HomeMy WebLinkAboutResolutions - 2015.03.18 - 21718? 7 IA E COMM-I-TEE
MISCELLANEOUS RESOLUTION #15056 - - BY: Finance Committee, Tom Middleton, Chairperson
March 18, 2015
IN RE: BOARD OF COMMISSIONERS — REVISED POLICY FOR PARTICIPATION IN DOWNTOWN
DEVELOPMENT AUTHORITIES, LOCAL DEVELOPMENT AUTHORITIES, CORRIDOR
IMPROVEMENT AUTHORITIES AND TAX INCREMENT FINANCING AD HOC REVIEW COMMITTEE
To the Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
WHEREAS the Oakland County Board of Commissioners strongly supports the economic growth of
Oakland County; and
WHEREAS one of the tools used to promote economic growth is Tax Increment Financing (TIE) used by
Downtown Development Authorities (DDA's), Local Development Authorities (LDFA's) and Corridor
Improvement Authorities (CIA's); and
WHEREAS, Public Act 197 of 1975, as amended, which governs DDA's, Public Act 281 of 1986, as
amended, which governs LDFA's and Public Act 280 of 2005, as amended, which governs CIA's, permit a
municipality to form an Authority, which is a legal entity able to use TIF to make improvements to the
District. An Authority may capture a portion of the taxes that would normally be collected by other
jurisdictions that levy taxes in the District; and
WHEREAS before an Authority can implement a TIF Plan to capture or increase the amount of taxes
received by the Authority from taxing jurisdictions in its District, it must hold a public hearing. Taxing
jurisdictions subject to capture, including the County, may opt out of contributing their incremental taxes
by sending a notice to the Authority within 60 days after the public hearing; and
WHEREAS to review requests from the County's cities, villages and townships to capture its taxes
through the use of DDA's, CIA's or LDFA's, the Board of Commissioners, pursuant to Miscellaneous
Resolution #99010, established the Tax Increment Financing (TIF) District Review Policy Ad Hoc
Committee (TIF Review Committee) to evaluate and recommend to the Finance Committee whether the
County should participate in proposed TIF Plans. The composition and tasks of the TIF Review
Committee were updated in Miscellaneous Resolutions *01002, #08098 and #14231; and
WHEREAS the Board of Commissioners has adopted three separate policies to guide the TIF Review
Committee in the evaluation of the DDA, LDFA and CIA proposals. These policies were approved in
Miscellaneous Resolutions #03081, #04239, #07289, which revised Miscellaneous Resolutions #90144,
#97157, #01193 and #06134; and
WHEREAS the various Board Resolutions concerning TIF have been written over the course of several
years and are in need of consolidating and updating to clarify the County process and criteria for
evaluating TIF Plans; and
WHEREAS it is in the best interests of the County to establish a quantifiable limitation on County tax
revenue available for capture by Authorities and include these limitations in an updated policy; and
NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners, upon
recommendation from its TIF Review Committee, hereby adopts the attached policy for County
consideration and possible participation in DDA's LDFA's and CIA's; and
BE IT FURTHER RESOLVED that this policy replaces and supersedes the previous individual policies for
a DDA, LDFA and CIA participation, specifically Miscellaneous Resolutions #03081, #04239, #07289,
#90144, #97157, #01193, and #06134; and
BE IT FURTHER RESOLVED that this policy replaces and supersedes all previous Resolutions
concerning the composition and tasks of the TIF Review Committee specifically Miscellaneous
Resolutions #99010, #01002, #08098, and *14231.
Chairperson, on behalf of the Finance Committee, I move the adoption of the foregoing resolution.
FINANCE COMMITTEE VOTE:
Motion carried unanimously on a roll call vote.
