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TIF s Can Work Panel Discussion WVEDC 2008 Fall Conference

Purpose of Tax Increment Financing. To capture projected increase in property tax revenue created by development and use increase to pay project costs.. Captures the projected increase in property tax revenue (real and personal) to be created by developing an area and uses that increase to assist in paying for Projects..

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TIF s Can Work Panel Discussion WVEDC 2008 Fall Conference

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    1. TIF’s Can Work Panel Discussion – WVEDC 2008 Fall Conference

    2. Purpose of Tax Increment Financing To capture projected increase in property tax revenue created by development and use increase to pay project costs.

    3. Captures the projected increase in property tax revenue (real and personal) to be created by developing an area and uses that increase to assist in paying for Projects.

    4. Amendment One - passed in 2002: Constitutional amendment approved by the voters Enabling legislation enacted in 2002 2004 Amendments to Legislation - clean-up: Exclusion of personal motor vehicles from personal property Clarification of creation of District without project Conflict of interest provisions Publication requirement changes

    5. Captures tax increase to benefit local project. Broad statutory authorization “Scalpel vs. Sledgehammer” Public policy protections: - Prevailing Wage - Competitive Bid - West Virginia Jobs Act - Public hearing and notice requirements Local control

    6. Government approvals Notice and public hearing requirements Prevailing wage Competitive bidding Local labor preference Development Office approval FOIA accessibility

    7. Timing Complexity Cost Low property taxes result in low yield Public perception (not reality) Learning curve

    8. Preferred Projects: Infrastructure (water & sewer) Roads Other Projects: Landscaping and Street Lighting Land Acquisition New Buildings Renovation of Existing Buildings Other Capital Costs

    9. Types of projects funded from TIF in Other States: Downtown revitalization Station Square (in Pittsburgh, for example) Manufacturing Facilities Sports Complexes Recreational Facilities Commercial Developments Mixed-Use Developments

    10. Several unrelated private taxpayers Large increase in assessed value Immediate demonstrable increment Experienced developer and professional team

    11. One, or several related, private taxpayers Development due to state agency or not-for-profit Little increase in assessed value Speculative, or slow to develop, increment Inexperienced developer and professional team Politically difficult projects

    12. Bond Counsel: Prepare required resolutions, orders/ordinances, notices, etc. Assist with the preparation of the TIF Application Prepare bond documents for the TIF Bonds Provide opinion on the tax status of the TIF Bonds Investment Banker: Assist with the preparation of the TIF Application, including TIF obligations structure, projection of net property tax increment and projected maturity of the TIF obligations Structure the TIF Bonds and prepare coordinate required information, studies and analyses for sale of the TIF Bonds

    13. Determined by type of project (Public Use vs. Private Use) and security/guarantees (“Naked” vs. Private Security) and must be considered early in structuring the transaction Tax-exempt TIF Bonds provide for a lower interest cost than taxable TIF Bonds TIF Bonds are tax-exempt in most cases if “naked” (no private security other than the pledge of incremental property taxes) TIF Bonds are taxable in most cases if proceeds of TIF Bonds are used for private purposes/benefit

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