By DOTTY NIST
The need for crosswalk and roadway improvements, drainage upgrades, and bridge replacements has been identified in south Walton County. According to a consultant’s report, approximately $700,000 a year for such work would be possible through the use of Tax Increment Financing (TIF) in that area. It was also reported that a similar financing district along the U.S. 331 corridor in unincorporated Walton County would produce $4,275 annually for water and wastewater infrastructure needs associated with that corridor.
This information was part of a presentation by Camille Tharpe of Government Services Group at an Oct. 28 Walton County Board of County Commissioners (BCC) special meeting at the South Walton Annex.
Tax Increment Financing is a tool that local governments in Florida can use to capture a portion of incremental increase in ad valorem tax revenues resulting from rising property values. Moneys obtained through such financing are required to be used within the areas from which they are generated.
For purposes of GSG’s study, $11.3 million worth of projects had been identified for south Walton County and $29 million worth for the U.S. 331 corridor. The study was divided into two parts devoted to each of the two areas.
Methodology for Tax Increment Financing requires the creation of TIF districts by the local government. If this strategy is pursued, Walton County would use its Home Rule powers to set up Tax Increment Financing, according to the presentation.
Each year, a base year tax, previously calculated by assessed value of properties within a district minus all appropriate exemptions multiplied by the related millage rate, would be deducted from the amount computed by multiplying the county’s millage rate for the fiscal year in question by the current aggregate taxable value for the district. The difference would be the tax increment.
The south Walton study, also referred to as the CR-30A Project, included 40,788 properties, some abutting CR-30A, some south of U.S. 98 and some north of U.S. 98. The U.S. 331 study looked at 1,227 properties from DeFuniak Springs to Freeport within the unincorporated area.
All types of properties, residential, commercial, industrial, institutional, vacant, and government owned, were included.
The study analyzed historic changes in property values from 2005 to the current year. A conservative 2-percent annual rise in prices for properties was predicted based on GSG’s analysis.
The suggestion of the studies was that Walton County therefore use a 2-percent annual increase as the basis for its funding options.
Projects paid for through TIFs may be funded in a “pay-as-you-go” manner as funds become available. This method would generally be used for smaller projects. Another option is to fund projects through bond issuance, with construction costs financed by the local government over a 30-year period and with TIF revenue used for debt service.
For the CR-30A Project, GSG calculated a debt service amount of slightly less than $1.1 million per year to fund the projects with the bond issuance option, based on a 30-year period and a 5-percent interest rate.
Data analysis from the study showed that annual revenue from the TIF for the CR-30A Project would yield almost $700,000 per year. However, that amount would fall short of the amount required for debt service by almost $400,000 per year.
“Therefore, the tax increment revenue alone cannot support the Bond Issuance funding option for the CR-30A Project,” GSG reported.
With funding by the pay-as-you-go options, the study calculated that it would take 16 years to complete the $11.3 million list of projects.
For the U.S. 331 Corridor study, also based on a 30-year period and 5-percent interest rate, GSG calculated that over $2.5 million would be required annually for debt service to fund the projects if the bond option were utilized. They also determined that just $4,275 per year would be produced in tax increment revenue for that district.
“Therefore, the tax increment revenue cannot support the Bond Issuance funding option for the U.S. 331 Improvement,” the study advised.
“For the ‘Pay-As-You-Go’ Funding option, not enough revenue would be generated on an annual basis to fund the U.S. 331 Improvements on a ‘Pay-As-You-Go’ alternative,” GSG also concluded.
With both studies, GSG provided information on alternative sources of funding for the projects.
For the U.S. 331 improvements, the use of a special assessment for properties in the unincorporated portion of the tax increment area was recommended as the best option, with those funds used to pay debt service for a bond issuance to make the projects possible.
To supplement funding for the CR-30A improvements, GSG identified the options of special assessments, fees, and, for the drainage upgrades, specifically the creation of a user charge, either on utility bills or as a special assessment on ad valorem tax bills.
The commissioners took no action on the GSG recommendations at the special meeting.
Walton County District 5 Commissioner Cindy Meadows, who spearheaded the GSG study for south Walton County, said she was encouraged by the information presented from that study. Meadows said she planned to meet with Tharpe for further discussion and also planned to bring up the matter again at a BCC meeting around the first of the year.
The improvements would include projects in districts 5, 4 and 1 south of the bay, she explained, including but not limited to the resurfacing of CR-30A, stormwater management systems, sidewalks, crosswalks, and other infrastructure.
The GSG presentation may be viewed online on the Walton County web site, www.co.walton.fl.us by selecting “Departments,” “Finance,” and then either “30 A Tax Increment Financing Project” or “331 Tax Increment Financing Project.”