POLICY FOR REVIEW AND POTENTIAL PARTICIPATION IN
DOWNTOWN DEVELOPMENT AUTHORITIES,
CORRIDOR IMPROVEMENT AUTHORITIES, AND
LOCAL DEVELOPMENT FINANCING AUTHORITIES
I. PURPOSE
The Purpose of this Policy is to consolidate and update the numerous Resolutions that have
established procedures for the County to evaluate whether or not to exempt its property taxes from
capture by Downtown Development Authorities (DDA's), Corridor Improvement Authorities
(CIA's) or Local Development Financing Authorities (LDFA's) utilizing Tax Increment Financing
(TIF) Plans for the purpose of improving economic conditions in Oakland County. This Policy
replaces and supersedes all prior Resolutions concerning the review of plans to capture County
taxes by one of three types of Authorities. The standards set forth in this Policy are intended to be
used as a guide and should not be interpreted as a guarantee that the County will or will not opt out
of a tax capture. Other factors such as economic conditions and budget priorities not enumerated
herein, may impact the County's decision. The County may determine to "opt out" or may negotiate
a contractual arrangement with an Authority and a municipality to govern the time period, projects
and amount of County tax revenue that may be captured, This Policy provides an annual percentage
limit on the County's participation in TIF captures by Authorities established after the effective date
of this Policy.
II. BACKGROUND
There are several different state statutes in effect to encourage local development and improved
economic conditions. The DDA, LDFA and CIA laws permit municipalities to form an Authority,
which is a legal entity able to utilize TIF to improve a defined area or District. Before an Authority
can implement a TIE Plan to capture or increase the amount of County taxes received by the
Authority, they must hold a public hearing. The County has the right to exempt its taxes from
capture by an Authority if it adopts a Resolution within 60 days after the public hearing is held. If
the County does not opt out of the tax capture or does not have a contract governing the terms of the
capture within 60 days after the public hearing, its incremental tax revenues will automatically be
captured by the Authority. Prior to 1994, state law did not give the County the ability to opt out of
DDAs. Consequently, several DDAs formed before 1994 continue to capture County tax revenue
without the County's ability to set a date for the capture to terminate. The Board of Commissioners
formed a TIF Ad Hoc Review Committee in 1999 to ensure the County made a decision during the
60 day time frame as to whether to opt out of having its taxes captured by an Authority. The three
different laws covered by this Policy address different economic development needs and have
slightly different legal requirements. This Policy contains criteria for reviewing proposals to
capture the County's tax revenue by DDAs, CIAs and LDFAs as well as terms to be included in a
contract if the County wishes to permit the collection of its taxes by an Authority.
III. DEFINITIONS
Applicant means an Authority and a municipality requesting the County's incremental tax revenues
for a District.
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Authority (ies) means a legal entity created by a municipality under the DDA, CIA or LDFA
statutes to improve the economic conditions within a District.
Corridor Improvement Authority (CIA) is an Authority created under Act 280 of 2005,
MCL 125.2871 et. seq., to prevent deterioration, promotes economic growth and encourages
historic preservation in a business District. The District must meet the statutory criteria which
includes being adjacent to or within 500 feet of a road classified as an arterial or collector by the
federal highway administration.
County means Oakland County, a Michigan Constitutional and municipal corporation.
District means the area which an Authority is authorized to collect TIF from participating
municipalities to improve economic conditions pursuant to the requirements under the DDA, CIA
or LDFA laws.
Downtown Development Authority (DDA) is an Authority created under Act 197 of 1975, MCL
125.1651 et. seq., to correct and eliminate property value deterioration, promotes economic growth
and to encourage historic preservation in a District in the downtown of a municipality that is zoned
and used principally for business.
Local Development Financing Authority (LDFA) is an Authority, created under Act 281 of 1986,
MCL 125.2151 et. seq., to prevent conditions of unemployment and promotes economic growth
within the boundaries of a District. The County may not exempt its taxes for capture by a LDFA if
the taxes are to be used for a certified technology park or certified alternative energy park. MCL
125.2154(3). An LDFA differs from a DDA or CIA as use of its tax capture is limited to structures,
buildings, land improvements and other real property and equipment located within the District
whose primary use is either manufacturing, high technology, certain agricultural processing or
energy production.
Tax Increment Financing (TIF) is often referred to as tax capture. The Authority captures the
property taxes on the increase in value (tax increment) from the initial or base year. Thus, if the
base value is $1,000,000 and the second year the value is $1,250,000 the Authority gets to capture
the taxes due on the $250,000 increase in value.
TIF Review Committee means the TIF Ad Hoc Review Committee which reports to the Finance
Committee of the Board of Commissioners, and operates in accordance with the Board of
Commissioner's Rules and state law.
