06-22-1999 Council Agenda - Laserfiche WebLink

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JUN 18 '99 02:00PM EHLERS & ASSOCIATES TIP District June 18, 1999 Page 3 P.4 /9 increments can only be used to pay existing obligations and contracts. The statute limits the use of tax increment revenues as follows: • before or within five years after certification of the district, the revenues are actually paid to a third party with respect to the activity; bonds, the proceeds of which must be used to finance the activity, are issued and sold to a third party before or within five years after certification, the revenues are spent to repay the bonds, and the proceeds of the bonds either are, on the date of issuance, reasonably expected to be spent before the end of the later of (I) the five -year period, or (ii) a reasonable temporary period within the meaning of the use of that term under § l48(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve or replacement fund; • binding contracts with a third party are entered into for performance of the activity before or within five years after certification of the district and the revenues are spent under the contractual obligation; or • costs with respect to the activity are paid before or within five years after certification of the district and the revenues are spent to reimburse a party for payment of the costs, including interest on unreimbursed costs. TW District 3 -2 was certified in 1996 and the five -year rule takes effect in 2.001. This constraint will soon become an important factor in the Rice Street - Little Canada Road area. Business Subsidies In the 1999 Session, the State legislature adopted new regulations on public participation in economic development. The new statutes creates a process for granting and reporting on subsidies given to businesses. I have attached a summary of the statute for your information. While the statute is generally confusing, one aspect is clear. You are required to conduct a public hearing and adopt a set of criteria before granting any business subsidies after August 1, 1999. Both the City Council and the Economic Development Authority are "grantors" as defined in the statute. I recommend that the City Council and the Economic Development Authority conduct a joint public hearing for business subsidy criteria. I have attached a resolution for this purpose. NMAWCwta\Unlo Cciado \Y'IPi2\99 An mdianliWCmo lwc Ikwpd PAGE 253