Archive for September, 2010

Colorado Adopts New Legislation Limiting the Use of TIF on Agricultural Land

Thursday, September 23rd, 2010

The Colorado Governor signed House Bill 1107 into law on April 14, 2010, limiting the inclusion of agricultural land in urban renewal areas.  Generally, under the Colorado Urban Renewal Law, a local governing body can designate a slum or a blighted area as an urban renewal area.  Upon such a designation, an urban renewal authority can pledge incremental real estate taxes and sales taxes generated within the urban renewal area to development projects for up to 25 years. 

House Bill 10-1107 amends the Urban Renewal Law by providing that land classified as agricultural at any time during the 5-year period prior to the date of adoption or modification of an urban renewal plan may not be included in an urban renewal area unless any of the following is true:

  • The area is a brownfield site;
  • At the time of the designation of the urban renewal area, at least 50% of the area is blighted and at least 67% of the area’s perimeter is contiguous to urban development;
  • It is within a municipality and has been completely surrounded by urban development for at least 3 years;
  • All taxing bodies governing the proposed urban renewal area agree to include the agricultural land; or
  • The agricultural land was included in an approved urban renewal plan prior to June 1, 2010.

In addition, to encourage industrial development between June 1, 2010 and May 31, 2020, if agricultural land is contiguous to an existing urban renewal area, both the agricultural land and the contiguous portion of the urban renewal area are owned by the same person, and the agricultural land will be developed for industrial projects that create manufacturing jobs, the agricultural land can be included in the urban renewal area.


Friday, September 17th, 2010

A new report by the Sweet Home Chicago Coalition examines the role that TIF dollars could play in alleviating the effects of foreclosure in Chicago neighborhoods.  The report, entitled “A Drop in the Bucket” was released earlier this month and explores how uncommitted tax increment generated in Chicago’s 159 TIF Districts could be used to complement the Neighborhood Stabilization Program (NSP), Chicago’s primary source of funds available for neighborhood redevelopment in the wake of residential foreclosures.

According to the report, City TIF Districts which contain at least 50 residential foreclosures have uncommitted TIF funds in amounts estimated to be between $19 million and $761 million available over the remaining life of those districts.  The report found that using TIF funds to construct and rehabilitate affordable housing in addition to or in place of NSP funds would be advantageous because TIF funds allow for increased flexibility as compared to NSP funds.  NSP funds are governed by federal requirements that limit the use of the NSP funds and the period such funds are available.

The Sweet Home Chicago Coalition report is part of an on-going effort to urge the Chicago City Council to adopt an Ordinance that would require the City to provide an amount equal to at least 20 percent of the aggregate tax increment collected through the TIF Districts in the City during a fiscal year for the development and preservation of affordable housing in the next fiscal year.  If approved, the Ordinance would require the City of Chicago Department of Community Development to inform residential developers of the availability of TIF funds and for developers to submit proposals to construct or preserve affordable housing.  The Ordinance would require that the affordable housing rental units remain affordable in perpetuity.  The Chicago Community Land Trust would control the owner-occupied affordable housing units.

The Ordinance was introduced in March and referred to the City Council Joint Committee on Finance and Housing, where it was debated during a July meeting.  There has been no further City Council action on the Ordinance.

Wisconsin Adopts New Legislation to Help Troubled TIF Districts

Monday, September 13th, 2010

The Wisconsin Governor signed Senate Bill 291 into law on May 13, 2010 which allows cities to declare TIF districts (TIDs) created before October 1, 2008 as distressed or severely distressed.  Such designations, which must be made by a local legislative body before October 1, 2011, would allow these TIDs to exist for longer periods than otherwise permitted under the Wisconsin Tax Increment Law.  If the revenue generated in a TID during its life is inadequate to pay off all project costs incurred, it can be declared a distressed TID.  In order to be declared a severely distressed TID, the value increment in the TID, derived from the equalized value of all taxable properties in the TID minus the tax incremental base, must have declined by at least 25% from its highest annual value increment.  Only TIDs that have been in place for a minimum of 7 years are eligible to be designated as distressed or severely distressed.

Under the new law, the term of a distressed TID can be extended for up to 10 years after it would otherwise be required to terminate (generally, 20 years, 23 years or 27 years depending on the type of TID and the year in which it was created).  A severely distressed TID can be extended for up to 40 years after the district is created.  If a TID is designated as distressed or severely distressed, the project plan may not be amended to add new project costs or to allow for funds to be expended outside of the TID’s boundaries.

To designate a TID as a distressed or a severely distressed TID, the local legislative body must hold a public hearing and adopt an appropriate resolution, and the Joint Review Board must approve the designation after consultation with the Wisconsin Department of Revenue.