IV. TIF REVIEW COMMITTEE
A TIF Review Committee was established by the Board of Commissioners to review the creation of
Authorities utilizing TIF, the expansion of TIF Districts or the use of TIF by Authorities that were
previously established.
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The TIF Review Committee is comprised of seven members. The non-Board of Commissioners
members are one representative from: the County Treasurer, the Equalization Division, the
Economic Development and Community Affairs Department, and Corporation Counsel. Each
department must provide a letter to the Board of Commissioners at the beginning of each two-year
term identifying its representative and alternate to the Committee. The following Commissioners
are also members of the TIF Review Committee: the Finance Committee Chairperson, the Finance
Committee Minority Vice Chairperson, the Planning and Building Committee Chairperson or
designee and one additional Commissioner appointed by the Chairperson of the Board of
Commissioners. The County Commissioner(s) representing the Applicant community shall be
invited to participate in discussions of the TIF Review Committee in a non-voting capacity.
At the start of each two-year term of the Board of Commissioners, the Chairperson of the Board
shall send a letter to each local unit of government in the County requesting that all notices
announcing the date of the public hearing to consider the use of TIF by an Authority, or expansion
of a District utilizing TIF, be sent to the attention of the Board Chair as head of the legislative body.
The letter shall also request that courtesy notice copies be sent to the County Treasurer and the
Director of Economic Development & Community Affairs. The letter shall contain a copy of this
Policy and any amendments to this Policy.
The Chairperson of the TIF Review Committee shall send a copy of each notice received by the
Board of Commissioners, announcing the date of a public hearing to consider the use of TIF by an
Authority, to the members of the TIF Review Committee.
V. PROCEDURE FOR BRINGING REQUESTS TO THE TIF REVIEW COMMITTEE
The County encourages Applicants to meet with the County in advance of initiating or amending
TIF Plans. Applicants considering the use of TIF should contact the County Economic
Development and Community Affairs Department and the Equalization Division of the Department
of Management and Budget prior to requesting a meeting with the TIP Review Committee. An
Applicant is encouraged to present its plans to the TIF Review Committee prior to the date of its
public hearing to establish an Authority with TIF, expand a District or begin utilizing TIF. The
County Executive's Budget Task Force must have an opportunity to review and make a
recommendation on the appropriate amount, if any, for the County to consider contributing to an
Authority with a TIF Plan, prior to a recommendation by the TIF Review Committee to enter into
negotiations with an Applicant.
The TIF Review Committee shall carefully scrutinize a new TIP Plan from an Applicant that has a
District created prior to 1994 capturing County taxes. An Applicant with a pre-1994 District shall
be asked by the TIP Review Committee to enter into negotiations with the County to establish an
end date for the capture of County taxes, This includes authority districts created under the Tax
Increment Finance Authority Act, Public Act 450 of 1980, as amended, MCL 125.1801 et. seq. It
shall be at the discretion of the County to determine if it is in its best interests to reach an agreement
to participate in a new TIF .Plan. It shall be at the discretion of the Applicant to determine if it is in
its best interest to reach an agreement to end the capture of County taxes by a pre-existing
Authority.
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VI. OPT OUT AND POTENTIAL NEGOTIATIONS
Unless an executed contract between the County and an Applicant is in place prior to the end of the
60 day opt out period after the Applicant's public hearing, the Board of Commissioners shall pass a
Resolution to opt out of each potential capture of its taxes by an Authority within the 60 day opt out
period.
After a review and recommendation by the County Executive's Budget Task Force, the TIF Review
Committee shall evaluate each proposed TIF Plan to determine if the County should enter into
negotiations to attempt to establish a contract permitting the capture of the County's taxes. If the
County determines an Applicant's TIF proposal is in the best interests of the County to contribute to
and its proposal is consistent with the County's fiscal considerations, the TIF Review Committee
may recommend that Corporation Counsel negotiate terms for a contract with an Applicant. If the
proposed contract is acceptable to the TIF Review Committee, the Committee may recommend its
approval and that any prior opt out be rescinded by the Board of Commissioners.
