Agenda - Planning Commission - 09/01/1998

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· Preparation of a development plan approved by the agency and the city. · Declaration ora base year from which to measure tax revenue increases. · Solicitation of developers to build within the district. Needs Assessment. The municipality must first conduct a needs assessment to establish that an area is blighted and that redevelopment is both necessary and in the public interest. Careful documentation of the assessment is critical because it is subject to judicial scrutiny. Such scrutiny requires that the state statute be followed explicitly and that the redevelopment agency be prepared to defend its findings. As a protective measure, the agency should carefully document data and methodology, including expert testimony. The study should cite as many permissible bases as possible from the statute to support the findings of the needs assessment study. Establishing need with a well-supported study is crucial to the TIF process as a means of combating any legal challenges that arise and gaining public approval for the redevelopment project. Municipalities usually make the decision to establish a redevelopment authority to exercise redevelopment powers. The powers of such an agency typically include property acquisition to eliminate blight, demolition, construction of infrastructure and utilities, disposition of property at its fair value, programs to repair and rehabilitate buildings, acquisition rehabilitation and resale of structures for affordable housing use, and acquisition of air rights. Redevelopment Planning. A project plan is essential to the TIF process because it provides a framework for implementing the TIF district. Most state statutes require some form of redevelopment plan in order to ensure that TIF provides a benefit to the community as a whole. Although the details vary among states, legislation will usually outline the content of the plan. Pennsylvania's Tax Increment Financing Act of 1990 is an example of such legislation: "The authori.ty shall prepare a project plan for each tax ' increment distri(~t and submit the plan to the governing body of the municipality which will create the district and to the governing body of any other municipality or school district that levies property taxes within the boundaries of the proposed district. The plan shall include the following: · A statement listing the kind, number, and allocation of all proposed pubic works or improvements and/or all residential, commercial, or industrial development and revitalization improvements. · An economic feasibility study of the project and the fiscal effects on the municipal tax base. · A detailed list of estimated project costs. · A description of the methods of financing all estimated project costs and the time when related costs or monetary obligation are to be incurred. · A map showing existing uses and conditions of real property in the district. · Proposed changes of any zoning ordinance, master plan, map, building code or ordinance. · A list of estimated non-project costs. Lolita Sereleas is a banking and economic development specialist at the Metropolitan Chicago Information Center. · A statement of proposed methods for the relocation of families, persons, and businesses to be temporarily or permanently displaced from housing or commercial facilities in the project area by implementation of the plan." Planners can play a central role in these first two stages of the TIF process by providing technical expertise, including knowledge of state statues, local zoning laws, and land-use issues. Additionally, planners can help ensure that TIF districts remain committed to the goal of eliminating blight and enhancing the long-range plans of the area. In many TIF districts, zoning remains consistent with the city's master plan. In other districts, h6wever, zoning changes are needed to lay the groundwork for desired redevelopment and to attract developers. A TIF district in Chicago recently underwent just such a zoning change, Part of the district was established on the Site of the RR Donnelly Establishing multiple TIF districts is not just a tool for larger cities. Thh downtown TIF district in Rock Island, Illinois (population 41,000) is one of two such districts in the ci{y. Downfo~ building. The large facility was the former location of the company's printing operations, but is now slated for mixed-use development. The zoning change came as no surprise to residents who have watched many area properties make the transition from industrial to urban residential. Establishing a Base Year. The base year refers to the tax base of the year in which a TIF district is established. This tax base serves a point of reference for determining future tax increments. The general formula used to calculate tax increment revenues is: I = r(n-I), where I = increment revenues, r = the tax rate in the current year, n = the assessed valuation in the current year, I = the assessed valuation in the base year. This formula determines that any positive difference between the base year and the subsequent years' tax revenue will flow into the redevelopment fund. A base year should be established early in the TIF process with as low an assessment base as possible. Again, it is beneficial to pay close attention to the statue, which outlines deadlines and provisions for triggering the base year. Solicitation of Developers. Pending completion of the steps to establish a TIF district, the redevelopment agency must work to attract the private investment that will raise the tax assessment base. Activities of the agency include planning, making investments in public improvements, and acquiring and clearing land for redevelopment. Such activities may require an investment in advance of private development.