Background on Resolution 16-50

I received a question from a citizen yesterday asking why was One University Place divided into two parcels, and two condominium regimes. The questioner wondered if it had to due with who would control a home owner's association, commercial owners or residential owners. Below is my response. Of course after sending it, I remembered the most important reason, for this occurring, which is this:

In December, 2015 the development team was informed that if the property was to be assessed on Jan. 1, 2016, then a condominium regime had to be filed with the State of Iowa by Dec. 31, 2015. The simplest way to file that was to make the south building, already under construction, a separate entity. Without a filing by 12/31 there would be no assessment of the property as commercial or residential and to be taxable until Jan. 1, 2017, meaning any taxes generated would come an entire year later. Remember than an assessment on Jan 1, 2016 will result in an initial property tax payment in Sept. 2017. Since the property had previously been assessed at $0 valuation due to it's use as a church, there would have been no taxes paid.

The issue of dividing the property into two plats really has nothing to do with commercial owners vs. residential in a condo association. Council first heard about this at the Dec. '15 council meeting. At the Jan. 2016 Council meeting there is a considerable explanation of why this was done. In the Jan 16 Legal Report the city attorney explains what the issues are at length. Look at his report, item 6, are on pages 6-8 of the linked document.

In the Feb 16 Legal Report city attorney also outlines details of what should happen to ensure that all PUD and TIF document details are carried out by two condominium regimes instead of one. Item 2, pages 8-13 outline these opinions.

The March 16 legal report states that the city attorney and developer's attorney had begun working through those details. The April 16 legal report says the process between the attorneys is still underway but not complete. The May 16 legal report says the process is close to completion and a chart showing all provisions of the PUD and TIF agreement and how they are addressed in North and South condo declarations is being created.

The June 16 Legal Report states that due to the fact that the financing proposals (GO Bond and special assessment) being considered will also include amending the PUD and TIF documents, council should wait until those actions are complete so as to consider all amendments to the PUD and TIF at the same time. Item 6 on page 65 outlines this.

That brings us to the September meeting when the GO bond work was complete, so council was to consider all the PUD and TIF amendments. What Resolution 16-50 does is finish that process and allow us to go forward with a special assessment of OUP to repay the Public Works project, which is the larger portion of the general obligation bond that was let on 8/29. It also allows us to take advantage of better pricing on the community center due to that special assessment. I've written in more detail about that on my blog: What is the Impact?

The Sept. 16 Legal report gives a summary of the process and more details. Item 2 pages 188-191 refer to this. The chart mentioned in the May legal report can be found on pages 61-64.

What is the Impact?

Defeating Resolution 15-60 at last night's council meeting has serious impacts on future planning in University Heights. Here's a quick summary and recap:

With a 2 yes, 0 no, and 3 abstention vote, this resolution failed due to all resolutions needing to have 3 yes votes to pass. An explanation of the resolution can be found in the attorney's report section of last night's agenda and attachments.  Basically this was to amend the PUD to allow for 2 separate condo regimes for the North and South buildings. This change, has negligible affect  on city business. Defeating this resolution means that:

• Occupancy permits cannot yet be issued for the south building, which has residential units ready to be sold.

•  The special assessment which would be placed on OUP to repay the costs of the Public Works Project cannot be assessed.

• Without the special assessment, the city cannot proceed on our reduced price acquisition of the community center.

 

Here is what's critical to the financial well being of our residents. Without the special assessment ALL U-Heights taxpayers will have to pay for the $650K portion of the Public Works Project. With a special assessment in place ONLY property inside the OUP development will make payments on that. Without the special assessment in place our purchase price for the Community Center increases from $275K to $395K. The price of the Community Center will be paid by ALL property tax payers throughout U-Heights.

Jim Lane and I voted "yes." on resolution 15-60. Dotti Maher, Silvia Quezada, and Jerry Zimmermann all voted "abstain." Jerry said his abstention was due to his exploring purchase of a commercial space in OUP. Silvia said her abstention was due to her being opposed to TIF funding. Dottie declined to explain her vote at the time.

