Title
Consider/Discuss/Act on a Policy Regarding the Allocation and Awarding of TIRZ No. 1 Funds, and Accompanying Resolution
Summary
MEETING DATE: September 3, 2014
DEPARTMENT: Development Services - Planning
CONTACT: Matt Robinson, AICP, Planning Manager
Michael Quint, Director of Planning
Barry Shelton, AICP, Interim Assistant City Manager
RECOMMENDED ACTION:
· Approve the proposed policy regarding the allocation and awarding of TIRZ Funds.
ITEM SUMMARY:
· Staff is requesting that the Board consider and act on proposed policies which will guide Staff's recommendations regarding future TIRZ reimbursement and/or grant requests.
· The TIRZ No. 1 Project Plan was adopted in 2010. It specifies the types of projects which warrant TIRZ support and/or participation and also the specific amount in which support should be offered. For example, the TIRZ is expected to generate approximately $91MM during its 30 year term. The approved project plan allocates $85MM for catalyst projects and $3MM for vacant/underutilized site/buildings.
· To date, the TIRZ has agreed to award $200,000 for the Flour Mill project and has awarded $500,000 to the Cotton Mill. The Cotton Mill is identified as a vacant/underutilized site/building and the Flour Mill is identified as both a catalyst project and a vacant/underutilized site/building.
· Going forward, Staff anticipates additional large dollar amount requests for participation; these may significantly impact the TIRZ's ability to fund larger catalyst projects including but not limited to the reconstruction of State Highway 5 (McDonald St.) and the construction of a municipal structured parking facility in Downtown. Knowing this potentially negative impact to the stated goals of the Board and the City Council, Staff recommends that certain limitations be placed on the awarding of TIRZ funds so that participation in larger projects remains possible while healthy reserve balance is simultaneously grown within the TIRZ fund.
· Staff has approached the Board for policy direction in the recent past and has received feedback that each case should be evaluated on a case-by-case basis. Staff has concerns that this approach will not provide Staff with sufficient guidance with which to make recommendations and also that this approach has may negatively impact the TIRZ's long-term success and stated goals.
· Staff is proposing the following parameters which would guide future TIRZ reimbursements and/or grants consideration and dispersal:
o Catalyst Projects. Catalyst projects should be evaluated on a case-by-case basis by the Board and should be awarded with funds that are not otherwise allocated for other projects, encumbered by debt maintenance or annual awards for vacant/underutilized site/buildings.
§ As a means to evaluate and provide a recommendation on the funding of catalyst project submittals, internal scoring criteria would be developed and utilized. These criteria would evaluate a project's overall estimated impact to the Town Center. Funding requests would be evaluated based on the score the project receives under the criteria. For example, a score of 35 points (on a 100-point scale), would make the project eligible to receive up to 35% of available TIRZ funds or the request amount, whichever is less, that are not otherwise allocated for other projects, encumbered by debt maintenance or annual awards for vacant/underutilized site/buildings. However, the funds recommended for approval would not exceed the amount requested by the applicant.
§ Catalyst projects anticipated during the life of the TIRZ include:
· State Highway 5 Improvements;
· Parking Facilities;
· Development of new buildings (or redevelopment of existing buildings) as mixed-use/residential/civic projects; and
· Transit Improvements
o Vacant/Underutilized Site/Buildings. Awards for vacant/underutilized site/buildings shall be limited to $25,000 per individual project and no more than $100,000 shall be awarded per fiscal year. Projects approved by the Board will be recommended for funding on a first-come, first served basis. If the $100,000 allotment is exhausted before the fiscal year concludes, Staff will recommend the project request reimbursement during another fiscal year or recommend the request not be funded during the current fiscal year.
§ The proposed $100,000 per fiscal year cap is derived from dividing the project plan's $3MM allotment by the term of the TIRZ (30 years).
§ As the TIRZ fund continues to grow, the $25,000 per project cap and the $100,000 per fiscal year threshold may be re-evaluated as appropriate.
§ Also, as the TIRZ fund continues to grow and the number of reimbursement requests increase, it is Staff's recommendation that the 'per project requests' be considered and approved by Staff within the guidelines established by the Board as long as the requests remain within the 'per fiscal year cap.' This approach would be similar to how the Historic Neighborhood Improvement Zone (HNIZ) handles residential tax abatements. If the Board is comfortable taking this approach to the allocation of TIRZ funds immediately, Staff has the capacity and is willing to oblige. Doing so now will expedite the allocation of funds and will streamline the reimbursement process thereby expediting downtown redevelopment opportunities.
BACKGROUND INFORMATION:
· The Financing Plan for TIRZ No. 1 emphasizes that the TIRZ has been created with the primary intention of collecting and retaining revenues (in the TIRZ) for to facilitate long-term financing of critical transportation infrastructure and other substantial catalyst projects to support and encourage sustained revitalization of the Town Center.
· As such, the ability to aggregate the tax revenue increment to maximize financing capacity and financing options will take precedence over projects that may to diminish the ability of the TIRZ to aggregate a sufficient increment fund over time. Notwithstanding this policy, the Financing Plan acknowledges that certain projects may arise that justify a targeted expenditure versus aggregation of the tax revenue increment. Thus, the Financing Plan provides flexibility to the Board and City Council to consider TIRZ funding for certain projects on a case-by-case basis.
FINANCIAL SUMMARY:
· The TIRZ #1 Project Plan estimates the cost of vacant and underutilized sites and building projects will be $3,000,000 over the 30 year life of the TIRZ. This estimated cost is approximately 3.3% of the total TIRZ estimated projected cost of $91,000,000.
· By limiting the annual grant total to $100,000, the funding of vacant or underutilized sites and building projects will not exceed the estimated 30-year total cost for projects of these types.
· The City Council has created the TIRZ with the primary intention of providing a long-term financing mechanism for critical transportation infrastructure, through the collection and retention of revenues to produce aggregation. These policies will protect those goals while allowing for the flexibility to fund projects of immediate priority to the area served by the TIRZ.