Baxter working on TIF snag

BAXTER -- Baxter officials say they are working toward filing the necessary paperwork the state needs to release tax-increment funds.

Jeremy Vacinek, new finance director, today said he has been involved in other priorities, including the 2002 audit and setting the city's preliminary budget and levy. But Vacinek said he expected to complete the reports this fall.

Baxter has more than $229,000 in unclaimed tax increment because reports for 2000 and 2001 are still pending. Today Mayor Gary Muehlhausen said there is a misperception with the public that the money goes into the city's general fund.

"It doesn't," Muehlhausen said.

An earlier auditor's report in July provided information about the funds to the Baxter City Council.

The eight Minnesota cities whose funds are being withheld are all at least one year late in filing reports on tax-increment financing, which allows communities to buy and clear land, install sewers and do other work to attract private development. Costs are repaid from the additional property-tax revenue produced by the redeveloped land.

"I'm working on it right now, but I need to get caught up to speed with it," Vacinek said.

Vacinek was appointed finance director about a month ago. He succeeded Jim Wiegel.

Wiegel, who retired in June, died in July after a long battle with cancer. Baxter terminated former City Administrator Larry Kruse's contract in November. Kruse was hired in 1998 after Don Lorsung resigned and accepted a position in Charles City, Iowa.

The city is currently involved in setting up a search for an administrator.

Muehlhausen said the city has been short two key positions and Vacinek and Todd Holman, city planner, have had additional duties because of that. Vacinek said the staff changes were part of the issue with some of the issues coming in the void between the two previous city administrators. Various staff members were responsible for completing the eight-page TIF report to the state. Vacinek said the TIF district was amended a few years ago and the reports did not properly reflect the change, which is one reason the filing was delayed. Reports for August 2001 are due by August 2002.

"We are close at this point," Vacinek said.

He said the interest lost to the county is accumulating at about 1 percent and there are no projects in the works to use the funds. Tax-increment money is restricted in use to economic development. The TIF district covers the Westport Mall and movie theater area in Baxter. The TIF district goes back to 1984.

The unclaimed funds identified by the state auditor's office, including $495,236 to Virginia alone, are being held by county auditors under a state law that prohibits distribution until the cities file reports required by the Legislature. More than $782,000 in tax-increment money has gone unclaimed in the state.

Ron Lackner, Virginia's finance director, said he knows the money is available and has been working with the auditor's office to get the last three years' reports filed.

Baxter acknowledged receiving notices from the state auditor's office regarding the unfiled reports.

"We haven't forgot about it and we are not ignoring the issue either," Vacinek said. "We are working on it."

(This story includes information from The Associated Press.)