DEVELOPMENT AGREEMENTS Iowa Municipal Professionals Institute Jason L. Comisky Ahlers & Cooney, P.C. 100 Court Avenue, Suite 600 Des Moines, Iowa Telephone: (515)
WHAT IS A DEVELOPMENT AGREEMENT? A “Development Agreement” or “Agreement for Private Development” is a contract. Typically it is a contract between a Developer and the City It defines the rights and obligations of both parties In order to have a valid contract there must be at a minimum: Offer Acceptance Consideration
WHAT IS A DEVELOPMENT AGREEMENT? What will the Developer do? Agree to build a new factory or expand an existing facility Agree to retain and/or create jobs (hire 50 new employees) Agree to a Minimum Assessment Agreement Agree to keep its property in good repair Agree to insure its property Agree to pay its taxes
WHAT IS A DEVELOPMENT AGREEMENT? What will the City do (i.e., what will the City provide as an incentive)? Tax Rebates (strongly recommended) Upfront Cash (higher risk) Forgivable Loan (higher risk) Public Infrastructure Property Transfer – Remember the three C’s Call your realtor – make sure you’re selling at fair value Competitive bidding Check the safe harbor – minimum assessment agreement
WHY IS THE DEVELOPMENT AGREEMENT SO LONG? Even small deals can be complicated! Identify the Minimum Improvements (in detail) Timing of rebates, grants Benefit to City (job creation/retention, building) Non-appropriation language Memorandum of Agreement Certificate of Completion Annual Certification
WHAT IF IT’S A HOUSING DEVELOPMENT? Will the housing be 100% LMI? If not (non-LMI housing): LMI Set-Aside Reimbursement for only public infrastructure Limited time for the collection of tax increment (10 or extend to 15) May have to create new urban renewal area Multiple development agreements
DRAFTING CONSIDERATIONS: How to Get Started: Tell the Developer to put its request in writing Determine if it’s a project the City wants to encourage Ask for help if you think your experts can assist Decide which incentives the City wants to provide Complete our Questionnaire so we have all of the information in one place. It helps us be more efficient and saves the City money!
DRAFTING CONSIDERATIONS: Be sure that: Development Property is in Urban Renewal Area Specific project authority in Plan or Amendment Grants/benefits will not be cut short by sunset Ordinance allowing for collection of increment Find out the legal name of the Developer Is it an owner/tenant situation? Make sure the business is not relocating from an adjacent county or city
DRAFTING CONSIDERATIONS: More Decisions! Do you want the Developer to pay for the City’s fees (legal/planning) for the project? Do you want to give the Developer increment on both the land and the building? Will the “base” be the current assessed value of the property?
WHERE TO GET HELP Financial Advisors County Assessor County Auditor Local City Attorney City Attorney (Urban Renewal/Economic Development)
TAKE AWAY FROM THIS PRESENTATION: Remember you are negotiating a contract for the City Decide what projects the City wants to support Get the Developer’s request for incentives in writing Get your experts involved early Try to protect the City and the Taxpayers by using lower risk arrangements such as tax rebates instead of higher risk arrangements such as grants and forgivable loans Make it clear to the developer from the start that you do not have the authority to bind the City, only the Council can do that after the appropriate process.
QUESTIONS? Jason L. Comisky Ahlers & Cooney, P.C. 100 Court Avenue, Suite 600 Des Moines, Iowa Telephone: (515)