Argue Says Rogers TIF Probably Won?t Fly

State Sen. Jim Argue, D-Little Rock, said a proposed tax increment financing district to develop the Interstate 540 corridor in Rogers will likely be canned, or at least curtailed, when the state Legislature meets this coming spring.

Argue said the proposed Rogers TIF would basically tax all property owners in Arkansas to pay for new development in one of the state’s richest cities.

“I’m not completely negative about TIFs,” Argue said. “But I really think they need to be for blighted areas, not the Interstate 540 development. That’s going to happen without a TIF.”

“A lot of the money that would go into this infrastructure is lost from Northwest Arkansas anyway,” Rogers Mayor Steve Womack said, referring to state taxes that take money from the wealthy northwest corner to fund schools across Arkansas. “As a mayor, I’m tired of being a donor.”

Womack said Rogers is acting on what the Legislature has already done, not what it might do this spring.

“What we are doing is provided for by law,” he said. “We are moving forward, and we are moving forward rapidly.”

If the Legislature changes the law, Womack said he expects Rogers’ TIF district to be grandfathered in since it was developed legally.

“I would caution the Arkansas General Assembly about gutting the legislation,” Womack said. “It’s not the kind of bias that you want to demonstrate to the development community.”

Womack said “green field development” is allowed through TIF districts established nationwide. If the state takes that kind of funding away, cities like Rogers will have to rely on the Arkansas Highway and Transportation Department for road improvements along I-540, and those improvments probably won’t keep up with commercial development in the area.

Arkansas voters approved Amendment 78 of 2000, which allows TIFs in blighted areas. But in 2001, the Arkansas Legislature passed Act 1197, which meant TIF districts could also be established to spur development in areas where roads and infrastructure are lacking.

Act 1197 states: “Redevelopment project means an undertaking for eliminating, or preventing the development or spread of, slums or deteriorated, deteriorating or blighted areas; for discouraging the loss of commerce, industry, or employment, or for increasing employment, or any combination thereof.”

That’s what Womack is aiming at with the proposed I-540 TIF, which is new development of what was basically a cow pasture before.

“It clearly refers to blighted areas,” Argue said, going back to Amendment 78. “I think that was the intent. That’s how we sold it to the people, and that’s what they expect.”

Argue said there have been two Attorney General opinions since 2000 that have “cast doubt” over the proposed funding mechanism for Arkansas’ TIF districts.

TIF districts allow increases in property taxes to be used for development in the district. That’s money that would have been going primarily to public schools. But with the current funding formula, the state will make up the difference to the school districts.

Act 43 of 2003 eliminated the increase in property value, based on improvements within the TIF district, from the state’s school funding formula. The state collects the amount taxed on the first 25 mills in each school district and returns that money to the district with additional state funds to equal a statewide per-student formula ($5,400 per student for the current school year). A school district’s debt mills are excluded from the TIF. (A mill is one-tenth of one percent of assessed property value.)

Of Rogers’ 39.5 mill total property tax, 16.4 mills go to pay off debt. That means the school district’s 23.1 taxable mills is below the 25-mill cutoff in the state’s funding formula. So, if less money is collected in Rogers because it’s going back to the TIF, the state will add money to equal the per-student funding amount.

Essentially, taxpayers across the state would pay for development in the TIF instead of the city of Rogers, Argue said.

“If a community dives into that pool not knowing how deep it is, they may be surprised,” Argue said. “They may be assuming tax relief that’s never going to be there. I do think the Legislature needs to clarify this issue.”

Argue said a TIF district proposed for Fayetteville’s Mountain Inn renovation makes more sense because it could be considered a blighted area.