to tap into this new funding source.

TIF districts work by freezing the property tax available to all the taxing bodies with any increase in tax revenue going back into the TIF district to help fund economic development. The city credits the TIF districts with growing the value of the property within the district. Those properties will continue to be taxed, but the revenue will be going to the various taxing districts instead of a TIF fund.

The proposed tax rate this year would be $0.82 as opposed to last year’s $0.86, a 4.65% decrease. For a home valued at $100,000, this would mean a $15.70 decrease for property taxes, according to a worksheet provided by Hoel. According to the document, the general fund would see an increase of $137,692 for the year. 

In other news. The Council approved the professional services agreement for the Tuscola Master Meter Station. The proposed fee would not exceed $96,660, approximately 15% of the budgeted construction costs for the project.

Kaci Magee of LWH CPA presented the annual audit report. She said she was happy to report it was a very good, clean audit this year. The city has also received increased tax income across the board for the year.

Tuscola Fire Chief Brian Moody recommended the promotion of firefighter Brian Endres to Lieutenant. The promotion would be effective Dec.1. and fill a vacant officer position.

The fire department is also currently installing support equipment on the new firetruck and is training to use it. Moody said the truck should be ready to use in a couple of weeks. Moody also brought the truck to city hall to show to the Council.

Dave Schaab from Waste Management told the Council that going forward at the start of the year they would do all solid waste service curbside rather than alley-side. Schaab said the newer trucks and their limited mobility significantly cut into productivity while opening in alleys.

The Council agreed to waive formal bidding for the roof repair for the library. The project would cost $30,132.

The Council also approved a fundraising request for the Salvation Army holiday kettle drive. They started ringing their bells and fundraising at the Council meeting. Paul Wisovaty passed around the bucket for donations. Mayor Dan Kleiss and Andrew Bequette were one of the first to make their donations.

The Council approved Frenchie’s Mobile Boutique in Parking Area at 101 N. Main on Nov. 24 and the Christmastown Parade and 5K run/walk route on for Dec. 3.

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