VII. LIMITATION OF COUNTY FUNDS FOR CAPTURE
Oakland County shall limit the capture of its incremental property taxes for use by TIF Authorities
to an annual amount not to exceed five percent (5%) of the total County operating levy (i.e. total
taxable value for all County communities multiplied by the County millage rate, multiplied by 5%)
Preference on granting approval to capture the County's incremental tax revenue shall be given to
Applicants that do not have any pre-existing Districts.
When considering Applicants that have pre-existing Districts, preference will be given to
Applicants that are capturing less than five percent (5%) of the amount of County operating levy
assessed within their municipality. (i.e. total taxable value for municipality multiplied by the
County millage rate, multiplied by 5%)
For each individual TIF District, the tax increment revenue attributable to the County cannot
constitute a greater proportion of the overall tax capture by the Authority than the proportion of
capture that is attributable to the city, village or township which established the TIF District.
The County will not contribute more than fifty percent (50%) of the total amount of County ad
valorem tax revenue available for capture by an Authority unless the amount contributed by the
city, village or township in which the TIF District is located contributes at least three times the
amount of incremental tax revenue than what is proposed for the County to contribute. In those
instances where a city or township is contributing an amount three times that of the County, the
limitation on capture of County revenue may be increased by agreement to an amount not to exceed
75% of the total amount of County ad valorem tax revenue then available.
As provided by law, Authorities may not include in the capture any local taxes attributable to the
zoological authorities act, the art institute authorities act or other local taxes specifically excluded
by law,
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VIII. REQUIREMENTS FOR ALL TIF PLANS
1. The Applicant must provide financial projections that demonstrate a positive return on
investment of County incremental taxes proposed for capture as well as an improvement of
employment and the taxable value of the District. The projections shall attempt to include
details on the projected number and types of new and retained jobs and a projection of tax
base growth for the entire capture period. The TIF Review Committee may request the
County's Equalization Division to conduct a review of the Applicant's projections.
2. The Applicant must disclose any agreements, proposed agreements, or opt-outs by other
taxing entities and any voted millages that would impact the amount of lawfully captured
tax revenue.
3. The Applicant must explain its plan to inform investors and businesses in the District about
the services available from the Oakland County Economic Development Community Affairs
Depaitment including the One Stop Shop Business Center and the Oakland County
Economic Development Corporation and the Oakland County Business Finance
Corporation.
4. The city, village or township which created the Authority must adopt/amend its community
master plan to accurately incorporate the TIF Plan.
5. The Authority utilizes all (100%) of the TIF revenue for redevelopment efforts, i.e., those
activities specifically authorized within the applicable act, including operating expenses of
the Authority.
6. The proposed plan must meet a majority of the standards provided in this Policy for the
particular type of Authority.
IX. GUIDELINES FOR REVIEWING DDA PROPOSALS
The following performance standards are established as guidelines for evaluating (1) a new DDA
with TIF requests, and/or (2) requests for expansion of area boundaries by an existing DDA with
TIF:
1. Meets the requirements of Public Act 197 of 1975, as amended.
2. Demonstrates declining property values exist in the District which is caused by factors such
as blight, reduced building occupancy or below market rent values.
3. Supplements TIF revenue with a DDA millage (up to 2 mills), special assessment and/or
designated budget contributions from the municipality it is located in, to demonstrate local
commitment and funding for the DDA program.
4. Demonstrates that the majority of land within the District is used by a traditional,
commercial business District (including uses such as commercial, retail, office, public/civic,
multi-family and mixed-use with upper floor housing) and may have buildings of historic
importance.
5. Establishes that the amount of land area devoted solely for single family residential use
within the District is limited.
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6. Demonstrates that any single family residential development (planned or existing) within
the District must support, contribute to and compliment the business District.
7. The Authority has adopted/amended a management plan based upon the "Main Street
4-Point Approach" of Organization, Promotion, Design and Economic Restructuring.
X. GUIDELINES FOR REVIEWING CIA PROPOSALS
The following performance standards are established as guidelines for evaluating CIA requests for
participation in a TIE Plan.
1. Meets all applicable criteria in Public Act 280 of 2005, as amended.
2. Demonstrates to the TIF Review Committee how it complies with the seven development
area criteria specified in PA 280.