Later in the meeting council decided to schedule a special meeting on 9/19 to reconsider this item. A major sticking issue was the wording regarding a city seat on the North condo board:  "yes, if desired." Striking "if desired" could likely result in an approval of the resolution. 

In my late night email summary last night I stated that: Only someone who voted on the prevailing side can bring the item up for reconsideration. That is not correct. Since the special meeting is a new event ANY councilor may move the resolution for adoption.

I am hopeful that council will do the right thing and adopt resolution 15-60 on Monday.

The Name is BOND, G.O. BOND...

Unlike James Bond, City Council on Monday night approved General Obligation or "G.O." Bonds to pay for items related to the One University Place project.

There are two parts to the bond, one for the Public Improvement Project (realignment of Sunset/Melrose, turn lane into OUP, etc.) the other for the purchase of unit 103 in the South building to be used for City/Police offices as well as a multi-purpose room. This has been commonly referred to as the Community Center. The combined total of these two projects was estimated at $950,000. 

The largest portion of that is for the public improvements. By letting the bond, the city will pay for these improvements now, and then there will be a special tax assessment on OUP Property ONLY that will repay those costs. No current University Heights property owner will pay for any of the costs of the Public Improvement project. That project was estimated at $625,000.00

The smaller portion is for the community center space. That will be repaid by ALL city property owners via their property taxes. OUP property owners will also pay this assessment.

The city put their 10 year bond out for auction on Monday, Aug. 29th. When that happens banks and other entities bid to get the bond. The lower the bid, the LESS the city has to repay in interest. We were hopeful that we could get bids in the 2% to 2.25% interest range. There were 6  bids submitted. The winner, Banker's Bank of Madison, WI, bid 1.7%. That bid saved the city of University Heights $115,000.00 in projected interest payments. Due to how we structured our agreement with One University Place developers, the lower interest rate reduced the cost of the community center from $390,000.00 to $275,000.00. The lower rates saved U-Heights tax payers 29.5% on the cost of the community center. I remarked at the meeting that we are purchasing a community center for roughly the median house price in University Heights.

Full details of the financing can be found here: 
Aug. 29 Special Meeting Agenda & attachments

Two Roads Diverged in a Wood...

Our city is at a crossroads right now regarding the development project One University Place. Which path we take will make a great deal of difference. 

One topic that was discussed at tonight's council meeting was the possibility of a special assessment being levied on One University Place to pay for the Public Improvements to Melrose/Sunset interesection and left turn lane on Melrose Ave.  

In a nutshell, here is what has brought us to this fork in the road. Following negotiations last year the final TIF agreement said the developer would pay for public improvements directly, while the Developer's Agreement said that they would be paid via a special assessment. Those two documents should have agreed with each other, but they did not. The long and short of all of this is, it was a major mistake on the developer's part not to have caught this. 

However, this is an opportunity for both the City and the developer to find a silver lining. By the City agreeing to a special assessment to be levied ONLY on property inside the development, we can reduce the amount that would need to be paid back for the construction because we can get a lower interest rate. In exchange for the City agreeing to this, the developer will reduce the cost of the community center by approximately $95K, which roughly translates to 90% of what they would save in interest if they were to pay back the City via a commercial loan. In addition, the City would be able to include the property tax from inside OUP for the Community Center costs, so that the repayment for a community center would be spread across all property owners, which is a fairer method in my opinion.

This path is one that this nuanced, is a good compromise, and has led to cooperation among residents who haven't always seen eye to eye on this project in the past. Below is a summary of that path from Finance Chair, Jim Lane, with analysis from Zoning Commission Chair Pat Bauer. And while it is 12 pages long, the high points on page one are very concise.

Special Assessment memo

The other path is follow that of Councilor Silvia Quezada who sent this email on Monday evening to some city residents:

New Financing Request by Maxwell/OUP Policy Issues Alert

Councilor Quezada has every right to express her own opinions in whatever forum she chooses. What I would like to point out here is that Silvia was not able to convince any fellow councilors to take her path in the summer of 2015 and vote against the TIF and Development Agreement. With a new council, including two brand new councilors, she has still been unable to convince any fellow councilors to follow her path. 

