In particular, Michigan encourages developers to reuse brownfield properties through extensive financing incentives. Michigan broadened the traditional definition of a brownfield to include badly damaged or functionally obsolete properties. To oversee the distribution of public funds used for brownfield redevelopment, municipalities create Brownfield Redevelopment Authorities (BRAs). According to the Michigan website, 287 BRAs currently exist throughout the State. The goal of a BRA is to make developing brownfields more competitive with greenfield development. To offset the additional costs associated with brownfield redevelopment, BRAs can provide developers with TIF assistance, loans and grants.

TIF eligible costs include pollution abatement activities, environmental insurance, demolition or redevelopment of existing structures, and Baseline Environmental Assessments (BEAs). Normally, any owner in a property’s chain of title may be held liable for environmental contamination. A BEA is designed to determine the amount of existing contamination on a property to protect future purchasers from environmental liability for past contamination. To repay TIF bonds and notes issued for eligible costs, BRAs can capture all incremental property taxes generated by a specific project on eligible property for up to 30 years. BRAs may delay the commencement date to capture incremental property taxes for up to 5 years, potentially providing developers with extra time to remediate their properties prior to development.

Funding for brownfield redevelopment began in the late 1980s when Michigan passed several bond measures including the Environmental Protection Bond Fund (1988) and the Clean Michigan Initiative (1998). These two bond initiatives provide funds for the Brownfield Redevelopment Loan Program, the Brownfield Redevelopment Grant Program as well as the Waterfront Redevelopment Grant Program. In 1996, Michigan also passed the Revitalization Revolving Loan Fund which offers developers low interest loans for brownfield redevelopment costs. As of 2008, funding from these programs was more than $155 million of the approximately $1.4 billion the State had spent for brownfield redevelopment. For BRAs, in particular, from 1998 to 2007 the State provided $120.7 million in assistance to almost 300 brownfield projects.

In the agreement, Apple committed to a minimum investment of $250 Million on the 160 acres of land it purchased in February for $5.6 Million.  It also committed to a minimum of 35 jobs with wages at least 150% of the county average.  The data center will be constructed in one of Crook County’s enterprise zones.

In return for the property tax exemption, Apple has agreed to pay local governments a $150,000 per year project fee, which will be split between the City of Prineville and Crook County.

The exact amount of the benefit to Apple is uncertain, and depends on the amount Apple actually invests in the project.  Google received a similar tax break on a $1.3 Billion data center and the tax break is valued at more than $24 Million annually.

In addition to Google and Apple, Central Oregon has attracted other data centers for companies such as Facebook, Microsoft, Amazon and Yahoo.  To encourage additional internet-based companies to locate in Oregon, lawmakers adopted legislation in 2012 to exempt large data centers from certain property taxes, such as taxes on the company’s intangible property.  According to Rep. Tobias Read (D-Beaverton), this legislation will encourage even more internet-based companies to locate their data centers in Oregon.  While data centers are not typically large employers, they have become an integral part of Central Oregon’s economic development strategy.  Crook County, where the new Apple data center will be located, has an unemployment rate of approximately 15%, the highest in Oregon. City and County officials believe that these data centers will spur other development in the surrounding region.

Mesa del Sol is a master-planned, mixed-use development which encompasses a twenty square mile tract of greenfield space south of Albuquerque.  Over the last few years, infrastructure has been constructed at the Project and, according to the Mesa del Sol website, the first houses will be available for occupancy this spring. Approximately 27% of the Project’s 12,900 acres is expected to include 38,000 units of mixed-income housing.  Mesa del Sol will also include a nature preserve, community centers and recreational facilities. Along with these residential amenities, the remaining development will contain retail, corporate and industrial sectors, such as Albuquerque Studios, one of the nation’s largest media production companies, and Advent Solar, a solar technology company. The developer expects to create approximately 60,000 jobs as part of the project.

New legislation was passed in New Mexico in 2006 broadening the availability of tax increment financing. To assist the Project, the City of Albuquerque and the State of New Mexico have pledged tax increment for public infrastructure costs (TIF is known as Tax Increment Development or TID in New Mexico and Tax Increment Development Districts are known as TIDDs). As part of TID, the state, counties and municipalities can pledge up to 75 % of future gross receipt tax (GRT) and ad valorem property tax increment for a maximum period of twenty-five years to repay bonds used to finance development projects.

