TIF A New Form Of Tax Abatement

TIF Agreement Synopsis

In 2012 The city, and Wilmington schools agreed to a Tax Increment Financing (TIF) arrangement with ATSG, the parent company of Airborne Express. The deal will divert property taxes that ATSG would normally pay to the Clinton County treasurer for a new joint use maintenance and paint (JUMP) hangar being built at the Wilmington Air Park. Those tax revenues would, under normal circumstances, be distributed to the various local entities such as the school district, city and county.

The state of Ohio has arranged for a $4 million loan to help finance the construction of the hangar and the diverted tax dollars will be used by the city to pay off that loan over the 20 years starting in 2016.

The hope is that the new 259 good paying promised by ATSG as a result of the hangar construction will increase tax revenue by other means, both direct and indirect.

All JUMP hangar Property tax payments shall be placed in a city controlled state loan repayment fund, called the service payment fund.

Starting in tax year 2014, collected in 2015, the city will start collecting service payments from JUMP hangar property taxes.

Payments from the service fund for the $4 million, plus 1% interest, loan repayment, shall commence on 5/15/16 with the first payment of $88,145 and a second payment of $88,586 on 11/1516. Twice per year payments of increasing amounts will continue until the final payment of $107,000 is made on 05/15/36.

VALUATION OF PROPERTY

Assuming that the original value of the hangar will approximate the $15.5 million cost of construction, the resultant tax payment would be:

15,500,000 X .35 = 5,425,000 taxable value X .048 tax rate = $260,671 per year for the service fund.

Under this valuation scenario, where the first year loan payment of $176,731 is $83,900 less than service fund revenue the Wilmington school district can receive their annual compensation payment.

ANNUAL SCHOOL COMPENSATION PAYMENTS

The city shall make semi annual payments to the Wilmington school district from the service payment fund, if enough funds are available.

The payments will calculated at 25% of the amount the district would have received if the TIF agreement had not existed.

Using the above valuation, the amount of the annual payment would be:

$5,425,000 X .0263 (school millage) = $141,000 X .25 (agreement allowed) = $35,263. Using the same formulation Laurel Oaks JVS would receive $3,369.

Note: Any new school levies would effect the annual payments to the schools.

INCOME TAX

IF the service fund lacks sufficient money to fully compensate the schools in any given year the city shall provide make up payments via new income tax sharing

If no make up payments are required: From calendar year 2012 and thereafter the City will make annual income tax payments to the school district equal to one-third of any new city income tax revenues derived from new JUMP hangar employees including construction employees.

Paul Hunter (contact or comment paulhunter45177@gmail.com)