The bottom line here is that her path is one that will cost every resident higher property taxes, because not by being able to bond, the cost of the community center will be borne by only current residents, and OUP property will not be included.

I hope we will take the path that is cooperation and compromise, that will help our entire City become an even better place than it is already.

It will make all the difference...

City Budgets and Library Services Feedback Needed!

City Council held a special meeting last week to discuss our FY17 Budget that will begin on July 1, 2016. We will have a budget hearing on March 8, 2016 and vote to approve our budget later that evening. We must submit an approved budget to the state no later than March 15, 2016.

One area we discussed the other night was library services. U-Heights residents are able to get both an Iowa City and a Coralville library card. We pay for library services according to contracts set with both of those community libraries. 

One of the first "political" things I did when my family moved to University Heights in 2005 was participate in the library levy campaign. As a community we voted to enact this levy to help pay for the library services we enjoy. That levy passed with an 88% yes vote. by state law the levy rate is 27 cents per thousand property valuation. 

For next year the Library Levy will generate $18,961 that can only be used for library services. Our assessment from the libraries comes to a total of $47,533. That means $28,000 needs to come from our general fund.


Mayor Wally Heitman would like to know how many people use library services, and which library do they generally use. Could you please email me your thoughts? 

Thanks.

February Council Meeting Summary

Dear U-Heights residents, City Council held their regular February meeting Tuesday night, below are some highlights. For more information please look at the full agenda and attachments. County Assessor Talk New Johnson County assessor Tom Van Buer gave an overview of how his office works, and the process of assessing property. This year U-Heights is scheduled for visits from assessor's staff.Please refer to the agenda above for his presentation. It will also be available from IC Cable 4 as a webstream in the next week.   FY17 Budget Planning State law requires all cities to submit an approved FY17 (beginning July 1, 2016) budget by March 15 each year. Council held preliminary budget discussions and will continue that next week in a special meeting on Feb. 15 at 6:30 PM in the City Office, 1004 Melrose.   One University Place There was a great deal of discussion of One University Place this evening. Council directed the city attorney to draft a letter of agreement specifying the scope of duties not covered by the building inspector or city engineer  that a project manager would perform. If council approves of this draft a short term contract would be entered into with Glen Siders at a projected rate of $75 to $100 dollars an hour. Regular construction reports are posted after council meetings on the city website OUP Construction Updates.   Upcoming Events Council Special Meeting Feb. 15 6:30 PM City Office to discuss FY17 budget Community Visioning Meeting Feb. 29 7:00 PM  public invited U-Heights History Presentation 2:00 PM March 7  IC Senior Center

Follow University Heights on Twitter Consider contributing to the University Heights Community Fund I also write a blog covering U-H and other timely topics, with my opinions expressed UHForward.blogspot.com Join the community at Nextdoor University Heights! As always it is a pleasure to serve as your city councilor. -Mike Copyright © 2016 Mike Haverkamp, All rights reserved. This is information about University Heights for residents who wish to receive it. Our mailing address is: Mike Haverkamp 315 Golfview Ave. Iowa City, IA 52246

Make Sure You're in the Saddle...

The first meeting of  the newly elected city council was held last night. We had some lively discussion and interesting moments as we started our new term together. Wally Heitman in his Mayor's Report mentioned his hopes for more civility and wishes for all of council to work together for the benefit of the community. I thought Wally did quite well in his first meeting. I heartily agree with his sentiments and will continue to do all I can to make it happen.

The title of this post is the first half of a quote attributed former UH City Councilor Yon Schoenmaker. The last half of the quote is

...Before You Apply the Spurs!

We seemed to have a case of that as the very first council item on our agenda was to discuss hiring a project manager to oversee the construction phase of the One University Place Project. I find this to be a very interesting way to start our term.

