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Tax increment redevelopment plan

Streck

Cyburbian
Messages
604
Points
18
The city is presenting verbage for a Tax Increment Redevelopment Plan to the Planning Commission.

As a Planning Commission member, I am not familiar with this animal, but it looks like we are preparing to take some property, demolish whatever is there, if anything, and build as a tract to the city's satisfaction.

We have not been advised as to exact location, yet. The verbage comes from an attorney's office and looks very thorough.

What are some pitfalls that the Planning Commission should be aware of in their review and recommendations?

It is in written form without property designations at this time, and will be presented at our next meeting, Monday, August 12, 2002 for comment and approval.
 

mike gurnee

Cyburbian
Messages
3,066
Points
30
First and foremost, I would recommend tabling the idea. You do not have enough information to make a recommendation. more later.
 

Streck

Cyburbian
Messages
604
Points
18
I would certainly agree that we do not have anything that we could approve at this time.

Article XI Tax Increment Financing Plan does not describe the specific property, Exhibit I Redevelopment Plan (legal description) is not included, and Exhibit II Redevelopment Area (map delineating corprate (project?) boundaries) is not attached either.

But are there some general pitfalls we should look out for?

Is there an article in a Planning magazine that might address considerations, failures, and good results?
 

mike gurnee

Cyburbian
Messages
3,066
Points
30
A few years ago APA published a Planners Advisory Service Report on tax increment financing (TIF). As I recall it dealt primarily with the financial feasibility of such projects. In a nutshell, TIF is a development financing scheme where the before development property tax become a base line; after development the valuation rises--and the increase in property taxes (the increment) is used to pay off bonds floated to create the development.

Without knowing your state criteria, I bet the planning commission is asked to bless TIF projects for compatibility with the comprehensive plan, or to adopt the redevelopment plan. How a project is financed is usually not a planning commission concern. My issue is your lack of information. Commission members should know the location and intensity of the proposed development before the meeting day. How can you be expected to make an informed decision? If you are asked to adopt a redevelopment plan, there should be a public hearing...and you cannot give out much public notice if you do not know where.
 

Chet

Cyburbian Emeritus
Messages
10,624
Points
34
Grab your state statues and read about the required elements of a TID plan. I can't beleive you have a plan without knowing the exact area you are dealing with.
 

nerudite

Cyburbian
Messages
6,544
Points
30
TIF is pretty complex, and there is a range of opinions both for and against using TIF as a tool for economic development. In either case, as a Planning Commissioner, it doesn't sound like you have been provided with enough project specific information. If you want an opinion from someone with more of the contrary view to TIF, you can take a look at this document:

http://www.igpa.uiuc.edu/publications/pdf/workingpaper75.pdf

I read the PAS report awhile ago, and it was pretty informative. You may want to ask the planners who prepared the recommendations for PC to provide you with a copy (if they have one) or provide additional background regarding the purpose of TIF in your community as part of their presentation.
 

Cardinal

Cyburbian
Messages
10,080
Points
34
I have been involved in several TIF projects and would not worry about not having specific information as to the boundaries at this point. It is a normal stage of plan development to to run it by the plan board conceptually, to test the receptiveness of the overall idea - proposed markets, projects, financial feasibility, etc., before committing to which exact propoerties will be included. Nobody should ask you for approval of the plan without the boundaries (illegal, I would guess) but they should be asking for the plan board's opinions during the planning stages. That is, I would guess, where you are right now.

There are a few things you need to assess when you are planning a TIF. Here are a few:
- To renovate or redevelop, or both. Are the buildings that are there worth saving? Structurally or historically, are they sound, or would saving them pose an obstacle to a preferred redevelopment concept?
- Market. What uses will the area support? Will they be residential, commercial, industrial or mixed use, and what likely products/users. Low income apartments or high-end condominiums? Mixed-use commercial/residential buildings or Denny's and Burger King? The boundaries of the TIF and nature of TIF activities should aim for a realistic market.
- Use of TIF. What will the TIF provide? Possible uses of TIF (depending on state enabling legislation) include land assembly, clearance, infrastructure development, public improvements such as streetscaping or parking lots, and various incentives to private developers. What types of "claw-back" provisions are proposed?
- Financial feasibility. Most TIFs will issue bonds to pay for the improvements they make up front. The increase in property tax payments is used to repay the bonds. Will the redevelopment occur and will the increment it generates be sufficient to retire the debt the TIF will incur?
 

Streck

Cyburbian
Messages
604
Points
18
Thanks. I am overwhelmed with info you guys have provided.

Two attorneys presented the TIF concept to us tonite. Both represented the city. One was formerly with the State Attorney General's office and specialized in public financing. No developers were present to present anything.

They presented the Redevelopment Plan which is legally required in our state prior to having a TIF. The Redevelopment Plan was text only, and basically stated the requirements for applying for a TIF anywhere in the city. The boundary for the Redevelopment Plan was the city boundary.

There is a TIF in development, but it was not presented. There will be a Public Hearing.

As I understand the proposed TIF (not presented yet), the city wants a major retail developer to extend a new boulevard a mile or so past his development, and develop a required detention area partially on his property into a really nice facility for the city.

The advantage to the city over conventional bond issuance is that the developer pays all up-front costs, and must totally complete all of the agreed facilities to the satisfaction of the city before the city pays anything. Also, the TIF does not count against city bonded indebtedness.

The attorneys reported no litigation unsatisfactory to cities as a result of TIF's in our state. They also reported no pitfalls to cities. If revenues do not meet expectations, the bond holders have to absorb the loss, not the city.

Am I missing something?
 

Chet

Cyburbian Emeritus
Messages
10,624
Points
34
Wow. Your state must have great TIF laws. Ours keep getting more stringent.

-Our TIF debt counts towards general indebtedness (thanks to a state supreme court ruling).

-If revenues fall short, the municipality generally will cover the expense rather than have the bond holders take the loss. No one wants a bond downgrade on their next TIF project. You might want to inquire as to your community's philosophy on that.


Otherwise, sounds like a good start for you, Streck. The devil is in the details, but it sounds like everything will come out in the later phases. Good luck!
 
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