HomeMy WebLinkAbout22. 16-365JULY 12, 2016 16-365 RESOLUTION
(CARRIED________ LOST________ LAID OVER___7-0___ WITHDRAWN_______)
UNTIL JULY 26, 2016 COUNCIL MEETING
PURPOSE: APPROVE UPDATED TAX INCREMENT FINANCING (TIF) POLICY
AND APPLICATION GUIDELINES
INITIATED BY: COMMUNITY DEVELOPMENT
WHEREAS, the City of Oshkosh is active in its use of tax increment financing (TIF) to
promote redevelopment and industrial development activity; and
WHEREAS, a formal TIF policy and application better communicates the City’s
expectations to the development community and public regarding use of TIF; and
WHEREAS, Council previously approved TIF policy and application guidelines; and
WHEREAS, based on developer interest in utilizing TIF funding and the current market,
staff is recommending revisions to three significant policy and criteria elements of the TIF
Policy and Application:
1) Criteria for TIF Assistance
2) Payback Period
3) Policy Criteria
NOW, THEREFORE, BE IT RESOLVED that the Common Council of the City of
Oshkosh hereby approves of the attached revised City of Oshkosh Tax Increment Financing
Policy and Application guidelines.
&A
C3 =`
Oshkosh
MEMORANDUM
TO: Honorable Mayor and Members of the Common Council
FROM: Darryn Burich
Director of Planning Services
DATE: July 6, 2016
RE: Approve Updated TIF Guidelines and Application
BACKGROUND
For the past few years the City has been operating under a set of guidelines for use of TIF
that was developed after Planning staff extensively researched what other communities had
been doing in that regard and with a few years experience utilizing the new guidelines staff
thought it necessary to make some changes to the policy and guidelines to better reflect use
in our market. Attached Council will find the update TIF Application document. Many of the
changes involve minor grammatical edits and spelling but there are three main policy
changes that will impact how the City uses TIF explained below.
ANALYSIS
The three significant policy and criteria related changes are explained hereunder.
75% Rule
The first criteria staff is recommending to change is Criteria # 2 on Page 4 and involves
adjusting the "75 %" Rule. The criteria states that no more than 75% of the net present value
of the tax increment generated may be made available to the project. Basically what we
would do is run a calculation out over 20 years based on the projected value and increment
and present value that increment income stream to arrive at the value that we would cap the
city's participation. This process worked relatively well until the recession which impacted
equalized values that triggered the city's change to the paygo preference. The 75% rule was
set up with up front loans in mind and a desire to have a "cushion" if values changed
negatively.
With paygo, funds are provided each year out of increment based on performance which is
then provided back as an incentive to the property owner. This has the impact of lessening
annual operating expenses which has an impact on the Internal Rate of Return (IRR) which
measures the rate of return for a project based on initial investment based on cash flow. The
development community evaluates projects (in part) based on the IRR of project. There is no
real hard and fast standard for minimum IRR but you typically don't see many projects with
IRR's less than 6 %. If the rate is less than 6% there are probably better areas to invest your
money unless there is a big upside. For less risky projects and more stable tenants it is
easier to take less of an IRR versus some more speculative projects.
We don't have a good set of local IRR information but in talking with the TIF specialist for the
City of Madison what they have been seeing is IRR's in the 12 -15% range for their
development project.
With paygo a developer has to bring more equity or financing into a project which impacts the
IRR and can make some projects not financially feasible because you may not have enough
equity or the bank will not loan you any more funding based on the project's ratios (e.g. DCR,
LTV, etc.). Up front loans reduce the amount of equity that has to be brought into the project
and the annual debt service. Both methods impact IRR but up front loans are more risky for
the city because the city has to borrow and make payments relying on tax increment value to
pay debt service and if the increment is not there has to pay out of the general fund. This is
why the city changed its preference to paygo because the developer is only paid for actual
increment created. However, paygo can make projects more difficult to accomplish simply
because the additional equity or leverage requirements which lowers the IRR. For larger
projects, some financial institutions will monetize the TIF increment (at a discount) and offer
those funds as part of the overall financing package.
Staff is now proposing to change that criteria specific to paygo projects to allow up to 90% of
the increment to be used for project support. Staff still feels it necessary to retain 10% of the
increment for maintenance and administration costs. The 90% is also not a given, it still has
to be demonstrated that the project requires that level of support through a financial proforma
analysis and a development agreement has to be negotiated. Staff is proposing this change
based on recent financial reviews of TIF related project proformas where an additional level
of increment being provided will create higher IRR's and make the projects more financially
feasible. This change simply makes projects more doable and thus more of an incentive to
redevelop other properties primarily in the central city. The 90% level could be granted in
districts with no or little other district wide costs so there would be little or no impact from this
change.
