How a TIF works
$35 MILLION TIF CONSIDERED BY COUNTY, DEVELOPER
Vermilion Daily has received documents from Lorain County regarding a Tax Increment Financing (TIF) arrangement pertaining to the Sunnyside Planned Use Development (PUD).
A TIF is borrowed money. The documents indicate that a TIF for up to $35 million in project costs has been considered by Lorain County and the Sunnyside PUD developer, Dan Reaser.
The Sunnyside PUD is a controversial residential and commercial development that is planned for 300 acres on the east and west sides of Sunnyside Road between Brownhelm Station Road and Route 2.
The documents include two financial analyses prepared as of April 15, 2024. One analysis assumes project costs of $35 million associated with debt service payments of $89.7 million over 30 years. The other analysis assumes project costs of $20 million associated with debt service payments of $37 million over 19 years.
Money borrowed via a TIF is used for infrastructure improvements. It is paid back with interest. Payments are made using all or part of increased property tax revenues resulting from increases in property values for a period after the TIF is authorized. The property tax revenues used for payments are therefore not used for normal purposes, such as local services and schools.
If a $35 million TIF were established for the Sunnyside PUD, the borrowed money could be used for infrastructure improvements necessary to make the development feasible. All or part of the increased property tax revenues from new homes and businesses in the Sunnyside PUD would be used to pay back the borrowed money, with interest. The property tax revenues used to pay back the borrowed money would not be used for local services or schools.
For clarification, income tax revenues paid by new residents and businesses to the City of Vermilion would go into city coffers.
Some Vermilionites who have spoken to Vermilion Daily have expressed concern that a TIF will cause their property values and property taxes to increase even though they are not a beneficiary of the Sunnyside PUD.
Others have asked how the borrowed money would be paid back if the developer fails to complete the Sunnyside PUD development?
This is a developing story. Vermilion Daily will seek comment from the City of Vermilion’s elected officials and the Sunnyside PUD developer, Dan Reaser.
Note: Vermilion Daily notes that the documents received by it do not indicate that a TIF will necessarily be undertaken by Lorain County, or that a TIF would be in the amounts considered. The documents were received by Vermilion Daily in response to a Freedom of Information Act request.
