RESOLUTION
NO. 03-1053
A
RESOLUTION ESTABLISHING A CITY OF
WHEREAS, the City of Olathe, Kansas (the “City”) recognizes that it
is essential to stimulate economic growth and development of new commercial
enterprise in order to provide services, employment and tax revenues for the
benefit of the community; and
WHEREAS, it is further recognized that the stimulation of balanced economic
development is a joint responsibility of the private and public sectors,
working closely together creating a positive business environment and to induce
commercial development and expansion in the City; and
WHEREAS, the economic
development program goals of the City include economic diversification,
broadening of the property tax base, stimulation of private investment,
enhancement and support of new development, creation and quality of employment
opportunities, and increased per capita income; and
WHEREAS, to meet these
economic development goals, the City recognizes the need to assist in the
redevelopment of property located within the City by the creation of
redevelopment districts; an economic development vehicle established by K.S.A.
12-1770 et seq. for the financing of qualified redevelopment projects; and
WHEREAS, the City finds it in the best interest of the public to
establish certain policies and guidelines for the consideration of proposals
that may be presented to the City by private developers requesting Tax
Increment Financing ("TIF") assistance; and
WHEREAS, by adopting this policy the City has determined that the use
of TIF should be reserved for projects which further an important and clearly
definable public interest of the City, and the City desires to restrict those
projects which are eligible for TIF assistance to projects which further such a
purpose; and
WHEREAS, by adopting this policy the City intends to set forth a
flexible framework for evaluating requests for TIF assistance; and
WHEREAS, the use of TIF by the City is an important economic
development tool to stimulate the local economy and improve the quality of life
for its citizens.
WHEREAS, the use of TIF represents an important tool for
encouraging the development of projects the City finds and determines are
desirable and in the public interest; and,
WHEREAS, all prospective TIF projects must be carefully evaluated by
the City because the character of tax revenues generated by different
developments can vary widely, and in most cases will impact other taxing
jurisdictions in the
WHEREAS, the City desires to use TIF for those projects which
demonstrate the highest public benefit by eliminating blight, financing
desirable public improvements, strengthening the employment and economic base,
increasing property values, reducing poverty, creating economic stability,
upgrading older neighborhoods, facilitating economic self sufficiency, and
implementing the Comprehensive Plan and economic development goals of the City;
and
WHEREAS, the staff of the City is to pursue discussions about this
policy with other taxing jurisdictions impacted by TIF in the City of
WHEREAS, each TIF Application submitted to the City will be
evaluated on its own merits, and an evaluation of the proposal will be
performed by a TIF Committee comprised of City Staff and/or consultants and a
Chamber representative; and,
WHEREAS, all projects must demonstrate financial and economic
reasons such that they would not otherwise go forward and be viable, but for
conditions of blight, extenuating circumstances which exist in the site,
location, or other factors related to the development.
NOW, THEREFORE, THE REDEVELOPMENT DISTRICT (TAX INCREMENT
FINANCING) POLICY FOR THE CITY OF
SECTION ONE: ADOPTION
OF POLICIES AND PROCEDURES:
The Tax Increment Financing (TIF) Application Procedures and Application Form
are hereby adopted as fully set out herein and the City Manager is hereby
authorized to implement the following procedures and to make such additional
changes and clarifications that shall be deemed advisable and in the best
interest of the City:
SECTION
TWO: POLICY STATEMENT:
1. It shall be the
policy of the City to consider creation of a redevelopment district for
qualifying redevelopment projects. Prior
to and following the creation of the redevelopment district, the applicant
shall meet all state law and city requirements relating to the redevelopment
plan and project.
2.
It is the policy of the City to consider the judicious use of TIF
for those projects which demonstrate a substantial and significant public
benefit by constructing public improvements in support of developments that
will, by creating new jobs and retaining existing employment; eliminate blight,
strengthen the employment and economic base of the City, increase property
values and tax revenues, reduce poverty, create economic stability, upgrade
older neighborhoods, facilitate economic self sufficiency, promote projects
that are of community wide importance, and implement the Comprehensive Plan and
economic development goals of the City.
3. Care will be
exercised in the use of TIF to thoroughly evaluate each project to ensure that
the benefits that will accrue from the approval of TIF are appropriate for the
costs that will result, and that they are equitable to the City as a
whole.
