Evart LDFA dissolved, council votes 4-0 in favor
City assumes $284K in retirement liabilities
EVART -- Following a closed session that lasted over two hours, Wednesday, Jan. 8, the Evart City Council returned to open session and unanimously voted to approve a motion to dissolve the Local Development Finance Authority (LDFA).
Evart Mayor John Joyce said in a statement the LDFA has accomplished everything it set out to do, and due to the fact that the statute says "once they have completed their objectives they shall be dissolved," the city council exercised their responsibility as elected officials in voting to dissolve the entity.
"The LDFA has been an asset to the Evart area for some time," Joyce said. 'We hope to build on their success going forward, and we are working towards continuing the economic growth that the LDFA has started. I wish to thank the LDFA at this time for the untold hours they have dedicated to move Evart forward."
LDFA director Melora Theunick said the city council believes the authority has completed their mission, but the authority feels otherwise.
"The LDFA has brought major development to the area," Theunick said. "While the work was not always evident, it was invaluable to the city of Evart."
Evart city manager Sarah Dvoracek said the LDFA has done a lot for the city including creating the entire industrial park and all the infrastructure throughout the park and helping fund the sewer plant.
"When they had the funds available to do what they do, they did great things for this city," Dvoracek said. "They do not have the funding now mostly because the personal property tax has been eliminated from the equation."
Theunick said the LDFA has faced a large amount of debt, which is believed to be one of the reasons behind dissolving the entity, but they were prepared to address the debt, although she did not elaborate on how.
Dvoracek said the LDFA has struggled with financials, but that the city council thoroughly analyzed the LDFA's budget and the development plan established in 1994 before deciding to dissolve the entity.
"City council looked at the LDFA's Municipal Employee Retirement plan (MERS), the LDFA's expenses, the development plan and the tax increment finance (TIF) plan," Dvoracek said. "They reviewed all the information and discovered that the purpose of the development plan and the TIF had been accomplished. Per law, they have to be dissolved upon completion of their purpose and council felt they had successfully done that."
Osceola County Commissioner Roger Elkins, who represents the City of Evart, said, "I am among those who are disappointed with this vote and even more so with the way things were done."
The Evart LDFA was established in 1990 as a process for awarding incentives for industrial park projects. It's policy was to use its limited resources to maximize development of the industrial park.
The LDFA was funded through the capture of property taxes on businesses within their district above and beyond the base taxable value. Changes in the personal property tax codes for industrial businesses has taken money away from the city, and from those entities that capture tax revenue above the base values such as the LDFA, Dvoracek said.
With the dissolution of the LDFA, the city will be required to take on the financial burden of the MERS plan which covers two retired workers and one current employee.
The unfunded accrued liability of the MERS plan was $284,000 as of Dec. 31, 2018.
"That will have to be paid out by the city and will come from the TIF property tax capture that would have gone to the LDFA," Dvoracek said. "That will be an additional $29,000 to the city's general fund, and all of the other entities that contributed to the LDFA will now get to keep their tax money."
Moving forward, the city council will look at other communities that have been successful to see what they are doing and will brainstorm what is the best fit for Evart, Dvoracek said, whether that would be a full time economic development coordinator or some type of contractual worker.