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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] Local Redevelopment Using TIFs.

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Tax increment financing strategic considerations for development or planning process and pitfalls
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]


Local redevelopment using tifs
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
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
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 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 Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


Steps for considering and creating a tif district
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
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 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 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 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
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
Planning, Process and Pitfalls

Center for Economic Development Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


Planning
Planning

If you don't know where you are going, how can you expect to get there?- Basil S. Walsh

Center for Economic Development Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


Planning1
Planning

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.

Center for Economic Development Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


Planning2
Planning

Goals are dreams we convert to plans and take action to fulfill.

- Zig Ziglar

Center for Economic Development Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


Process
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.

DO:

Center for Economic Development Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


Pitfalls
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


Pitfalls1
Pitfalls

  • Don’t: assume the work is done once you adopt a TIF district.

  • on-going accounting

  • annual reporting

Center for Economic Development Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


Pitfalls2
Pitfalls

Don’t:

use an ad valorem TIF for retail.

Center for Economic Development Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


Questions
Questions?

Center for Economic Development Law

301 N. Harvey, Ste. 200 ● Oklahoma City, OK 73102 ● (405) 232-4606


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