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 –  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?

SWITCHING GEARS… Post-Issuance Compliance

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 (515)