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TIF district decertification funds captured by city

Craig Clark poses in the council chambers of City Hall in Worthington. When Clark isn't at work, he finds time for fun at home with his wife and three young children. (BRIAN KORTHALS/DAILY GLOBE)

WORTHINGTON -- A determining factor in setting the city of Worthington's precertification levy Friday was the necessary decertification of a tax increment financing (TIF) district.

Members of the Worthington City Council agreed to transfer the increments collected from TIF District 7 to the city's general fund during a Friday morning meeting. Tax increment financing is a method for the city to finance improvements based off of added value from real estate in a designated area.

The city's TIF District 7, which encompasses the area surrounded by Minnesota 60, Interstate 90, Oxford Street and Diagonal Road to the west of the city, became effective in 1986. In line with Minnesota statute that allows 25 years for increments to be collected, the district needs to be decertified by the end of this year.

In making the decision to transfer the TIF District 7 money to the general find, council members considered a $530,000 loss in local government aid and market value credit slated for the 2012 fiscal year. City Administrator Craig Clark explained that by moving the TIF revenues into the general fund, they will function in the same manner as revenues collected from all other city properties.

"The increased revenue that was paying for infrastructure improvements (in District 7) will (now) essentially be paying for the array of city services," he said.

Putting the TIF District 7 money into the general fund will result in a 7.6 percent increase in the 2012 levy, with no impact on current property. The city's levy represents the total amount needed from general taxpayers to fund services.

"What the levy is doesn't, per se, transfer to what you'd pay as an individual or business owner in taxes," Clark said. "A 7.6 increase in the levy doesn't mean that you're going to pay 7.6 percent more on your tax bill."

A percentage point levy increase is equivalent to $27,500. With $210,000 moving out of the TIF District 7 fund into general fund, it translates into the 7.6 percent levy increase.