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TIF and The Annual Urban Renewal Report – From Concept to Completion

TIF and The Annual Urban Renewal Report – From Concept to Completion. July 25, 2013 1 – 3pm. Order of Events. A Brief Explanation of TIF Setting up your Urban Renewal Area Starting TIF Within an Urban Renewal Area BREAK TIME (exactly 7.5 minutes)

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TIF and The Annual Urban Renewal Report – From Concept to Completion

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  1. TIF and The Annual Urban Renewal Report – From Concept to Completion July 25, 2013 1 – 3pm

  2. Order of Events • A Brief Explanation of TIF • Setting up your Urban Renewal Area • Starting TIF Within an Urban Renewal Area • BREAK TIME (exactly 7.5 minutes) • Sweet, Sweet TIF Revenues and What to Do with Them • The Mystery of LMI • Checking the Final Balance and Debt Load • Some Fun Facts (TIME PERMITTING)

  3. Brevity is the soul of wit…my attempt at a brief explanation of the tif mechanism

  4. What is TIF? • Mechanism to fund certain types of projects • Slum / Blight Mitigation • Economic Development • Commercial / Industrial • Residential • Diversion of potential revenues from other Levy Authorities to fund projects achieving the area purpose

  5. How TIF Functions TIF Entity TIF Ends All property tax revenues on area are apportioned to all taxing authorities Increment Increase in value over the base that is apportioned to TIF authority $$ Misc Districts City County Schools FROZEN TAX BASE Portion that provides revenue to all taxing authorities TIF Begins TIF Ends Everyone Wins! 10 Years or 20 Years or

  6. Setting up your urban renewal areas & the AURR

  7. Annual Urban Renewal Report • First required for FY 2012 • Due December 1st each year • On-line completion and submission • Required if: • Your community has an “active” Urban Renewal in place during the year.

  8. Or it could be with your city or your bond counsel’s records departments/storage area… • But I am new to the City / Job…How would I know if we have an active Urban Renewal Area? • Or just to figure out if you have an active UR Area or not… • Information on your area(s) could be in your files…

  9. Click!

  10. Click! Click!

  11. Click!

  12. Annual Urban Renewal Report • First required for FY 2012 • Due December 1st each year • On-line completion and submission • Required if: • Your community has an “active” Urban Renewal in place during the year. • Your City Council has approved an Urban Renewal Plan during the FY being reported.

  13. This page poses two initial questions: • When did the UR Area start? • Date of Approval of the UR Plan by the City Council • Why did the City start the UR Area? • Blight • Slum • Economic Development

  14. Now We Have the Why, but How… • UR Area Plan document is created • Contains the purpose for which the UR Area was created. • States the designation of the UR Area • Following amendments will set the designation for each amended area. • May or may not include a map of the UR Area

  15. Now We Have the Why, but How… • UR Plans can be amended to allow for more projects or territory to be included • City Council Approves the UR Plan to make it “Active” and create the opportunity for TIF to be used. • Must be reuploaded each time the UR Plan is amended.

  16. 3…2…1…ignition!Igniting the TIF Revenue Rocket

  17. How TIF is Activated • Existence of approved UR Plan for an area allows an “Ordinance for the Division of TIF Revenues” to be passed by City Council.

  18. Uploading the Documents to the AURR • The three documents must be uploaded to AURR if any changes have been made during FY2013 or if none have yet been uploaded. • The UR Area Creation Date and UR Area Purpose should be entered into the UR Area Data Collection page from the UR Plan as well.

  19. UR Areas Crave to be Used… • Once the UR Area has been defined and UR Area Plan has been passed: • Projects can be considered and undertaken • Debts to pay for those projects can be created • Debts can not be certified to the County Auditor until the ordinance to begin TIF has been passed.

  20. Rolling Through the Projects • Projects should be… • In line with the stated goals of the UR Plan • Allowable (usually) if: • Infrastructure Improvements • Loans or Grants for Improvements • Land or building acquisition and remodeling • Only projects done in the UR Area are subject to repayment from TIF

  21. AURR Project Inputs • Information must be entered for projects that are active during the year. • Active meaning under construction, approved by Council, or the debt funding the project was outstanding.

  22. AURR Project Inputs • Necessary information to input into the AURR system for each project includes: Select yes if the physical work is complete on your project otherwise, select no. Select yes if the debt funding the project is paid off. No if debt is outstanding Select the classification that best fits your project Enter a detailed description of the project being completed Enter a brief, descriptive project name

  23. Finding Information on Your Projects • Start with the debts that are paid with TIF money • Track what projects the proceeds paid for • Look at expenditures from past FYs and track back through work papers • Look at minutes of past Council meetings • Check with your Bond Counsel or Financial Advisor (if applicable)

  24. The Debt Makes the Project • Debt repayment is the primary reason to use TIF • TIF Revenues only to be used to repay debts incurred for UR projects • Debt used to fund projects due to the delay caused by certification process (covered later) • Debt for TIF purposes means that a formal agreement for repayment or indebtedness is in place