One University Place (OUP for short) is a private development built on private property. As such this project is subject to all of the requirements of any private construction. Inspections are a vital and continual part of the process. The good news for us, is the the City of U-Heights has an excellent building inspector. He holds more certifications than any other building inspector in Johnson County, and is recognized as one of the best in the state of Iowa. He also works for the City of Iowa City and has had much experience in very large projects over the past five years, Plaza Towers, Park@201 downtown etc. and the University of Iowa Fire Inspector routinely consults with him for advice on how to conduct inspections at  Hancher, the Music Building, Peterson Residence Hall among others. 

Regardless, there will always be inspections at OUP that he is not licensed to conduct, and those officials who are qualified have already been identified and utilized as needed. Our inspector is the one who already certified the building plans, and awarded the initial building permit. He is very familiar with the project.  

Despite this, there is interest on council in hiring an independent project manager to oversee construction. This would have to been done at additional cost to the city. No other community around us does this for a private project. Project managers are typically used only when it is a Municipal project, and the city is paying for the building. 

Fortunately our inspector was at our meeting last night so he could introduce himself to the city councilors who had never met or talked to him. I asked how often he stops at the OUP site and his answer was typically 4 times a week. He also said that when the weather was better he stopped as often as 3 times a day. I asked if there had been any problems or issues with inspections he has already conducted and the answer was no. My very strong impression is that this project is very well supervised and is within the time and technical abilities he has to devote to this.

A fellow councilor said he "knows a guy," recently retired, who would be well qualified to be an independent project manager for us. For our February meeting we will be informed as to details of the job, availability and price. Given the fact several times later in the meeting there were questions about bidding all work to be done for the city to ensure good pricing, we might want to consider that too.

My thought right now is that spending city resources on a job that won't improve results, or solve with a major problem, is going to get us thrown off the horse.

2015 Election Notes and Issues

With the municipal election next month I have been going door to door talking with citizens about city issues. This is always an interesting and informative process for me, and I greatly value the time I get to spend talking to so many residents.

Here are some very practical notes first, from the Johnson County Auditor: 

In person early voting, Auditor's Office, 913 S. Dubuque St. Iowa CityEarly voting available weekdays 7:45 - 5:30 through Monday, November 2.

Nov. 3 U-Heights polling station St. Andrew Church 1300 Melrose Ave. Polls open 7 AM to 8 PM

As I have been walking and talking I have highlighted the following:

 A Ballot Initiative for U-Heights Voters

The following will be on our Nov. 3rd ballots: Shall the terms of elective office of the Mayor and Council Members of the City of University Heights, Iowa be changed from two (2) to four (4) years, with the Council Members' terms being staggered?

U-Heights is the last town in the county with two year terms for council and mayor. Staggering 4 year terms will allow for greater continuity in the council as there would not be the possibility of overturning the entire council in a single election. I would urge you to vote “yes” on this measure.  

Two Important Issues that council will need to address:

One University Place

As you all know, construction began on the mixed use building has started. I will continue to work for the completion of this project with minimal disruption to neighbors, and to protect the city’s interests as the Melrose/Sunset intersection in re-aligned. The completion and planning of the community center space will be critical as well. As someone who has worked on this project for 6 years, I ask for to the opportunity to see it through to completion.

  City Finances

As a small land-locked community our budget is always a major topic of concern. My goal is to make sure our priorities are funded and we are able to control spending and stay within our projected budget limits. Since we contract most of our city services we have very few areas that we can make budget adjustments. I have the experience to make crucial decisions with our limited resources. 

An Issue where we can be a leader for the greater metro area

Bike Friendly Community

A higher percentage of U-Heights workers walk and bike to work than any other city in the U.S. We are the smallest city ever recognized by the League of American Cyclists with a Bronze Level Award in 2012. With our critical location near UIHC we need to improve commuter access through town. We can become a leader in how to involve community members and partners to improve our commuting infrastructure.

With any improvements to our infrastructure we could easily become a Silver or perhaps the first Gold level community in Iowa.

My personal request:

I have worked hard to represent all citizens in town during my three terms on council.  I would like to finish the work I’ve helped start and also lay the groundwork toward a greater future for our town. I ask for your vote so I can help accomplish these tasks.

Details, Details, Details

I think its fair to say attention regarding the One University Place development has ratcheted up bit in town this week. With fliers appearing at doors and citizens being encouraged to contact councilors, I thought it would make sense to remind people what is happening. Many statement I've read lately are not the reality of what is happening.

