5.6. PCSR 06-08-2010 - Laserfiche WebLink

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IMPLEMENTATION increment beyond the boundaries of the TIF district. Items to be funded by TIF must be located within the TIF district or be an amount that falls within pooling limits. For redevelopment TIF districts, not more than z5% of tax increment may be spent outside of the district. The actual application of pooling limits is often more restrictive. Administrative expenses of the TIF district count against the z5% maximum. The amount of revenue available to support eligible costs outside of the district may fall in the 15% to zo% range. Time Constraints: In a perfect world, the City would establish a TIF district and wait for redevelopment. Current State law makes this approach a risky proposition. TIF districts are subject to several time limitations. The most important of these limitations is the five-year rule. After five years from the date of certification of the TI F district, the use of tax increment is subject to new restrictions. Generally, tax increment can only be used to satisfy existing debt and contractual obligations after this date. This rule creates a five year window to make commitments for the use of TI F. Additionally, the geographic area of the TIF district can be reduced, but not enlarged, after five years from the date of certification. Therefore, if a TIF district is established without a specific plan for development, there should be reasonable certainty that development will occur within five years. The City has the ability to decertify all or part of a district and create a new one. This action sets a new five year clock. There is a risk that the conditions used to establish the original district will not be present in the future. Use Limits Several specific statutory limitations will influence the use of tax increments on implementation of the plan. State law requires that at least 90% of revenues from a redevelopment TIF district be used to finance "the cost of correcting conditions that allow designation" of the district. The majority of redevelopment and public improvement expenditures in this plan meet this criteria. Several important limitations must be noted: » Tax increments cannot be used for "a commons area used as a public park". The plan takes a conservative position and assumes that this limitation precludes using TIF for proposed open space improvements. The statute does not define the term "public park". The City may wish to explore this issue with appropriate legal counsel. » Tax increments cannot be used forpublic facilities used for "social, recreational, or con ference" purposes. As with parks, the statute does not de fine these terms. Special rules apply to public • r 171St. QV2r1U2 Focused Area STn~i} ]3 ~ j