Presentation on theme: "DEVELOPMENT AGREEMENTS AND POST-ISSUANCE COMPLIANCE Iowa Municipal Professionals Institute, 2014 Kristin Cooper Ahlers & Cooney, P.C."— Presentation transcript:
DEVELOPMENT AGREEMENTS AND POST-ISSUANCE COMPLIANCE Iowa Municipal Professionals Institute, 2014 Kristin Cooper Ahlers & Cooney, P.C.
WHAT IS A DEVELOPMENT AGREEMENT? What will the Developer do? Build a new warehouse Hire 10 new employees Agree to a Minimum Assessment Agreement Promise to keep their property in good repair Promise to insure their property Promise to pay their taxes
WHAT IS A DEVELOPMENT AGREEMENT? What will the City provide as an incentive? Tax Rebates (strongly recommended) Upfront Cash (higher risk) Forgivable Loan (higher risk) Public Infrastructure Property Transfer – 403.8 Remember the three C’s Call your realtor – make sure you’re selling at fair value Competitive bidding Check the safe harbor – minimum assessment agreement
WHY IS IT SO LONG? Even small deals can be complicated! Identify the Minimum Improvements (in detail) Timing of rebates, grants Benefit to City (job creation/retention, building) Non-appropriation language Memorandum of Agreement Certificate of Completion Annual Certification
WHAT IF IT’S A HOUSING DEVELOPMENT? Will the housing be 100% LMI? If no: LMI Set-Aside Reimbursement for only public infrastructure Limited time for the collection of tax increment (10 or extend to 15) May have to create new urban renewal area
DRAFTING CONSIDERATIONS: How to Get Started: Identify a project the City wants to encourage Decide which incentives the City wants to provide Be sure that: Development Property is in Urban Renewal Area Specific project authority in Plan (given 2012 legislation) Grants/benefits will not be cut short by sunset Ordinance allowing for collection of increment
DRAFTING CONSIDERATIONS: Tell us if you need to borrow money to do the project Find out the legal name of the Developer Is it an owner/tenant situation? Make sure the business is not relocating from an adjacent county or city Ask if the Developer is also requesting money from the IEDA
DRAFTING CONSIDERATIONS: More Decisions! Do you want the Developer to pay for the City’s fees (legal/planning) for the project? Do you want to give the Developer increment on both the land and the building? Will the “base” be the current assessed value of the property?
MAJOR TAKEAWAY: Make sure you have a Post-Issuance Compliance Policy! Procedures should provide for: Due diligence at regular intervals Identify the official or employee responsible for review Provide for training of the responsible official or employee Address retention of records Timely identify and correct tax noncompliance
RECOMMENDATIONS Keep records Consider separate storage and destruction policies for bond related records Create sub-accounts for proceeds Keep receipts Start a tickler system Keep a list of property bought with bond proceeds
POST ISSUANCE COMPLIANCE Arbitrage rebate and yield restriction compliance key part of post- issuance compliance proactively monitor arbitrage rebate and yield restriction Develop process for identifying private use
CALL BOND COUNSEL IF… You sell an asset purchased with bond proceeds (before you sell) If you intend to lease any asset purchased with bond proceeds If you plan to enter into any management or research agreement relating to a financed asset If you intend to enter into any agreement to confer special legal rights or entitlements relating to a financed asset (such as naming rights)
WHY HAVE A POLICY? Failure to check the boxes on the Form 8038 / 8038-G may cause you to end up in audit pile
WHY HAVE A POLICY? Not absolutely required May be audited (more frequently) Opportunity to participate in VCAP to address violations Failure to comply with tax requirements could result in loss of tax- exempt status of the financing Hurt reputation of borrower
QUESTIONS? Kristin Cooper Ahlers & Cooney, P.C. 100 Court Avenue, Suite 600 Des Moines, Iowa 50309 (515) 246-0330 firstname.lastname@example.org