Letter to the Editor

Letter to the Editor

Friday, May 29, 2009

Can Linton afford annexation?

To the Editor:

There are three different areas to be annexed. First is 4.75 acres known as Musselman Apartments. Second is 49.48 acres known as Winters Estates. Third is 578 acres east of Wal-Mart. Linton is currently 1,900 acres and this project will increase the land they take care of by 33%. Approximately 26 households with a population of 63. The fiscal plan calls for $1,700,000 to be spent on sewage upgrades, $30,000 on electric upgrades, 8,000$ on streetlights. It will add 1.5 miles of streets for upkeep, as well as adding fire, police, trash, city maintenance, solid waste, and everything else they do for Linton.

Linton will borrow this money. If you borrow $2 million at 4% for 20 years you have to pay approximately $145,000 per year.

There are two separate issues taking place here. One is annexation, the other is creating a tax increment financing area. Annexation is simply making an area part of the city. What this will mean is the total 632.23 acres will continue to pay all the same taxes they already do plus city taxes. Now the Musselman and Winters areas are in Stockton Township which has higher taxes than Grant. So generally speaking those two areas will see a modest increase in taxes, my guess is 20-30%. The folks in the 578 acres in Grant township have lower rates and thus will see a much bigger increase, my guess is close to doubling. Now it gets complicated because all the separate taxes you pay should still go to the same places and not be effected, unless you hit the state cap of 1% for homes, 2% for agriculture or rentals, or 3% for businesses. Most in Grant will be automatically pushed up to this limit which will then reduce each separate tax (city, county, township, etc) by a proportionate amount. What this means is that White River Valley school will lose some tax dollars. My guess is somewhere around $10,000 per year. Grant Township will also lose tax dollars from its fire department because Linton will now get those dollars.

Any areas that are annexed will have to be provided all the services that the rest of the town gets. For the first two areas they already have most of them. All those houses on golf course road have their own septic systems and will get city sewage run to them. If you take what this project may cost which is $2 million and divide it by 26 homes that comes to $77,000 per home for the folks that don't have city sewage. Anyone annexed will have to pay for city services like the rest of Linton. Most of the proposed annexation areas already have city water and gas.

The second issue is creating a tax increment financing district or a TIF. What this means is any taxes paid on additional improvements built on the annexed land will not go to the usual places. Instead that will be spent in the TIF area as determined by the city council. For example if a business builds a million dollar building in the TIF, instead of the $30,000 in taxes going to the local school, it will instead be placed in a fund to be used how the council chooses. Generally this is promised to the business in the form of roads, parking lots, or perks of similar nature. Just to be clear a TIF only takes future building improvement taxes, all current property taxes still go to the same place. Also note a TIF will not help you build roads or infrastructure before a company builds, it only pulls tax dollars from the usual spot after something is built.

So why annex? One reason is that some of these areas already get most the benefits of the city without paying any city taxes. This is those that are on city sewage, water and gas but not in the city limits. I think most would agree these areas should be part of the town. These areas can be annexed with little cost. However when you start getting east of the golf course where there is no city sewage you start racking up the expense of adding onto the waste water system. As mentioned earlier this comes to about $77,000 per home.

Annexation is not an all or none proposition, boundaries can be drawn wherever the city council chooses. They could choose to annex all the way to Switz City or just take in the people that already get city services.

What does creating a TIF mean? In simple terms a TIF is a way to keep future taxes from going to local schools and be able to direct them elsewhere. The city council can use them as bait to lure business to the area. This is very difficult to understand. On one hand we all want new business, on the other hand it just isn't fair to existing business to give the new guy an advantage. For instance if a hardware store wanted to locate in the TIF they could receive a 3% advantage which seems unfair to our local hardware store that has been here years and supported our local schools steadfastly. These are very tough questions that have long lasting impacts. TIF's were created to boost the potential of poor areas. For instance ghettos, slums, off the beaten path areas that most would not want to build in, a business would get a kiss to do so. TIF's were never intended to be a vehicle a business could use to lower it's costs in an area that would be developed anyway.

So now you have to decide three basic questions

1. Do I want to annex 632 acres?

2. Is this the right time to annex?

3. Do I want to create a TIF on this area?

My opinion is that some of the area could be annexed. Just the ones that already get the services and don't pay the taxes. I also feel that if this were a time that the city had extra cash we could consider reaching out a little farther. The mayor has mentioned cutting services, going to a volunteer fire department, laying off city employees. This is not the time to start borrowing money, it's the time to start saving money. All this talk means higher taxes for everyone. As for a TIF it's being used in the wrong manner. We all know that if Linton grows it will be at the following places, across near Wal-Mart or the land near the golf course. So why take taxes away from our schools? When an industry wants to locate here that's the first place they will look anyway.

There is no person that would like to see industry come to Linton more than myself, but spending $2 million just isn't going to achieve that. I own 98 acres in the east area I have been referring to (the old Linton airport), for years I have wanted city sewage to be accessible. It would make my property very valuable. I just can't stomach the fact that it will cost the people of Linton $145,000 per year for 20 years.

About 10 years ago a ballast factory was interested in some of my land, and 15 acres was offered to them for free. The Linton mayor at the time assured them Linton would run sewage to them. They decided to build in a town in Kentucky which gave them bigger tax cuts and had cheaper loans guaranteed. I was told that they stayed open five years and then closed up and left the town. I just don't think you want that kind of situation here. If an industry doesn't build here for the right reasons, such as a great labor pool. Do we want them? Do you really want to get the company that chooses you because you offered $30,000 worth of grease?

I have dealt with those kind of people before and it's never a partnership. I say let the lowest bidder deal with them, I personally will wait until someone wants to recognize the advantages we have and then bend over backwards to work with them.

John Paul Coleman