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Saturday, June 27th, 2009

Townships, county tapped to cover debt

By Shelley Grieshop
Three northern Mercer County townships and one county agency likely will share a $755,000 debt after officials recently discovered a financial error made several years ago involving a mega dairy farm in Rockford.
The error - an exaggerated estimate of proposed improvements to the Hopewell Township farm - has reduced funds collected from a Tax Increment Finance (TIF) district that was created to pay off a 10-year loan for road work to handle increased truck traffic in the area.
The TIF was projected to generate about $136,000 annually. However, this is the first year for collection and only $36,484 was drawn so far in the year, according to county commissioners.
A TIF sets aside property taxes on permanent improvements in order to help pay for the cost of development for specific projects. The TIF for the 2,100-head dairy farm at 3101 Tama Road was created by county officials. Its figures were based on financial data submitted in 2005 by the farm's developers, Vreba-Hoff Dairy Development, a Dutch organization.
According to documents received by The Daily Standard, a Vreba-Hoff employee estimated capital improvements to the 64-acre farm at $8.4 million. However, the improvements actually totaled about $3 million. The parties all agree that Vreba-Hoff's inflated figure "innocently but erroneously" included valuations on equipment and other assets, instead of only permanent buildings and fixtures.
The county engineer's office and the townships of Hopewell, Blackcreek and Liberty likely will pay the outstanding balance not collected through the TIF. The road and bridge work performed about three years ago extended into all three townships.
The county engineer's share is estimated at $50,000 per year. Hopewell Township would be responsible for $2,800 annually; Blackcreek, $3,200; and Liberty, $4,000.
Several trustees have voiced their desire to pay off the entire 10-year debt early to avoid interest charges. That arrangement could be approved by the county commissioners, who said they are awaiting input from trustees before proceeding with formal action.
Randy Thomas, a Liberty Township trustee, said he's disappointed.
"We try to keep a cushion in our budget. It's not too bad right now but we'll probably have to make some adjustments," he said. "We got what we got, it is what it is and we're going to find a way to deal with it."
Other trustees also said they weren't happy about the shortfall of the TIF but are glad it's in place. The infrastructure work would have been necessary someday, they said, and they would have paid the entire cost without the TIF funds.
The dairy farm began operations in 2007 with the Bert and Annette DeBruijn family at the helm. However, less than two years ago Doug Hubby was appointed operations manager, said Cecilia Conway, spokeswoman for Vreba-Hoff.
No explanation for the transition was offered.
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