Proposed Economic Development Policy For the City of Tuscaloosa

1. ProposedEconomic Development PolicyFor the City of Tuscaloosa

2. Qualified Private Development Public Infrastructure Improvement Assistance Policy of the City of Tuscaloosa (A05-0278)

3. GOALS Establish principles of economic development for the City Identify types of development that the City deems eligible Further Core Beliefs Inform potential developers Maintain flexibility

4. FUNDAMENTAL PRINCIPLES OF ECONOMIC DEVELOPMENT • Must serve the general public • Only incidental benefit to private development

5. Principles Of Economic Assistance: • City’s financial interest shall never be placed at risk • Must meet public purpose: • promotion of public health, safety, security, prosperity and general welfare of the community • the expenditure by the City must confer a direct public benefit or a reasonably general character to a significant part of the public • No City funds may be devoted to the benefit of any private person

6. Principles (cont’d): • Must be beneficial and needed by community: • Must offer opportunities not currently available • Should not duplicate existing commercial and/or retail activities • City must have a legal interest in the land upon which public assistance is to be conducted • No adverse impact on taxes: • no rebate of Sales or Use Taxes • no legal authority to abate ad valorem taxes

7. Principles (cont’d): • Must be proof of adequate tax revenue generation to guarantee annual payment amount • Must be a development of distinction based upon size, scope, features, location, and creation of new jobs or retailers • Developer must be experienced and qualified and able to provide references and proof of experience with prior, similar developments • Transaction must be in a lawful manner • Developer must demonstrate financial ability to fund the development and produce a realistic, viable financing plan

8. BASIC CONCEPT OF ASSISTANCE Essentially, for qualifying developments, the City may elect to engage in or pay for certain “Public Infrastructure Improvements” if the “Development” will generate sufficient “Annual Tax Revenues” to pay for them over a period of time.

9. Key Terms • To fully understand the policy one must be familiar with the definitions. The policy defines 24 terms. The following terms are some of the most important: • “Public Infrastructure Improvements” • “Annual Payment Amount” • “Annual Tax Revenue” • “Development” • “Substitution Effect”

10. TYPES OF PUBLIC ASSISTANCE AVAILABLE • May include assistance with the following activities on public • property, public right of way or easements dedicated to the City: • Turn lanes, acceleration and/or deceleration lanes • Relocation of all or portions of existing City water and/or sewers • Half or full street improvements • Traffic signals, signage, and other traffic-control • Pedestrian amenities including sidewalks, bicycle paths, and lighting • Public parking • Street scaping and/or landscaping • Fire suppression and water services • Water and/or sanitary sewer main extensions • Drainage structures and storm sewer systems including retention facilities, system extensions, etc. • Similar public infrastructure improvements

11. “Public Infrastructure Improvements” does NOT include any of the following which are not consistent with the Public Purpose Doctrine • any structures or improvements within or upon the development property • parking lots or parking decks serving only the development • lighting within the development • pedestrian amenities serving only the development • architectural enhancements of structures • street scaping and/or landscaping in the development • drainage structures benefiting only the development • grading or filling the site

12. Four Categories of Development • “Qualified Development” : a development which has been determined to be “qualified” due to an application of the evaluation process in the policy • “Qualified Enterprise Zone Development” : “Qualified Development” but in a defined geographic area of the City that has been determined to be economically depressed and in greater need of development than the City as a whole. An Enterprise Zone must be within an area designated as low to moderate income in accordance with applicable Community Development Block Grant requirements

13. Categories of Development (cont’d) • “Merit Development” : a development that does not meet all the criteria of a “Qualified Development” but meets a sufficient number of the criteria to be of special merit as compared to other developments in the City or other unique features and therefore eligible for limited public assistance • “Residential Enterprise Zone Development” : a residential development that meets a substantial number of the relevant criteria for a qualified development, is in an Enterprise zone, and offers a realistic opportunity for redevelopment by eliminating blighted or inadequate housing while providing quality low and/or moderate income housing to a significant number of citizens

