Dorchester looks at closing TIF districts
With two large TIF districts on the verge of closing, the village of Dorchester can expect a sizable infusion of cash into its general fund just as it prepares to complete some street and utility projects next year.
That was the message from consultant Brian Reilly of Ehlers, Inc., a firm hired by the village board last week to provide financial advice on a variety of decisions facing the village.
“You’re really at a pivotal point of decision-making that will have some legacy impacts going forward,” Reilly told the board.
The village’s two TIF districts are nearing the end of their life cycles, he said, with the board having the option to close them next year. If that were to happen, Reilly said the property tax levy would see a one-time increase of 24 percent, or about $58,000, in 2023. By comparison, the levy is only set to go up by $388 in 2022, which is the amount allowable due to new construction.
Tax incremental financing (TIF) works by capturing all of the property value created by new construction in a designated area. Instead of distributing those property taxes to the local school district, county and village, the money is kept in a special fund to pay for infrastructure projects in that area.
Over the past 20-plus years, Dorchester’s two TIF districts have amassed over $17 million in new property value, so when those districts are closed, all of that value will be added to the normal tax base.
“You’re going to levy more dollars against a larger tax base,” Reilly told trustees. “So, you’re going to collect more revenue, but the tax rate is actually going to go down.”
As a result, if the village were to do nothing but close the TIF districts next year, most taxpayers would see a break in the amount of money owed to the village.
However, the village is also looking at having to borrow some money next year in order to complete projects on North and South Third Street and on North Front Street. Besides these street projects, the village is planning to upgrade a lift station and its sewer treatment plant.
The board approved a bidding schedule prepared by Cooper Engineering that calls for going out for bids over the next month and opening them on Dec. 16, with contracts being awarded as early as the board’s Jan. 5, 2022, meeting.
All together, Reilly said the village is planning to do about $3 million worth of work next year, and about $1.7 million of that will be considered general fund expenses. The remainder will be paid for by the water and sewer utilities.
The village has qualified for a $1 million Community Development Block Grant (CDBG) to help pay for the projects, but Reilly said the village’s general fund will still have to borrow $660,000 to pay for the street projects. A loan from the state trust fund would create an annual loan payment of $50,000 for the next 20 years, he said.
This would be considered general obligation debt, which is backed up by the village’s ability to collect taxes from residents. Reilly said the village has no existing general obligation debt, so it can borrow as much as $2.7 million.
With extra cash coming in from the closed TIF districts, Reilly said borrowing the $660,000 would add 95 cents per thousand dollars of property value onto the village’s mill rate, or an extra $95 per year for the owner of a $100,000 home. Without the TIF closures, he said the impact would be $1.39 per thousand, or $139 on a $100,000 home.
The water and sewer utilities will also need to take on additional debt in order to replace underground utility lines and upgrade the village’s sewer facilities.
Reilly said the water utility has enough revenue coming in to pay off additional debt, but the sewer utility does not.
“The sewer utility is operating at a deficit and needs to be addressed in some fashion,” he said.
The village board raised sewer rates in February, but that has not generated enough revenue to produce enough cash flow for the utility. Board members discussed the possibility of further rate increases at last month’s meeting.
Reilly said the village needs to do some careful financial planning as it takes on additional debt while reaping the benefits of its two long-standing TIF districts.
“This is not going to happen again for a very long time,” he said. “These districts have run well over 20 years — approaching 30 years in one circumstance — so this is more of a generational moment.”
2022 budgets reviewed
Trustees reviewed 2022 budgets for the general fund and water and sewer utilities.
The general fund includes about $1.2 million in revenue, including a property tax levy of $235,581 — an increase of just $388 over this year’s tax collections. Other major revenue sources include $215,294 in state shared revenue and $77,057 in transportation aid.
On the other side of the ledger, the village plans on spending just over $1.1 million, leaving a roughly 7 percent contingency of about $79,000.
Next year’s budget does not include any money for wages, benefits, insurance or many of the other costs associated running a police department. Instead, the village plans on spending close to $79,000 to have the Clark County Sheriff’s Department provide a deputy.
The police budget also includes about $17,000 for the initial costs of equipping the deputy and another $12,000 to help with the purchase of a new squad vehicle (the village plans on taking in another $14,000 by selling its existing squad).
The water and sewer budgets show the utilities with enough money to cover operating expenses and debt payments, but trustees said a rate increase is needed for the sewer utility.
_ DPW Clint Penney told the board that most of the village’s buildings
have been re-keyed, including those at Memorial Hall.
_ The board voted to obtain additional FDIC coverage at Nicolet National Bank, where it currently holds over $1 million in money. The extra coverage comes at no additional cost to the village.
_ The board approved a motion to advertise for bids for an empty shed left behind on village-owned property at 127 S. Front St. Whoever submits the winning bid would have until April to remove the structure.
_ Trustee Daniella Schauer told the board that the village’s building inspector, Bob Christensen, is preparing to place a placard on the house at 128 S. Second St., making it clear that it’s uninhabitable. Schauer said the owner, Terry Recore, is illegally renting out the house even though it does not have running water. She said Recore has ignored two letters asking for proof of a water hook-up.
Before a placard can go up, Schauer said the village needs to help the current renter find living quarters elsewhere and to have the locks changed.
“The first step is getting in there for an inspection,” she said.
_ The board accepted a $7,460 quote from Country Wide Painting to repaint the entirety of Memorial Hall, including the upstairs hall and the downstairs bar.
_ The board established the village’s snowmobile 2021-2022 route, with no changes since last year.
_ The board approved a wiring project at the Dorchester Days facilities, with all of the costs being handled by the event planning committee.
_ The board authorized the clerk to spend up to $1,500 on a fireproof safe for storing important documents at the clerk’s office.
_ The board authorized the DPW to set wages for part-time workers who may need to be hired for snow removal.
_ After meeting in closed session, the board authorized the following hourly raises: public works supervisor Clint Penney, from $25.25 to $27.25; public works employee Randy Geiger, from $23 to $25; water/sewer manager Rick Golz, from $25.25 to $27.25; clerk-treasurer Susan Ballerstein, from $19 to $20.50; deputy clerk-treasurer Christie Erikson, from $19 to $20.50.