Payback Period
The current policy states that there will be a 20 year maximum payback period and that was
established based on the City's typical borrowing periods. The switch to paygo may create a
need to extend the expenditure period again based on a financial analysis and is something
that will be negotiated in a development agreement.
Policy Criteria
Staff is proposing to adjust some of the categories on the ranking sheet to recognize that TIF
as a tool used in the city has generally been to promote redevelopment of blighted areas.
The current criteria skews a bit toward job creation and makes it somewhat harder for
redevelopment projects without a heavy job creation emphasis (e.g. an adaptive reuse
project). Staff is proposing to lower criteria # 1 from 20 points to 15 points and adding those
5 points to category # 2 recognizing that using TIF to implement local plans such as
redevelopment plans, Comprehensive Plan, Downtown Action Plan, etc. is an important
criteria to evaluate TIF projects. Implementation and consistency with local plans is actually
a subject that must be covered in each TIF project plan.
FISCAL IMPACT
Approval of the changes and updated TIF Guidelines and Application will have no impact on
the provision of city services.
RECOMMENDATION
The Long Range Finance Committee recommended approval of the updated Guidelines and
Application at its July 6, 2016 meeting.
Respectfully Submitted,
Darryn Burich
Director of Planning Services
Approved,
Mark Rohloff
City Manager
Tax Incremental Financing
Policy and Application
What is TIF?
Tax Incremental Financing (TIF) is a special funding tool available to local municipalities that spurs
economic development which otherwise would not occur. When a Tax Increment District (TID) is created
property owners within the district continue to pay the same property tax rates as those outside the district.
The difference is that tax collections, over and above the "base value are placed into a special fund that is
used to pay for project costs. Once all costs incurred by the creation of the TID are recooped by the
additional tax increment created the TID is closed
TIF Closed and the additional property taxes created are shared
1 by all taxing entities. The use of TIF varies from
Purpose;
The purpose of this Policy is to articulate to existing or potential businesses the City of Oshkoshs desire to
promote economic development that is consistent with the City's Comprehensive Plan and provides a
community benefit that will ultimately be shared by all taxing entities (City, School, Technical College,
County, and State) impacted through the establishment of Tax Increment District (TID).
Notwithstanding compliance with any or all of the guidelines herein, the provision of TIF assistance is a
policy choice to be evaluated on a case -by -case basis by the Common Council. The burden of establishing
the public value of TIF shall be placed upon the applicant and the application must substantially meet the
criteria contained herein. City Administration reserves the right to bring any TIF proposal forward for
Council consideration.
Meeting statutory requirements, policy guidelines or other criteria listed herein does not guarantee the
provision of TIF financial assistance nor does the approval or denial of one project set precedent for
approval or denial of another project.
TIF Authority.
The authority and regulations for Tax Incremental Financing and the establishment of Tax Increment
Districts are found in Wis. Stats. 66.1105. The City of Oshkosh reserves the right to be more restrictive than
provided under the statutes.
project to project and district to district. In some
cases, the City uses TIF to promote redevelopment
TIF Created
of older parts of the community. In other cases the
Tax Increment Created
City uses TIF to create industrial parks through
v Used i`or Projeet Crests
land acquisition and construction of infrastructure.
w"
Base PropertyTax 0
In both cases, increased property tax collections are
used to pay down debt service associated with
project costs. The following outlines the City's
Time
policy regarding TIE
Purpose;
The purpose of this Policy is to articulate to existing or potential businesses the City of Oshkoshs desire to
promote economic development that is consistent with the City's Comprehensive Plan and provides a
community benefit that will ultimately be shared by all taxing entities (City, School, Technical College,
County, and State) impacted through the establishment of Tax Increment District (TID).
Notwithstanding compliance with any or all of the guidelines herein, the provision of TIF assistance is a
policy choice to be evaluated on a case -by -case basis by the Common Council. The burden of establishing
the public value of TIF shall be placed upon the applicant and the application must substantially meet the
criteria contained herein. City Administration reserves the right to bring any TIF proposal forward for
Council consideration.
Meeting statutory requirements, policy guidelines or other criteria listed herein does not guarantee the
provision of TIF financial assistance nor does the approval or denial of one project set precedent for
approval or denial of another project.
