Practical Issues Working with Special Taxing Districts October 9, 2015 Practical Issues Working with Special Taxing Districts Shannon Creighton Roxsen Koch Gilmore & Bell, P.C. Polsinelli PC Robert Klahr Armstrong Teasdale LLP

OVERVIEW OF TOOLS Transportation Development Districts (TDDs) Missouri Transportation Development District Act, §§ 238.200-238.280 RSMo. Community Improvement Districts (CIDs) Community Improvement District Act, §§ 67.1401-67.1571 RSMo. Neighborhood Improvement Districts (NIDs) Neighborhood Improvement District Act, §§ 67.453-67.475 RSMo.

CID/TDD/NID COMPARISON CID's Separate Political Subdivision and Board of Directors Bonds are not obligations of City/County Enjoy a broad range of powers Board is elected or appointed by City/County forming District Project should be within the boundaries of District Sales Tax, Property Tax, Special Assessments, Fees Available TDD's Separate Political Subdivision and Board of Directors Bonds are not obligations of City/County May fund transportation only Board is elected by property owners or registered voters Project need not be within the boundaries of District Sales Tax, Property Tax, Special Assessments, Tolls Available

CID/TDD/NID COMPARISON(cont.) NID's Are nothing more than a "line on a map" Bonds are limited general obligations of the City or County (counts against constitutional debt limit) Limited purpose financing tool Less flexibility related to special assessments Project need not be within the boundaries of District Only Special Assessments may be levied

CHOOSING THE RIGHT TOOL PUBLIC/PRIVATE PARTNERSHIPS WHAT ARE THE DEVELOPER'S OBJECTIVES/CONSIDERATIONS/CONCERNS? WHAT ARE THE PUBLIC'S OBJECTIVES/CONSIDERATIONS/CONCERNS?

CHOOSING THE RIGHT TOOL(cont.) FUNDING NEEDS LEVERAGING THE DISTRICT REVENUES SINGLE USE VS. COMBINATION WITH OTHER TOOLS

TIF AND TDD/CID COMBINATION OVERLAY ADVANTAGES Additional Revenues Captured (with consent of District) Revenues Captured are not from Existing Taxing Districts Captured Portion Not Limited to TDD or CID Purposes TIF DISTRICT

FINANCING THE PROJECT - TAX EXEMPT FINANCING – SELECTED FEDERAL TAX ISSUES

WHO IS A VALID ISSUER? General Rule: Interest on debt issued by or "on behalf of" a State or political subdivision of a State may be tax-exempt under the Internal Revenue Code. A "political subdivision" is an entity that (a) acts for a public purpose and (b) has been delegated a substantial portion of at least 1 of 3 sovereign powers. Eminent Domain Taxing Power Police Power

IS THE BOND TAX-EXEMPT? Interest on state or local bonds is tax-exempt, unless the bond is a "private activity bond." A bond is a private activity bond if: More than 10% of Financed Property "Used in a Private Business Use"; AND More than 10% of Bonds secured or "paid" by private business user or property used in a private business use. Does the District have a "generally applicable tax"?

BANK QUALIFICATION $10,000,000 of bank qualified debt each calendar year. Includes debt issued by the political subdivision and any entity issuing debt on behalf of that entity (a subordinate entity).

LIFE AFTER THE FINANCING

QUESTIONS?