1. TIF and The Annual Urban Renewal Report – From Concept to Completion July 25, 2013 1 – 3pm

2. 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

3. Brevity is the soul of wit… my attempt at a brief explanation of the tif mechanism 3

4. 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

5. How TIF Functions 5 TIF BeginsTIF Ends 10 Years or Increment Increase in value over the base that is apportioned to TIF authority TIF Ends All property tax revenues on area are apportioned to all taxing authorities FROZEN TAX BASE Portion that provides revenue to all taxing authorities Everyone Wins! 20 Years or $$ CityCountySchools Misc Districts TIF Entity

6. SETTING UP YOUR URBAN RENEWAL AREAS & THE AURR 6

7. Annual Urban Renewal Report First required for FY 2012 – Due December 1 st each year On-line completion and submission Required if: – Your community has an “active” Urban Renewal in place during the year. 7

8. But I am new to the City / Job…How would I know if we have an active Urban Renewal Area? 8 Information on your area(s) could be in your files… Or it could be with your city or your bond counsel’s records departments/storage area… Or just to figure out if you have an active UR Area or not…

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13. Annual Urban Renewal Report First required for FY 2012 – Due December 1 st 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

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16. 16 This page poses two initial questions: –W–When did the UR Area start? Date of Approval of the UR Plan by the City Council –W–Why did the City start the UR Area? Blight Slum Economic Development

17. 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 Now We Have the Why, but How… 17

18. 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. Now We Have the Why, but How… 18

19. 19 3…2…1…ignition! Igniting the TIF Revenue Rocket

20. How TIF is Activated 20 Existence of approved UR Plan for an area allows an “Ordinance for the Division of TIF Revenues” to be passed by City Council.

21. 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. The three documents must be uploaded to AURR if any changes have been made during FY2013 or if none have yet been uploaded. Uploading the Documents to the AURR 21

22. 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

23. 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

24. AURR Project Inputs 24 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.

25. AURR Project Inputs 25 Necessary information to input into the AURR system for each project includes: Enter a brief, descriptive project name Enter a detailed description of the project being completed Select the classification that best fits your project Select yes if the physical work is complete on your project otherwise, select no. Select yes if the debt funding the project is paid off. No if debt is outstanding

26. 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

27. The Debt Makes the Project 27 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

28. 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

29. AURR Debt Inputs 29 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

30. Spreading the Good News… 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 about Internal Loans

31. 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

32. 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

33. 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

34. 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 Boasting About your Jobs in the AURR 34

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36. BREAK TIME 36 Go out and cool down from all of the excitement TIF-tastic

37. SWEET, SWEET TIF REVENUES & WHAT TO DO WITH THEM 37

38. TIF Revenues and the TIF Special Revenue Fund Brief reset of our journey to this point –U–UR Plan Created and Approved –T–TIF Ordinance passed and submitted to Co. Auditor –P–Projects Started –D–Debt taken out to fund projects –L–Last step to get the flow of TIF going: TIF CERTIFICATION! 38

39. A Brief Sermon on TIF Certification Due to the County Auditor by December 1 st 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

40. 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

41. 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 valuation) is tracked via Tax Districts 41 TEDBURG CITY TEDBURG URBAN RENEWAL AREA TAX DISTRICT AREA #1 TAX DISTRICT AREA #2 TAX DISTRICT AREA #3

42. TIF Revenues Thru the Tax District Prism 42 TEDBURG CITY TEDBURG URBAN RENEWAL AREA TAX DISTRICT AREA #1 TAX DISTRICTAREA #2 TAX DISTRICT AREA #3

43. TIF Revenues Thru the Tax District Prism 43 TIF Tax Districts come in pairs TAX DISTRICT AREA #1 TAX DISTRICT AREA #2 TAX DISTRICT AREA #3

