County proposes TIF compromise with city

By a 2-1 vote, the Marion County Board of Commissioners voted Monday to move forward with a compromise proposal regarding the future of the tax increment district in Hillsboro.

Commissioner Randy Dallke made the motion to allow the city of Hillsboro to correct an error in the plat filed with the county in 2008 that incorrectly described the area included for the TIF district.

Dallke?s motion also would allow the city of Hillsboro to recoup all but a small part of the increase in property taxes resulting from the area of the property already developed, which includes the new facility constructed by Midway Motors.

The tax money would be used to recoup the $400,000 the city invested to develop the property and add streets and utilities.

At the same time, Dallke?s recommendation would limit the application of the TIF strategy to the property already developed.

The city of Hillsboro would be required to come to the commissioners for permission to develop any additional areas of the property within the designated area, and could not use a TIF strategy to finance the work.

Commission chairman Roger Fleming seconded the motion and joined Dallke in voting for it. Commissioner Dan Holub voted against it, citing Hillsboro?s lack of cooperation on past county projects, such as a ballot initiative to build a new jail and a county-wide neighborhood revitalization program.

Prior to Dallke?s motion, Holub had made a motion that would have had Hillsboro start the TIF district process from the beginning.

Holub said the negative financial ramifications of a TIF district such as the one Hillsboro developed would ?grow almost exponentially? for other taxing entities, including the county and the local school district.

Holub?s motion died for a lack of a second.

J.T. Klaus, bond counsel for the city of Hillsboro, supported Dallke?s motion and felt the Hillsboro City Council would support it, too.

Hillsboro mayor Delores Dalke, city administrator Larry Paine and economic development executive director Clint Seibel attended the meeting but did not participate in the discussion.

The only exception was when Holub asked Paine if the city intended to use TIF funding to demolish any portion of the former AMPI property, which was included in the original TIF district.

Paine said the city has no plans at present to demolish any part of the building.

Jan. 18 discussion

The discussion at Monday?s meeting retraced many of the arguments presented during a two-hour discussion at the commission?s Jan. 18 meeting.

At the end of that discussion, the commissioners agreed to wait until their Jan. 24 meeting to take action.

J.T. Klaus, bond counsel for the city of Hillsboro, offered a solution at the precious meeting to fix the technical error in the legal notice published in December.

?I do think if you let us correct the legal and let us agree not to do anymore projects,? Klaus said, ?it will have accomplished (the objective).?

Klaus said Hillsboro?s council would agree to that, adding the commissioners wouldn?t be saying they approved anything.

?In fact,? Klaus said, ?we would be under worse conditions than other cities not bound by that agreement.?

Holub initially made a motion to go with resubmission, or in other words, begin the process all over again, because the mistake was a ?significant change? based on statutes.

?I am not necessarily against this,? Holub said, ?but there are questions we need answered.?

Dallke said he was undecided on which way to go and asked Holub to consider withdrawing his motion.

In contrast, Fleming said he wanted to see something decided that day.

?I think our answers won?t be different (by waiting) and I would like to see us proceed forward with what is already developed and anything further, than that can come to us,? Fleming said.

?Fatal error?

Klaus, along with Andrew N. Kovar, his associate, wanted to clear any misunderstandings associated with the Hillsboro Business Park and redevelopment of adjacent properties within the TIF district.

He said the Hillsboro Business Park TIF district also included a segment of unplatted property, the AMPI building.

?I made a fatal error,? Klaus said, ?Thirty days passed and another 30 days, and the city adopted the ordinance with map on it too, but more as a reference, not an indication of what the boundaries are.?

Thea technical mistake was to off the first line, which read, ?The Hillsboro Business Park, Hillsboro, Marion County Kansas, and….?

Technically, only the AMPI?property was included in the legal description filed with the county.

?I could argue the ordinance is ambiguous because the map is still attached and is still called Hillsboro Business Park TIF District. and everybody knew it was intended to include Hillsboro Business Park TIF District, but the error is there,? he said.

Klaus said his firm researched this and talked to the attorney general?s office, trying to make the city whole on this.

?I will be frank, the city has already spent the $400,000,? he said. ?The pond exists, drainage is there and the street is built in reliance upon the ability to finance with the TIF.?

Klaus said the city did everything it thought it was supposed to do, adopting a resolution, indicating intent to form a TIF, which included AMPI and Hillsboro Business Park, but an error was made in the description.

Commissioners felt misled

Dallke said if Klaus would have been at a commission meeting in 2008, the commissioners might have voted differently.

?We appreciate you being here today,? he said, adding that the approach in 2008 was not a fair way to present the information.

?Some of the information in 2008 by certain people is now what we know today,? Dallke said.

Klaus said he apologized for that.

?While we didn?t invite ourselves, there was nothing on my part to intentionally prevent my being here,? he said. ?Meetings are my favorite thing.?

Dallke said he blames himself, too, for not finding out more than he was told in 2008, when the TIF district was created.

Holub agreed with Dallke, adding that each commissioner was approached as individuals by City Administrator Larry Paine and Hillsboro Economic Development Director Clint Seibel.

?I voiced objections (then),? Holub said, ?asking what happens to the money from the sale of land??

?We made a mistake too, by not following through on this,? he added.

County vs. city

?I am worried about actual costs, which I consider significant,? Holub said. ?We are asking someone from Burns and Tampa to help Hillsboro and I don?t see any end in it.?

Holub was referring to the nine possible projects that could be built on in the district and how each could extend the TIF.

?You cannot reassure me that agreement outside the statute (will hold up in court),? he said to Klaus.

Klaus told commissioners that as long as he is the bond counsel, he will not forget this day.

Dallke also said his job as a commissioner is to watch tax dollars.

?I have to answer to my district on the south end of the county and I voted to give taxes away (with TIF district),? he said.

Dallke was also disappointed at the Hillsboro City Council meeting during the discussion of the Midway Motors project.

?When I heard about this, I thought we would have so many days to object and take care of that. The city council let me express my viewpoints, but the school board was already in there and they were told it was too late to object. I didn?t like that.?

As the commissioners, Dallke also wanted to make sure Klaus and others understood that they are put in their position as commissioners for both large or little cities.

?It means everybody in their district, and this is tax dollars that all of them will be using,? he said.

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