  25. Certifiably TIF Debt • Old Standards • GO Bonds / Notes • TIF Revenue Bonds/Notes • Private Loans • Debt with a Twist • Internal Loans • Rebates/Developer Agreements • Administrative Costs

  26. AURR Debt Inputs • Necessary information to input into the AURR system for each Debt includes: • Descriptive Name of Debt • Select Debt Type • Amount of Principal and Interest to pay debt in full at the beginning of the fiscal year. • Is the Debt Annually Appropriated (YES or NO)? • Date debt approved by Council • Date Debt will be paid in full

  27. about Internal Loans Spreading the Good News… • Allowable, and commonly used, form of TIF Debt • Common mistakes with Internal Loans • Certifying but never making the internal loan (deficit spending TIF Fund) • Not formalizing internal loans via resolution by Council • Failing to track and pay back internal loan

  28. Administrative Costs, because Lawyers must be paid • Costs paid by General Fund or another fund for administering the TIF fund • Lawyer fees • Portion of staff time (BE VERY CAREFUL) • Audit fee pertaining to auditing of AURR • Most show on AURR as a debt and project

  29. We Treat all Rebates and Developer Agreements as Equals • Rebate Agreements • Agreement to give a portion of taxes paid by a specific taxpayer back to that taxpayer • Developer Agreement • City pays a set amount to a developer or individual, regardless of taxes paid *Caveat – Either may have minimum assessment or Jobs Agreement

  30. Agreements Containing Jobs Provisions • Portion of developer/rebate agreement stating a minimum number of jobs to be created or retained • May also provide for minimum salary required

  31. Boasting About your Jobs in the AURR • Information about any Jobs Provisions that are contained in rebate/developer agreements must be entered into the AURR • Jobs Provisions are generally written into the rebate/developer agreement

  32. BREAK TIME Go out and cool down from all of the excitement TIF-tastic

  33. Sweet, Sweet TIF revenues & what to do with them

  34. TIF Revenues and the TIF Special Revenue Fund • Brief reset of our journey to this point • UR Plan Created and Approved • TIF Ordinance passed and submitted to Co. Auditor • Projects Started • Debt taken out to fund projects • Last step to get the flow of TIF going: TIF CERTIFICATION!

  35. A Brief Sermon on TIF Certification • Due to the County Auditor by December 1st • Only need to do a certification when… • New TIF debt was taken on • Ready to pay existing TIF debt that wasn’t yet certified in a past year • Modification needs to be made to the previously certified debt totals • AVOID RECERTIFYING THE SAME DEBT MULTIPLE TIMES (AMAZINGLY COMMON)

  36. A Brief Sermon on TIF Certification • Certification forms available on the DOM Website under TIF FORMS • Educational webinar available through Iowa League of Cities • Ask County Auditor or DOM for assistance if uncertain of need to certify

  37. TIF Revenues Thru the Tax District Prism • TIF revenues are generated through valuation within the Urban Renewal Area • The Urban Renewal Area Valuation (and all valuation) is tracked via Tax Districts TEDBURG CITY TAX DISTRICT AREA #1 TAX DISTRICT AREA #2 TEDBURG URBAN RENEWAL AREA TAX DISTRICT AREA #3

  38. TIF Revenues Thru the Tax District Prism TEDBURG CITY TAX DISTRICT AREA #1 TAX DISTRICTAREA #2 TEDBURG URBAN RENEWAL AREA TAX DISTRICT AREA #3

  39. TIF Revenues Thru the Tax District Prism • TIF Tax Districts come in pairs TAX DISTRICT AREA #1 TAX DISTRICT AREA #2 TAX DISTRICT AREA #3

  40. TIF Revenues Thru the Tax District Prism • TIF Tax Districts come in pairs • Base District • Increment District • Identical area, different valuation totals • Base District is taxed by all Levy Authorities • Increment is taxed by the TIF Authority Base Tax District #1 Increment Tax District #1 TAX DISTRICT AREA #1

  41. The Creation of TIF Revenues • (Increment Valuation/1000) X TIF Rate = TIF REVENUE • TIF revenues are forwarded to the City from the County Treasurer • Accounted for under the TIF Special Revenue Fund • Obligated to UR Area that created them Increment Increase in value over the base that is apportioned to TIF authority FROZEN TAX BASE Portion that provides revenue to all taxing authorities

  42. Tax Districts in the AURR • Revenue is accounted for by tax district on the AURR • Not all tax districts in UR Area may have revenues in a given year • Request the revenue by increment tax district from the County Treasurer • Designation is also tracked by tax district in the AURR

  43. UR Areas Crave to be Used… • Once the UR Area has been defined and UR Area Plan has been passed: • Projects can be considered and undertaken • Debts to pay for those projects can be created • Debts can not be certified to the County Auditor until the ordinance to begin TIF has been passed. Click!

  44. TIF Special Revenue Fund • Special Revenue = Obligated Monies • May require several sub funds to avoid co-mingling of TIF revenues CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund

  45. TIF Special Revenue Fund • Special Revenue = Obligated Monies • May require several sub funds to avoid co-mingling of TIF revenues CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund

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