TAX INCREMENT FINANCING: Strategic Considerations for Development (or Planning, Process and Pitfalls) Center for Economic Development Law Leslie V. Batchelor 301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606 [email protected]
Dec 21, 2015
TAX INCREMENT FINANCING: Strategic Considerations for Development
(or Planning, Process and Pitfalls)
Center for Economic Development LawLeslie V. Batchelor
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Local Redevelopment Using TIFs
A city, town or county may implement a TIF in an area that is unproductive, undeveloped, underdeveloped or blighted (OK Constitution).
The Local Development Act provides tools to be used in areas where investment, development, and economic growth are difficult but possible if the Act is used.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
What is a TIF?
A TIF allows a city to direct the apportionment of an increment of certain local taxes and fees to finance public project costs in order to stimulate development in the area.
The increment is the portion of the ad valorem taxes produced by the increased value of the property in the TIF district.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
TIF Project Plans
The TIF district is established by the development and approval of a project plan, which must specify the boundaries of the district, the objectives of the project area, the projects to be carried out in furtherance of those objectives and the cost.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
TIF Validation
TIF districts have been validated by court proceedings involving:
Two TIF districts in Oklahoma City (for economic development projects at the Oklahoma Health Center and for the Downtown/MAPS project) and,
The TIF district in Guymon, OK (for the Guymon-Seaboard Economic Development project).Center for Economic
Development Law301 N. Harvey, Ste. 200 ● Oklahoma City,
OK 73102 ● (405) 232-4606
Steps for Considering and Creating a TIF district:
City Council Initiates Process: City Council passes resolution establishing
review committee and appoints its representative
The Review Committee consists of: A representative of City Council, to serve as
chairperson; A representative of the Planning Commission; A representative designated by each taxing
jurisdiction within the proposed district whose ad valorem taxes might be impacted according to the plan; and
Three members representing the public at-large and selected by the other committee members form a list of seven names submitted by the chairperson of the review committee.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Review Committee Consideration
Committee elects at-large members Committee studies proposed project
and makes findings on eligibility of proposed project area and district
Committee makes finding on financial impact of proposed district upon affected taxing entities
Committee makes a recommendation regarding approval of proposed project and creation of district.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Planning Commission Review
Planning Commission determines whether proposed project plan conforms with comprehensive (master) plan for the City.
Planning Commission makes a recommendation regarding approval of proposed project plan.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
City Council Consideration and Approval I
City Council must hold two public hearings before adoption of a project plan– one to provide information and to answer questions, and a second to give interested persons the opportunity to express their views on the proposed plan.
City Council considers the findings and recommendation of the Review Committee and the resolution and recommendation of the Planning Commission.
City Council makes final determination that the proposed district meets the eligibility criteria of the statute, including that the project area is an enterprise area, an historic preservation area, or a reinvestment area.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
City Council Consideration and Approval II
City Council makes finding that the improvement of the area is likely to enhance the value of other real property in the area and to promote the general public interest.
City Council adopts ordinance approving the project and establishing the increment district.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Examples of successful TIF districts
Oklahoma City Durant Guymon Seminole Midwest City Norman Okmulgee
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Planning, Process and Pitfalls
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Planning
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
If you don't know where you are going, how can you expect to get there?
- Basil S. Walsh
Planning
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Have a plan. Follow the plan, and you'll be surprised how successful you can be. Most people don't have a plan. That's why it's easy to beat most folks.
- Paul "Bear" Bryant, football coach, University of Alabama's Crimson Tide.
Planning
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Goals are dreams we convert to plans and take action to fulfill.
- Zig Ziglar
Process
Consult affected entities early. Engage the business
community. Communicate effectively. Designate a point person. Negotiate conditional
development agreement(s). Make it a win-win-win.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
DO:
Pitfalls
Don’t: assume a TIF will produce revenue.
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Pitfalls
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Don’t: assume the work is done once you adopt a TIF district.
on-going accountingannual reporting
Pitfalls
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606
Don’t: use an ad valorem TIF for retail.
Questions?
Center for Economic Development Law
301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606