tax increment finance course - cdfa · 2019-08-29 · 16 tax increment finance course the farms of...
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November 1-2, 2007Doubletree Hotel,Washington, D.C.
Tax Increment Finance Course
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Tax Increment Finance Course
TIF Financing VariationsTIF mechanics are wide in scope. TIF financing is available using revenue or general obligation bonds, pay-as-you go financing, developer financing and combinations of various tools. This session will address how TIF deals can be financed in various ways outside of traditional tax increment-backed bonds. Presenters will discuss additional sources for the repayment of TIF debt including: property tax, sales tax and special assessments.
Ken Powell, Managing DirectorStone & Youngberg LLC
Bill Calderon, PartnerHawes Hill Calderon
Alan C. Cason, Managing PartnerMcGuireWoods LLP
Marc Hughes, Director (Moderator)DEPFA First Albany Securities LLC
Speakers:
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Tax Increment Finance Course
Alan C. Cason
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Tax Increment Finance Course
“MORE MONEY SOONER”
Additional governmental revenue sources to supplement or “back-up” traditional property tax increment revenues
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Tax Increment Finance Course
ADDITIONAL REVENUE SOURCES
1) Special Taxes and Assessments2) Special Hotel Occupancy Taxes (SHOT)3) Sales Tax Revenues4) Enterprise Zone Tax Credits5) Personal Property Taxes6) PILOT Revenues 7) State and local grants or contributions
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Tax Increment Finance Course
SPECIAL TAXES AND ASSESSMENTS
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Tax Increment Finance Course
SPECIAL HOTEL OCCUPANCY TAXES
Hilton-BaltimoreBaltimore’s Publicly Owned Convention Center Hotel
Gaylord National Harbor HotelPrince George’s County, Maryland
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Tax Increment Finance Course
SALES TAX REVENUES
DISTRICT OF COLUMBIA
ALABAMA
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Tax Increment Finance Course
ENTERPRISE ZONE TAX CREDITS
East Baltimore Research Park (legislation pending)
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Tax Increment Finance Course
PERSONAL PROPERTY TAXES
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Tax Increment Finance Course
PILOT REVENUES(Payments in-lieu of taxes)
The New Yankee StadiumTenant: New York Yankees Groundbreaking: August 2006Construction began: August 2006Opening: Spring 2009Capacity: 51,800Style: Open airSurface: GrassOwner: New York YankeesCost: $1.02 billionPublic financing: $220 million from New York Cityfor parking facilities ($75 million), parkland alongThe waterfront ($135 million) and other work relatedto the StadiumPrivate financing: $800 million from the Yankees
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Tax Increment Finance Course
STATE AND LOCAL GRANTS OR CONTRIBUTIONS(to off-set costs of infrastructure improvements)
National HarborPrince George’s County, Maryland
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Tax Increment Finance Course
LEGAL CONSIDERATIONS
1) Legal authority to pledge additional revenue source.
2) Contractual availability of additional revenue source.
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Tax Increment Finance Course
Ken Powell
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Tax Increment Finance Course
3. Special Assessments
A. Variation of TIFB. Rate and Method – ReasonablenessC. Priority / Recordation / ForeclosureD. Examples
1. The Farms of New Kent CDA2. Eastridge CFD (Prescott Valley, AZ)3. Reynolds Crossing CDA
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Tax Increment Finance Course
The Farms of New Kent (New Kent County, Virginia)September 2006
Bond Issue: $85,666,000 The Farms of New Kent CommunityDevelopment Authority Special AssessmentBonds, Series 2006A, B, & C
Location: New Kent County, VA - Approximately 30 miles east of Richmond on I-64Development: 1,450 age-restricted units�� 300 estate lots�� 450 single family homes�� 100 resort cottages�� 830,000 sq. ft. of commercial space�� 18-hole Rees Jones Golf Course�� Winery, vineyards, polo complex, farmer’s marketDevelopers: Boddie-Noell Enterprises, Republic Land and K. HovnanianUse of Proceeds: Public infrastructure improvements including road, water and
wastewater improvements.Primary Security: Special Assessment RevenuesSpecial Features: ▪ Second largest non-rated special district financing in Virginia.