TIF Authority.
The authority and regulations for Tax Incremental Financing and the establishment of Tax Increment
Districts are found in Wis. Stats. 66.1105. The City of Oshkosh reserves the right to be more restrictive than
provided under the statutes.
Tax Incremental Financing
Policy and Application
Basic Provisions:
As a matter of policy the City of Oshkosh will consider using Tax Incremental Financing to assist private
development in those circumstances where the proposed private project shows a demonstrated financial gap
and that the financial assistance request is the minimum necessary to make the project feasible. The developer
is expected to have exhausted every other financial alternative(s) prior to requesting the use of TIF, including
equity participation, other federal and state funds, bonds, tax credits, loans, etc.
It is the intent of the City to provide the minimum amount of Tax Incremental Financing assistance to make the
project viable and not solely to broaden a developer's profit margin on the project. Prior to consideration of a
Tax Incremental Financing request, the City will undertake (at the requestor's cost) an independent analysis of
the project to ensure the request for assistance is valid.
In requesting TIF assistance, the developer must demonstrate that there will be a substantial and significant
public benefit to the community by eliminating blight, strengthening the economic and employment base of
the City, positively impacting surrounding neighborhoods, increasing property values and the tax base, creating
new and retaining existing jobs, and implementing the Comprehensive Plan.
Each project and location is unique and therefore every proposal shall be evaluated on its individual merit,
including its potential impact on city service levels, its overall contribution to the economy and its consistency
with the Comprehensive Plan, Strategic Plan or other community planning documents. Each project must
demonstrate probability of financial success.
"BUT FOR" TIF
The fundamental principle and that which the City must determine through information provided by the
developer is that the project would not occur "but for" the assistance provided through Tax Incremental Financ-
ing. The burden is on the developer to make this case to the City and not the City to make this case for the
developer. Should this "but for' determination not be made, Tax Incremental Financing for the project cannot
move forward.
TIF Objectives:
The City will consider utilizing Tax Incremental Financing to meet the following basic objectives:
1. Stimulate and continued revitalization of the central city and downtown area by:
a. Improving infrastructure;
b. Creating a variety of housing opportunities to increase the number of downtown residents;
c. Preventing or eliminating slums and blighting conditions;
d. Constructing mixed -use developments;
e. Attracting desirable businesses and retaining existing businesses.
f. Encouraging development projects that enhance the streetscape and pedestrian experience and
improve the vitality of the downtown area by adding interest and activity on the first floor of
mixed- use buildings.
2. Promote efficient usage of land through redevelopment of blighted areas.
3. Strengthen the economic base of the City and support Economic Development.
4. Stabilize and upgrade targeted neighborhoods.
5. Create and retain family supporting jobs in the City.
b. Increase property values and tax revenues.
7. Leveraging the maximum amount of non -city funds into a development and back into the community.
2
Tax Incremental Financing
Policy and Application
What Development is Eligible?
The type of development that the City will consider TIP funding includes:
1. Business development (attraction, retention, expansion). TIF assistance will be evaluated on its
impact on existing local markets.
2. Mixed -use developments that creatively integrate commercial and retail projects into a residential
development.
3. Revitalization of historically significant or deteriorated buildings.
4. Projects that promote central city office and retail development.
5. Projects that promote neighborhood stabilization or revitalization.
6. Projects that promote industrial development.
7. Projects consistent with approved TIF Project Plans.
8. Projects that involve environmental clean -up, removal of slum and blighting conditions.
9. Projects that contribute to the implementation of other public policies, as adopted by the city in its
strategic plans such as promotion of high quality architectural design, energy conservation (i.e.
LEER, Energy Star, etc), green infrastructure, etc.
The Rivers Assisted Living Facility was
completed in 2011 within TID #21 also
known as the Fox River Corridor Project.
Basler Turbo Conversions is located in
TID #8, South Aviation Park, which was
developed in 1991 and is approximately256 acres.
What Development is Ineligible?
The City will not favor use of TIF funding to help support the following types of development.
1. Speculative office development without one or more anchor tenants.
2. Relocation of offices, retail and/or commercial uses for purposes other than retaining or
substantially expanding the business.
3. Office and retail development outside of the central city unless part of a city owned business or
industrial park.
4. Stand alone residential development projects unless limited by site and environmental conditions
beyond which make the project financially infeasible.
