TIF presentation

8/6/2019 TIF presentation

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Tax Increment FinancingWest Hills Business Center

Presentation to:

Northwestern Lehigh School District

June 15, 2011LCIDALCIDALCIDALCIDA


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Tax Increment FinancingWhat Are TIFs/How Do They Work?

Tax Increment Financing (TIF) is an economic development financing tool

which can utilize increases in property taxes, resulting from privatedevelopment within a specified area, to finance needed capital

improvements within that same area.

A portion of the new taxes or tax increment generated by a

development project is designated by the affected taxing bodies to cover

the debt service payments of a bond or note that finances the eligible

improvements.

In many cases, the improvements that are financed via a TIF constitute

publically owned infrastructure.

2West Hills Business CenterLCIDALCIDALCIDALCIDA


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The Tax Increment Financing Act of 1990 (amended 1992), Act

113, 35 P.S.6930.1 et seq., permits Local Industrial

Development or Redevelopment Authorities to administer a TIFproject in accordance with the affected local taxing bodies.

Today 49 states and the District of Columbia have such

legislation.

The process starts with a local Authority working with a private

development project in need of assistance with excessive costs

related to necessary improvements to support the project.

In the majority of cases, the required assistance involves fundingmandated public infrastructure improvements.



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The basic process involved in developing a tax increment financing

project is as follows:

- The local industrial development authority, in this case, LCIDA,makes presentations to the affected taxing bodies (i.e school

district, local municipality, county) requesting they designate a

representative to serve on a TIF Committee to assist the Authority

in developing a Tax Increment Financing Plan.**This is the purpose of our presentation to you tonight.

- The resulting TIF Plan must include, among other things, an

exhaustive description of the project/district and a detailed

economic feasibility study and assessment of the fiscal impact on

the municipal tax base.



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Upon completion of the TIF Plan, the Authority then presents

the plan to the taxing bodies and requests that they either opt-in or opt-out of the plan.

In this context, the three taxing bodies (county, municipality and

school district) agree to allocate all or part of the increased taxes,

received from properties within the TIF District, to the Industrial

Development Authority to meet principal and interest payment

obligations to the holders of the bonds or notes.

Finally, the county or the local municipality designates by

ordinance or resolution a certain geographical area as a TIF

District.



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Things to remember:

The allocations made by each of the taxing bodies in support ofthe project do not need to be the same and the taxing bodies

retain 100% of their Base taxes.

Once the TIF loan is repaid, the TIF District is dissolved and all

tax proceeds go to the respective taxing bodies.

TIF is not a tax abatement program - unlike the Local Economic

Revitalization Tax Assistance Act (LERTA) and the Keystone

Opportunity Zone (KOZ) programs.



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EXAMPLE

TIF DISTRICT BEFORE DEVELOPMENT GENERATESA TAX BASE OF$10,000

AT COMPLETION OF DEVELOPMENT THE

DISTRICT GENERATES TOTAL TAXES

OF$100,000

THE TAX INCREMENT IS +$90,000

THE TAXING BODIES AGREE TO ALLOCATE 70%

OF THE TAX INCREMENT TO THE IDA OR...$63,000



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EXAMPLE (continued)

IDA BORROWS $500,000 THROUGH THE ISSUANCE OF BONDS ANDREPAYS THE IDAS BOND OBLIGATIONS WITH THE $63,000

RECEIVED EACH YEAR.

THE TAXING BODIES RETAIN THE $10,000 TAX BASE AND 30% OF

THE TAX INCREMENT ($90,000), FOR TOTAL TAXES RETAINED OF$37,000 VERSUS THE ORIGINAL $10,000.



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Tax Increment FinancingHow is the TIF Guaranteed?

Recourse from the note holder or bond holders, in the event ofdefault, will be limited to the funds made available through the tax

increment financing or the NID. The School District, Township andthe County will have no liability in the event of default.

No full faith and credit guarantee will be provided by any of thetaxing bodies.

The TIF legal documents will provide that property owners within

the TIF District will be prohibited from seeking tax reassessments oftheir properties below a floor that is adequate to service debt.

In the event the School Board disagrees with the results of theplanned Lehigh County Reassessment, the TIF will not preclude theSchool Board from challenging the reassessment.

As a reinforcement mechanism to offset potential deficits in TIFrevenues to support the required debt service, a NID will also becreated.

9LCIDALCIDALCIDALCIDA West Hills Business Center


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Tax Increment FinancingHow is the TIF Guaranteed?

The Pennsylvania Neighborhood Improvement District Act allows

municipalities to establish a Neighborhood Improvement District(NID).

Property owners in the NID can be assessed fees based on debtservice shortfall and collected as property tax.

The revenues generated from the assessments in the NID willprovide funds necessary to ensure that payments of principal andinterest under the bonds will be made.

The NID that will be formed will include only the tax incrementdistrict which will be the proposed development site only.



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Tax Increment FinancingWest Hills Project Overview

Location: I-78, Exit 45 (New Smithville)

Consists of: 233 Acres

3,800 Linear Feet Frontage on I-78 Planned Development- 2.3 Million Square Feet

Product: Institutional Quality Industrial Buildings

High Quality Business Park Environment



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Tax Increment FinancingProperty Location



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Tax Increment FinancingWest Hills Project Status

Industrial Zoning

Approved Plans:

Final Subdivision Plan (Township)

Final Land Development Plan (Township)

Approved Permits: PENNDOT - Highway Occupancy Permit

PA Dept of Environmental Protection NPDES

US Army Corps of Engineers Section 404 of the U.S. CleanWater Act



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Tax Increment FinancingWhy is a TIF Needed?

Public Infrastructure Deficiencies

I-78 Exit 45 New Smithville PENNDOT has Designated the Bridge Over I-78 as Functionally Obsolete

Sub-Standard Vertical and Horizontal Clearances

Signals and Turning Lanes Needed

Waste Water Treatment Plant Currently a Failed System Which is Subject to PADEP Moratorium

Will be Upgraded to Meet Current PADEP Standards

Will Add Capacity for West Hill Business Center (WHBC), Weisenberg

Elementary School, Diner

Electrical Service Substation Upgrades and Extension to WHBC


TIF presentation

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