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.