5. Projects not consistent with the Comprehensive. Plan.
3
Tax Incremental Financing
Policy and Application
Eligible Costs:
TIF eligible expenditures are defined by Section 66.1105(2)(e) of Wisconsin Statutes, which the City of
Oshkosh may further limit on a project by project basis. The following are typical eligible costs.
1. Capital costs, including actual costs of:
a. Construction of public works or improvements;
b. Construction of new buildings, structures, and fixtures;
c. Demolition, alteration, rehabilitation, repair or reconstruction of existing buildings,
structures and fixtures, other than historic buildings and structures.
d. Acquisition of equipment to service the district,
e. Restoration of soil or groundwater affected by environmental pollution; and
f Clearing and grading of land.
2. Real property assembly costs.
3. Professional service costs (planning, architectural, engineering, and legal).
4. Relocation costs.
5. Environmental remediation.
6. Organizational costs (environmental and other studies, publication and notification costs).
7. Development Incentives in the form of loans or grants.
Criteria for TIF Assistance:
All of the following financial criteria must be met in order to be considered for TIF assistance.
1. Equity Requirement. Developers must provide a minimum 15% equity of total project costs.
Projects that exceed the 15% equity requirement will be looked upon favorably by the City.
Equity is defined as cash or un- leveraged value in land or prepaid costs attributable to the project.
TIF shall not be used to supplant cash equity.
2. Maximum Increment Use. For loans, no more than 75% of the net present value of the tax increment
generated by a private development shall be made available to the project. For "pay -go" supported
projects up to 90% of the generated annual tax increment can be made available if a financial need
is demonstrated and there are no other public infrastructure projects planned in the district.
3. Payback Period. Payback period for loans will match the amortization period but in no case will
exceed the statutory life of the district. Preference will be given to projects with payback periods
of 10 years or under.
4. TIF Cap. The total amount of TIF assistance should not exceed 25% of total project costs. This
limitation may be waived if the project involves redevelopment of existing structures or the
assembly and clearance of land upon which existing structures are located.
5. Self- Supporting Projects. Each project requesting TIF assistance should generate sufficient tax
increment to cover the requested TIF assistance and a portion of any public infrastructure costs
within the district.
a. No increment from other private development projects within the district may be used to
supplement another project's inability to generate sufficient tax increment to cover project
costs.
6. Land Assembly Cap. TIF assistance for land /property assembly costs will not be provided in an
amount exceeding 10% of the fair market value of the land. The fair market value will be
determined by an independent appraiser contracted by the City with cost of appraisal paid for by
developer. 4
Tax Incremental Financing
Policy and Application
Criteria for TIF Assistance continued from previous page...
7. Internal Rate of Return. The amount of assistance provided to a developer will be limited to the
amount necessary to provide the developer a reasonable rate of return on investment in the project
and the subject site. A developer's return on equity, return on cost or internal rate of return will be
based on current market conditions as determined by the City or City's financial advisor. In no case
shall the internal rate of return exceed 30 %.
8. Taxable Increase. The project should result in an increase in taxable valuation of at least 20% upon
project completion.
Policy Criteria
In addition to meeting all of the above financial criteria, projects must accumulate at least 50 points based on
the following policy criteria. Points can range from 0 to the maximum shown below in each category:
Criteria
Maximum Points
1. Attracting, retaining or expanding businesses for the purpose of improving the City's
economic base.
15
a. Documentation of employment or financial projections must be provided by the party
making the request and will serve as the basis for the agreement.
2. Projects that directly implement specific recommendations of the City's strategic planning
15
documents such as the Comprehensive Plan, Downtown Action Plan, Riverwalk Plan,
Vision Report, Consolidated Plan, Stortnwater Plans, etc.
3. Projects involving retail development that is targeted to encourage an inflow of customers from
outside the city that result in exported goods, or that provide services or fill retail markets that
5
are currently unavailable or underserved in the City.
4. Presence of extraordinary development /redevelopment costs such as:
a. Remodeling/Rehabilitation /Demolition
b. Environmental Remediation
20
c. Capital purchases
d. Facility expansion
e. Public infrastructure
5. Proposed employment potential.
a. Number of new employees.
b. Skill and education levels required for the jobs.
c. Range of salary and compensation rates for the jobs as compared with the median
income level for the community.
10
d. Cost of public assistance per job.
e. Potential for executive relocation.
6. Enhance the streetscape and pedestrian experience.
5
7. Historic Preservation. Preservation /rehabilitation of a locally significant historic structure.
5
8. Provides direct benefit to distressed areas through blight elimination.
15
9. Quality of development and overall aesthetics (architectural, site design, landscaping, etc.)
5
beyond that which is minimally required by the Zoning Ordinance.
