MAHASKA COUNTY — Mahaska County’s rural roads, bridges and culverts are in poor shape.
The Mahaska County Board of Supervisors decided on Monday, Nov. 4, to use available tax increment financing (TIF) for road projects.
County acres with windmills have base revenues which are available to taxing bodies including the county, North Mahaska School District and towns.
Jeff Heil, senior vice president of Northland Securities, a financial advisor hired by the supervisors, said the incremental funds are new revenues in excess of the base revenues generated by the windmills and have not been used for any taxing purposes.
Mahaska County Board of Supervisors Chairman Mark Gorenendyk said the tax increment financing would be paid to the revenue services fund or the general fund and the county would be borrowing against itself.
The supervisors elected to use $300,000 the first year; then $700,000 the following year and increasing TIF fund usage each subsequent year.
Groenendyk said currently the windmills’ current taxable value is zero and will start being assessed Jan. 1, 2020 for the next fiscal year at roughly $12,200,000.
“And they will increase that amount for the next six years,” he said. “So the seventh year, the total taxable valuation will be roughly $73,257,600.”
Jeff Heil, senior vice president of Northland Securities, hired by the supervisors, said the tax increment financing will not cause tax increases.
“The only [way] taxes go up is if the supervisors, the school, or the cities ask for more money. That’s the only way taxes go up. Not because of an action of putting it in an urban renewal or not,” he said. “What we’re doing here is taking that pool of money that the wind turbines are going to pay.”
Heil said using the tax increment financing will generate about $30 million over the life of the TIF.
“The board, all they’ve been talking about is using $10-15 million of it,” he said. “Now that’s the plan.”
The supervisors can either fix the roads voluntarily, Groenendyk said, or the court can order the repairs.
“All the supervisors have admitted it’s a terrible road. It’s not going to be a problem with the court to say boy you guys admit it’s a terrible road,” he said. “And the previous supervisors did promise some of this to go to TIF. We don’t have to honor their word because every board has their own decisions to make.”
North Mahaska School District
North Mahaska School District Superintendent Angela Livezey said she had concerns regarding transparency and communication during the process.
Livezey said following a recent meeting with Groenendyk and Economic Director Tom Flaherty, she was under the impression it would be a few years before the windmills underwent tax increment financing. A short time thereafter, she was informed that new information had come to light and the supervisors would TIF the windmills after all.
Livezey asked during the Board of Supervisors meeting whether all the money would be spent in the North Mahaska District.
“The answer was ‘initially,’ but I had to ask three times to even get the ‘initially,’ so that tells me no, it’s not all going to be spent in the district,” she said. “Yet our taxpayers of our district will be the ones to shoulder the load.”
Heil said the schools do not lose any money because of TIF.
“They’re based on a school aid formula by population. So we’re not talking about loss of dollars,” he said. “We’re only talking about the levy that was voted on on a previous bond issue that is going to go up more than what they had shared with the public assuming that all of the value of the TIF has taken place.”
Livezey said in an interview there is potential for the tax rate to increase because of the windmills being tax increment financed.
“We know that when the bond passed at North Mahaska School, that was going to keep the tax rate level,” she said. “Obviously, if it had not passed, it would have dropped the tax rate. But with the bond passing, we are projecting the tax rate to remain level. We do know that the potential is there with the TIF for the tax rate to increase by a few cents.”
During the meeting, Groenendyk said the North Mahaska School District passed a bond and TIF does not affect that one way or the other.
“That money will come off the top of TIF regardless what we do,” he said. “The county has a bond on a radio system. That money’s going to come off the top of this regardless what we do.”
Livezey said the North Mahaska School District knew some roads in Mahaska County need to be fixed.
“And that money has to come from somewhere,” she said. “We’re not saying all the money needs to come from the taxpayers of our district. We want to make sure that both entities can meet the needs of the people of Mahaska County in a way that does not drastically increase their debt and their tax rates.”