1. TIF Basics and Project Planning – A Real-Life Example
Presented to WGFOA Winter Conference
Christine Cramer
December 2, 2010

2. Tax Incremental Financing
Provides a means for the City to stimulate beneficial development and redevelopment
One of the best financing tools for economic development projects

3. Principles of TIF
Taxes generated through increased property values within the TIF district pay for needed improvements
The City provides public improvements and incentives to attract development—the overlying tax districts that benefit should share in costs

4. How TIF Works

5. 27th Street Corridor Proposed TID No. 3
Presented to the City of Greenfield
July 14, 2009

6. Planning Area Howard Avenue Cold Spring Road Layton Avenue
Edgerton Avenue
Grange Avenue

7. Need for Redevelopment of the 27th St. Corridor
Improve existing buildings and promote redevelopment of underused or obsolete sites
Transportation System Changes
Reconfiguration of 27th St./I-894 interchange
Need for traffic improvements in the area of the 27th St. and Layton Ave.
Competition from Other Commercial Corridors
27th Street in Franklin/Oak Creek
Highway 100
Bluemound Road

8. Types of TIDs At least 50% of area must be:
Suitable for industrial development;
Suitable for mixed-used development;
Blighted; OR
In need of rehabilitation or conservation work
Maximum TID life:
20 years
27 years

9. Rehabilitation and Conservation Work
Wis. Stat. § (2m)—rehabilitation or conservation work includes:
“carrying out a program of voluntary or compulsory repair and rehabilitation of buildings or other improvements; acquisition of real property and demolition, removal or rehabilitation of buildings or improvements on the property where necessary to eliminate unhealthful, unsanitary or unsafe conditions, lessen density, reduce traffic hazards, eliminate obsolete or other uses detrimental to the public welfare, to otherwise remove or prevent the spread of blight or deterioration, or to provide land needed for public facilities; installation, construction or reconstruction of streets, utilities, parks, playgrounds, and other improvements necessary for carrying out the objectives of the urban renewal project; or the disposition for uses in accordance with the objectives of the urban renewal project, of any property acquired in the area of the project. An urban renewal project includes activities for the elimination and for the prevention of the development or spread of slums or blighted, deteriorated or deteriorating areas.”

10. Existing Buildings

11. Example of Redevelopment – Forest Home Ave / Hwy 100

12. Example of Redevelopment – Bluemound Road

13. Example of Redevelopment – Bluemound Road

14. Goals of the TIF District
Improved appearance of the corridor/gateway
Increased property values
New housing
New employment
More office and retail space
Better mix of land uses

15. Proposed TIF District Public infrastructure improvements
Street, storm water and utility improvements / right-of-way acquisition
Creation of a complete “28th Street” for better access and improved traffic flow
Access to property north of 27th St./Cold Spring Road intersection
Streetscape improvements
Along 27th St. and Layton Ave.
Gateway features at entrance to Greenfield from Layton Ave.
Redevelopment and rehabilitation assistance to property owners and developers
Public assistance will be necessary in order to attract the high-quality redevelopment desired by the City

16. Proposed TIF District

17. Proposed TIF District

18. Proposed TID No. 3 Project Costs
Description
Cost
27th Street Lighting
$400,000
Layton Avenue Streetscaping
$262,000
27th/ Layton Area Street / Utility Improvements (28th Street)
$2,182,500
27th/ Layton Area Right-of-Way Acquisition (28th Street)
$3,800,000
Coldspring Road Area Streetscaping
$121,000
Coldspring Road Area Street / Utility Improvements
$2,643,500
Subtotal Public Infrastructure
$9,409,000
Financing Costs
$1,694,000
Redevelopment Assistance - Demolition
$2,000,000
Redevelopment Assistance - Incentives
$8,000,000
Organization, Administration, Professional Services
Total Costs
$21,503,000

19. Financing of TID No. 3 Project Costs
“Traditional” Financing
City borrows for project costs upfront
Costs are repaid from TIF revenues
Recommended to be used for public infrastructure improvements
“Pay-as-you-go” Financing
City pays for costs and incentives as development occurs and TIF revenue is received
Recommended to be used for redevelopment assistance and developer incentives

20. Economic Feasibility Study Components
Project costs and timing
Project financing
Development projections – amount and timing
Projected tax increments
Cash flow pro forma

22. Economic Feasibility Summary
Low-Range
Mid-Range
High
Public Investment in Infrastructure (NPV) (1)
$10.3 million
Public Investment in Redevelopment Assistance (NPV) (1) $0
$3.2 million
$4.7 million
Additional Commercial / Office / Retail Space (SF)
52,000
315,000
570,000
New Housing Units 48 72 96
Increase in Property Value
$71 million
$107 million
$142 million
Expected Year of TID Closeout 27 22 20
Additional Annual Tax Revenues per Year at Closeout (2)
$1.59 million
$2.44 million
$3.18 million
Net present value of future investments, discounted at 5%, to convert to a value in current (2009) dollars.
Expressed in current (2009) dollars. Includes all local property tax revenues, including City, school district, county and vocational/technical college district.

23. Plan Meets TID Requirements
Value increment of existing TIDs plus the value of the proposed TID < 12% of total EV
Conformity with Master Plan
Improvement of the area is likely to significantly enhance property values of the District
Project costs relate directly to the purpose of the District
“But for” test
Benefits outweigh the costs
Proposed TID would put the City’s total TID value at 2.3% of total EV
Comp Plan recommends TIF
Half of plan costs relate to redevelopment assistance
Purpose of plan is to address traffic access and redevelopment
Other proposals have failed; significant obstacles exist
Economic Feasibility analysis

24. Steps to Create the District
Develop Project Plan May / June
Presentation to the Plan Commission 7/14
Public notices published / mailed 7/22 & 7/29
Joint Review Board meeting 7/22 – 8/5
Plan Commission Public Hearing 8/11
PC adopts Project Plan / boundaries 8/11
Council approves Project Plan 9/15
Council creates District 9/15
Joint Review Board approval 9/16 – 10/15
Deadline for creation of TID in /30

25. Creation of the District:
Establishes a TID Fund that will receive property taxes on any increased property value
Creates a new revenue source that can be used as a catalyst for redevelopment
Signals to businesses, property owners and developers that the City wants to improve this area
Does not commit the City to expenditures or, by itself, accomplish redevelopment of the area

26. Ongoing Implementation
Refine timing, layout, design, and costs of infrastructure improvements
Acquire properties for 28th Street
Form public/private partnerships
Negotiate developer agreements
Issue financing

27. Minimizing the City’s Risk
Carefully monitor TIF performance every year
Don’t assume that if you build it they will come – base City investment on ‘real’ projects
Limit public investment to the minimum needed to move a desired project forward
Limit City-financed costs—use pay-as-you-go as much as possible
Strong developer guarantees
Use TIF to leverage more private investment

28. Best Practices in Implementation
Build community partnerships
Coordinate efforts with the City of Milwaukee to promote the corridor
Establish developer need, not want
Align TIF use with community goals
Adopt detailed TIF policy guidelines
Monitor and report performance
Use TIF to compete on a global scale
Source:“Tax Increment Financing in Southeastern Wisconsin,” Public Policy Forum, Research Brief Volume 96, Number 2, February 2008.

29. Current Trends and Issues
Loss of property value in some districts
Economic conditions
Change in DOR valuation methods
Ag use
Other factors reducing TIF revenues
Levy limits and lower tax rates

30. Options for Struggling TIDs
Extension of maximum District life
Distressed designation
Donor TIDs
Boundary amendments

31. Questions?
For additional information: Christine Cramer (262)