08-27-1984 Council Packet - Laserfiche WebLink

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TAX INCREMENT FINANCING PLAN The TIF Plan of the Authority must contain the following: 1. Statement of objectives of the Authority for the improvement of the TIF District; 2. Statement as to the development program for the TIF District, including the property which the Authority intends to acquire; 3. Estimates of the following: • Costs planned to be incurred within the TIF Di--trict, including administrative expenses; • Amount of bonded indebtedness to be incurred; TAX INCREMENT BONDS Tax increment bonds are, in effect, long-term loans made by the bondholders to an Authority which enable the Authority to pay certain costs associated with the TIF District (the types of project costs which can be reimbursed with tax increments depend upon the statutory authorizations of the Authority). Upon completion of the development or redevelopment within the TIF District, the tax increments which are collected from the marginal increase in assessed value of the TIF District are placed in a special fund of the Authority and are used to pay the principal and inter- est on the bonds issued to finance the acquisition and improvement of a Qualified Project. Pursuant to the Act, tax increment bonds issued to finance a Qualified Project within a TIF District may he either general obligation bonds or revenue bonds. Tax increment general obligation bonds are pay- able primarily from a revenue source (i.e., the tax increment derived from a TIF District), but are also • Sources of revenue to pay public costs; • Most recent assessed valuation of taxable real property; • Estimated captured assessed value at completion; • Duration of the 'TIF District's existence; and 4. Statement on the impact of tax increment financing on the assessed values of all taxhig jurisdic- tions in the TIF District. backed by the full faith and credit of the municipality. They are not included in the computation of the net debt of the municipality, although the bonds remain an obligation and a legal liability of the municipality as long as they remain outstanding. General obliga- tion bonds will usually carry a lower interest rate than revenue bonds. On the other hand, tax increment revenue bonds, which also are not included in the computation of the muncipality's net debt, are, by law, neither a moral obligation nor a legal liability of the municipal- ity. The Act specifically states that the issuing munici- pality shall not "be subject to any liability Thereon or have the powers to obligate itself to pay . . the bonds." This provision should remove any doubt that tax increment revenue bonds are not, and could never become, a legal liability of the issuing municipality, and its overall general obligation bond rating will not be affected by the issuance of tax increment revenue bonds.