tif and the annual urban renewal report – from concept to completion
DESCRIPTION
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) - PowerPoint PPT PresentationTRANSCRIPT
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)• 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)
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Brevity is the soul of wit…
my attempt at a brief explanation of the tif mechanism
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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
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How TIF Functions
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TIF Begins TIF Ends10 Years or
IncrementIncrease in value over the
base that is apportioned to TIF authority
TIF EndsAll property tax
revenues on area are
apportioned to all taxing
authoritiesFROZEN TAX BASEPortion that provides revenue to all taxing authorities
EveryoneWins!20 Years or
$$
City County Schools Misc Districts
TIF Entity
Setting up your urban renewal areas & the AURR
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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.
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• But I am new to the City / Job…How would I know if we have an active Urban Renewal Area?
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• Information on your area(s) could be in your files…
• Or it could be with your city or your bond counsel’s records departments/storage area…
• Or just to figure out if you have an active UR Area or not…
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Click!
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Click!
Click!
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Click!
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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.
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• 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
• 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
Now We Have the Why, but How…
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• 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.
Now We Have the Why, but How…
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3…2…1…ignition!
Igniting the TIF Revenue Rocket
How TIF is Activated
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• Existence of approved UR Plan for an area allows an “Ordinance for the Division of TIF Revenues” to be passed by City Council.
• 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.
• The three documents must be uploaded to AURR if any changes have been made during FY2013 or if none have yet been uploaded.
Uploading the Documents to the AURR
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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.
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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
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AURR Project Inputs
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• 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.
AURR Project Inputs
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• Necessary information to input into the AURR system for each project includes:
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)
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The Debt Makes the Project
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• 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
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
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AURR Debt Inputs
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• 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
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
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about Internal Loans
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
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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
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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
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• 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
Boasting About your Jobs in the AURR
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BREAK TIME
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Go out and cool down from all of the excitement
TIF-tastic
Sweet, Sweet TIF revenues & what to do with them
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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!
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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)
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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
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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
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TEDBURG CITYTEDBURG URBAN RENEWAL AREA
TAX DISTRICT AREA
#1
TAX DISTRICT AREA
#2
TAX DISTRICT AREA#3
TIF Revenues Thru the Tax District Prism
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TEDBURG CITYTEDBURG URBAN RENEWAL AREA
TAX DISTRICT AREA
#1
TAX DISTRICTAREA
#2
TAX DISTRICT AREA#3
TIF Revenues Thru the Tax District Prism
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• TIF Tax Districts come in pairs
TAX DISTRICT AREA
#1
TAX DISTRICT AREA
#2
TAX DISTRICT AREA#3
TIF Revenues Thru the Tax District Prism
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• 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
IncrementTax District
#1
TAX DISTRICT AREA
#1
• (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
The Creation of TIF Revenues
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FROZEN TAX BASEPortion that provides revenue to all taxing authorities
IncrementIncrease in value over the base that is apportioned
to TIF authority
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
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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.
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Click!
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TIF Special Revenue Fund
• Special Revenue = Obligated Monies• May require several sub funds to avoid co-
mingling of TIF revenues
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CITY OF TEDBURG TIF SPECIAL REVENUE FUND
UR Area #1
Sub Fund
UR Area #2
Sub Fund
UR Area#3
Sub Fund
TIF Special Revenue Fund
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CITY OF TEDBURG TIF SPECIAL REVENUE FUND
