05-11-2022 Workshop Packet - Laserfiche WebLink

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Developments that would already commence construction prior to December 31, 2025, or those that do not add or retain jobs in the state, would not be permitted beneficiaries of the transfer. Transfers must provide the assistance in one or both of the following ways: 1. By providing improvements, loans, interest rate subs idies, or assistance in any form to the private development; or 2. By making an equity or similar investment in a corporation, partnership, or limited liability company that the authority determines is necessary to make construction of a development financial ly feasible. In order to demonstrate compliance with the new provision, an authority may wish to include affirmation of the qualifications in the written resolution electing to make the transfer. The authority also should keep documentation that demonstrates that the development created or retained jobs in the state and that commencement of construction by December 31, 2025, depended on the transfer. Approvals and Spending Plans Prior to approving the use of this temporary transfer authority by resolution , the City must also create a written spending plan that authorizes the City to provide the assistance or make the investment that makes the development qualify. The plan must detail the use of transferred increment. The OSA recommends identifying planned expenditures using the same categories identified in TIF plans and TIF reporting (e.g., acquisition, site preparation, financing costs, etc.), except for a category for administrative expenses, because administrative expenses are not included in the permissible uses of the transferred increment in the new law. Parameters and Limitations The authority to transfer increments under this provision expires on December 31, 2022. Amounts being transferred under this provision must be transferred from the fund or account in which tax increments are segregated and into a separate fund or account by December 31, 2022. All transfers must be spent by December 31, 2025. Transfers from a TIF district in calendar years 2021 and 2022 are limited to a maximum transfer equal to the excess of the district’s unobligated increment. Under the provision, unobligated increment includes any increment not required for payment of obligations due during the six months following the transfer on outstanding bonds, binding contracts, and other outstanding financial obligations of the district to which the district’s increment is pledged. Therefore, the transfer of increment for 2021 is limited to the eligible balance of tax increment at the end of 2020, less amounts needed to pay bonds, pay-as-you-go notes, and interfund loans due from January 1, 2021, to June 30, 2021. Similarly, the transfer of increment for 2022 is limited to the eligible balance of tax increment at the end of 2021, less amounts needed to pay bonds, pay -as-you-go notes, and interfund loans due from January 1, 2022, to June 30, 2022. Increment that is improperly retained, received, spent, or transferred is not eligible for transfer under this authority. Therefore, the 2020 and 2021 balances of tax increment should be carefully evaluated prior to making transfers in 2021 and 2022, respectively. For example, excess increment calculated for 2019 that might remain in the TIF fund after it should have been returned by September 30, 2020, would not be eligible for transfer, nor would any subsequent excess increment be eligible for a transfer after it s hould have been returned. Likewise, if a district receives tax increment after it should have decertified under the Six -Year Rule, such amounts of increment would also not be eligible for transfer. Unspent Transfers Increment not spent by December 31, 202 5, must be returned to the fund(s) of the contributing TIF district(s). The distribution of returned amounts need not be proportional to the amount contributed, but the amount returned to each TIF district must not exceed the amount transferred from the district. The spreadsheet on the following page provides an overview of the initial financial analysis for each of the City’s existing Tax Increment Financing District to determine the estimated available amounts of unobligated funds that could potentially be available pursuant to this legislation. Current estimates of unobligated funds from all of the City’s districts is approximately $2.254M. None of the districts are reporting excess increment and are not projected to have excess increment.