JOINT FINANCE COMMITEE PACKET 04-30-2024

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Based on the extent to which the project achieves the policy statements (1-6 above), the city will consider TIF for projects in the following categories: • Manufacturing • Major office warehouse/production facilities • Research and development • Commercial projects encouraging substantial redevelopment of substandard properties • Housing needs identified in the most recent city housing study Assistance for TIF is required to meet the uses identified by statute including, but not limited to the following: • Public improvements • Land acquisition and land write down • Loans • Site preparation and improvement • Demolition • Legal, administration, and engineering The preferred method of TIF is pay-as-you-go for eligible costs as reimbursement, upfront financing maybe considered on a case-by-case basis. Policy Considerations Each project is required to meet the “but-for” test to determine the need for and level of assistance. This test and the amount of tax increment generated determines the district’s term. It is difficult to facilitate a redevelopment, housing or soils condition district for less than the maximum term as the extraordinary costs involved are usually significant. Consideration: the developer has stated the assistance is necessary for the project to proceed and has stated that without the upfront land write down assistance, the project would not proceed. The term of the district could coincide with the amount of tax increment the city has to spend on its priorities within a project area. Consideration: the full term of the district would be necessary to repay land write down. Of all TIF districts, the Economic Development District is most often the one limited to a lesser term. Economic Development Districts are really “incentive” districts where it is not so much the extraordinary costs as it is an “incentive” to get a business to locate in a community. In the other districts, the costs are easily identifiable and usually significant such as demolition, relocation, environmental remediation, and the cost differential between market rate and income/rent restricted housing. Consideration: The developer has stated the project would not happen ‘but-for’ the assistance. The assistance will also facilitate the creation/retention of a minimum 70 jobs and wage levels consistent with the City’s business subsidy policy. As the City has also received an application for other City forms of assistance, including a business microloan, the City may consider assigning within the business subsidy agreement a portion of the jobs as applicable to the TIF assistance and a portion to the microloan. Developers receiving TIF assistance shall provide a minimum of ten percent (10%) cash equity investment in the project. TIF will not be used to supplant cash equity. Consideration: the developer will have at least 10% equity investment. Most of the required equity will come from the sale of existing building property. The owner/business will provide initial cash down payment for the project at the closing of the land and construction financing and will be reimbursed when the property sells. The developer will also be using land as equity for securing financing. TIF will not be used in circumstances where land and/or property price is in excess of fair market value. A third-party appraiser agreed upon by the city and developer will determine the fair market value of the land. Consideration: the City hired a commercial broker to help it determine listing price and fair market value. This sales price would meet expectations of fair market value. The developer shall demonstrate a market demand for a proposed project. TIF shall not be used to support purely speculative projects. Consideration: existing business operations.