BEST PRACTICES FOR TAX INCREMENT FINANCING AGENCIES IN OREGON November 2019 ABOUT THE OEDA TAX INCREMENT FINANCING COMMITTEE The Association of Oregon Redevelopment Agencies (AORA) merged with the Oregon Economic Development Association (OEDA), in July of 2017. OEDA’s Tax Increment Financing (TIF) Committee continues to represent established TIF agencies which may be initiated by cities or counties. Their boards can be comprised of the municipal governing body, a housing authority, or members may be appointed by the governing body. Leadership of OEDA’s TIF Committee is provided by a Chair and Vice Chair and exists under the general leadership of the OEDA Board of Directors. OEDA’s TIF Committee holds regular meetings and continues to innovate with new ways to share information and resources to public and private redevelopment professionals. This committee does the following; • Promotes TIF ‘best practices’ among the state’s TIF agencies; • Provides a forum for discussion with professional colleagues throughout the state on issues pertinent to redevelopment; • Provides education and information to the Legislature and state agencies on issues related to redevelopment and TIF; • Evaluates and coordinates TIF agency responses to litigation on TIF and redevelopment; and • Communicates with the League of Oregon Cities and other key partners. 2019 OEDA TAX INCREMENT FINANCING COMMITTEE LEADERSHIP Kate Porsche Chair [email protected] Rebecca Ziegler Vice Chair [email protected] Justin Douglas Past Chair [email protected] 2019 OEDA EXECUTIVE LEADERSHIP Kate Porsche President Sarah Means Past President Matthew Miller Vice President Cindy Moore Secretary Kit Kamo Treasurer OEDA STAFF Avery Pickard Executive Director [email protected] Cover photos (top left to bottom right). Redmond’s Cook Crossing, Hermiston’s Festival Street, Tillamook’s Pelican Brewing, Tigard’s Atwell Off Main. ear Practitioner, OREGON ECONOMIC It’s hard to believe it’s been more than five years since the publication DEVELOPMENT ASSOCIATION Dof the original Best Practices document. This 2019 version adds updates from recent legislative changes, with a focus on the new language from this year’s session. We have also added handy references and sample documents in the appendices. A new chapter has been added to focus on diversity, equity, and inclusion, and the need for us practitioners, to always be working to ensure that underrepresented populations are a part of the conversations, part of the process. Interestingly, it was the drafting of that chapter, that led us PO Box 18060 to a conversation about nomenclature. For many, “urban renewal” is a Portland, OR 97218 term that evokes past practices of the 1950s and 60s wherein minorities (541) 623-0064 and underrepresented populations were displaced to clear the way for redevelopment. I have long thought that the term does us no favors and www.oeda.biz/committees/urban- misses highlighting the numerous ways in which the tool has helped so many renewal/ communities, large and small, rural and urban, to revitalize, create jobs, and to create opportunities for their citizens. OEDA TAX INCREMENT FINANCING To that end, the committee made the conscious decision to begin to shift COMMITTEE LEADERSHIP from the term urban renewal to tax-increment financing or TIF, a term used consistently in other parts of the nation. Starting with the title and Kate Porsche, Chair throughout the document, you will now see the use of TIF, though we leave Economic Development Manager, language and references to ORS as urban renewal as stated in the statutes. Corvallis/Benton County Economic We hope you can begin to make this shift in your own community as well. Development Office Before you is an easy-to-navigate, consolidated reference about TIF Districts in Oregon. Whether you are considering a new district for your community, or if you are a seasoned practitioner, this document provides valuable Rebecca Ziegler, Vice Chair information. Throughout the manual, you will find best-practice tips from Project Manager, City of Salem Urban experienced practitioners, consultants, and TIF attorneys and bond counsel Development Department (of course it is always recommended to check with your consultant or attorney when navigating new territory). Justin Douglas, Past Chair A letter from the Special Districts Association of Oregon, whose members are Manager, Governance, Learning & one group directly impacted by the use of TIF Districts, can be found in the Outcomes, Prosper Portland appendices. Their letter and thoughts give real insight into the concerns and tensions surrounding TIF Districts but also provide recommendations for how communities can better partner with taxing districts to create successful TIF districts. This document represents the energy of a great group of people committed to making TIF Districts a better tool for redevelopment and economic development in Oregon. We hope you find this to be a useful reference in your work, and that these best practices help to keep this tool strong in Oregon. Kate Porsche OEDA President & TIF Committee Chair TABLE OF CONTENTSCONTENTS 1. Introduction & Overview 7 1.1 INTRODUCTION .......................................................................................................................7 1.2 HOW TO USE THIS DOCUMENT ..........................................................................................8 1.3 SUMMARY OF CHANGES IN THIS EDITION .....................................................................9 1.4 DIVERSITY, EQUITY, AND INCLUSION .............................................................................12 2. Preliminary Feasibility Studies 18 2.1 PUBLIC INVOLVEMENT ........................................................................................................19 2.2 AREA BOUNDARY ................................................................................................................20 2.3 BLIGHT ......................................................................................................................................21 2.4 PRELIMINARY PROJECTS AND PROGRAMS ................................................................22 2.5 COMPREHENSIVE PLAN REVIEW......................................................................................24 2.6 FINANCIAL ANALYSIS .........................................................................................................25 2.7 IMPACTS ON TAXES IMPOSED BY OVERLAPPING TAXING DISTRICTS .................26 2.8 GAPS AND ISSUES ................................................................................................................28 3. Creating a TIF District 31 3.1 ESTABLISHING THE BOARD ...............................................................................................32 3.2 ADVISORY COMMITTEES ....................................................................................................37 4. TIF Plan 40 4.1 PUBLIC INVOLVEMENT ........................................................................................................42 4.2 AREA BOUNDARY ................................................................................................................44 4.3 GOALS/OBJECTIVES .............................................................................................................46 4.4 PROJECTS FUNDED WITH TIF ..........................................................................................47 4.5 COMPREHENSIVE PLAN AND ECONOMIC DEVELOPMENT PLAN REVIEW ........54 4.6 PROCEDURAL REQUIREMENTS FOR APPROVAL OF A PLAN .................................55 4.7 TIF REPORT ..............................................................................................................................59 4.8 BLIGHT ......................................................................................................................................61 4.9 FINANCE ...................................................................................................................................63 5. Amendments to the TIF Plan 69 5.1 SUBSTANTIAL AMENDMENTS ..........................................................................................70 5.2 MINOR AMENDMENTS ........................................................................................................82 5.3 COUNCIL APPROVED/MAJOR AMENDMENTS ............................................................84 6. Managing a TIF District 86 6.1 ESTABLISHING BYLAWS .....................................................................................................87 6.2 CHANGING THE FORM OF AGENCY GOVERNANCE ..................................................87 6.3 PUBLIC INVOLVEMENT .......................................................................................................88 6.4 FINANCIAL REPORTING ......................................................................................................89 6.5 BUDGET ....................................................................................................................................92 6.6 AUXILIARY USES OF TIF ......................................................................................................93 6.7 PROGRAM INCOME ..............................................................................................................96 6.8 DEBT AND MAXIMUM INDEBTEDNESS REPORTING .................................................98 6.9 PERFORMANCE MEASURES ...............................................................................................99