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HomeMy WebLinkAboutResolutions - 2019.01.09 - 30950MISCELLANEOUS RESOLUTION , #19002 January 9, 2019 BY: Nancy Quarles, Chairperson, Legislative Affairs and Government Operations Committee IN RE: BOARD OF COMMISSIONERS — POLICY REFLECTING RESTRUCTURED MEMBERSHIP OF THE TAX INCREMENT FINANCING REVIEW COMMMITTEE To the Oakland County Board of Commissioners Chairperson, Ladies and Gentlemen: WHEREAS a Tax Increment Financing Ad Hoc Review Committee (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; and WHEREAS the TIF Review Committee is comprised of eight members as provided for by MR #99010 and amended per MR #01002, MR #01093, MR #08098, MR #14231 and MR #18000 consisting of the Finance Committee Chairperson, the Finance Committee Minority Vice Chair or designee, the Economic Development and Community Affairs Committee Chairperson, or designee, one commissioner appointed by the Board Chairperson, and one representative and one alternate for each of the following: County Treasurer, the Equalization Department, the Economic Development and Community Affairs Department and Corporation Counsel; and WHEREAS the Rules for the Oakland County Board of Commissioners 2019-2020 session alter the membership of the TIF Review Committee; and WHEREAS the provisions of the 2019-2020 Board Rules call for the organization of a TIF Review Committee consisting of nine (9) members: the Finance Committee Chairperson, the Finance Committee Majority Vice Chairperson, the Finance Committee Minority Vice Chairperson or designee, the Economic Growth and Infrastructure Committee Chairperson, or designee, one commissioner appointed by the Board Chairperson, and one representative and one alternate for each of the following: County Treasurer, the Equalization Department, the Economic Development and Community Affairs Department and Corporation Counsel; WHEREAS to ensure conformity between the TIF Policy and the 2019-2020 Rules for the Board of Commissioners, an amendment to the TIF Policy is required. NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners hereby adopts the attached revision to the Tax Increment Financing Review Policy to bring the TIF Review Committee into conformance with the Board's organizational structure for the 2019-2020 session. BE IT FURTHER RESOLVED that this policy replaces and supersedes Miscellaneous Resolution #18000. Chairperson, on behalf of the Legislative Affairs and Government Operations Committee, I move the adoption of the foregoing Resolution. Cornmission&Q.Ncy ) Quarles, District #17 Chairperson, Legislative Affairs and Government Operations Committee LEGISLATIVE AFFAIRS AND GOVERNMENT OPERATIONS COMMITTEE VOTE: Motion carried unanimously on a roll call vote with Gingell absent. DOES NOT REQUIRE COUNTY EXECUTIVE ACTIOP POLICY FOR REVIEW AND POTENTIAL PARTICIPATION IN DOWNTOWN DEVELOPMENT AUTHORITIES, CORRIDOR IMPROVEMENT AUTHORITIES, AND LOCAL DEVELOPMENT FINANCING AUTHORITIES AND LIMITATION ON TAX CAPTURE BY ALL TIF 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 (DDAs), Corridor Improvement Authorities (C1As) or Local Development Financing Authorities (LDFAs) utilizing Tax Increment Financing (TIF) Plans for 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, 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 TIF Authorities. 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 decided 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. There are other TIF Authorities such as Brownfield Redevelopment Authorities (BRAs) and Tax Increment Financing Authorities (TIFAs) that capture County tax revenues without being required to obtain County permission before the capture. Despite being unable to opt out of all TIE Authorities, the County will take into consideration the total tax revenue captured by all TIE Authorities when it considers whether to participate in a DDA, CIA or LDFA TIF Plan. Except where specifically noted, this Policy does not apply to BRAs and TIFAs. III. DEFINITIONS Page 1 of 7 Revised & Approved by BOC 01092019 Applicant means an Authority and a municipality requesting the County's incremental tax revenues for a District. 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. Brownfield Redevelopment Authority (BRA) is a TIT Authority created under Act 381 or 1996, MCL 125.2651 et. seq., to promote the reuse and redevelopment of certain properties. 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 (TIE) 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. Tax Increment Financing Authority (TIFA) is an authority created under Act 450 of 1980, MCL 125.1801 et. seq., to encourage economic development and historic preservation. TIE Authorities means all authorities authorized to utilize TIF. This includes DDAs, ClAs, LDFAs BRAs, TIFAs and other similar authorities such as Water Resource Improvement Authorities, Historic Neighborhood Finance Authorities, etc. TIE 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. This Committee only reviews plans and proposals for DDAs, ClAs and LDFAs as provided by law. IV. TIF REVIEW COMMITTEE Page 2 of 7 Revised & Approved by BOC 01092019 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. The TIF Review Committee is comprised of nine 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 Majority Vice Chairperson, the Finance Committee Minority Vice Chairperson, the Economic Growth and Infrastructure 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 TIT by an Authority, or expansion of a District utilizing TIE', 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 TIF 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 T1F, expand a District or begin utilizing TIF. The County Executive's Budget Task Force (BTF) 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 negotiations with an Applicant. The TIF Review Committee shall scrutinize a new TIF 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 TIE Review Committee to enter 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 TIT' 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. VI. OPT-OUT AND POTENTIAL NEGOTIATIONS Page 3 of 7 Revised & Approved by BOC 01092019 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 negotiations to attempt to establish a contract permitting the capture of the County's taxes. If the County determines an Applicant's TIE 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 TIE 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 TT 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. The Economic Development and Community Affairs Department (EDCA) must annually provide the BTF and the TM Review Committee with the amount of the total capture of County taxes by all TIF Authorities. EDCA must apprise the BTF of proposed TT Plans by a BRA established by the County, prior to the time the plans will be voted on by the BRA to understand the potential impact on the overall amount of County taxes subject to capture. 