Huntingburg Council approves $6 million TIF-backed bonds for Stellar
To support the next steps in the Stellar Community projects, the Huntingburg Common Council approved the creation of $6 million in tax increment finance bonds to pay for the projects.
The city currently has $5.4 million in tax incremental funds available. Those funds have been accumulating since the TIF districts were created over 20 years ago. “The previous administrations and redevelopment commissions have been very fiscally responsible with those funds,” Mayor Denny Spinner explained. “Their decisions allowed us to show the Stellar Community Committee that the city could pay for the proposed Stellar Projects in our package.”
TIF funds are collected on the increase in property taxes that occur when property values increase after a baseline is established in a designated tax increment finance district. The increased taxes are captured by the TIF district and can be used in projects that impact that district.
Huntingburg has used TIF funds for projects to support the expansion of local industry including the installation of water mains and fiber optic internet for Touch of Class’s new headquarters building and Farbest’s expansion.
The resolutions passed Thursday night will now leverage $3.5 million of collected TIF funds to secure an additional $6 million in bonds to cover the city’s share of Stellar projects. The $10 million will secure an additional $30 million from state, federal and private funds to complete the projects planned for Huntingburg.
The 18 projects the money will be used for include the police and fire station upgrades, the Ninth Street extension, Market Street Park, Heritage Trail, Fourth Street water main replacement, community gateways, and overpass.
To keep the rate low and lower the risk for investors, Huntingburg also committed $1 million of Economic Development Income Tax funds to the bonds as security for the $6 million to be paid back by TIF funds. Using the EDIT funds in that manner for the TIF bonds is considered a general obligation of the city. “Cities are limited to how much general obligation they can undertake, we can only undertake two percent of one third of our assessed valuation,” City Attorney Phil Schneider explained. “In our case, that is about a million dollars.”
According to Mayor Spinner, the Huntingburg TIF districts at the current property values are capturing enough tax increment annually to pay the bond debt service twice over each year. “That is at the current incremental tax rate,” Spinner said. “If the property values didn’t go up at all, we would be able to pay the bonds back twice.”
The bonds’ life is 25 years and will extend the life of the TIF districts to 2040. They would have terminated in 2025 if they city had not issued the bonds.
“This is a remarkable credit to everyone in the community that has ever served on these boards to put us in a position to do this,” Mayor Spinner said. “And this is done with no effect on the property taxes in Huntingburg.”
The council also took the following actions:
– Approved an agreement to work with Koester Call Center to cover the city’s after hour calls for service. The service will initially cost the city $200 a month but the cost can be adjusted by the services needed by the city. The service will begin July 1.
-Approved applying for the Section 5311 Federal Transit Grant through the Federal Transit Administration administered by the Indiana Department of Transportation for the city’s transit program. The grant will pay for the operational expenses of the city’s transit system.