10. Higher standards of Building Design, Materials, and Energy Efficiency such as meeting
5
LEED certification, Energy Star, etc.
Tax Incremental Financing
Policy and Application
Process of TIF Approval:
Tax Increment District creation requires following statutory prescribed timelines that include notification to
the overlying taxing jurisdictions (i.e. public school district, technical college, county, city), property owners
within the district, and published meeting notification in the newspaper. Ultimately the City's Plan
Commission, Common Council, and Joint Review Board all must approve the TIF creation request.
1. A pre - application meeting is held between the developer and the City.
2. A Tax Incremental Financing Application is submitted by the developer to the City.
3. The City will review the Application and determine completeness and whether the proposed
project is eligible under the City's policy and statutory requirements.
4. An analysis of the TIF Plan and financial proformas will be conducted by city staff and /or
outside consultants.
5. Within ninety (90) days of receipt of a completed application staff will schedule a public
hearing before the Plan Commission on the Project Plan and District Boundaries. If approved
by the Plan Commission, the Project Plan and recommended boundaries will be sent to the
Common Council for review. 'There is a minimum 14 day wait from the public hearing to
Council review.
6. The Common Council may approve or deny the proposal to create the Tax Increment District.
The Common Council may also adjust the boundaries (retraction only) of the proposed
district from that which was recommended by the Plan Commission. If approved, the plan is
forwarded to the Joint Review Board to make the final determination that the development will
not proceed "but for" the use of TIF.
7. If approved, a Development Agreement is drafted and negotiated between the City and
Developer.
8. Once general agreement has been reached on the terms of the Development Agreement, it will
require approval by the Common Council.
9. Execution of the Development Agreement between the City and Developer.
Structure for Tax Incremental Financing Assistance:
1. Tax Incremental Financing assistance will be provided by the City on a "pay -go" note method or
via bond proceeds. Requests for up -front financing may be considered on a case -by -case basis
if increment generation is sufficient to meet initial financing and debt service costs and is not
the first dollars spent on a project.
2. For `pay -go" structured projects, the project owner shall agree to pay all other outstanding City
of Oshkosh property tax bills prior to disbursement of any pay -go payments by the City.
3. No Mortgage Guarantees. The City will not provide mortgage guarantees.
4, Personal Guarantee. The City will require a personal guaranty for receiving up front TIF
assistance. Amount and form shall be acceptable to the City.
5. The property owner shall agree not to protest to the Board of Review or Circuit Court the
Assessor's determination of the property value for the properties for which the grant is requested.
C
Tax Incremental Financing
Policy and Application
Structure for Tax Incremental Financing Assistance Continued from previous page...
6. The City will retain a maximum of 10% of any tax increment received from the project to
reimburse for administrative costs. Until such time as the project generates positive tax
increment, the City will charge an administrative fee to the developer to partially offset the cost of
record keeping, report preparation, and accounting.
7. When the project is intended as a for -sale development (i.e., office, retail or residential
condominiums), the developer must retain ownership of the overall project until final completion;
provided, however, that individual condominium units may be sold as they are completed. For
all other projects, the developer must retain ownership of the project at least long enough to
complete it, to stabilize its occupancy, to establish the project management and to initiate payment
of taxes based on the increased project value.
8. Projects receiving assistance will be subject to a "look back' provision. The look back mandates a
developer to provide the City or its financial advisor with evidence of its annualized cumulative
internal rate of return on the investment (IRR) at specified periods of time after project
completion. The IRR shall be calculated with equity, revenues, and expenses in accord with
generally accepted accounting principles.
When the developer owns the subject property and rents space to tenants, supporting
documentation shall include certified records of project costs and revenues including lease
agreements and sales on a per square foot basis. If the records indicate that the developer has
received a higher return on equity, a higher return on cost, or a higher internal rate of return than
originally proposed to the City at the time of development agreement, the developer and the City
may split, on a 50150 basis, the increase above the originally projected rates of return. Terms of any
split will be negotiated in a Development Agreement.
When the subject property is a for -sale development and the IRRI cannot be completed, the
developer is to provide financial data after the project is completed. This shall include a
calculation of profit on total development costs minus the TIF assistance. If the financial records
indicate that the developer has received a higher return on equity, a higher return on cost, or a
higher internal rate of return than originally contemplated at the time of development agreement
approval, the developer and the City may split, on a 50150 basis, any increase at or above original
projected rates of return. Terms of any split will be negotiated in a Development Agreement.
