Question: For Year X + 2, does the DDA capture taxes on the original increment of $10 million, leaving the city with only $0.5 million on which to collect taxes? Or does the city collect taxes on its initial baseline $1 million of Property A’s taxable value, leaving the DDA with just $9.5 million on which to capture taxes? Or is the drop from $11.5 million to $10.5 million allocated proportionately to the city’s part and the DDA’s part?

Which is it?

Have I missed it?

Putting the “baseline” valuation aside, what I was trying to say is that if the DDA is entitled to the taxes from the increment due to new construction (the $10 million) and the city gets the revenue from any new valuation due to inflation; but if the valuation then drops so that there is no gain due to inflation, but rather a loss from the original increment, the city does not collect any new tax from the new construction.

The baseline question complicates it but is also a good question.

I’m understanding that as an intended reference to “the DDA” not “the city” – partly because I don’t think of the city as “capturing” anything, but rather just levying and collecting taxes.

Whatever the intended referent in [3], there’s this followup question in [15] “Does the drop in value come off the DDA’s ‘top’ or is it split evenly between both entities when the value of a property goes down? How did it play out in 2008 and after?”

Just want make sure I understand the kind of scenario we’re being asked to contemplate, before pursuing this further.

SCENARIO: A vacant Property A with no improvements since inception of the DDA has taxable value of $1 million. The city collects tax on the $1 million taxable value of the parcel. The DDA collects zero, because there’s no improvement-based increment.

Then in Year X, the owner completes a building that gives Property A a taxable value of $11 million. The increment on Property A is $10 million, on which the DDA captures taxes. The city continues to collect taxes on the baseline $1 million.

In Year X + 1, let’s say that market appreciation gives Property A a value of $11.5 million. The DDA captures taxes on the original increment of $10 million; and the city collects taxes on the baseline $1 million plus the $0.5 million in appreciation – so the city collects taxes on $1.5 million.

But in Year X + 2, let’s say that instead of market appreciation, we have dramatic deflation, and Parcel A has a taxable value of just $10.5 million.

Question: For Year X + 2, does the DDA capture taxes on the original increment of $10 million, leaving the city with only $0.5 million on which to collect taxes? Or does the city collect taxes on its initial baseline $1 million of Property A’s taxable value, leaving the DDA with just $9.5 million on which to capture taxes? Or is the drop from $11.5 million to $10.5 million allocated proportionately to the city’s part and the DDA’s part?

Steve, does that fairly portray the specific issue?

From the DDA budget for FY 2014:

Salaries         $334,240
Fringe Benefits  $223,356
Administrative   $256,834

 
The most recent figures I have easily handy for a breakdown of individual salaries dates from FY 2009, when the DDA had three employees. Executive director had base of $94.6K, deputy director $86.3K and management assistant $45.2K.

Fringe benefit package is supposed to be the same as for city employees. Administrative budget line is not additional compensation for employees.

By way of comparison, the city administrator has a base salary of $145,000, and the city attorney’s is just under that. Mayor and council salaries are $42,436 and $15,913, respectively – and they’re set by the local officers compensation commission (LOCC), which meets every two years. This year (2013) is a year for the LOCC to meet and set salaries. Coverage from 2011 here: [link]

That raises an interesting question. The City and the DDA will both face the repercussions of falling valuations once again beginning later this year and continuing for several more. Does the drop in value come off the DDA’s ‘top’ or is it split evenly between both entities when the value of a property goes down? How did it play out in 2008 and after?

Dave, can you look into that?