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. VIII. REQUIREMENTS FOR ALL TIF PLANS Page 4 of 7 Revised & Approved by BCC 01092019 1. The TIT' Plan shall include all property classes (real and personal property) in the total capture, unless otherwise provided by law. 2. 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 TIE Review Committee may request the County's Equalization Division to conduct a review of the Applicant's projections. 3. 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. 4. The Applicant must disclose the dollar amount of capture by all TIE Authorities in its jurisdiction. 5. 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 Department including the One Stop Shop Business Center and the Oakland County Economic Development Corporation and the Oakland County Business Finance Corporation. 6. The city, village or township which created the Authority must adopt/amend its community master plan to accurately incorporate the TIE Plan. 7. The Authority utilizes all (100%) of the TIE revenue for redevelopment efforts, i.e., those activities specifically authorized within the applicable act, including operating expenses of the Authority. 8. The proposed plan must meet most of the standards provided in this Policy. IX. GUIDELINES FOR REVIEWING DDA PROPOSALS The following perfoimance 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 TIE. 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 TIE revenue with a DDA millage (up to 2 mills), special assessment and/or designated budget contributions from the municipality it is in, to demonstrate local commitment and funding for the DDA program. 4. Demonstrates that most 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. 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. I. Meets all applicable criteria in Public Act 280 of 2005, as amended. 2. Demonstrates to the TIE Review Committee how it complies with the seven development area criteria specified in PA 280. Page 5 of 7 Revised & Approved by BOC 01092019 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.advantageoakl and.com as an economic growth industry, will benefit from this request. XL 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 TIE: 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: 1. 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: i. The amount of taxes captured by the Authority The amount spent on each project in the TIE Plan. 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 number 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 Depaitinent of Treasury. 4. A requirement that Applicants must appear before the TIT 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. The list of projects must include the construction or improvement to a physical asset such as the construction of a building or improvements to a roadway. A requirement that if any of the physical assets are not constructed Page 6 of 7 Revised & Approved by BOC 01092019 or improved by the date indicated in the TIF Plan, the amount of County's taxes captured by the Authority for the construction or improvement of the asset(s) must be refunded to the County with interest at the prime rate plus one percent. 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. 7. A prohibition against using County taxes to accumulate funding to attract a developer to invest in the District. 8. A prohibition against elected or appointed officials of the Applicant or their immediate family members engaging in a business transaction, relating to property in the District, which he or she may profit from because of his or her official position or authority or benefit from confidential information which he or she has obtained because of such position or authority. This provision does not prohibit members of the governing body of the Authority from having an ownership or business interest in the District. Any plans by the Authority to purchase property in the District from elected or appointed officials of the municipality, or their immediate family members, shall be disclosed in writing to the County. 9. A requirement to appear before the TIF Review Committee to discuss any TIF Authorities created or expanded after the date of the agreement as well as a right to terminate should the capture by those TIF Authorities exceed the County cap in Section VII. XIII. PRECEDENCE OF STATE LAW AND POLICY Any future changes to the state laws governing DDAs, CIAs and LDFAs which conflict with this Policy, shall supersede and control those conflicting provisions until this Policy is officially updated to consider the legislative changes. This Policy supersedes and replaces the prior policies and Resolutions previously adopted by the Board of Commissioners concerning DDAs, CIAs and LDFAs and the TIF Review Committee, specifically Miscellaneous Resolution 4#1_6166. Page 7 of 7 Revised & Approved by BOC 01092019 Resolution #19002 December 9, 2019 Moved by Quarles supported by Luebs the resolution be adopted. AYES: Taub, Weipert, Woodward, Zack Gershenson, Hoffman, Jackson, Kochenderfer, KowaII, Long, Luebs, Markham, McGillivray, Middleton, Miller, Nelson, Powell, Quarles, Spisz. (19) NAYS: None. (0) A sufficient majority having voted in favor, the resolution was adopted. 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 January 9, 2019, 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 9th day of January, 2019. Lisa Brown, Oakland County