EDSR MEMORANDUM 03-13-1995 - Laserfiche WebLink

Home Browse Search

8. TIF Legislative Restrictions House File 147 has been introduced as proposed legislation which would further restrict the use of Tax Increment Financing (TIF). The bill contains several provisions that will affect future TIF projects as well as existing districts. The restrictions on existing districts may have an adverse effect on TIF Districts No. 1 and No. 3. Further, HF 147 may affect the City's ability to access funds from a TIF district that has already been decertified. For example, TIF District No. 4, the Refuse Derived Fuel (RDF) District, was decertified in December, 1990. Some consultants/advisors at the Capitol have suggested that the City may not be able to access these funds unless a specific commitment is made prior to the effective date of the legislation. The rub, however, is that HF 147 has a retroactive date. HF 147 requires that commitments be in place by February 1, 1995. City staff believes that this date may be pushed ahead to May 1, 1995. Another section of HF 147 applies to all TIF districts created before May 1, 1990. HF 147 would limit the expenditure of revenues derived from tax increment to: 1) pay outstanding bonds issued before February 1, 1995, or bonds issued to refund the principal of bonds • issued before February 1, 1995;2) pay for contracts executed before January 15, 1995; 3) fund an escrow account to make payments for the contracts; 4) pay for school referendum levies; or 5) pay reasonable administrative expenses, subject to other limitations. When all bonds as described in one (1) have been paid or defeased and all contractual obligations as described in two (2) have been paid or escrowed as described in three(3), the district must be decertified. As stated, some have suggested that this would adversely affect the City's ability to access excess funds currently in District No. 1 and No. 3 - including the decertified District No. 4 (RDF District). City staff is currently evaluating these matters and will provide additional information at the EDA meeting. Aside from the chilling effect this legislation may have on No. 1 and No. 3 and the RDF decertified district, the intent of this legislation is clear. It is to bring pre-1990 districts under some standards to prevent, say, neighboring communities from perpetuating the existence of its pre-1990 TIF districts. EDA Commissioners will recall that pre-1990 districts are exempt from the LGA or HACA loss. One way to curtail the arbitrary extension of these districts is to place restrictions on how TIF revenues • can be expended. A mechanism to do that is to require that the TIF