9. Exceptions to TIF Policy. The City reserves the right to amend, modify, or withdraw these policies
or require additional statements or information as deemed necessary. Any party requesting waiver
from the guidelines found herein or on any other forms provided for TIF assistance may do so
on forms provided by the City with the burden being on the requestor to demonstrate that the
exception to these policies is in the best interests of the City.
7
Tax Incremental Financing
Policy and Application
Please complete and submit the following information to the City of Oshkosh for a more detailed review of
the feasibility of your request for Tax Incremental Financing (TIF) assistance. The application is comprised
of five parts:
1. Applicant Information
2. Project /Property Information
3. Project Narrative
4. Project Budget /Financial Information
5. Buyer Certification and Acknowledgement.
Where there is not enough space for your response or additional information is requested, please use an
attachment. Use attachments only when necessary and to provide clarifying or additional information.
The Department of Community Development (DCD) reviews all applications for TIF assistance. Failure to
provide all required information in a complete and accurate manner could delay processing of your
application and DCD reserves the right to reject or halt processing the application for incomplete submittals.
For further information please refer to the "City of Oshkosh Tax Incremental Financing Policy" document.
Legal Name:
Mailing Address: _
Primary Contact #:
E -mail:
Attorney:
Cell #:
FAX #:
Legal Entity: Individuals) joint Tenants Tenants in Common Corporation
LLC Partnership Other.
If not a Wisconsin corporation /partnershipfLLC, state where organized:
Will a new entity be created for ownership? Yes No
Principals of existing or proposed corporationlpartnershipfLLC and extent of ownership interest.
Name: Address: Title: Interest:
Is any owner, member, stockholder, partner, officer or director of any previously identified entities, or any
member of the immediate family of any such person, an employee of the City of Oshkosh? Yes_ No
If yes, give the name and relationship of the employee;
Have any of the applicants (including the principals of the corporation /partnership /LLC) ever been
charged or convicted of a misdemeanor or felony? Yes No
If yes, please furnish details:
Tax Incremental Financing
Policy and Application
Overall Project Summary and Objectives:
Current and Proposed Uses:
Description of End Users:
Describe any zoning changes that will be needed:
Property Summary:
Parcel /Land Area: SF
Building Area: SF
# of Dwelling Units:
# of Stories:
# of Parking Spaces:
Identify any other approvals, permits or licenses (i.e. Liquor License, Health Department, etc):
Describe briefly what the project will do for the property and neighborhood:
Tax Incremental Financing
' Policy and Application
Project/ Property Summary:
Project Timetable Date
Final Plan /Specification Preparation:
Bidding and Contracting:
Firm Financing Approval:
Construction /Rehabilitation:
Landscaping /Site Work:
Occupancy /Lease Up:
Development Team
Developer:
Architect:
Surveyor:
Contractor:
Other Members:
Describe Team expertise and experience in developing similar projects:
Other current Team projects in development:
Financial ability of the applicant to complete the project:
Full and part -time jobs to be created by the proposed project including estimated salary:
?rofessional Studies
darket Studies: Applications for commercial and residential projects must include a comprehensive market
tudy. The market study must identify target markets, analysis of competition, demographics, market rents,
etters of intent /interest from prospective tenants, or for housing developments, sale prices or rental rates of
:omparable properties.
kppraisal: All projects that involve the transfer of land must include a recent appraisal. Projects that include
and as a form of equity or collateral must also submit a recent appraisal. The appraisal must value the property
'as is ", and the impact on value must be considered for such items as demolition, environmental remediation,
.elocution of utilities, lease buy -outs, and other work necessary to make the site developable. The property
oust be valued assuming that the highest and best use is the proposed use.
10
Tax Incremental Financing
Policy and Application
Sources and Uses of Funds
Identify the sources of funds used to finance the project. Typical sources include equity, lender financing,
mezzanine financing, government financing, other anticipated types of public assistance, and any other types
or methods of financing.
Uses of Funds
Land Acquisition:
Demolition:
Environmental Remediation:
Site Clearance and Preparation:
Soft Costs/ Fees:
Soft Cost Contingency:
Hard Construction Costs:
Total Project Costs:
Amount ($)
$ per SF of Building Area
Sources of Funds
% of total project costs
Equity
Developer Equity:
$
%
Other Equity:(
} $
%
Total Equity:
$
%
Loans
Rate Term
Construction Financing:
$
% rnos.
