TIF Projects Make Big Impact on Phelps County
Tuesday, May 01, 2018
Past construction projects involving tax increment financing in Holdrege have helped increase the city’s taxable valuation by $21 million.
“TIF is a powerful tool that helps make the pie bigger for everyone,” said Ron Tillery, executive director of the Phelps County Development Corporation.
According to statistics from the Phelps County Assessor and Treasurer’s offices, 21 projects have been approved for TIF in the county since the tool became available in 1995.
Some of those projects have included the redevelopment of the former Tower Motel area that now features Orscheln’s and the corporate headquarters for AgWest. Other projects include a Wagner’s Irrigation expansion, Janssen Ford, VA Clinic and Super 8 Motel (now Rodeway Inn).
Tillery said that TIF is used as a financial tool to help developers fund projects during the critical first few years of a project. It does not take existing taxes away but instead allows a portion of new taxes to be returned to the developer or owner to pay for loans on qualified TIF expenses, such as sewer and water lines and paving parking lots, curbs and gutters. Another portion of the new tax revenue is still paid as taxes benefitting local schools, cities and counties. Local governing bodies work with developers to determine the percentage of taxes returned to fund the project and the length of time the funds are needed, up to 15 years.
In Phelps County, the 21 TIF projects have a total current valuation of $22.8 million compared to an original valuation of $1.8 million.
Eight of the 21 approved TIF projects have already been completed and are 100 percent on the tax rolls. The tax valuation of those eight properties prior to construction was $595,805. The current valuation is nearly $6 million, which generates an additional $97,088 in new property taxes annually.
The base valuation of the 13 ongoing projects was $1.2 million. The new taxable value of the active projects currently stands at $16.8 million.
These numbers do not include Phelps County projects, such as the new Cargill facility between Holdrege and Atlanta that has added $10 million to the tax rolls.
While those funds won’t be on the tax rolls for several years, financial benefits to the construction, insurance and banking sectors begin immediately. During the second phase of the project, benefits also include more jobs or increased salaries.
The Phelps County Development Corporation is working with a group of local and regional investors who want to build a new Cobblestone Hotel on the site of the former Washington School, which is owned by PCDC. The investors have requested TIF for the project to address significant challenges associated with the site, which adds more cost and risk to the project. TIF is specifically intended to address these kinds of obstacles to new projects. Without TIF, this project presents too much risk and it will not occur.
A recent hotel study conducted by Core Distinction Group indicated that a new 45-room hotel was needed in Holdrege. The hotel would face Highway 183 and would be built on ground that is already zoned neighborhood commercial so no zoning changes would be needed. Other types of projects that could be built on the property based on its current zoning status are banks, clubs, lodges, convenience stores, jewelry stores, medical and dental offices, funeral homes, parking lots, professional offices, retail stores or businesses, art/music/dance studios, radio or television stations or wholesales offices or showrooms.
Cobblestone Hotels have recently been built in several other Nebraska small towns, including Broken Bow, McCook and Cambridge. The hotels are one of the fastest-growing hotel chains in the Midwest and boast the motto: “Big City Quality … Small Town Values.”
Based on the initial hotel study, a new hotel could generate close to $900,000 annually in hotel room fees.