▪ Unique bond structure in which prepayments used first to call Series A Bonds, then the Series B Bonds and finally the Series C Bonds.▪ Alleviated County’s problem of limited existing wastewater treatment capacity restraining development in County
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Tax Increment Finance Course
The Farms of New Kent (New Kent County, Virginia)September 2006
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Tax Increment Finance Course
Eastridge (Prescott Valley, Arizona)September 2003
Bond Issue: $2,500,000 Eastridge Community FacilitiesDistrict Special Assessment Lien Bonds, Series 2003
Location: Prescott Valley, AZ - Approximately 80 miles northwest of PhoenixDevelopment: ▪ 12 parcel, 40 acre development on Highway 69 frontage property�� ▪ commercial�� ▪ retail�� ▪ banking�� ▪ auto sales and repairDevelopers: Eastridge InvestmentsUse of Proceeds: Public infrastructure improvements including major roads that intersect with
Highway 69, water lines, sewer lines, storm drains and street lighting.Primary Security: Special Assessment RevenuesSpecial Features: ▪ Ownership: 7 different landowners – 2 own over 30% each. 100% landowner support
▪ Five Year Sales Tax rebate (portion) to encourage development
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Tax Increment Finance Course
Eastridge (Prescott Valley, Arizona)September 2003
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Tax Increment Finance Course
Reynolds Crossing (Henrico County, Virginia)May 2007
Bond Issue: $14,594,000 Reynolds Crossing CommunityDevelopment Authority Special AssessmentRevenue Bonds, Series 2007
Location: Henrico County, VA - 5 miles northwest ofdowntown Richmond, Virginia. Borders I-64 andis 3 miles West of I-95.
Development: 71 acre mixed-use development250-room Westin hotel480,000 sq. ft. of new office space170,000 sq. ft. of restaurants and retail tenants230,000 sq. ft. seven-story office building64,000 sq. ft. medical office building
Developers: Reynolds Holdings, LLCUse of Proceeds: Public infrastructure improvements including road improvements (curb, gutters,
paving, striping, sidewalks and traffic signals), a storm water drainage system, public water and sanitary sewer lines and facilities, development signage and landscaping.
Primary Security: Special Assessment RevenuesSpecial Features: ▪ Public improvements enhanced existing development to attract national tenants
such as Westin hotel.▪ Former site of Reynolds Metals Company headquarters.
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Tax Increment Finance Course
Reynolds Crossing (Henrico County, Virginia)May 2007
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Tax Increment Finance Course
William Calderon
•Presented by
Council of Development Finance Agencies 2007
Workshop:TIF Financing Variations
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Tax Increment Finance Course
Workshop Outline
w 1. Introductionw 2. Revenue Tools
• Sales Tax Corporations• Assessment Based Mechanisms• Municipal Utility Districts• Development Corporation (or Local Government
Corporation)• 380 Programs• Other Tools
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Tax Increment Finance Course
Introduction
• This discussion will provide an overview of various economic development tools available to supplement TIF Financing. All have the following characteristics in common:• Governmental (public) entities subject to state/local
statues• Oversight provided by local governing authority• May engage in partnerships with private sector to
finance public projects
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Tax Increment Finance Course
Sales Tax Corporations
w Purpose:To promote economic development through programs to encourage new and expanded industry and manufacturing, and civic and commercial projects, within the municipality and its vicinity.
w Eligibility Criteria:
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Tax Increment Finance Course
Sales Tax Corporationsw Powers and Duties:
• Use of tax proceeds for authorized purposes• Limited power of eminent domain• Powers of nonprofit, non-stock corporation• Exempt from federal, state, local taxes• Compliance with Open Meetings Act, Public Information
Act• Board of directors subject to municipal oversight
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Tax Increment Finance Course
Sales Tax Corporations
w Permitted Services and Projects:• Provision of land, buildings, equipment, facilities• Targeted infrastructure improvements for job creation• Transportation, research, manufacturing, industrial
facilities• Solid waste disposal, recycling, pollution control
facilities• Professional and amateur sports parks• Parking, entertainment, convention, tourist facilities
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Tax Increment Finance Course
Sales Tax Corporations
w Revenue:Derived from economic development sales tax equal to
between one-eighth and one-half of one percent.
w Bonds:A Corporation may issue bonds, notes, and other
contractual obligations to fund projects. However, a bond or debt issued by the Corporation is not an obligation of the city.