Permanent Financing:
$
% yrs. %
TIF Assistance
$
%
Other: ( }
$
%
Total Sources of Funds
$
100%
Financing
Source Amount
Equity:
Loans 1:
2:
3:
4:
Terms Years /Interest
11
Contact Information
Tax Incremental Financing
Policy and Application
Detailed Pro Forma (must correspond to line items for Uses of Funds on previous page)
Land Acquisition
$
Demolition
$
Site Clearance and Preparation
Infrastructure
$
Utilities /removal
$
Utilities /relocation
$
Utilities /installation
$
Hazardous Materials Removal
$
Other( )
$
Total Site Clearance and Preparation
Soft Costs /Fees
Project Management ( %)
$
General Contractor { %)
$
Architect /Engineer ( %)
$
Developer Fee ( %)
$
Appraisal
$
Soil Testing
$
Market Study
$
Legal /Accounting
$
Insurance
$
Title/Recording/Transfer
$
Building Permit
$
Mortgage Fees
$
Construction Interest
$
Commissions
$
Marketing
$
Real Estate Taxes
$
Other Taxes
$
Other( )
$
Other ( )
$
Sub -total Soft Costs/Fees
$
Soft Cost Contingency
$
12
Tax Incremental Financing
Policy and Application
Pro Forma Income and Expense Schedule
Applicants whose projects involve the rental of commercial, retail, industrial, or living units must submit
project pro formas that identify income and expense projections on an annual basis for a minimum five -year
to a maximum eleven -year period. If you expect a reversion of the asset after a holding period please include
that in your pro forma as well. Please check with city staff to determine the time period needed for the pro
forma. Identify all assumptions (such as absorption, vacancies, debt service, operational costs, etc.) that
serve as the basis for the pro formas. Two sets of pro formal are to be submitted. The first set should show
the project without TIF assistance and the second set with TIF assistance.
For owner - occupied industrial and commercial projects, detailed financial information must be presented
that supports the need for financial assistance (see below).
Analysis of Financial Need
Each application must include financial analyses that demonstrate the need for TIF assistance. Two
analyses must be submitted: one WITHOUT TIF assistance and one WITH TIF assistance. The applicant
must indicate the minimum return or profit the applicant needs to proceed with the project and rationale for
this minimum return or profit. The analyses will necessarily differ according to the type of project that is be-
ing developed.
Rental Property: For projects involving rental of space by the developer to tenants (tenants include offices,
retail stores, industrial companies, and households), an internal rate of return on equity must be computed
with and without TIP assistance based on the pro forma of income and expense prepared for the Income
and Expense Schedule below. The reversion at the end of the ten -year holding period must be based on the
capitalized 11th year net operating income. The reversionary value is then added to the kith year cash flow
before discounting to present value. State all assumptions to the analyses.
For Sale Residential: Show profit as a percent of project cost (minus developer fee and overhead and minus
sales commissions and closing costs, which should be subtracted from gross sales revenue). Other measure
of profitability may be submitted, such as profit as a percent of sales revenue.
Mixed Use Commercial 1 For -Sale Residential: Provide either separate analyses for each component of the
project or include in the revenue sources for the for -sale portion, the sale value of the commercial component
based on the net operating income of the commercial space at stabilization. Indicate how the sale value was
derived.
Owner - Occupied Commercial: For projects, such as "big -box" retail projects, provide copies of the analyses
that the company needs to meet or exceed the company's minimum investment threshold(s) for proceeding
with the project.
Competitive Projects: In instances where the City is competing with other jurisdictions for the project (e.g.,
corporate headquarters, new manufacturing plant), present detailed analyses that demonstrate the capital
and operating cost differential between the proposed location(s) in Oshkosh and locations that are seriously
being considered by the applicant.
13
Tax Incremental Financing
Policy and Application
Revenue Projections - Rental Project
Expenses
Maintenance & Repairs
Year I
Year 2
>>Year I1
Income rent per sf (or avg.)
