TIF Policy
TAX INCREMENT FINANCING POLICY
General Policy
While Tax Increment Financing (TIF) is an important and useful tool in attracting and retaining business, it is essential that it is used appropriately to accomplish the City’s Increment Financing viability in that it is designed to encourage development which would not otherwise occur. The City of Eagle Lake’s Economic Development Authority (EDA) is responsible to assure that the project would not occur “but for” the assistance provided through TIF.
The City of Eagle Lake’s EDA shall consider TIF in cases that serve to accomplish the City’s targeted goals for economic development as they may change over time. These goals include projects that would result in and the creation of a significant number of jobs that pay wages adequate to support households, and the retention and expansion of business.
Projects Eligible for Tax Increment Financing
Projects eligible for consideration of TIF assistance include are not limited to office, office/service/warehouse, industrial/manufacturing and office/industrial/corporate headquarters.
Given the current development within the City, the Eagle Lake EDA does not intend to participate financially in the development of retail commercial projects; further the EDA is generally not if favor of using TIF to subsidize the development of housing. However, the EDA may consider the use of this tool in the future if it becomes necessary to meet changing goals for the provision of low and moderate income housing or to provide housing for senior citizens. Such requests will be evaluated on a case by case basis.
Costs Eligible for TIF Assistance
Project costs qualifying for TIF assistance as defined under the TIF Act, include utility design, landscape design, architectural and engineering fees directly attributed to the site work, site related permits, earthwork/excavation, soil corrections, street/parking lot paving, street/parking lot lights, curb and gutter, sidewalks, land acquisition, special assessments, legal (acquisition, financing and closing costs), soil tests, environmental studies, surveys, park dedication fees, SAC and WAC charges, title insurance and TIF application deposit.
Determination of Amount of Assistance to Applicant
The amount of TIF provided to an applicant will be based on the analysis of fundability guidelines for financial assistance eligible projects costs submitted on the application for TIF assistance and amount of increment generated by the project as calculated by the EDA staff.
The standard guideline for assistance is 70% of the project’s annual increment for a term determined by the number of points accumulated in the fundability guideline.
The level of assistance provided will be evaluated on a case by case basis and may reflect an increase or decrease in assistance. In addition, evaluation of the subjective information provided may result in adjusting the amount of assistance provided.
Types of Assistance
TIF can be provided in two different forms. One form is “pay as you go” wherein the Eagle Lake EDA compensates the applicant for a predetermined amount for a predetermined number of years. Annual payments are based on increment generated from the project and issued to the applicant after payment of property taxes by the applicant. The EDA will give special consideration to applicant’s applying for “pay as you go” assistance.
Another form is “up front” payment to the applicant wherein the EDA must issue revenue or general obligation bonds. The increment generated from the applicant’s project is then used for repayment of the bonds.
Financing in the form of excess increment will be provided in annual installments to the applicant based on the positive cash flow balance in the EDA’s excess increment fund.
Application for TIF Assistance within all Existing Project Areas
The Eagle Lake EDA shall require a deposit in the amount of $5,000.00 from the applicant for the city’s consultants to investigate the feasibility of providing TIF assistance to the applicant. If the EDA incurs additional expense beyond the $5,000.00 prior to the execution of the developer’s agreement, the EDA shall notify the applicant in writing and the applicant will be required to deposit additional funds.
If the project is approved and the applicant proceeds with the project, the EDA shall reimburse the applicant’s deposit to the extent permissible under the TIF Act. If the applicant does not proceed with the project, the EDA shall reimburse the applicant for the unused portion of the deposit.
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