03-27-2002 Council Agenda - Laserfiche WebLink

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Functional Analysis March 2l, 2002 Page 11 • The County will not leave the Public Works site until 2005. If initial redevelopment occurs in 2006, tax increment or abate revenues will not be available until 2008. • The establishment of a TIF district is a balancing act. Current laws encourage delaying the start of the five -year window for obligating TIF revenues until the point of redevelopment. Although positive changes in the TIF Act are possible, this approach assumes some risk because the State may change the Act in ways that limit applications for Rice Street Crossings. The challenges in using TIF in this area are present in many other settings across the State. A real commitment to Livable Communities and Smart Growth initiatives will require new or expanded finance tools for local governments. Funding Capacity The table in Attachment A contains a preliminary analysis of the local funding capacity for Rice Street Crossings. This analysis is intended solely to provide an initial indication of the funding capacity created by the Use of TIF and tax abatement. Based on the assumed project size and valuation, the Preferred Concept provides a funding capacity of $8.4 million to $11.7 million. Several variable influence the results of this analysis: • The analysis uses tax capacity formulas and tax rates for taxes payable 2002. Recent history shows the challenges of forecasting the future elements of the property tax system. • The base value of TIF districts is a simple estimate based on existing values. The reconfiguration of parcels, the classification of redevelopment property and the values assigned to County parcels will shape the actual base values and the impacts on funding capacity. • The analysis assumes that all tax increment and abatement revenues are pledged to debt incurred to finance project costs. • No finance costs or capitalized interest are accounted for in this analysis. These expenses count as supportable costs and reduce monies available for project costs. • The economics at the time of redevelopment will influence the actual value resulting from redevelopment.