$
$
$
Commercial Rent
$
$
$
Commercial Expense Recoveries
$
$
$
Residential Rent
$
$
$
Other Revenue ( }
$
$
$
Gross Potential. Income
$
$
$
Commercial Vacancy %
$
$
$
Residential Vacancy %
$
$
$
Effective Gross Income (EGI)
$
$
$
Expenses
Maintenance & Repairs
$ $
$
Real Estate Taxes
$ $
$
Insurance
$ $
$
Management Fee
$ $
$
Professional Fees
$ $
$
Other Expense { )
$ $
$
Other Expense ( )
$ $
$
Total Expenses
$ $
$
Net Operating Income (NOI)
$ $
$
Capital Expenses (reserves, tenant improvements, commissions)
$ $
$
Debt Service
$ $
$
Net Cash Flow (before depreciation)
$ $
$
Reversion in Year 10
Year II NOI before Debt & Capital Expenses $
Capitalization Rate %
Gross Reversion $
14
Tax Incremental Financing
Policy and Application
Revenue Projects - For -Sale Project
Gross Sales Revenue
Housing Units Unit Type* Number
Total Housing Sales:
'affordable units if any
Housing Unit Upgrades:
Price /Unit
$
$
$
$
$
$
Commercial Space Unit Type Size -sf Price per sf
$
$
Total Commercial Sales: $
Total Gross Sales Revenue $
Cost of Sales
Commissions % $
Marketing % $
Closing % $
Other Costs { ) % $
Total Costs of Sales % $
Net Sales Revenue $
15
Tax Incremental Financing
Policy and Application
Summary Letter
Provide a summary of the project in the form of a letter addressed to the City Manager. The letter should not
exceed two (2) pages in length and should include only the following essential information about the project:
• Description of site or building • Overview of private - sector financing
• Current and proposed uses • Amount of TIF assistance requested
• Description of end users • Summary of increment projections
• Project start and end dates • Name of developer and owner
• Profitability • Total development costs
• Description of public benefits, • Statement regarding why TIF is essential and why the
including job creation. "but for" provision will be met.
Note: In the "but for" discussion you must clearly describe why TIF is needed to help this project and
why the project will not /cannot proceed without such support. Failure to clearly provide the
"but for" explanation will delay action on your application.
Project Narrative
Provide an in -depth overview of the project in narrative format. The narrative must include a description of
the following aspects of the project:
• Current condition of the site and historical overview that includes the size and condition of
any existing structures, environmental conditions, and past uses of the site.
• Proposed use(s) of project (e.g. industrial, commercial, retail, office, residential for sale or
for rental, senior housing, etc.)
• Construction information about the project including: size of any existing structure to be
demolished or rehabbed; size of any new construction: types of construction materials
(structural and finish); delineation of square foot allocation by use; total number and individual
square footage of residential units: type of residential units (e.g. for -sale, rental, condominium,
single - family, etc); number of affordable residential units; number and type of parking spaces;
and construction phasing.
• If in an existing TID or redevelopment area, confirm that this project is consistent with the goals and
objectives in the Project or Redevelopment Plan.
• A summary of the proposed "green' features to be included in the project, All projects that receive
TIF assistance are encouraged to include environmentally friendly features.
16
Tax Incremental Financing
Policy and Application
Filing Requirements
You must provide all of the following items with your signed application:
1. Fee: An application fee of 1% of the requested TIF assistance or $10,000, whichever is greater. This
fee is to cover City costs associated with evaluating the TIF application and does not cover the
use of outside consultants, which if required will be paid for by the applicant. Make your
Notes
check payable to the City of Oshkosh.
2. Site Maps: Provide a map that shows the location of the site. Also provide a map that focuses on
the project and its immediate surroundings. Both maps should be no larger than
1 1x17 inches. Larger maps will be required for projects presented to the Plan
Commission, Redevelopment Authority, or Common Council.
3. Project Renderings: Provide preliminary architectural drawings, plans and renderings for the
project. These drawings should be no larger than 11x17 inches. Larger maps will be required
for projects presented to the Plan Commission, Redevelopment Authority, or Common
Council.
The City charges an administrative fee of 5% of the annual tax increment revenue.
If the project requires planning and zoning approvals, you must make these applications concurrent
with this request.
Agreement
I, by signing this application, agree to the following:
1. I have read and will abide by all the requirements of the City for Tax Incremental Financing.
2. The information submitted is correct.
3. I agree to pay all costs involved in the legal and fiscal review of this project. These costs may
include, but not be limited to, bond counsel, outside legal assistance, and outside financial
assistance, and all costs involved in the issuance of the bonds or loans to finance the project.
4. I understand that the City reserves the right to deny final approval, regardless of preliminary
approval or the degree of construction completed before application for final approval.
5. The undersigned authorizes the City of Oshkosh to check credit references and verify financial and
other information.
6. The undersigned also agrees to provide any additional information as may be requested by the City
after filing of this application.
Applicant N
17