14. THE PROCESS • The Policy establishes a detailed application and review process. Examples of some of the required application criteria are as follows: • A detailed application • Statement of how the development meets the fundamental principles of economic development • A description of the specific public infrastructure improvements for which City participation is being requested • Maps and plats prepared by a professional engineer depicting the property • A market feasibility study conducted by a reputable source. The developers must be able to provide demonstrable proof substantiating the projected or forecasted Annual Tax revenues

15. Application Criteria (cont’d) • A traffic impact analysis • An estimate of probable construction cost • A detailed written description of the types and kinds of retail and/or commercial operations • A statement that the Developer is willing to provide in a development agreement a guarantee of Annual Tax Revenue and/or, at the option of the City, a lease covenant • A covenant to maintain a net worth of 35% of the estimated worth of the development • A commitment to complete the construction and retail operation of the development by a date certain • The percentage of requested cost of public infrastructure improvements participation to the cost of the development (for qualified developments cannot exceed 10% or 15% for a qualified enterprise zone development)

16. Evaluation Criteria Each application is then graded based upon the following criteria: • A detailed written description of the types and kinds of retail and/or commercial operations (Up to 14 pts) • The number of square footage of retail space of the development (for qualified developments, a minimum of 100,000 square feet is required; for qualified enterprise zone developments, a minimum of 50,000 square feet is required) (up to 10 pts) • The amount of private investment in the complete acquisition, design and construction of the development (for qualified developments, a minimum of $20 million is required; for qualified enterprise zone developments, a minimum of $10 million is required) (up to 16 pts)

17. Evaluation Criteria (cont’d) • The estimated Annual Tax Revenue from all forms of taxes to be paid to the City by the Development (for qualified developments, a minimum of $1 million annual after a 50% substitution effect; for qualified enterprise zone developments, a minimum of $500,000 after 50% substitution effect) (up to 20 pts) • The number of new full time jobs and part time jobs to be created (up to 18 pts) • Any aspects of the development that make it unique or enhance the development (up to 12 pts) • Annexation or redevelopment of blighted property required (up to 10 pts)

18. RESPONSE TO APPLICATIONS • Form of The Mayor’s Recommendation: • The development is not qualified, no public infrastructure improvements participation is recommended • The development is not qualified; however, due to stated reasons it is considered a “Merit Development” and is eligible for some public infrastructure improvements assistance • The development is qualified but due to other stated reasons the City should decline to participate • The development is qualified and identifies the specific types of public infrastructure improvements and their cost in regard to which the City could participate • The development is qualified; however, further discussions with the developer are required to refine the parameters of the City’s participation • Undecided or more information required. This response indicates that the City has neither rejected the proposal or accepted it but requires additional time, information, and/or analysis before deciding

19. City Council Consideration of the Recommendation of the Mayor • The Council may by resolution duly enacted, elect to authorize the Mayor to proceed with negotiating a development agreement • If the Council has taken no action in regard to the Mayor’s recommendation concerning the development within thirty (30) days of the receipt of the Mayor recommendation, the application will be deemed denied • Upon completion or termination of negotiations, the Mayor shall make a report to the City Council containing his recommendations • Council members will not engage in any negotiations or discussions concerning the terms and conditions of City assistance to the Development at any time with any one other than the Mayor and City staff

20. Requirements to Bind the City • The City will not be bound by any proposal, response, resolution, recommendation, negotiation, communication or other action or inaction, unless and until the following conditions are met: • The Finance Director certifies that sufficient funds exist or are anticipated or budgeted for the City to perform its obligations under the proposed agreement • The City Attorney prepares or approves a written agreement between the pertinent parties • The City Council duly adopts a resolution or ordinance approving the written agreement and the agreement is duly execute by the Mayor and all pertinent parties