Loading...
HomeMy WebLinkAboutResolution - 2002-R0259 - Adoption Of Tax Increment Financing District Policies - 06/26/2002Resolution No. 2002-R0259 June 26, 2002 Item No. 54 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: That the City Council of the City of Lubbock hereby adopts the attached Tax Increment Financing District Policies for the City of Lubbock. Said document is incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of the Council. Passed by the City Council this 26th do ATTEST: Reb cca Garza, City Secretary APP V AS T NTENT: Craig Farme , Director of Planning APPROVED AS TO FORM: Linda L. Chamales, Supervising Attorney Office Practice Section Resolution No. 2002-R0259 Subject: Tax Increment Financing (TIF) Policies for the creation of a Tax Increment Reinvestment Zone (TIRZ) 1. GENERAL POLICIES 1.1 Tax Increment Reinvestment Zones (TIRZs) are a useful funding mechanism to finance new public improvements in a designated area, in order to stimulate new private investment. A TIRZ is also an important redevelopment (as compared to development) and reinvestment tool. 1.2 Tax Increment Reinvestment Zones vary as to their benefit to a city, and the City reserves the right to either create or not create a TIRZ depending on the amount of public benefit. Nothing in the following policies requires the City to participate in a TIRZ, and the City is not obligated to spend funds that are not available. 2. TIRZ CREATION POLICIES — The City will consider creating a TIRZ in those areas that: 2.1 Qualify in accordance with state law, Tax Code: Chapter 311, in one of the following categories: 2.1.1 Unproductive, underdeveloped, or blighted areas 2.1.2 Areas that are predominately open and underdeveloped 2.2 In addition, the following limitations will apply: 2.2.1 A TIRZ in areas with more than 10% residential usage, must be initiated by petition signed by the owners of more than 50% of the appraised values in the proposed zone. 2.2.2 The total appraised value within all Tax Increment Reinvestment Zones must represent less than 15% of the total appraised value of the City. 2.3 The City will not consider creating a TIRZ in neighborhoods, commercial districts or areas where there is limited public purpose and the sole benefit is to the property owners to the detriment of the General Fund and the other taxpayers in the City. 2.4 The City will not consider creating a TIRZ in neighborhoods, commercial districts or areas where there is not a significant proposed increase in property values due to private development or redevelopment. The normal increase of property values in an area due to inflation is considered to be existing taxes of the City as a whole. 3. TIRZ ELIGIBLE ACTIVITIES - State statutes allow a TIRZ to undertake a number of activities, provided they are performed in accordance with state law. The following policies are only to clarify the activities and expenses that the City will authorize in a Lubbock TIRZ. The following are eligible activities and expenses for TIRZ funding in the City of Lubbock: 3.1 Capital Costs 3.2 Financing Costs 3.3 Construction Interest 3.4 Real Property Assembly Costs - While state statue allows the acquisition of private property for private use in a TIRZ project, in accordance with the redevelopment policies of the City, the City will use its power of eminent domain only to obtain property for public use in a redevelopment project including street and utility rights -of - ways and easements. It is not the intention of the City to force relocation of an existing business or residence. 3.5 Relocation expenses (see above) 3.6 Professional services 3.7 Administration and organization costs 3.8 Direct operating costs for zone and project facilities 3.9 Care should be taken in the selection of projects for the TIRZ project plan to make sure that improvements add to the viability of a project and enhance property values. Other funding mechanisms should be used for ordinary and routine expenditures that don't increase property values. 4. TAX INCREMENT FINANCING POLICIES - The statutes allow a TIRZ to use a number of financing techniques, provided they are performed in accordance with state law. The following policies are only to clarify the Tax Increment financing methods that the City will authorize in a Lubbock TIRZ 4.1 Gap Financing — Gap financing will be required if no anticipated incremental value has been created in the TIRZ, yet public improvements are required to provide the creation of value. The following may be used to temporarily finance the improvements. 4.1.1 Loans from developers. 4.1.2 Loans from one or a group of financial institutions. 4.1.3 Loans from other City funds. 4.1.4 Loans from other taxing jurisdictions. 4.1.5 The interest for such loans is a TIRZ eligible expense and may be paid by TIRZ revenues. Such interest may be capitalized in the final TIRZ debt issuance. 4.2 Pay-as-you-go Financing — projects will be paid for as tax. increments are received. This option allows 100% of the taxes to be paid toward projects in the TIRZ. This option also eliminates any additional expenses such as bond issuance costs, interest costs, legal counsel fees, etc... 4.3 Revenue Bonds — If projects are needed immediately and debt is required, revenue bonds will be considered. This option should only be used if the TIRZ is established and has a track record of receiving stable tax revenues. 4.4 Certificates of Obligation — If projects are needed immediately and debt is required, certificates of obligation will be considered. This option is best when the TIRZ is relatively new and has no proven history of tax revenues. The underlying collateral for this debt will be the revenues generated from the TIRZ. 4.5 City Financing — The City may finance TIRZ improvements, through interfund loans, if it is the most cost effective method. Such debt should be backed by TIRZ revenues and/or structured to reduce the City's liability as much as possible. 4.6 Timing of Debt — Regardless of the source of funds, the TIRZ Financing Plan should attempt to correlate private improvements with the corresponding increment in property taxes, the timing of the receipt of those funds and the debt issuance to fund public improvements. The goal is to reduce the potential liability to the City and to insure that debt issued to fund improvements is backed by actual tax increments.