Tax collections in the Fulton Tax Increment Financing District are running about $50,000 short of the annual interest and principal payments due on the $8.7 million in bonds financing part of the cost of the Fulton Commons Shopping Center.
The shortfall in sales tax collections was revealed Monday morning by Kathy Holschlag, Fulton chief financial officer, during the annual meeting of the Fulton Transportation Development District.
Members of the board of directors of the Fulton Transportation Development District have many of the same property interests as the Tax Increment Financing Commission and the districts have roughly the same geographical boundaries.
Fulton City Administrator Bill Johnson said when the Fulton Commons was built in 2006 the Tax Increment Financing Commission issued $8.7 million in bonds to assist with street, lighting and infrastructure costs relating to creation of the Fulton Commons shopping center on the former Walmart property on Business 54 South.
Johnson said the $8.7 million in TIF bonds were sold to individual and corporate investors. The bonds were financed by diverting all sales taxes and real estate taxes generated on the property for 23 years, starting in 2006.
The Missouri tax increment financing law allows cities to forego tax collections on real estate developments in blighted areas for 23 years if the city and the commission believe the project is in the public interest. The theory is that the property otherwise would not be developed and the tax incentive will make the project economically feasible, providing jobs and a boost in the local economy. The project also is expected eventually to produce increased tax collections for the city.