TIF Application Approved

Just before last night’s council meeting, City of Elkins learned that its TIF application was approved by the West Virginia Department of Economic Development.

Excerpt from approval letter, over the signature of Mitch Carmichael, Secretary of the West Virginia Department of Economic Development:

This approval means that the city is now authorized under state law to establish the proposed TIF district. The next step is for council to approve an ordinance, on the usual two readings, enacting the TIF district. Officials are meeting to plan next steps soon; the process will likely be complete within 30 or so days.

TIF is a mechanism created in state law to help cities and counties pay for needed projects when other financing is not available. At the heart of TIF is the concept of reserving future increases in property tax revenues for local use, while avoiding the need to increase property-tax rates. (Read more about TIF here.)

TIF revenues are deposited in a standalone bank account and must be used for the approved projects, although it is possible to apply to add new projects or amend existing project plans. By default, the TIF district will remain in existence and continue to generate revenue for 30 years. This time limit may be extended upon approval by the WVDED.

TIF funds may be accessed by issuing municipal bonds or through a process called pay-as-you-go. Issuing bonds would require separate council approval, along with justification of financial need and anticipated revenue collection. Elkins has not made any decisions about whether it would issue bonds or use pay-as-you-go financing. Different projects may be better suited to one or the other method.

No one pays higher taxes as a result of TIF. School system revenues are unaffected by the TIF, because they are protected by the state School Aid Formula. The $25 million figure is based on a projection of what the property tax revenue increases in the district might amount to over the next 30 years in the best-case scenario. A more realistic projection would be under $10 million. Although these sounds like large sums, it is important to keep them in perspective and remember the timeframe. If Randolph County’s revenues—just estimated for Fiscal Year 2024 at $12,639,190—were to remain flat for the next 30 years, the county’s full income during that period would be about $380 million. Against that amount, even $25 million revenue for the city would be less than seven percent of the county’s revenues during that period, and it seems reasonable to expect that the county’s revenues will not remain flat for the next 30 years. Indeed, we are confident that the TIF district itself will help fuel increased revenues over the next 30 years at the county level as well.

This is because it is also reasonable to expect that the kinds of projects that the TIF can fund will increase business activity and fuel both population growth and increased property values throughout Elkins and even outside city limits—in other words, not only inside the TIF district. Increased business activity inside the TIF will likely result in a greater diversity of establishments that city and county residents alike will enjoy visiting and patronizing.

Many jurisdictions in West Virginia have found TIF-funded improvements to be of great regional benefit. The City of Elkins is convinced that the approval of our application is great news not only for the city but all of Randolph County, and we look forward to what now looks like an even brighter future for this area that we all love.