The proposed 2012 Gardner budget includes a TIF adjustment from Walmart, but city officials say to date, the big box giant hasn’t formally agreed to the plan.
According to Laura Gourley, city finance director, Walmart officials have verbally agreed.
“They still say: ‘Yeah. Probably. Sounds great. Sounds good,’” Gourley said.
City officials began discussing an agreement in which the city would keep $150,000 annually of the Walmart tax-increment financing for the next four years.
When the store was built, the Walmart paid for infrastructure like roads and sewer extensions related to the project. Typically the city pays for infrastructure upgrades related to new developments, so city officials are using what Gourley calls “pay-as-you-go” TIF financing to repay Walmart for the infrastructure. Under the original agreement, the store keeps sales tax proceeds that would go to the city — with the exception of the half-cent park and pool tax — and its property taxes as a way for the city to essentially pay the store back. The city is paying 6 percent interest on the principle.
Gourley said the financing plan allows the city not to have a set debt schedule,” she said. “Whatever the store earns in sales taxes and whatever it is assessed in property values repays the infrastructure debt.
“The good news is we never have a bill come in. We just give them what came in. They don’t get the park sales portion and then we add interest. It’s never a cash flow issue. The TIF will always have cash flow because we just keep paying until we pay it off.”
Last year, however, city officials approached the store requesting to keep $150,000 each year for the next four years — sort of a TIF extension agreement — to help the city with cash flow issues during the recession.
Gourley said according to current estimates, the agreement would extend the TIF for an additional nine months. The TIF would likely still end in 2016, but the extension could cost the city between $480,000 and $550,000 in interest.
But, Gourley said in the meantime the city will garner $600,000 from the deal.
If the extension falls through, Gourley said it will create a monetary gap in the 2012 budget.
“We don’t know how we’ll solve it until the next budget cycle,” she explained. “Revenues may come in better. Maybe we’ll get a housing development. Maybe something we planned for in the budget doesn’t cost as much. Who knows? Every time you do anything with financials, you have to take a snapshot.”
Although the deal didn’t end up culminating in the 2011 budget — when it was originally proposed — Gourley said that hasn’t been a big deal.
Although revenues haven’t been great, Gourley said they’ve come in a little better than anticipated.
“But we still have to get through the end of the year,” she said.
In the meantime, city officials are waiting for some sort of final confirmation from Walmart. Part of the problem, she said, is that there have been staff changes at Walmart.
“The people we were contacting last year are not the same people we’re contacting this year,” Gourley said. “We can’t get someone to say, yes, let’s sign. We can’t get anyone to say that yet, but everybody says it sounds good. It’s a win on both sides — even though we’d prefer to pay it off as quickly as possible.”
Gardner awaiting approval from Walmart for TIF adjustment