REDEVELOPMENT LAW BASICS

Transcription

1 REDEVELOPMENT LAW BASICS Tax Increment Financing Tools For Local Governments April 18, 2019 Adam S. Long Copyright Smith Hartvigsen, PLLC 2019 All Rights Reserved

2 What is a Redevelopment Agency? Officially called a community reinvestment agency (but redevelopment agency is remains the prevailing jargon) Separate legal entity created by county/city to encourage development Agency has special powers by statute (Utah Code Title 17C Community Reinvestment Agency Act) This the tool that local governments have in Utah, but not a panacea Governed by an agency board (the city council or county commission) Although legally separate, day-to-day operations look a lot like another gov t department still needs oversight and controls

3 What is a Project Area? Specific geographic area where a redevelopment agency can operate Created by agency resolution and city/county ordinance Just an area on the map no $$ committed yet Can be any size depending on proposed development Not just for tax increment financing

4 Development and Tax Increment TAX INCREMENT BASE TAXABLE VALUE Base Year (undeveloped) Developing Development Complete (and on tax rolls)

5 The Basic Redevelopment Process

6 What is Tax Increment Financing? A tool for communities to create a property tax (or sales tax) revenue fund that can be used to encourage new development Traditionally bond financing, secured by future property tax revenues Frequently used now to fund incentives over time to encourage development Commonly used nationwide to attract and promote economic development (along with other tools that we don t have in Utah) This is the carrot; land use ordinances are the stick

7 Benefits of Tax Increment Fund projects with tax increment The sponsoring town/city/county does not have to bear this burden alone, but instead can share the burden with all taxing entities within a project area Access more funds by diverting tax increment from all taxing entities within a project area Use tax increment to pay for administrative expenses Streamlined incentive programs to attract development and enhance community with infrastructure and housing improvements

8 Benefits of Tax Increment, cont d Reduce administrative hassle and expense by fulfilling all notice and hearing requirements up front Limit sponsoring town/city/county legal exposure by having the Agency, a separate political subdivision, enter into agreements with developers Agencies can operate much more freely, without many of the statutory requirements that restrict the sponsoring town/city/county Gift property/provide development incentives more freely Agency actions are not land use actions

9 How to Attract New Development? Fund infrastructure improvements Street improvements, sewer, water, curb, gutter Fee waivers / reimbursements Business development grants / loans Property tax rebates / incentives Demolition Environmental cleanup Land purchase / project site assembly

10 Competition for New Development States, counties, cities and towns throughout the United States provide development incentives to attract and encourage business development Tax increment financing (aka TIF or redevelopment) is the tool available in Utah for our communities to compete Use TIF to attract high-quality employers, retail businesses, and to revitalize decaying areas

11 Examples of Redevelopment Projects Young Subaru (and new expansion) in South Ogden

12 Examples of Redevelopment Projects Solar projects throughout Utah

13 Examples of Redevelopment Projects Niagara Bottling Brigham City

14 Three OLD Ways to Access TIF (existing project areas remain unchanged) Urban Renewal Project Area Eliminate and revitalize blighted areas Economic Development Project Area Promote the creation of nonretail jobs Community Development Project Area Flexible approach to encourage community development, including retail

15 Now: Community Reinvestment Project Areas After May 10, 2016: only Community Reinvestment Project Areas ( CRA ) Project area creation process and public hearings Project area plan requirements Still lots of flexibility Increment sharing through interlocal agreements (unless eminent domain) Sales tax available All CRAs must have written budget approved by taxing entities Mandatory minimum housing allocation of 10% (if $100k+ annual increment) Eminent domain power with TEC approval and blight finding Blight finding process like old Urban Renewal project area

16 Community Reinvestment Project Area Creation

17 Community Reinvestment Project Area Creation

18 Tax Increment Sharing Community Reinvestment Project Area ( regular - no eminent domain): Each Taxing Entity decides whether to participate Get participation from all, some, or even one Taxing Entity Can establish different terms for each (percentage, years) Participation governed by interlocal agreements between Agency and Taxing Entities Participating Taxing Entities must consent to CRA Budget (but Budget doesn t govern increment sharing)

19 Tax Increment Sharing Community Reinvestment Project Area (with blight and eminent domain): Agency must establish a Taxing Entity Committee TEC approves the CRA Budget and the Budget controls tax increment sharing TEC made up of 6 or 8 representatives from all Taxing Entities: 2 reps from the County 2 reps from the City/Town (if applicable) 2 reps from the School District 1 rep from the State Office of Education 1 rep from all other taxing entities (special districts, etc.) TEC voting by 2/3 majority for most decisions

20 Agency Responsibilities (1) Annual budget (2) Annual November Report (3) (if applicable) Annual TEC meeting to review active Project Areas (4) Monitoring of development and compliance with agreements (5) Agency-specific accounts, internal controls, etc.

21 Agency Best Practices Make sure someone is responsible Integrate redevelopment agency into regular procedures (agendas/minutes, annual budgeting, expenditures, recordkeeping) Set up processes and controls up front (who approves expenditures? how are requests handled? how to account for internal costs?) Engage with taxing entities from day 1

22 2019 Legislation SB 56 requires GOED database of all project areas and details, not until 2021 SB 77 clarifies tax increment calculations SB 98 no housing allocation required if certain conditions met HB 185 allows use of housing funds for student housing HB 245 blight now development impediment, no new TEC-based projects, adopt housing plan

23 Trends / Future Issues Always an issue for legislature Mandatory housing allocation is here to stay possibly expand allowable uses Tax treatment of personal property and new growth / mitigation payments School district participation and effect on overall funding Control of economic development Interplay between local and state incentives

24 Questions about Redevelopment? Adam S. Long 257 East 200 South, Suite 500 Salt Lake City, Utah Phone (801)