44. TIF Revenues Thru the Tax District Prism 44 TIF Tax Districts come in pairs – Base District – Increment District Identical area, different valuation totals – Base District is taxed by all Levy Authorities – Increment is taxed by the TIF Authority Base Tax District #1 Increment Tax District #1 TAX DISTRICT AREA #1

45. (Increment Valuation/1000) X TIF Rate = TIF REVENUE TIF revenues are forwarded to the City from the County Treasurer Accounted for under the TIF Special Revenue Fund – Obligated to UR Area that created them The Creation of TIF Revenues 45 FROZEN TAX BASE Portion that provides revenue to all taxing authorities Increment Increase in value over the base that is apportioned to TIF authority

46. 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

47. 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. 47 Click!

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49. TIF Special Revenue Fund Special Revenue = Obligated Monies May require several sub funds to avoid co- mingling of TIF revenues 49 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 50 CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund Special Revenue = Obligated Monies May require several sub funds to avoid co- mingling of TIF revenues

51. TIF Special Revenue Fund 51 CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund UR Area #1 Project UR Area #1 Rebate UR Area #2 Project UR Area #2 Rebate UR Area #3 Project UR Area #3 Rebate

52. 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

53. Example -- Bond/Note/Loan Payment 53 CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund UR Area #1 Project UR Area #1 Rebate

54. Example -- Bond/Note/Loan Payment 54 CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund UR Area #1 Project UR Area #1 Rebate CITY OF TEDBURG DEBT FUND

55. PAYING AGENT / NOTE HOLDER 55 CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund UR Area #1 Project UR Area #1 Rebate CITY OF TEDBURG DEBT FUND

56. Example -- Payment of an Agreement 56 CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund UR Area #1 Project UR Area #1 Rebate AGREEMENT PAYEE

57. 57 CITY OF TEDBURG TIF SPECIAL REVENUE FUND UR Area #1 Sub Fund UR Area #2 Sub Fund UR Area #3 Sub Fund UR Area #1 Project UR Area #1 Rebate AGREEMENT PAYEE

58. Expending TIF Monies in the AURR Segregated tabs for entering Rebate and Non- Rebate expenditures Only need to enter amounts expended for the FY being reported 58

59. 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

60. 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

61. 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

62. 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 62 Original Principal of Bonds: $10,000,000 Project 1 Cost: $1,000,000 $1M/$10M= 10% 10% x $605K = $60,576 Project 2 Cost: $250,000 $250K/$10M= 2.5% 10% x $605K = $15,144 Project 3 Cost: $500,000 $500K/$10M= 5% 5% x $605K = $30,288

63. 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

64. THE LMI MYSTERY 64

65. 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

66. 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

67. 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

68. CHECKING THE BALANCE & DEBT LOAD 68

69. Finishing Out Strong Financial Recap – Accounting of the balances and transactions for FY in each UR Area 69

70. 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

71. 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

72. 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

73. Levy Authority Summary vs. AFR AURR TIF Sp. Rev. Fund Cash Balance TIF Revenue – Property Tax TIF Sp. Rev. Fund Interest Asset Sales Loan Repayments Returned to Co. Treaurer TIF Sp. Rev. Fund Cash Balance as of 06-30-2012 AFR – TIF Special Revenue Pg 5, line 134 Pg 2, line 7 Pg 2, line 18 Pg 5, line 124 Pg 4, line 113-119 – Misc Pg 10, line 172 – Other Gen Gov Pg 12, line 270 – Total Ending Balance 73

74. QUESTION TIME 74 TED NELLESEN City Budget Director Iowa Department of Management 515-281-3705 ted.nellesen@iowa.gov

75. TIME ALLOWED FUN FACTS 75

76. Time Allowed Fun Facts FY 2012 Reported Data 76

77. Time Allowed Fun Facts FY 2012 Reported Data 77

78. Time Allowed Fun Facts FY 2012 Reported Data 78

79. FY 2012 Reported Data Time Allowed Fun Facts 79