City Council will consider a PUD (planned unit development) document and developer's agreement at the June 9th council meeting. At the special meeting we decided to have the City's TIF attorney, John Danos, begin the process of preparing documents to consider a rebate TIF. 

Council has heard from citizens and at least one council member that a TIF is unnecessary for this project. I disagree and would cite two pieces of evidence to support my thoughts. One would be the NDC Gap Financing Report we received. The other would be what is happening around us. 

The City of Iowa City recently announced the awarding of a contract to CA Ventures to developed the city-owned property at the old St. Pat's school site. Much was made of the fact that this development would NOT receive any TIF funding. This 1.1 acre parcel will be home to a 15 story condominium tower AND a 14 story hotel tower. 

Here is some of what the March 23, 2015 Press Citizen story had to say:

The proposed building, called RISE at Riverfront Crossings, is a $102.5 million, nearly 560,000-square-foot project that includes two towers: a 15-story residential tower and a 14-story, 152-room hotel. Designs for the towers include 127 one-bedroom units, 149 two-bedroom units and 44 three-bedroom units. Designs also include more than 23,000 square feet of office space and 6,000 square feet of retail space.

Davidson said Core Campus, which proposed HUB at Iowa City, was named an alternate preferred developer, in case an agreement cannot be made. Plans for HUB at Iowa City include a 15-story mixed-use building with 31 efficiency units, 75 one-bedroom, 83 two-bedroom and 161 three-bedroom units. Plans also include a 153-room hotel, 4,000 square feet of retail space and 20,000 square feet of office space.

Davidson said that although the two projects are similar, the mix of housing options offered by CA Ventures project, particularly the one- and two-bedroom units, made the project more desirable.

"(RISE at Riverfront Crossings) housing options include about 90 percent one- and two-bedroom units, and almost half of Core Campus' units are three-bedroom," Davidson said. "Usually when we hear three-bedroom units, we think of college roommates living together, and we'd like to make the residential space more available."

CA Ventures has offered the city $6.5 million for the almost 60,000-square-foot property, $1.5 million more than Core Campus' offer. Neither project currently requires tax increment financing assistance from the city.

Davidson said, due to the developer's interest, construction could begin at the site as early as this year.

"The developers are trying to stay on track with the (University of Iowa's) plans to expand," he said.

This parcel, is one fourth the size of the St. Andrew site. To get a quality development, that is not focused on student housing, it has to have a mass that is much larger than what has been approved on the St. Andrew site.  It is also important to note the yellow highlight I used to show what real student housing looks like. A predominance of 2 bedroom units is NOT a student property. Also students want to be close to downtown, the east campus and other students. A west side site would not do that. The last sentence of the above article is important, as UIHC expands we need to be ready to bear the pressure of increased housing needs due to expanded hospital staffing.

I also want to remind people what TIF expert Peter Fisher had to say when he spoke to council on April 28th. Here is a link to my write up on that: A Closer Look at TIF. We are following the recommendations he made at this meeting.

This project remains high quality project with 104 units, and 5 story and 3 story buildings. By contrast the RISE project is 320 residential units and 152 hotel units. I don't think our town is willing to double or triple the size of the project in order to not have a TIF request.

The current TIF request is 40% of what was asked for in 2010. I have consistently told this developer to bring in a high quality project and if there is to be gap funding that the city's participation be modest. A rebate TIF that is equal to 10% of the projected valuation while not exposing the City to any risk, meets that criteria.

One University Place PUD My Thoughts

In the past week City Councilors received the National Development Council's report analyzing whether a TIF proposal would be warranted for the One University Place project. We also received the latest Developer's Agreement draft document.  Both of these will be helpful as Council holds it's Public Hearing and Special Meeting on Wednesday May 27. This meeting will be at the University Club at 7:00 PM. All citizens are invited to attend and comment.

