Limitations of One University Place TIF PlanCity Council MeetingJuly 14, 2015

Outline of challengesA good financial deal?Following the law?Following best practices?Transparent?Peter Fisher’s questions

A good financial deal?Process set up to City’s disadvantage

◦ Predefined TIF amount◦ To get it, developer had to make sure they shot

higherLoss of revenue per resident during TIF years

◦ Extra revenue does not make up for extra residents

Lack of school funding is offset in part by higher property tax rates per Tax Increment Financing Impact on ICCSD document by Craig Hansel, Chief Financial Officer

Legal uncertaintyNational Development Council

reported $1M of TIF goes to residential

The Urban Renewal Plan draft says all $4M are for commercial retail units

These numbers don’t match.

Following best practices?Loan guarantees (for TIF-based loan)

◦does the developer guarantee payment of TIF loan if revenues fall short?

“But-for” test Parts I and II◦ I. the development would not happen solely

through private investment in the reasonably foreseeable future

◦ II. the induced development will yield a net increase in market value for the site compared to the likely development that would occur without TIF For OUP, if market value of no-TIF development were

>=26.5M, then the project would fail the “but-for” test

Following best practices?Setting a maximum percentage

of tax increment going to developer◦To ensure some revenues flow to City

right away◦Don’t refund most of your increment;

City needs dollars nowHolding negotiation with

developer solely through public hearings

Transparent?TIF amount at which to stop negotiating

was not disclosed to the entire Council or to the public until after the analysis was complete

TIF deal means the City provides Maxwell most of the funds needed to purchase St. Andrew property but…◦we have not seen the purchase agreement

is there a TIF clause?

◦we have not seen the appraisalsNeed conflict of interest disclosures from

all City elected officials

Peter Fisher’s QuestionsWill the project itself generate

sufficient revenue to pay the TIF project costs?◦ Only if the projections are accurate. Cities

like Gainesville, FL have had problems with projects not generating enough revenue to cover TIF

Is there a public benefit from this project, or are there features that the city is demanding that the developer would not otherwise incorporate?◦ It depends on what kind of commercial is

built. Residents preferred commercial in the elections, but didn’t demand that it be built at any cost

Peter Fisher’s QuestionsDoes the project really need incentives,

or does it need all of the incentives requested?◦Having not done a “but for” analysis, and

having stopped negotiations at $4M TIF, it is not possible to answer this question

If it does need incentives to be profitable, why should the city subsidize a project that the market cannot support?◦The project represents a loss in revenue per

resident and higher taxes in the short term