Currently there are five TIDDs designated in Mesa del Sol with a total pledge of $500 million available to the project from both New Mexico and Albuquerque. The five distinct TIDDs will receive money in separate phases corresponding to the construction timeline, which is anticipated to be 50 years. Based on information from the New Mexico Taxation and Revenue Department, TIDDs in Mesa del Sol will receive approximately 60% of the 6.75% GRT generated by the Project, comprised of 67% of both the municipal dedicated GRT and the City’s share of State GRT and 75% of the State GRT. Mesa del Sol began receiving GRT distributions in January 2008. In FY 2011, it received approximately $890,000 in GRT increment; however, much of the retail planned for the Project must still be constructed.

As part of its obligations, Mesa del Sol must pass an annual test to guarantee the Project is cost neutral for the City. The development must also maintain its plans for a sustainable water supply, pedestrian-friendly environment and offer affordable housing.  TID funds will be used to construct roads, water systems, schools and libraries, among other components of the Project.

To promote innovation, spur R&D activities and create high-tech job opportunities, Chicago already has an established Laboratory Facilities Fund (LFF) program that was created by former Mayor Daley. The program aims to use TIF money to help develop laboratory space for new high-tech companies within certain TIF districts throughout the City. With maximum assistance of approximately $1.4 million per project and assistance distributed in a lump-sum amount upon project completion, the LFF program is designed to help new companies that develop products and processes in nanotechnology, biotechnology, pharmaceuticals, medical devices and services, food technology, and environmental technology. Large and publicly traded companies are not eligible to apply for this assistance.

In order to be eligible for assistance under the LFF program, new high-tech companies need to meet the following major requirements:

• Demonstrate evidence that they have advanced beyond incubator or early stage development and that they require larger and more advanced lab facilities;

• Present a lease or proposed lease for at least 5 years;

• Plan to occupy lab spaces ranging from 5,000 to 25,000 square feet in existing buildings within certain TIF districts; and

• Create or retain permanent jobs in Chicago.

Eligible expenses include the construction and rehabilitation of basic lab space improvements, environmental remediation, professional fees, and up to 30% of construction loan interest.

The LFF program application form is available on the City of Chicago’s website at: http://www.cityofchicago.org/content/city/en/depts/dcd/supp_info/laboratory_facilitiesfund.html

A joint review board is comprised of a representative from each community college district, school district, park district, library district, fire protection district, township and county that would have the authority to directly levy taxes on the property to be included in a proposed redevelopment project area as well as a municipal representative and a public member.

A joint review board offers recommendations to a municipality regarding the establishment or amendment of redevelopment plans and redevelopment project areas.  Current Illinois law provides that these recommendations are advisory only.  Any recommendation by the joint review board must be adopted by a majority of the board’s members, however a joint review board’s failure to act is considered to be an approval.

HB4694 would amend the TIF Act and give additional authority to a joint review board.  Most notably, the proposed legislation would delete the following language from the TIF Act: “A [joint review] board’s recommendation shall be an advisory, non-binding recommendation.”  Under HB4694, any recommendation would need to be adopted by a three-fifths majority, rather than a simple majority.  If three-fifths of the joint review board members reject a proposed amendment to a TIF plan, a municipality would be prohibited from proceeding with the amendment.  Additionally, it would be presumed that a joint review board’s failure to act on a timely basis means that the joint review board rejects the proposed redevelopment plan or project area because it fails to meet certain eligibility criteria.

HB4694 was assigned to the House Revenue and Finance Committee for review on February 7, 2012.  To read it in its entirety, visit http://www.ilga.gov/.

Current law requires any TIF fund balances not pledged to the repayment of outstanding obligations to be distributed to taxing entities. SB 654 proposed to retain approximately $1.3 billion in existing housing funds to pay for affordable housing projects. On January 31^st, the California Senate passed this bill; however, as of February 1^st, 2012, it had not passed the General Assembly.

SB 659 proposed to delay the Redevelopment Agency dissolution deadline to April 15^th, 2012, in order to provide the Redevelopment Agencies with sufficient time to resolve issues related to the dissolution. This bill never gained any traction in the legislature.

Since no new legislation regarding the dissolution of the Redevelopment Agencies was passed prior to the dissolution deadline, the Redevelopment Agencies were dissolved as of February 1^st, 2012. Current law requires a successor agency to handle the wind down of redevelopment activities. According to news reports, many cities in California have acted as successor agencies and are in control of former redevelopment agency assets. However, some cities, such as Los Angeles, have refused this role. In the case of Los Angeles, Governor Jerry Brown appointed a three-person panel to oversee the dissolution of the Los Angeles Redevelopment Agency.

The reforms, which are effective immediately, include the following:

• Creation of a comprehensive online TIF database.  The online database will provide the public with access to project and performance data and will allow the public to track all of the City’s TIF projects.

