.

.

Walmart has been reimbursed for about 93 percent of eligible project costs since the big box retailer was built in 2007 near 175th Street and Interstate 35.
This is ahead of the maximum 20-year payback period originally associated with the project. “We are absolutely on schedule; it’s (pay-off) going to be early 2016,” said Laura Gurley,finance director.
Once the TIF is paid off, Gardner will keep the sales tax, but will actually see a decrease in property tax money. Under the TIF, Gardner receives all property tax, but once the TIF is paid, that money will go to the county, USD 231 and other taxing entities.
Sales tax payments are made to Walmart quarterly, and about $660,000 has been remitted thru September 2015, Gurley said. The amount does not include the ½ cent sales tax that was dedicated to parks.
“Part of sales tax is the extra ½ cent that is still going to parks; no one gets to keep that,” said Gurley. “By law when you pass a special purpose sales tax, you can never do anything else with that tax except the purpose for which you passed it.
“Thank God for Walmart as far as sales tax for the parks department.”
When someone makes a purchase at the Gardner Walmart, the store remits sales taxes on the item to the state. The state returns a portion of that sales tax to the city of Gardner, and the city returns that sales tax to Walmart, due to the tax increment financing (TIF) used to build the Walmart development in Gardner.
When paid, the previously captured funds will become part of the “pool of resources” available in the General Fund that may be used to pay for the Council’s identified priorities during the next budget process, Gurley said. Although the council is aware that the TIF is projected to pay off in 2016, the city hasn’t begun the 2017 budget process yet, so there hasn’t been any discussion.
The Walmart TIF project included:
-removal of Conestoga’s sewer treatment ponds
-intersection improvements including 56 Hwy, Cedar Niles, and 175thStreet
Sales tax from Burger King, or any other businesses built on the Walmart pad site, are also included in the sales tax recaptured under the Walmart TIF.
A TIF project is generally defined as a public financing method that is used for subsidizing redevelopment, infrastructure, and other community-improvement projects on areas considered “blighted.”
The Walmart location was considered blighted because of old sewage lagoons located there. When an increase in site value and private investment create an increase in tax revenues,that is a tax increment.
A TIF dedicates tax increments within a certain area to finance the debt to pay for the project. A TIF can be used to channel money in distressed, underdeveloped, or underutilized areas where development might not occur otherwise.
The city no longer has a specific TIF or abatement policy.
In April 2015, Gardner council approved an economic incentive package that allows for each potential project to be reviewed individually to determine merit.
The Economic Development Incentive Policy is the “guidebook” that lays out the “curbs or guardrails.”
“The purpose of the “curbs” is to provide the governing body maximum flexibility within those curbs to evaluate each potential project requesting incentives on its own merits,” Gurley said. The more merits a potential project has, the more incentive the the council may wish to consider.
“But within that policy they have laid out their predetermined curbs so that developers already know up front what the governing body’s “base” thoughts are,” Gurley said.
A TIF project, such as Walmart, deals primarily with infrastructure, and job or residency requirements are typically included as requirements for tax abatements, not a TIF.
In a TIF, the businesses/development within the TIF actually pay every penny of their taxes but those taxes are captured and used to repay the costs of the development, Gurley said.
In a tax abatement situation, the business/development pays a Payment in Lieu of Taxes (because their “taxes” were abated…so the amount they pay is considered “in lieu of”), and there may be “performance requirements” (i.e. jobs, payroll requirements, etc) that if they are not met, the abatement may actually be reduced causing the business/development to pay more for their “payment in lieu of” taxes because of their failure to meet/comply with the reasons for which they were granted a tax abatement,” Gurley said. In other words, if the businesses don’t perform as promised, Gardner could reduce their benefit (abatement).
If there are any requirements for the tax abatement, the city requests whatever information is needed to audit the performance and prepares an annual correspondence to the county (who performs the tax billing) stating whether or not the business/developer complied with the requirements and if so, the business/developer will continue to receive the agreed upon abatement for the tax year.