Here is a link to the Agenda and Attachments for the hearing and the meeting. Also in this document are all the reports submitted to Council covering various aspects of the plan. This packet runs 138 pages, so here is a chronological listing of what's in it:

1. Agenda
2. Attorney report
3. PUD Submission 4/17/15
4. PUD Submission 5/21/15
5. MPOjc report
6. MPOjc traffic report
7. NDC gapfunding report
8. UH Building Inspector report
9. UH City Engineer report
10. Coralville Fire Department report
11. Iowa City Water Division report
12. UH Police Department report
13. University of Iowa report
14. Development team responses to city reports
15. Resolution 15-30
16. Development Agreement revised 5/21
17. Resolution 15-31
18. Resolution 15-32

While I think reading the entire packet is informative, I would especially recommend reading the two documents that I made into links above.

Here are my thoughts: I'm comfortable with the PUD plans as amended in the submission of 5/21/15. I will support Resolution 15-30 with the considerations listed (some of which have been addressed by the developer's response.)

I'm also comfortable with the Developer's Agreement as presented. I will support Resolution 15-31.

I'm also willing to support a rebate TIF as outlined in the NDC gap financing report. What that amounts to is a 10% support level, based on the final value of the project. 

A Closer Look at TIF

Council held a work session last night on Tax Increment Financing (TIF) as we continue to consider the One University Place project. We had two speakers talk with us, and it was a very informative and illuminating meeting.

The first presenter was Dr. Peter Fisher, Research Director of the Iowa Policy Project. Peter is national expert on public finance and is a frequently cited commentator on what is viewed as the abuse of TIF projects.

I spent a good deal of time speaking with Dr. Fisher in 2010 when in my first term on city council and the idea of TIF was proposed for One University Place. I find him to be very approachable and gracious with his time and expertise. Last night he had a PowerPoint presentation that he shared with the council and public who attended the meeting.
The slideshow can be downloaded from the U-H Municipal website:  TIF Presentation

The portion I found most helpful were the last two slides he shared. The first slide was guidelines for Responsible TIF Use:

These guidelines generally correspond with what I've said I would support in a TIF: a project based, rebate TIF with a definite time/cost ending. The only area above that I haven't supported is the last one in that I have mentioned TIF as a means to pay for the Community Center which would be a tax exempt facility. I will now need to consider bonding for a center in light of Dr. Fisher's suggestions.

The last slide was Questions to Ask:

These are the questions we should apply to One University Place, some I can answer now, others not yet:

Question One: YES ( we are only considering a rebate TIF, for the project site only)
Question Two: YES (I view the commercial space as a public benefit. The developer has said they could build a residential only project without TIF. I believe the public benefit of commercial space justifies a TIF)
Question Three: Not Yet (I'll talk about this down below)
Question Four: To ensure public benefit (This can be explained in my answer to question 2 as well as my firm belief that this property, which currently generates zero taxes, should be on the city rolls. If this development does not take place there is a high probability that it could be purchased by the University of Iowa, which would effectively remove any possibility of it generating taxes)

The second speaker was Tom Jackson of the National Development Council. City Council has hired Tom evaluate the One University Place project and recommend whether or not a TIF would be necessary. Tom has also performed this duty for the City of Iowa City as they consider re-development projects. Tom's work will heavily influence how I judge the answer to question 3 above.

Tom said he will have a full written report delivered to the City prior to our May 27th Public Hearing on the One University Place Planned Unit Development (PUD). He did have some preliminary remarks last night. Here are what I considered major points of what he said last night:

• While Tom didn't say outright that the project deserves a TIF, he did talk in general terms about amounts and time limits, so I am assuming he has deemed the project as viable and worthy of TIF
• Financing model is predicting an 8% return on the project 
• Local bank financing would be approximately 5% which would be paid first
• Private equity firms are not interested in projects generating under 15% return
• A TIF time limit of 12 years is the rough projection
• The payment would be a flat amount per year, so that after the first several years of payment, any excess amount generated from site would flow through normal channels to all other entities: county, city, school district
• A gap amount of $4 million is the rough projection

As I said at the beginning of this post, I found last night to be extremely helpful and what I learned will certainly influence and clarify my judgement regarding this project.

