Process is useful tool, county says
This is the second in a two-part series that examines redevelopment issues.
For County Manager Dan Holler, redevelopment is a multi-purpose tool which can be used to help fix problems in Douglas County.
Some of Douglas’s problems include stagnant property values, low sales tax revenues and neighborhoods which rely on individual wells while residents’ home septic systems quietly pollute the ground water they drink.
There are road and drainage problems, water systems which don’t have enough volume to put out house fires and small, regional parks which have inadequate facilities and funding to provide recreational opportunities like Little League baseball and girls’ softball for the county’s youth.
“Redevelopment will not solve the problems by itself, but when the county commissioners became the county’s redevelopment agency, they gained access to funding sources they wouldn’t have otherwise,” Holler said Tuesday.
Holler said flat property tax assessments in the county are a cause for concern. County government counts on slow, steady increases in assessments to fund its services. As long as property values increase along with other costs, the need for other forms of taxation is minimal. But when the county’s income barely keeps up with or is outstripped by prices, the county is in trouble.
The push for redevelopment, which can include improvements in the county that help promote development, has taken on a special urgency this spring.
County officials know that the assessed value of the Sierra Nevada Golf Club at Little Mondeaux near Jacks Valley could nearly double when the golf course opens this spring – going from an assessed value of around $1.5 million to about $3 million. At the county’s overall tax rate of $2.2085 per $100 of assessed value, that increase would generate about $30,000 in additional tax income for the county.
Officials also know that the county’s 1998-99 budget is balanced without the increase.
In and of itself, that $30,000 is not enough money for the county to fix even one of its problems. But it is enough to lend credibility to the agency, which can then issue bonds. The bonds are not a debt of the county and are repaid solely from tax increment revenue. Tax increments, revenue generated if redevelopment causes property values to increase, can be used only in the same project which generates them.
A resident recently asked how much money the county has spent on redevelopment.
To date, Holler said, Douglas County has spent $60,000 to hire consultants to evaluate the North County for inclusion in a redevelopment project area. It has also spent $10,000 for related legal services.
The county commission included $100,000 for redevelopment in its 1998-99 budget and set aside an additional $300,000 as a redevelopment contingency fund.
If redevelopment goes forward, Holler said, it repays those costs to the county.
There are concerns that redevelopment could cost other governmental agencies future revenue. In particular, the school and fire districts are funded by property taxes.
“The redevelopment agency (which is the board of commissioners) can pass the taxes back to schools and other government agencies if they show they are impacted,” Holler said. “Remember though, if redevelopment improvements allow one house to be built in an area, fees the county, fire and school districts collect will likely be more than a single year’s incremental tax increase for the (project) area without redevelopment.”
Noting that property values throughout the county have more than doubled in the past quarter century, one resident speculated that redevelopment could eventually collect as much or more in tax increment than the county itself.
According to state law, the redevelopment agency can only receive annual tax increment if it can show that it has created a debt which is an obligation of the agency. At the conclusion of the project and after all its debt has been repaid, the tax increment flow created by the redevelopment project is returned to the taxing entities.
Essentially, Holler said, when the problems are corrected, the agency goes away.
“In Douglas, we’re looking at needing water and sewers in the North County in the next two to 10 years – those are improvements the state’s environmental protection division may order for health reasons, just as they did in southeast Carson City,” Holler said. “If we can bring them sooner through redevelopment, we can use tax increment on commercial property to help fund the improvements and make more money for the county with additional sales tax allocations from the state.
“I guess the question is how proactive can we be today, knowing what’s coming in the future,” Holler said.
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