TIFs, IRB topics to Boyd | News

CATLETTSBOURG If there’s one word to sum up Tuesday’s Boyd County Tax Court meeting, it’s “TIF.”

In fact, it’s three words — Tax Increment Financing.

The majority of Tuesday’s meeting turned into a briefing on how the TIF District works, in anticipation of a proposed designation to the Camp Landing Entertainment District.

Attorney James E. Parsons, who has spent the past 16 years drafting documents for Commonwealth TIF Districts, presented the basics of district operation in Boyd County.

Along with this presentation, Parsons also entered into the Industrial Tax Bonds (IRB), another proposal for 65 acres of land by Ky. 180 and US 60 for a proposed shopping mall.

Although neither plan – the TIF or the IRB – was explicitly discussed in detail, Boyd County Executive Judge Eric Chaney said he wanted Parsons, who was retained by the county for the work of TIF, explains each concept so that the public can have a better understanding as things evolve.

Chaney said Tuesday’s meeting was originally supposed to be a public hearing on the creation of a TIF at Camp Landing, but the notice was not published in the newspaper in time for it to be. a lawful public hearing.

This public hearing will take place at a later date, he added.


According to Parsons, a local TIF — one without state money (like the one in downtown Ashland) — is a fairly straightforward affair.

Any city or county can create the TIF district by designating the area and establishing a baseline of “old income” – which is calculated on the basis of income received in the previous calendar year before the entry into force of the TIF.

Once the baseline is established, any income over that old income figure becomes eligible for reimbursement from capital economic development projects – public and private – up to 100% (although, Parsons notes, this has hardly been do).

Eligible taxes that could be pledged in the TIF are local property tax, business tax or payroll tax, Parsons said. School and fire districts are prohibited, but other entities — such as a library district — may choose to participate, Parsons noted.

So suppose a real estate developer works in a designated TIF area with a “former income” of $10,000 in the calendar year prior to the implementation of the TIF. According to Parsons, the county would still collect that $10,000.

However, if the development tax revenue was $20,000, then the $10,000 of old revenue would be subtracted. For the sake of argument, if the FIT refund is 80%, that means the developer would receive $8,000.

($20,000 (total income) – $10,000 (old income) = $10,000 (additional income) x 0.80 (TIF refund rate) = $8,000.)

According to Parsons, this money would be placed in a special account and given to the developer — who must provide documentation of activities in terms of capital improvements and economic development — to be reimbursed for their investment.

There are two types of TIF: the local development zone and the development zone. The difference is that local areas basically deal with undeveloped land and development areas generally relate to established degraded areas that are already developed. The local development zone is not eligible for public funds, while the development zone is.

Parsons said the Camp Landing TIF would not be eligible for state funds, but he did not specify which category it would fall into.

FITs can also be tied to a bond, where the extra revenue is used to pay off a bond that supports specific projects needed for development, such as water, sewer, parking, and other infrastructure needs.

Chaney said the TIF district under discussion would not be bound by any obligations.

During the presentation, Parsons took questions from Commissioner Larry Brown and a few people in the audience. One question that came up was the failure rates of TIF districts and whether the county would be responsible for anything.

Parsons said that in his entire time working in TIF, he had never seen a project fail.

Parsons said since the way the county is pursuing this TIF — without tying it to an obligation — there is no financial risk but could lead to embarrassment if the project were to fail. He said developers under these types of TIFs have a lot of incentive to continue growth and capital project work because the more revenue they generate, the more they will be reimbursed, up to a certain cap.

Chaney said the TIF district would in no way lead to increased taxes – Parsons backed him up, saying TIF funds are only based on income received, not the tax rate.


Industrial revenue bonds are another risk-free option for local governments, according to Parsons. According to Parsons, it works quite simply – the county functions as an intermediary between the developer and a bond.

Basically what happens is that while the IRB is in effect, the developer hands over title to the land to the county and pays the bond. In exchange, the county exempts the developer from paying property taxes, opting instead for a “payment in lieu of taxes agreement” (PILOT agreement). That money, which is at a lower rate than property tax, still goes to local tax districts, according to Parsons.

Now, if the developer folds, Parsons said the county isn’t liable for the bond. Depending on how the county sets it up initially, the developer will either have the option of selling the property with the IRB attached to it with or without county approval, Parsons said.

One benefit that Parsons pointed out for a PILOT tax is that when local revenue increases in a local school district, public funds are generally reduced. However, if the school receives funds from a PILOT tax, those revenues do not count towards its state funding, he said.

Once the bond is repaid, title is returned to the property developer, or once the bond expires — whichever comes first, Parsons said.

Following the presentation, local resident Lori Bowling raised a more practical concern: how would a mall affect flooding in the area?

“You talk about transparency, but you have to consider long and hard how this will affect the residents of North Big Run,” she said. “We had a beaver dam that caused flooding there last year; don’t you think a commercial development will do the same thing? »

Chaney said nothing is set in stone yet and developers will look to build in this area. He said it was “very easy to work with the developers” and many flooding issues could be resolved during development.

“There are going to be retention ponds and I’m sure we can clean up that river or that creek or whatever,” he said. “That could be a positive development.”

Chaney also noted that the county has no zoning, so whether or not the IRB passes, developers could still go ahead.

“We can’t control what they do with their land,” he said.

Bowling asked the tax court to talk to people up and down Big Run to get a sense of their receptivity to the project.

Ashland City Engineer Steve Cole, who was attending the meeting as a private citizen, asked for more information on the TIF and IRB projects.

Parsons said the Camp Landing project had an investment forecast of $85 million, while the proposed mall would have up to $56 million in investment. Parsons said the information is available in a report.

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