TIF Talk

City council will continue discussing Tax Increment Financing (TIF) at a work session on Tuesday April 28th. We held an informational session on TIF last month. Here is a link to the official minutes of the meeting as posted at the City of University Heights website:

http://university-heights.org/council/15/minutes/150323minutes.pdf

I recommend reading these. I also took notes at the meeting, here is what I recorded:

1. Explain difference doing TIF funding as opposed to doing a municipal bond to provide funding for a development.

Difference between fronting cash or a TIF rebate arrangement. When city has to front, they have to borrow, and puts city’s credit at risk. TIF rebate requires developer to front cash, and then offers future economic benefits, keeps risk on private side. Iowa law allows cities to define “necessary.” That includes infrastructure low-moderate housing.

2. What are the different types of TIF funding- Bond, tax rebate, tax abatement, et.al

Basic tenet: tool to repay obligations to a city or county of urban renewal projects. Has to have a public obligation. 1. Traditional banking (borrowing or a bond) general obligation can be paid by debt obligation levy. 2. Internal borrowing must have your own funds. 3. Negotiated TIF contracts or rebate agreements. 4. Statutory obligation for low income if you TIF market rate projects. One more tool “tax abatement” not a TIF. Keeps new valuations from going on the property tax roll.

3. What is a TIF district and who decides the location of the TIF district?

Location is defined by City Council and BOS have authority to establish urban renewal areas. TIF district is designated by ordinance.

4. Our town has a bonding capacity of about $5.3 million. How is our bonding capacity affected by the different types of TIF funding or a municipal bond?

Law sets debt limit. Interest is not legal debt. Utility borrowing, special assessments not considered debt. GO and TIF are debt. Annual Appropriations make it such that city’s payment liabilities are dependent on city council decisions and action. You can put specific concrete benchmarks to incentivize developers.

5. If TIF funding or a municipal bond is chosen as a gap funding mechanism, who determines how the repayment is used and where it goes. E.g. Johnson County, School District, University Heights.

All decisions are made by city council. Can’t control whether or not revenue comes in and the pace. Minimum assessment agreement establishes a floor of valuation with assessor. Makes TIF revenue stream more predictable.

6. How is University Heights' bonding capacity affected as new buildings are added to the tax rolls and a portion of the TIF or bond is repaid?

As buildings are added debt limits goes up 5% of assessed valuation of new construction. Have to wait for assessment to catch up. 18 month lag. Bond rating of city won’t be an issue.

7. Are there any employment requirements for any TIF funding or bonding?

Required? No but cities could say that if jobs are created in commercial projects the TIF could be higher. 

8. What are the circumstances in which TIF could go totally wrong and result in "bankrupting the city" that we hear from some individuals?

TIF negotiated contract shouldn’t ever hurt a city, since it isn’t the public credit put at risk. However fronting cash is risky but with debt limits and savvy lenders it shouldn’t be an issue either.

9. When does Affordable Housing come into effect for TIF projects?

Lower and moderate income set aside if used for public infrastructure related to new market rate housing then must have additional funding for low/moderate income. Amount is county specific due to rates. In negotiated contract that developer gets percentage after LMI (low moderate income) is first required. TIF for commercial does not require set aside.

What triggers that obligation (TIF used in residential project or for residential purposes, I believe);

How much funding is involved (how is the obligation computed); and

How is the obligation paid – over time, as TIF is rebated, etc.

Questions from audience

When should city not use TIF?

Each community has to make that decision about what is appropriate use and when.

Any implications for public space not subject to taxation?

2012 leg says analysis has to be done to find feasibility. Keeps discretion at local level.

In determining increment on tax exempt property how is increment measured?

County assessor starts from zero when counting in similar projects but must involve assessor to know for sure.

Coralville’s Bond Rating drops 6 levels in 2 years What about U-H? What about local banks not wanting to loan to us?  

Doesn’t work for a rating agency and has a hard time considering how we might need a bond rating agency. Are you making a good policy decision and a good fiscal decision?  Banks generally will enter with municipalities. 

20 year TIF collection limit under current law. For market rate housing TIF limit is 11 years.