UR Area #1
Sub Fund
UR Area #2
Sub Fund
UR Area#3
Sub Fund
• Special Revenue = Obligated Monies• May require several sub funds to avoid co-
mingling of TIF revenues
TIF Special Revenue Fund
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CITY OF TEDBURG TIF SPECIAL REVENUE FUND
UR Area #1
Sub Fund
UR Area #2
Sub Fund
UR Area#3
Sub Fund
UR Area #1Project
UR Area #1Rebate
UR Area #2Project
UR Area #2Rebate
UR Area #3Project
UR Area #3Rebate
Dispersing the Funds• All TIF revenues received in the TIF Special
Revenue Fund are obligated to specific debts• No payments to meet project costs should be
made directly from the TIF Sp. Rev. Fund– Transfers to other Funds– Transfer monies to Debt Fund to pay for bond,
note or loan payments
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Example -- Bond/Note/Loan Payment
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CITY OF TEDBURG TIF SPECIAL REVENUE FUND
UR Area #1
Sub Fund
UR Area #2
Sub Fund
UR Area#3
Sub Fund
UR Area #1Project
UR Area #1Rebate
Example -- Bond/Note/Loan Payment
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CITY OF TEDBURG TIF SPECIAL REVENUE FUND
UR Area #1
Sub Fund
UR Area #2
Sub Fund
UR Area#3
Sub Fund
UR Area #1Project
UR Area #1Rebate
CITY OF TEDBURGDEBT FUND
PAYING AGENT / NOTE HOLDER
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CITY OF TEDBURG TIF SPECIAL REVENUE FUND
UR Area #1
Sub Fund
UR Area #2
Sub Fund
UR Area#3
Sub Fund
UR Area #1Project
UR Area #1Rebate
CITY OF TEDBURGDEBT FUND
Example -- Payment of an Agreement
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CITY OF TEDBURG TIF SPECIAL REVENUE FUND
UR Area #1
Sub Fund
UR Area #2
Sub Fund
UR Area#3
Sub Fund
UR Area #1Project
UR Area #1Rebate
AGREEMENT PAYEE
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CITY OF TEDBURG TIF SPECIAL REVENUE FUND
UR Area #1
Sub Fund
UR Area #2
Sub Fund
UR Area#3
Sub Fund
UR Area #1Project
UR Area #1Rebate
AGREEMENT PAYEE
Expending TIF Monies in the AURR
• Segregated tabs for entering Rebate and Non-Rebate expenditures
• Only need to enter amounts expended for the FY being reported
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Expending TIF Monies in the AURR
• If a Public Building project was approved during the FY…– Funding Feasibility Analysis outlined under Iowa
Code 403.5– Analysis must be dispersed to the affected levy
authorities during consultation period– PDF of the Analysis document must be uploaded
to the AURR on the Public Building Analysis tab
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Logging Non-Rebate Expenditures
• Tied to Debt & Tied to Project fields are lists populated with enter debts and projects
• Must select a project, a debt, and enter an amount of FY expense to complete
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A Word on Bond Payment Entries
• Bonds generally issued to fund several projects– Not all TIF-related
• Only report the portions of payment that are related to TIF Projects
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The Rub of Bond Payment Entries
• Bond / Loan payments that cover more than one project must be separated by project
• So…– Total Bond Payment
$605,758– 3 TIF projects from the
UR Area are included in payment
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• Original Principal of Bonds: $10,000,000Project 1 Cost:
$1,000,000$1M/$10M= 10%10% x $605K = $60,576
Project 2 Cost:$250,000
$250K/$10M= 2.5%10% x $605K = $15,144
Project 3 Cost:$500,000
$500K/$10M= 5%5% x $605K = $30,288
Logging Rebate Expenditures
• Rebate/Developer Agreement expense requires three inputs not included in Non-Rebate tab– Property Address of project– Name of person or entity receiving the payment– Projected final year of payment
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THE LMI MYSTERY
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Low to Moderate Income Requirement
• Requirement set out under Iowa Code 403.22
• Applies when TIF revenue is spent on housing projects– Residential Economic
Development
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Low to Moderate Income Requirement
• TIF revenues equal to the Countywide LMI percentage must be spent on LMI projects
• LMI designated revenues can be spent anywhere in the City
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Entering LMI in the AURR• Expense that
added to the LMI req. entered in the top blank
• Expenses paid during the FY with existing LMI monies should be entered on the 5 lines below
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Checking the balance & Debt Load
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Finishing Out Strong• Financial Recap– Accounting of the balances and transactions for
FY in each UR Area
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Finishing Out Strong• Financial Recap– Need to enter the portion of TIF Fund beginning
balance attributable to the UR Area• Also pieces of the revenues and expenses
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Finishing Out Strong• Financial Recap– Changes to Financial Recap coming for FY13• Need to report portion of beginning and ending
balances that are LMI restricted
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Levy Authority Summary• Aggregated UR Area
Financial Recaps• TIF Debt Outstanding
is the total debt entered on Debt tab
• Net Debt shows amount of debt that will still trigger TIF
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Levy Authority Summary vs. AFR
AURR• TIF Sp. Rev. Fund Cash
Balance• TIF Revenue – Property Tax• TIF Sp. Rev. Fund Interest• Asset Sales• Loan Repayments
• Returned to Co. Treaurer
• TIF Sp. Rev. Fund Cash Balance as of 06-30-2012
AFR – TIF Special Revenue• Pg 5, line 134
• Pg 2, line 7• Pg 2, line 18• Pg 5, line 124 • Pg 4, line 113-119 – Misc
• Pg 10, line 172 – Other Gen Gov
• Pg 12, line 270 – Total Ending Balance
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QUESTION TIME
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TED NELLESENCity Budget Director
Iowa Department of Management515-281-3705
TIME ALLOWed FUN FACTS
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Time Allowed Fun Facts• FY 2012 Reported Data
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Time Allowed Fun Facts• FY 2012 Reported Data
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Time Allowed Fun Facts• FY 2012 Reported Data
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• FY 2012 Reported Data
Time Allowed Fun Facts
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