Two businesses under construction in the northern part of Hillsboro will bring revenue back into the area for infrastructure improvements through Tax Increment Financing, an economic development tool available from the State of Ohio, according to Hillsboro Safety and Service Director Mel McKenzie.
McKenzie told Hillsboro City Council on Tuesday that he is organizing TIF designation for the two properties currently being developed for construction on Pea Ridge Road and Harry Sauner Road.
“With the passage of these TIFs, it will be a good source of income for the city over the next 10 years,” he said during the meeting.
The property at the corner of Pea Ridge and North West Street (SR 73) will be the site of a new dental office, while crews are currently constructing an Orscheln Farm and Home store on the Harry Sauner property between Lowe’s and Walmart, according to McKenzie.
“We are really in the infancy of planning for the TIFs,” McKenzie told The Times-Gazette on Thursday, saying council will be presented with legislation on the matter.
According to the Ohio Development Services Agency, Tax Increment Financing is an economic development mechanism available to Ohio governments to finance public infrastructure improvements through funding derived from the increased assessed value of properties that have undergone various improvements.
In other words, according to Hillsboro Mayor Drew Hastings, TIF designation works much the same way as the Downtown Redevelopment Districts he is asking council to approve, in that a portion of property tax revenue is redirected into a separate fund if the property value is increased by improvements or rehab.
In turn, that revenue is directed back into the area through a variety of different avenues.
Similarly, revenue from TIF-designated properties is required by law to be used for infrastructure improvements in the area directly affected by the TIF designation.
“It’s required that the moneys raised be used in the proximity of the development, actually much like a Downtown Redevelopment District,” Hastings said. “It has to be used in the given area.”
According to McKenzie, with the construction and improvements, the dental office property is projected to generate roughly $83,000 in property taxes over the next 10 years, while the Orscheln property is set to generate about $260,000 over the the next decade.
McKenzie said as with most TIF designations, 75 percent of those amounts, totalling $62,250 for the dental office and $195,000 for the Orscheln property, will be used for public infrastructure improvements in the area.
The other 25 percent, as well as the property tax revenue based on the value of the undeveloped land, will be dispersed between the county, township, city and school district as normal, McKenzie said.
According to McKenzie, the public improvements to be made in the two areas have yet to be decided, but could include roadwork, water and sewer line replacement, storm water collection and new sidewalks.
“TIFs are a great program set up by the State of Ohio to fund projects without having to tax the public,” McKenzie said.
Hastings said he was pleased with McKenzie’s work.
“I’m really glad that he caught those properties in time prior to the development being finished, because it captures a lot of property tax revenue that the city is then able to use on improvements,” he said.
A representative of Orscheln Farm and Home did not return a call for comment Thursday morning. The owner of the dental office property could not be reached.
Reach David Wright at 937-402-2570, or on Twitter @DavidWrighter.