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Tax Increment Finance Course
Assessment Based Mechanisms
w Purpose:Created to finance public improvements and facilitate economic growth within a defined area and in a manner that equally distributes costs and benefits among property owners subject to the assessment.
w Eligibility Criteria:• Created through State Legislature or Municipality pursuant to
stakeholder petition
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Tax Increment Finance Course
Assessment Based Mechanisms
w Powers and Duties:• May levy taxes, assessments, impact fees in accordance
with a Service Plan and Assessment Plan authorized by petition of affected property owners and its board of directors
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Tax Increment Finance Course
Assessment Based Mechanisms
w Permitted Services and Projects:w Such districts may provide services and
improvements related to:• economic development• business recruitment• promotion of health and sanitation• public safety, traffic control, recreation• landscaping, lighting, signs• streets, walkways, drainage
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Tax Increment Finance Course
Assessment Based Mechanisms
w Administration:• Board of directors appointed in legislation or by
governing authority• New appointments/reappointments administered by
board and approved by local governing authority• Terms vary
w Duration:Districts generally exist until dissolved by:• Petition of property owners
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Tax Increment Finance Course
Municipal Utility District
• Purpose: To finance water, wastewater, and drainage facilities to support development.
• Powers and Duties:• Created by petition of the landowner(s). • Empowered to construct, finance and operate water, wastewater
and drainage facilities to serve land within their boundaries.• May be created inside or outside the boundaries of a municipality.
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Tax Increment Finance Course
Municipal Utility District
• Typical Uses: MUDs are typically used to finance and operate water, wastewater, and drainage facilities for residential and commercial development.
• Revenue, Bond Capacity• MUDs typically finance facilities through the issuance of tax-exempt
bonds, secured by property taxes assessed on land within the MUD.
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Tax Increment Finance Course
Municipal Utility District
• In-City MUDs:• In-City MUDs are also subject to the oversight of the city
in addition to a state regulatory body.• The city must approve of bond issuances by in-city
MUDs.• Because the city tax is also levied within the boundaries
of an in-city MUD, the bonding capacity of the MUD is often diminished.
• Administration
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Tax Increment Finance CourseDevelopment Corporation (or LGC)
w Purpose:To perform on behalf of a city/county any of the functions of the sponsoring local government.
w Eligibility Criteria:City/county resolution finding that:• Articles of incorporation meet criteria• Specific public purpose of corporation exists• Creation of the corporation is advisable
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Tax Increment Finance Course
Development Corporation (or LGC)
w Powers and Duties:• Promote and develop transportation facilities and
systems• Enter into contracts and developer reimbursement
agreements• Land Assembly (not by condemnation)• Enter into public/private partnerships• Manage TIRZ Projects and Services
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Tax Increment Finance Course
Development Corporation (or LGC)
w BondsCorporation may issue bonds as allowed by the
city/county
w Administration:• Board consists of three or more directors. • Terms vary• Appointed by local governing authority (city/county)
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Tax Increment Finance Course
Other Economic Development Tools
w Enterprise Zones:Purpose is to identify severely distressed areas of the state
and provide incentives by state and local government to induce private investment, provide tax incentives and economic development program benefits.
w Neighborhood Empowerment Zones:Promote the creation of affordable housing, increase
economic development, increase quality of social services, d ti bli f t t id t
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Tax Increment Finance Course
Guiding Principles
1. Consider Impact of Revenue Streams derived by Various Mechanisms
• Ad Valorem Tax• Sales Tax• Hotel Occupancy Tax• Special Assessments• Municipal Bond Proceeds• Development Corporation (or LGC) Bond Proceeds
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Tax Increment Finance Course
TIF Financing Variations
w Southwest Houston1. City of Houston TIRZ #20
• Commercial Corridor Enhancements• Mall Redevelopment• Developer infrastructure reimbursement
2. City of Houston Public Improvement District• Maintenance of Infrastructure• Supplemental Security• Business District Promotion
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Tax Increment Finance Course
TIF Financing Variations
w Kendall Lakes - Lake Houston1. Municipal Utility District
• Water • Sewer • Drainage
2. City of Houston TIRZ #10• Streets, Sidewalks• Landscaping• Public Amenities
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Tax Increment Finance Course
TIF Financing Variations
w Aldine - Harris County1. Municipal Management District
• Water, Sewer, Drainage• Transportation• Environmental Design• Public Safety & Security• Economic Development
2. Public Improvement District• New development infrastructure reimbursements for projects
that enhance the greater water/sewer system
Q&A, Discussion
HoustonP.O. Box 22167-2167Houston, Texas 77227(713) 541-0447
Arlington805 E. Abram, Suite 200Arlington, Texas 76010(817) 807-5782
Rio Grande ValleyP.O. Box 720339McAllen, Texas 78504
www.hhcllp.com