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)
2
Brevity is the soul of wit…
my attempt at a brief explanation of the tif
mechanism
3
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
4
How TIF Functions
TIF Entity
TIF Ends
Increment
$$
City
County
Schools
Increase in value over the
base that is apportioned to
TIF authority
Misc Districts
FROZEN TAX BASE
All property tax
revenues on
area are
apportioned to
all taxing
authorities
Portion that provides revenue to all taxing authorities
TIF Begins
10 Years or 20 Years or
TIF
Ends
Everyone
Wins!
5
SETTING UP YOUR URBAN RENEWAL
AREAS & THE AURR
6
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.
7
• OrI am
it could
• But
newbetowith
the your city or your bond
counsel’s records departments/storage area…
City / Job…How
would I know if we
have an active
• Or just to figure
Urban Renewal
out if you have
Area?
an active UR
Area or not…
• Information on your area(s) could be in your
files…
8
Click!
9
Click!
Click!
10
Click!
11
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
14
15
• 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
16
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
17
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.
18
3…2…1…ignition!
Igniting the TIF Revenue Rocket
19
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.
20
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.
21
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.
22
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
23
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.
24
AURR Project Inputs
• Necessary information to input into the AURR system
for each project includes:
Enter a brief,
descriptive
project name
Select yes if the
Select yes if the debt
Enter a detailed
Select the physical
work is
funding
the project is
description of the classification that
complete on your
off. No if debt is
project being
best fits your projectpaid
otherwise,
outstanding
completed
project
select no.
25
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)
26
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
27
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
28
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
29
Spreading the Good News…
about Internal Loans
• 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
30
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
31
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
32
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
33
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
34
35
BREAK TIME
Go out and cool down from all of the TIF-tastic
excitement
36
SWEET, SWEET TIF REVENUES &
WHAT TO DO WITH THEM
37
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!
38
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)
39
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
40
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
TAX DISTRICT
TAX DISTRICT
valuation) is tracked
via Tax
AREA
AREADistricts
#1
#2
TEDBURG URBAN
TEDBURG
CITY
RENEWAL AREA
TAX DISTRICT AREA
#3
41
TIF Revenues Thru the Tax District
Prism
TAX DISTRICT
AREA
#1
TAX
DISTRICTAREA
#2
TEDBURG URBAN
TEDBURG
CITY
RENEWAL AREA
TAX DISTRICT AREA
#3
42
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
43
TIF Revenues Thru the Tax District
Prism
• TIF Tax Districts come in
pairs
– Base District
– Increment District
Base
Tax District
#1
Increment
Tax District
#1
• Identical area, different
valuation totals
– Base District is taxed by
all Levy Authorities
– Increment is taxed by
the TIF Authority
TAX DISTRICT
AREA
#1
44
The Creation of TIF Revenues
• (Increment Valuation/1000) X TIF Rate = TIF
REVENUE
• TIF revenues are forwarded to the City from the
Increment
County Treasurer
Increase in value over the
base that is apportioned
to TIF authority
• Accounted for under the TIF Special Revenue
Fund
FROZEN TAX BASE
Portion
revenue
to allcreated
taxing authorities
– Obligated
tothat
URprovides
Area
that
them
45
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
46
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
Click!
– 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.
47
48
TIF Special Revenue Fund
• Special Revenue = Obligated Monies
• May require several sub funds to avoid comingling 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
49
TIF Special Revenue Fund
• Special Revenue = Obligated Monies
• May require several sub funds to avoid comingling 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
50
TIF Special Revenue Fund
CITY OF TEDBURG
TIF SPECIAL REVENUE FUND
UR Area
#1
Sub Fund
UR Area #1
Project
UR Area
#2
Sub Fund
UR Area #1
Rebate
UR Area
#3
Sub Fund
UR Area #3
Project
UR Area #2
Project
UR Area #3
Rebate
UR Area #2
Rebate
51
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
52
Example -- Bond/Note/Loan Payment
CITY OF TEDBURG
TIF SPECIAL REVENUE FUND
UR Area
#1
Sub Fund
UR Area #1
Project
UR Area
#2
Sub Fund
UR Area
#3
Sub Fund
UR Area #1
Rebate
53
Example -- Bond/Note/Loan Payment
CITY OF TEDBURG
TIF SPECIAL REVENUE FUND
UR Area
#1
Sub Fund
UR Area #1
Project
UR Area
#2
Sub Fund
UR Area
#3
Sub Fund
UR Area #1
Rebate
CITY OF TEDBURG
DEBT FUND
54
CITY OF TEDBURG
TIF SPECIAL REVENUE FUND
UR Area
#1
Sub Fund
UR Area #1
Project
UR Area #1
Rebate
UR Area
#2
Sub Fund
UR Area
#3
Sub Fund
PAYING AGENT / NOTE
HOLDER
CITY OF TEDBURG
DEBT FUND
55
Example -- Payment of an Agreement
CITY OF TEDBURG
TIF SPECIAL REVENUE FUND
UR Area
#1
Sub Fund
UR Area #1
Project
UR Area
#2
Sub Fund
UR Area
#3
Sub Fund
UR Area #1
Rebate
AGREEMENT PAYEE
56
CITY OF TEDBURG
TIF SPECIAL REVENUE FUND
UR Area
#1
Sub Fund
UR Area #1
Project
UR Area
#2
Sub Fund
UR Area
#3
Sub Fund
UR Area #1
Rebate
AGREEMENT PAYEE
57
Expending TIF Monies in the AURR
• Segregated tabs for entering Rebate and NonRebate expenditures
• Only need to enter amounts expended for
the FY being reported
58
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
59
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
60
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
61
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
• Original Principal of Bonds: $10,000,000
Project 1 Cost:
Project 2 Cost:
Project 3 Cost:
$1,000,000
$250,000
$500,000
$1M/$10M= 10%
$250K/$10M= 2.5%
$500K/$10M= 5%
10% x $605K = $60,576 10% x $605K = $15,144 5% x $605K = $30,288
62
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
63
THE LMI MYSTERY
64
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
65
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
66
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
67
CHECKING THE BALANCE
& DEBT LOAD
68
Finishing Out Strong
• Financial Recap
– Accounting of the balances and transactions for
FY in each UR Area
69
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
70
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
71
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
72
Levy Authority Summary vs. AFR
AURR
AFR – TIF Special Revenue
• TIF Sp. Rev. Fund Cash
Balance
• TIF Revenue – Property Tax
• TIF Sp. Rev. Fund Interest
• Asset Sales
• Loan Repayments
• Pg 5, line 134
• Returned to Co. Treaurer
• Pg 10, line 172 – Other Gen
Gov
• Pg 12, line 270 – Total Ending
Balance
• TIF Sp. Rev. Fund Cash
Balance as of 06-30-2012
•
•
•
•
Pg 2, line 7
Pg 2, line 18
Pg 5, line 124
Pg 4, line 113-119 – Misc
73
QUESTION TIME
TED NELLESEN
City Budget Director
Iowa Department of Management
515-281-3705
ted.nellesen@iowa.gov
74
TIME ALLOWED FUN FACTS
75
Time Allowed Fun Facts
• FY 2012 Reported Data
76
Time Allowed Fun Facts
• FY 2012 Reported Data
77
Time Allowed Fun Facts
• FY 2012 Reported Data
78
Time Allowed Fun Facts
• FY 2012 Reported Data
79