By Martin Slagter Kokomo Tribune
---- — As development and redevelopment projects continue to take shape downtown, the Kokomo Redevelopment Commission approved a new Tax Increment Financing District on Wednesday that could allow the city to capitalize on the growth.
Wednesday’s final approval of the TIF resolution was made with a couple of amendments to the original proposal, adding Kokomo Recycling, which is located in the TIF district on Market Avenue, as a designated taxpayer.
The commission also modified the base assessment date the revenue will begin being collected from March 1, 2013, to March 1. That means the city will begin to capture the taxes by March 2015. The TIF area is located downtown near North Main Street, extending south from Jefferson Street to Apperson Way.
A TIF is a tax capture area, where incremental increases in tax revenues are directed to the city or to a five-member Redevelopment Commission. The mayor appoints three of the RDC members and the Kokomo Common Council appoints the remaining two members. TIF districts are typically established just ahead of new development in order to capture the maximum amount of new revenue.
City attorney Lawrence McCormack explained that the date was modified because Patriot Porcelain, the city’s main target of the TIF, is in the process of appealing its assessment. The company has plans to expand its operations and add some new equipment this year, which could lead to a higher assessed value.
Patriot Porcelain, which will open new operations on North Main Street, will be investing approximately $11 million in taxable business personal property, while Kokomo Recycling will invest approximately $2.8 million. That would result in a $194,796 net tax increase generated by the TIF.
“The purpose is to make sure the Redevelopment Commission set the base assessed valuation at the lowest point,” McCormack said of Patriot Porcelain’s appeal. “Patriot Porcelain is currently appealing its 2013 assessment based on the purchase price they paid for the property. That appeal will probably lower their assessed valuation for 2013.
“If we set our TIF base assessed value in 2013, there is a possibility that it would be set including Patriot’s higher, pre-appeal assessment,” he added. “If they are successful on appeal, it will lower the total assessed value for the TIF allocation area and potentially put the TIF at a negative increment to start.”
By capturing the plant’s new assessed value, the district, which follows a rail line as it runs northeast from Jefferson Street to become part of the Nickel Plate Trail corridor, could generate hundreds of thousands of tax dollars annually, which the city or the Redevelopment Commission could then use for improvements.
McCormack said the city’s planned extension of the Industrial Heritage Trail will be one of the first beneficiaries of the TIF district.
“One of the first things we’d like to do is invest in the trail,” he said. “We’ll look at other things down the road based on the money that’s being generated by the TIF.”
While Patriot Porcelain and Kokomo Recycling are expected to be two main tax increment generators, the district also includes the old downtown railroad depot, which was purchased by the city two weeks ago for $45,000.
The depot, which has been vacant for years on North Buckeye Street, could eventually be renovated using TIF redevelopment dollars or increase the district’s assessed valuation.
McCormack said city officials haven’t yet discussed future plans for the depot.
“We haven’t really gotten into the details of that yet,” he said. “Right now we’ve just gotten into the purchasing of it. As far as what future plans are, we’ll cross that bridge when we get there.”
Martin Slagter can be reached at 765-454-8570, firstname.lastname@example.org or on Twitter @slagterm.