06-08-2022 Council Packet - Laserfiche WebLink

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Exhibit I Baker Tilly Municipal Advisors, LLC Page 4 In 2021, the Legislature enacted expanded, temporary authority to transfer unobligated tax increments for purposes of assisting private development consisting of the construction or substantial rehabilitation of buildings and ancillary facilities, if doing so will create or retain jobs in the state. Proposed amidst the COVID-19 pandemic, the enacted law is narrower than initially proposed and is similar to 2010 legislation that temporarily expanded the use of TIF with the aim of stimulating economic recovery after the Great Recession. Authority and Purposes The new law temporarily permits a development authority to elect, by resolution, to transfer unobligated increment for certain specified purposes. The new law does not, however, override requirements to pay bonds to which increments are pledged. Any transfer under this provision must be for the purpose of assisting private development that meets all of the following criteria: 1. it consists of the construction or substantial rehabilitation of buildings and ancillary facilities; 2. it creates or retains jobs in the state, including construction jobs; and 3. construction commences before December 31, 2025 and would not have commenced before that date without the assistance. 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 subsidies, 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 financially 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, a development authority must also create a written spending plan that authorizes the development authority 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. The municipality (which may or not be the same as the development authority) must also approve the authority’s spending plan after holding a public hearing. The municipality must