City of Wayne

Tax Increment Financing

Guidelines

 

The purpose of this guide is to describe the criteria for the use of TIF and the procedures which will be used for evaluating proposals requesting TIF.

 

Uses of TIF

 

Tax Increment Financing can be used for the following purposes:

 

• Total amount of public improvements associated with a redevelopment project which are located in a redevelopment area;

 

• Acquisition of redevelopment sites including all costs associated with acquisition;

 

• Site preparation, demolition, grading, special foundations, and other work prior to construction of the project;

 

• Utility extensions and hookups;

 

• Rehabilitation of structures within the redevelopment area;

 

• Construction of structure within the redevelopment project area; and

 

Tax Increment Financing is primarily designed to finance public improvements associated with a project.  However, residual funds can be used for other allowed purposes after allowing for the cost of public improvements.

 

PROJECT SELECTION

 

Project Review Committee

 

Each owner/developer seeking to use TIF must complete an application which will be evaluated by the Project Review Committee.  The Committee will make recommendations on the use of TIF to the Mayor and City Council.

 

The Project Review Committee will consist of the following members:

 

            -The City Administrator

            -The City Planner or a designated representative

            -The City Treasurer or a designated representative

            -The City Attorney or a designated representative

            -The Mayor

            -The Council President

            -Two additional Council representatives

 

Five members or at least 71% of the Committee, whichever is greater, must concur for a project to receive a positive recommendation.  All recommendations will be transmitted to the City Council for their approval.

 

Application Requirements

 

1. A detailed project description;

 

2. A development financing plan, including sources of funds and loan terms;

 

3. A preliminary commitment for financing and/or equity;

 

4. A 5-year proforma, if appropriate, indicating projected costs and revenues;

 

5. A statement and demonstration that the project would not proceed without the use of TIF;

 

6. Evidence that the project meets evaluation criteria as required below;

 

7. Preliminary plans for the project;

 

8. A development schedule;

 

9. If applicable, a list of public improvements which will be constructed along with the project;

 

10. Corporation or partnership papers if applicable;

 

11. An audited financial statement of the corporation, partnership, or individual for the most recent full calendar year;

 

12. Other information that may be required by the Project Review Committee.

 

Criteria for Evaluation

 

Projects applying for TIF assistance must qualify by meeting certain criteria.  Mandatory criteria must be met in order for the project to be considered.  Discretionary criteria will enable the Committee to further determine the benefits of the project.  The project application must demonstrate how the project meets the required criteria.

 

Mandatory Criteria

 

In order to be considered for TIF a project must meet each of the following criteria:

 

1. The project must be located within a substandard and blighted area or an area eligible for a designation of substandard and blight as required and set forth by State Statute.  The project must be located within a substandard and blighted area prior to the preparation of a Redevelopment Plan.

 

2. The project must further the objectives of the City's Comprehensive Plan.

 

3. The use of TIF for the project will not result in a loss of pre-existing tax revenues to the City and other  taxing jurisdictions.

 

4. The developer is able to demonstrate that the project would not be economically feasible without the use of Tax Increment Financing.  In addition, when the project has site alternatives, the proposal must demonstrate that it would not occur in the area without TIF.

 

Discretionary Criteria

 

In addition, the project must meet several of the following criteria.  A residential project meeting two or more of these criteria may use TIF for a fourteen (14) year amortization period.  A non-residential project meeting three criteria qualifies for a fourteen (14) year amortization period.

 

1. The project will show a positive cost/benefit ratio to the community for the principal value of the TIF loan.

 

2. All TIF proceeds are used for the construction of public improvements.

 

3. The project involves the rehabilitation of a designated city landmark; or a building listed on, or eligible for listing on the National Register of Historic Places.

 

4. The project will directly benefit low- and moderate-income people, as defined by the Community Development Block Grant Program.  A project will meet this criteria if at least one of the following conditions is met:

 

1. If the project is residential, at least 51% of all housing units will be initially affordable to low-and moderate-income households.

 

2. If the project is non-residential, at least 51% of the jobs created will be held by or available to low- and moderate-income people.

 

5. The building or site to be redeveloped itself displays conditions of substandard and blight as     established by Nebraska State Statute.

 

6. The project involves the start-up of an entirely new business or business operation within the City of Wayne.

 

7. The redevelopment site has displayed a recent pattern of declining real property assessments, as measured by the Wayne County Assessor's Office.

 

The TIF Approval Process

 

After the City Council approves the recommendations of the Project Review Committee, the project goes through the following process:

 

1. Declaration of Substandard and Blight:  The City makes determination subsequent to a public hearing that project location is in an already substandard and blighted area, or determines site meets the statutory standards of substandard and blight.

 

2. Preparation of a Redevelopment Plan:  The City or developer will prepare a redevelopment plan for the project. The plan has certain statutory requirements and will include a definition of the Tax Increment Project Area.  It will also contain information about the use of TIF funds.

 

3. Approval of the Redevelopment Plan: The Plan is then submitted to the Planning Commission for review and recommendation.  Following Planning Commission Action, the Plan is then submitted to the City Council for its public hearing and approval.  As a precedent to approving the Plan, the City shall conduct a cost-benefit analysis for the project.

 

4. Cost-Benefit Analysis:  The City or developer shall conduct a cost-benefit analysis for each redevelopment project intending to use TIF assistance, said analysis shall be developed using a statutory cost-benefit model and guidelines.

 

5. Approval of the Redevelopment Agreement:  Following approval of the Redevelopment Plan, the City and the Developer negotiate a Redevelopment Agreement.  The Agreement sets forth the mutual   responsibilities of both parties and may include the financial terms of the project.  As part of the agreement process, the Developer negotiates loan terms with a private lender unless the project is utilizing a publicly-offered bond issue.  This loan note is then attached to the Redevelopment Agreement.  The Redevelopment Agreement is approved by the City Council.

 

General Rules of the TIF Program

 

All approved projects must comply with the following general rules:

 

1. The minimum development cost of a project is $250,000 and the minimum supportable TIF loan to the project is $25,000.

 

 

 

2. Any TIF-assisted rehabilitation must be carried out according to the Secretary of the Interior Section 8 Standards for Rehabilitation.  Plans must be complete and must receive the approval of the Project Review Committee prior to authorization to release funds.

 

3. Projects must include funding for any required public improvements.

 

4. For any TIF bond, funds must be loaned to the City by the Project Developer and are then disbursed back to the project or used for public improvements, as required.  Tax allocations are refunded to the bond holders to amortize the TIF loan.  The City assumes no responsibility for the repayment of any TIF loan in addition to the tax allocations for the permitted term.

 

5. The City assumes no responsibility for funding any TIF bond.

 

6. Expenses of the City with regard to TIF bond financing including legal, bond counsel, administrative costs of bond initiation, and other bond issuance costs shall be net out of the TIF bond proceeds before any distribution to the developer.