CC PACKET 01241989 - Laserfiche WebLink

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'c An accounting system is established by the city finance director with separate subaccounts created for any specifically identified funds for which statutory or municipal limitations apply. Guidelines for the use of funds within the development account should be established. The funds within the development account should be used only where there is a reasonable expectation that the funds will be either repaid directly or indirectly to the development account. , QUESTION #4 - What type of guidelines should be established for the use of the development account? ANSWER: Guidelines may be established for the use of funds within the Account or the city may wish to prioritize the use of funds within the account in order to provide direction to the staff as to the type and form of public assistance available when the staff is negotiating with prospective developers. Procedural requirements necessary for the deposit or withdrawal of funds from the development account, and any policy determinations of the council made in relation to the use or priority of use of funds in the account can be deferred: Examples of possible guidelines may be as follows: 1. The highest priority for the development account will be to shorten the term of a project and to reduce or eliminate the need for tax increment bonding. 2. The development account will be used for short-term loans or loan guarantees to be repaid or replaced by other financing. 3. The development account shall be used to pay for any shortfall existing for payment of principal and/or interest on any tax increment bonds outstanding for a tax increment district within the city. 4. Tax increment projects will be examined to determine if all or part of the project can be closed and returned to the tax rolls by using the development account. 5. The development account shall be used to significantly reduce the amount of debt necessary for payment of project costs. For example, funds from the development account can be used to reduce the capitalized interest necessary for project financing during the interest only period before tax increments are available. Funds from the development account may not be used unless there is a mechanism for repayment of the fund to the account. 6. Development account funds will be adequately secured by liens, ownership options, tax increment, security bonds, etc. 7. To the extent possible, funds from the development account will be allocated directly or indirectly to a number of projects and programs, therefore reducing the risk that funds to be repaid will not be available for future use. 8. Minimum interest rates charged will be no less than general obligation bond interest rates for an equivalent loan term and credit worthiness of the borrower at the time the loan is made.