As the TIF

World Turns

Mark Cory and Patricia Martin, Ahlers & Cooney

Iowa League of Cities 2012 Annual Conference & Exhibit

Handouts and presentations are available online at www.iowaleague.org

CAVEAT

This Guide is intended for general informational purposes only. Answers to legal questions about Iowa urban renewal law can vary greatly depending upon the specific facts in a given situation. Please consult your attorney.

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2012 UR Amendments Urban Renewal Report

• Must be completed for each UR Plan and Area in effect during the most recently ended fiscal year

• Affirmative vote of Council/Board

• Submit electronically by December 1 following the fiscal year

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Urban Renewal Report

• Very detailed – 21 paragraphs of information, including: – Area designation; submission of all ordinances and

amendments to UR Plan; maps – List of all UR Projects in process and completed – List of all expenditures from special fund and the relating

UR Project (not required for 12/1/12 report) – Amount of property taxes rebated and list of those

properties – Assessed value of UR Areas, portion of assessed value used

to calculate incremental taxes, and portion “released” to other taxing entities

• Start organizing and drafting EARLY!

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Consequence for Reporting Non-Compliance

• Urban Renewal Report & Annual Financial Report

• Due by December 1 following end of fiscal year

• Prior to publication and adoption of budget for fiscal year after December deadline

• Otherwise: Department of Management will not certify city or county’s taxes back to county auditor

– Does not apply to reports due Dec. 1, 2012

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Amendments to Urban Renewal Plans

• Urban Renewal Project must be included in the plan or an amendment to plan – Public improvements

– Development Agreements

– Conveyance or Acquisition of Property

– Blight Remediation

– LMI Match

– Planning, engineering fees, attorneys fees and costs

• No Planning & Zoning review for amendments (just for new plans)

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Think About TIF Authorization a Little Differently

• Tie these 3 things together:

1. Authority for the UR Project in the Plan (description and dollar amount).

2. Resolution by Council/Board approving the expenditure as an UR Project, authorizing payment, and directing it be included in December 1 certification to county.

3. December 1 certification to the county auditor of the expense.

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When to Amend?

• As needed; and/or

• Annually

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AS

AP

(new

pla

n on

ly)

•Obtain written permission of all Ag owners and city/county joint agreement (if applicable).

•Draft UR Plan is approved by Staff and Counsel

•Resolution to set hearing and consulatation

•Refer to P&Z (only new plans, not required for amendments)

•Send copy of plan, resolution, notices of consultation and public hearing to affected taxing entities.

Designated Representative

Holds Consultation

•Written comments about plan.

NOTMORE THAN 30 DAYS

•Receipt by P&Z (new plan only)

•P&Z report to council/board (new plan only)

COUNCIL/BOARD

CLERK/ AUDITOR OR DESIGNATED

STAFF

AFFECTED TAXING ENTITIES

P&Z (only required for new plans, not required for amendments)

•Publish Ordinance

•Record Plan

•File copy of TIF ordinance with county auditor

•Written response to consultation parties

•Report to Council/Board

•Receive reports on consultation

•Receive report from P&Z (only new plans, not required for amendments)

•Hold Hearing

•Pass Ordinance

Relocation of Business Limited

• Cannot use TIF Reimbursement for Urban Renewal Projects that include the relocation of a business from county or contiguous county

• 2 exceptions – Written agreement between the two municipalities – Finding that relocation is “in the public interest” (out of state

move)

• “Relocation”, closure or substantial reduction of existing operations

• And start up of substantially the same operation in the same county or a contiguous county

• Does not limit “expansion” as long as no closure or substantial reduction of existing operation

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TIF Audit and Certificate of Compliance

• Each city or county audit includes examination of TIF compliance under section 403.19.

• City/County must annually certify compliance.

• State Auditor will provide information and rules on this certification

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Changes to TIF Certification

• TIF Certification must also include

– Interest negotiated

– Amounts which qualify for payment from TIF in the next fiscal year and any subsequent fiscal year

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Using TIF for Public Buildings

• If proposed Urban Renewal Plan or amendment includes use of TIF for a public building: – Analysis of alternative development

options and funding must be included in information with consultation notice

– Show such alternatives are “less feasible” than using TIF for the project

– Also include with annual Urban Renewal Report

• Police Station

• Fire Station

• Administration Building

• Swimming Pool

• Hospital

• Library

• Recreational Building

• City Hall

• Other public building exempt from taxation

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No Redetermination of Area Type

• Urban Renewal Areas can no longer be redetermined once they are designated.

• i.e. Cannot amend a pure economic development plan to include a blight area.

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Instructional Support Program Levy (ISPL)

• Must be needed to pay principal and interest of TIF debt

• If TIF debt was incurred: – On or before April 24, 2012

• Beginning fiscal year 2013-2014 • Must notify county by July 1 of each fiscal year to receive

ISPL revenues (suggest notifying school too)

– After April 24, 2012 • Not eligible to receive ISPL revenues [unless school district

passes resolution allowing use]

• Process is virtually identical to PPEL notification process

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Community Colleges

• No longer defined as an affected taxing entity.

– Not required to receive notice of public hearing or consultation.

– Not required to agree to extension of housing agreement for cities under 15,000.

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Surplus Balance in Inactive Funds

• If the necessity for the TIF special fund no ceases to exist and a balance remains:

– Balance cannot be transferred to another fund

– Balance must be paid into the funds for the respective taxing districts

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Use of Interest Earned on TIF

• Interest earned on amounts in special fund must be deposited into the special fund

• Net proceeds from sale of assets purchased using TIF money shall be deposited in special fund.

• No transfers are allowed from the special fund except for payment of loans, advances, etc. that qualify for payment from the special fund.

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POINT --COUNTERPOINT

IF YOU HAVE AN AREA THAT IS DESIGNATED AS ECONOMIC

DEVELOPMENT, CAN YOU ADD AN AMENDMENT AREA DESIGNATED AS

BLIGHT?

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POINT --COUNTERPOINT

CAN YOU EXECUTE A TIF REBATE DEVELOPMENT AGREEMENT

WITH A DEVELOPER WHO BUILDS AN OFFICE BUILDING FOR A TENANT WHO IS RELOCATING FROM AN ADJACENT COUNTY?

POINT -- COUNTERPOINT

IT IS HARD TO JUSTIFY

USING TIF ON A PUBLIC BUILDING

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POINT --COUNTERPOINT

DO YOU HAVE TO AMEND THE PLAN FOR EACH

DEVELOPMENT AGREEMENT, I.E. ABC COMPANY, EFG

LIMITED PARTNERSHIP, XYZ, LLC?

POINT --COUNTERPOINT

DO YOU HAVE TO INCLUDE INFORMATION ON THE UR REPORT FOR

AREAS THAT DID NOT SPEND TIF DOLLARS ON AN URBAN RENEWAL PROJECT DURING THE FISCAL YEAR

THAT IS THE SUBJECT OF YOUR REPORT?

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POINT --COUNTERPOINT

What was the legislature’s estimated cost for the 399

Local governments with active TIFs to comply with the UR

Report requirement?

Answer!!!

399 Local Governments with active TIF’s

12 Hours of administrative staff time devoted

X 40 Dollars per hour value of staff time

$192,000 Estimated statewide expense

(Source: HF2460 Fiscal Note)

QUESTIONS?

Contact Information:

R. Mark Cory (515) 246-0378

Patricia J. Martin (515) 246-0350

Ahlers & Cooney, P.C.

mcory@ahlerslaw.com

pmartin@ahlerslaw.com

891378

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