• Assessment Reports.  Prior to City Council consideration, the City will prepare these reports for every proposed private development TIF Project.  Information in these reports will include projected Project job creation and projected return on TIF dollar investment to the City.

• Monitoring of TIF Performance.  TIF Performance will now be monitored by the Department of Revenue and will include random audits of TIF Districts by independent auditors.

• City’s Internal TIF Task Force.  Representatives on the City’s TIF Task Force will now include the City Comptroller, the City’s Chief Operating Officer and the City’s Chief Financial Officer.  Previously, the Task Force only included members of the City’s Department of Housing and Economic Development.  This Task Force considers all proposed TIF deals that are brought to the City.

While the reforms are effective immediately, it is anticipated that they will be implemented throughout 2012.  According to the Mayor, “these critical reforms will strengthen the transparency and accountability involved in TIF projects, and will help the city focus the program on job creation and economic development.”

In 2011 alone, 162 companies received approximately $10 Million in SBIF grants for 222 projects. 87 TIF districts participated in the SBIF program in 2011, or approximately 50% of all of the City’s TIF districts.

Since 2001, the highest number of grant awardees has been in the Kinzie Industrial Corridor TIF District. From 2001 to 2011, 133 projects received SBIF grants in this TIF District for a total amount of approximately $5.3 Million. The Fullerton/Milwaukee TIF District and the Lawrence/Kedzie TIF District have also widely used this community redevelopment tool. In each of these TIF Districts, more than 50 projects have received SBIF grants between 2001 and 2011 in the total amount of $2.2 Million and $1.3 Million respectively.

The SBIF database is available on the City of Chicago’s website at:

https://data.cityofchicago.org/Community-Economic-Development/Small-Business-Improvement-Fund-SBIF-Grant-Agreeme/jp7n-tgmf

The Court’s decision means that approximately 400 Redevelopment Agencies throughout California will be disbanded and their obligations will be transferred to successor entities, typically local cities and counties where the Redevelopment Agencies are located.  As a result of the law, any pending projects or transactions that were not formally approved by June 29, 2011 will terminate and the validity of certain recent obligations issued or entered into after January 1, 2011 will be reviewed.

Newly constituted Oversight Boards comprised of local city and county officials have until March 1, 2012 to approve the list of enforceable obligations and the obligation payment schedules.  The lists must then be submitted to the State by April 15, 2012.  The Oversight Boards will also be charged with disbanding the Redevelopment Agencies and selling Agency assets.  Once the Redevelopment Agencies are disbanded, these Boards will oversee the distribution of taxes that would otherwise have been under the purview of the Redevelopment Agencies.

The California Department of Finance estimates that approximately $2.2 Billion out of $5 Billion in annual tax increment revenue must be set aside to pay debt service obligations for existing bonds.  The remainder of the tax increment would be distributed to local governments to ease budgetary pressures.

Under California’s Community Development Law, twenty percent (20%) of tax increment funds were allocated to low-income and moderate-income housing.  The Supreme Court’s ruling may have a significant impact on the construction and availability of affordable housing in California.

The California Redevelopment Association and the California League of Cities have already called on the California Legislature to commence work on legislation that would re-create Redevelopment Agencies, citing comments made by key California legislators that the purpose of the legislation was not to eliminate redevelopment agencies completely, but rather to limit their sizes and budgetary impacts.  However, because of the significant financial challenges facing California, it is unclear whether the State Legislature will be supportive of such an effort.

Unlike the TIF Statute, the Economic Development Area Tax Increment Allocation Act provides that municipalities can pledge tax increment to projects in Economic Development Areas without making a blight finding.  However, Economic Development Area projects must create or retain at least 4,250 jobs.  Additionally, private investment in Economic Development Areas must equal at least $100,000,000.  Unlike a TIF District, which only requires municipal approval, both municipal and State Department of Commerce and Economic Opportunity approval are required to establish an Economic Development Area.

The Sears EDA was initially established in 1989 by the Village of Hoffman Estates.  In 1990, the Village and Sears entered into a Development Agreement in which Sears agreed to construct a 1,600,000 square foot office complex and complete related infrastructure improvements in the Sears EDA, and the Village agreed to provide Sears with assistance including a portion of the incremental property taxes in the Sears EDA. According to Sears, it will have received a total of approximately $75 million in property tax assistance from the Village since the adoption of the Development Agreement in 1990.

It has been reported that Sears will receive approximately $125 million in property tax assistance if the Village approves an amended Development Agreement. In order to receive the assistance from the Village, SB0397 requires Sears to maintain at least 4,250 jobs in the Sears EDA for 15 years. Sears will likely also receive an additional $150 million in State income tax credits under the provisions of SB0397.