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City-County Leaders Discuss Possible TIF Project
By West Kentucky Star Staff
PADUCAH - The Paducah City Commission and McCracken County Fiscal Court held a joint called meeting Tuesday night that included a public hearing on a proposed Tax Increment Financing (TIF) Development Plan for downtown and the riverfront area. 

The meeting in Paducah's City Hall included a presentation from Casey Bolton of Commonwealth Economics Group, who gave a general overview of TIF projects, then spoke specifically about the potential TIF in Paducah. After he answered questions from city and county leaders, the public hearing allowed any citizens to ask additional questions or make comments. 

A local government can create a development area, and once it's approved by the state, any increase in future taxes in the developed area (the increment) is re-invested for future improvement projects in the area. 

An impact analysis by Commonwealth Economics looked at a potential TIF project that would include approximately 315 acres of downtown Paducah and the riverfront (see map photo). A portion of the Impact Analysis states, “The City of Paducah will be working with various developers to complete the project in Paducah through a mixture of public and private investment. The aim is to redevelop and connect vacant properties in the downtown area to Paducah’s riverfront, while also developing the necessary public infrastructure and new supportive uses on a handful of adjacent lots that are build ready. This will attract and support a greater level of density and vertical development throughout the City which will spur additional event and business activity.”

A TIF district does not change the way property or businesses are taxed or how taxes are collected. First, the baseline tax revenue - the amount of taxes currently collected - is calculated on the applicable properties in the district when the TIF is created. Once public and private projects are implemented, the generated tax revenue that exceeds the baseline is reinvested in the district for infrastructure improvements like utilities, parks, roadways, or parking, just to name a few.

Bolton told city and county leaders, "it's just a matter of tracking where taxes were in that area previously, where they are after the project, and using that lift to finance the project."

The taxes that can be used for reinvestment include state sales tax, property tax, individual income tax, and corporate tax in addition to local property and payroll taxes. 

During the question and answer period, Judge Executive Craig Clymer emphasized, “This is not an increase in tax rates. There is no part of this that’s a tax increase. Plus, we get to keep X-amount of revenue that would be going to the State.”  

City Commissioner Sandra Wilson said, “This is really to promote development. That’s the bottom line, to promote private development.”  

City Commissioner Gerald Watkins added, “It’s an opportunity to have development in this area and to create jobs.”

The city and county are looking at a mixed-use TIF district, which must meet at least three of seven qualifying conditions in state law. A project in downtown Paducah could qualify based on the following three characteristics: 1) a substantial loss of commercial activity has occurred; 2) public improvements and public infrastructure are inadequate; and 3) there is a combination of factors that substantially impairs growth and economic development of the area. Also for a mixed-use TIF, there must be capital investment between $20 and $200 million.  

Based on the anticipated projects for a TIF in downtown Paducah, Commonwealth Economics calculated that the total project would cost $156 million with $99 million of that amount from private development. Anticipated projects could include riverfront enhancements, conversion of the former Showroom Lounge into event space, new restaurants and retail, residential housing, additional hotel rooms, redeveloped manufacturing space, art house/theater, parking, and various other infrastructure improvements. Commonwealth Economics estimates that the additional tax revenue that could be collected over a 20-year period if these projects come to fruition (the increment) could total nearly $94 million. 

City Manager Jim Arndt added that he's had a lot of experience with TIFs, since there were four of them in Effingham, Illinois, where he last worked, and they do, "a bang up job help racking up development."

Arndt said, "When you talk to developers, they do inquire, 'do you have a TIF?' That's part of their equation, they're looking at what public infrastructure is going to be necessary for their project. When we require them to do those development projects, basically, it offsets some of their development costs, which in turn, once they make that investment into your community, generates the increment. It's a really good program, it's a marketing tool, it's a positive thing for the community. I'm very excited about it."

Both government bodies discussed entertaining resolutions in support of developing a TIF District in downtown Paducah at their upcoming meetings. Looking ahead, the next steps would include the approval of an interlocal cooperation agreement between the two governments, the approval of a TIF ordinance, and an application to the Kentucky Cabinet for Economic Development.  


To watch the entire meeting, including the public hearing, click play below (courtesy of the city of Paducah):


Published 08:07 PM, Tuesday Feb. 19, 2019
Updated 09:00 AM, Wednesday Feb. 20, 2019

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