3. Facilitates the redevelopment and/or revitalization of an existing developed area as opposed
to developing a greenfield area or relatively undeveloped areas.
4. Establishes that single family residential use does not comprise more than 10% of the
existing and/or planned land use of the Authority District.
5. Demonstrates that high density residential use does not comprise more than 30% of the
existing and/or planned land use of the Authority District.
6. If feasible, explains how one or more of the "Emerging Sectors" identified by Oakland
County on its website www.advantageoakland.com as an economic growth industry, will
benefit from this request.
XI. GUIDELINES FOR REVIEWING LDFA PROPOSALS
The following performance standards are established as guidelines for evaluating (1) a new LDFA
with TIF requests, and/or (2) requests for expansion of area boundaries by an existing LDFA with
TIF:
1. Meets all applicable criteria in Public Act 281 of 1986, as amended, including the
development plan requirements.
2. Has a business retention plan to support businesses in the District.
XII. CONTRACTS WITH AN AUTHORITY AND MUNICIPALITY
If the Board of Commissioners approves contract negotiations with an Applicant, all contracts
between the County and Applicant must contain the following:
I. A set dollar amount captured and a set number of years after which the contract
automatically terminates, whichever event occurs first.
2. The contract may not extend beyond 25 years.
3. A requirement for the Authority to submit the following financial information:
a. Within three (3) months after the end of the Authority's fiscal year, copies of the
annual financial report shall be sent to the Oakland County Treasurer, the Economic
Development and Community Affairs Department and the Board of Commissioners.
The report shall include:
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i. The amount of taxes captured by the Authority.
ii. The amount spent on each project in the TIF Plan.
iii, The amount of private sector investment received.
iv. The number of buildings rehabilitated the square footage per building
rehabilitated and the amount spent per building.
v. The amount of new construction including the dollar amount spent and the
square footage added.
vi. The number of new businesses locating in the District.
vii. The amount of new jobs created, and
viii. The increase/decrease in the taxable value.
b. Any financial information that the County is required to report in its financial
statements or to the Michigan Department of Treasury.
4. A requirement that Applicants must appear before the TM Review Committee within the
first five (5) years of the Contract execution date, and each five (5) years thereafter, to
present the District's current return on investment and discuss the financial information
required in 3a and 3b above.
5. A list of all projects the County agrees to for the use of its captured taxes.
6. A prohibition against using County taxes to bury utility lines, for land acquisition, municipal
facilities used to house the Applicant's departments or operations, or for event and
marketing materials not directly related to the implementation of projects approved within
the TIF plan.
XIII. PRECEDENCE OF STATE LAW AND POLICY
Any future changes to the state laws governing DDA' s, CIA's and LDFA's which conflict with this
Policy, shall supersede and control those conflicting provisions until such time as this Policy is
officially updated to take into account the legislative changes.
This Policy supersedes and replaces the prior policies and Resolutions previously adopted by the
Board of Coinmissioners concerning DDA's, CIA's and LDFA's and the TIF Review Committee,
specifically Miscellaneous Resolutions #90144, 497157, 499010, #01002, #01193, 403081, #04239,
406134, 407289, #08098, 414231.
(2014-0650-01 TlF Policy 031115)
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Resolution #15056 March 18, 2015
Moved by KowaII supported by Quarles the resolutions (with fiscal notes attached) on the amended
Consent Agenda be adopted (with accompanying reports being accepted).
AYES: Dwyer, Fleming, Gershenson, Gingen, Gosselin, Hoffman, Jackson, KowaII, Long, Matis,
McGillivray, Middleton, Quarles, Scott, Spisz, Taub, Weipert, Woodward, Zack, Bowman,
Crawford. (21)
NAYS: None. (0)
A sufficient majority having voted in favor, the resolutions (with fiscal notes attached) on the amended
Consent Agenda were adopted (with accompanying reports being accepted).
II Homey APPROVE THIS RESOLLMON
CHIEF DEPUTY COUNTY EXECUTIVE
ACTING PURSUANT TO MCL 45.559A (7)
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and
accurate copy of a resolution adopted by the Oakland County Board of Commissioners on March 18,
2015, with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at
Pontiac, Michigan this 18 1" day of March 2015.
Lisa Brown, Oakland County