CEDAR FALLS -- The industrial park Tax Increment Financing District is starting to pay dividends, but the city isn't looking to end the TIF or release large amounts of money into the city's general fund budget.

The TIF has allowed the city to have a security blanket when it comes to expanding the industrial park, and, as a result, the job base.

"The industrial park TIF is virtually self supporting. We can do a project and pay it off the next year," said Richard McAlister, Cedar Falls director of administrative services.

What the TIF hasn't done is inject large sums of money into the city's general fund budget.

"The actual benefit from a tax perspective stays in the industrial park," McAlister said. "For taxes, there are more peripheral benefits. It creates jobs, which create housing sales."

Property taxes generated by new construction within a tax increment financing district are used to finance infrastructure improvements within the district, such as streets and sewers, instead of going to support overall city, county and school district operations.

Four years ago, several city candidates pointed toward 2009 as a time when the city should be flush with new money from the industrial park, thinking it could lead to adding another fire station, hiring more police and firefighters or reducing property taxes.

At this time, the city plans to be more conservative. The city would plug the money back into further expansions of the industrial park so they don't have to take on longer-term debt for those projects.

This year is the first that the industrial park TIF district will take in more money than is paid out in debt. In future years, the revenue will increase each year over the debt service.

For the 2009 fiscal year, which begins in July, the industrial park TIF is estimated to generate $203,000 more than the debt service. The following year it's estimated at $6 million.

This year the city plans to expand Technology Parkway west of Hudson Road and into the newer section of the industrial park in that area. With the TIF debt retired, it will be easier to do that $3.2 million project.

"The good news is with Technology Parkway we will have the opportunity to see if we have enough money to pay it off and not issue debt," said city finance director Jennifer Rodenbeck.

McAlister said the TIF would stay running in the industrial park and pay off expansions. A 60-acre expansion can cost $4 million, so the TIF revenue could go out quickly.

That expansion will happen in the south part of town, adjacent to the existing industrial park. For years the city had planned on someday adding a second industrial park on the north side of town, near the Waterloo Regional Airport.

Last fall the city was approached to buy a property near the airport and annex it from Waterloo into Cedar Falls. That would have been the start of the northern industrial park, but the city of Waterloo was not interested in de-annexing the property.

"We probably won't be doing an expansion in northern Cedar Falls. That hasn't come together so we will probably focus on the south end," McAlister said.

The city is talking with the city of Hudson about a possible annexation of land south of U.S. Highway 20. Even if that does not go through, the city would expect to expand its park south of the Target distribution centers to Highway 20.

"What the industrial park has allowed us to do is pay off additional expansions as we go," McAlister said. "We're probably reaching a stage where some of the increment can be released back."

While the industrial park TIF isn't fading into the sunset, the TIF at Wal-Mart, established when that store was built on Viking Road, has expired.

Now that TIF is expired, Wal-Mart's full tax obligation of about $336,000 per year will go back into circulation. Of that amount, the city's share will be about $140,000.

Contact Jon Ericson at (319) 291-1461 or jonathan.ericson@wcfcourier.com.