4. The City will charge an
application and an administrative service fee as set forth in this policy.
SECTION THREE: POLICY GUIDELINES. The following
criteria are to be used by the City's TIF Committee and staff to evaluate TIF
Applications:
1. Each TIF
Application must demonstrate that "but for" the use of TIF, the
project is not feasible and would not be completed without the proposed TIF
assistance.
2. All TIF
Applications requesting the issuance of bonds or notes will be required to
demonstrate that the incremental taxes and/or the economic activity taxes
expected to be generated will be sufficient to provide a debt coverage factor
of at least 1.25 times the projected debt service on the tax increment bonds or
notes. Debt service coverage greater
than 1.25 times may be necessary to market any notes or bonds that are limited
to public offerings. Developer or bank
purchased bonds may be less than 1.25 times debt service coverage.
3. The total
amount of TIF assistance provided for projects will be based on the economic
payoff expectations of the project and its significance to the community. In general, the goal would be a 10-year
payoff. Longer periods may be considered
if a determination is made that the project is of community-wide significance.
4. Each TIF
Application must include evidence that the applicant:
(a) Has the financial ability to
complete and operate the project.
(b) Will be liable for, or contribute
equity or private financing of at least fifteen percent (15%) of the total cost
of the project or provide a performance bond for the completion of the
project. Projects with equity or private
financing contributions from the developer in excess of fifteen percent (15%)
will be viewed more favorably.
5. The City
will require satisfactory assurance that the project will be completed in a
timely manner in accordance with the Redevelopment Plan and Agreement.
6. TIF
Applications for new or expanded industrial, manufacturing, office, and retail
projects will be viewed more favorably than service commercial (commercial uses
that mainly provide a service rather than the sale of products) projects. TIF projects which create jobs with wages
that exceed the community average will be encouraged. Industrial, manufacturing, retail and office
developments will be given more consideration than warehouse type uses based
upon the projected employment per square foot.
Additional consideration will be given to projects in excess of twenty
million dollars ($20,000,000) or if the development has the ability to
stimulate the local economy and improve the quality of life for its
citizens.
7.
TIF
Applications for retail and service commercial projects should be limited to
those projects in which a substantial part of its total products and/or
services are either exported from the Olathe area or they would add jobs and
replace purchases now being made by Olathe citizens in areas outside of the
city. Additional considerations may
include whether the project has the effect of supporting or stimulating new
retail development.
8. TIF
Applications for residential redevelopment projects may be considered for
removal of blight and revitalization of older developed neighborhoods, and/or
to provide for public improvements to benefit economic development and
employment.
9. TIF
Applications for the redevelopment of existing residential neighborhoods,
commercial and industrial areas will be viewed favorably. Projects to stabilize current residential
neighborhoods, commercial, and industrial areas that have or will likely
experience deterioration will be favored.
10. All TIF
Applications shall comply with the requirements
of the Kansas TIF Statute.
11. Project
eligible costs covered by TIF funds shall be identified in the application and
the Redevelopment Plan.
12. TIF
Applications that include the establishment of business areas, or the
redevelopment of existing business areas, shall include information as to the
business type of the major tenants of the TIF area. In addition, a thorough market analysis
should be completed which identifies: (1) the population areas that will be
drawn from; and, (2) the businesses of similar types which would be competing
with the TIF area businesses.
SECTION
FOUR: PROCEDURE. The City may consider issuing tax increment
financing bonds or reimbursing the eligible costs from tax increments pursuant
to state law and this Resolution after the following occurs:
1.
A complete
application is received by the City from the applicant in a form prescribed by
the City. The application shall be
submitted in sufficient time for staff to follow established procedures, review
the project documents, and to meet with the unified school district within
which the property proposed for redevelopment is located.
2.
Upon review of
the application, the City may require and the applicant shall furnish further
information in order to clarify the submittal.
3.
After creation
of the redevelopment district, the City may designate the applicant as the
proposed developer through the adoption of a Memorandum of Understanding.
4.
The applicant
shall, in consultation with the City and the Planning Commission proceed with the preparation of a
Redevelopment Plan pursuant to state law and city requirements, including a
complete and comprehensive financial feasibility study demonstrating that the
economic benefits of the project exceed the cost, the tax increment to be
derived from the project will fully fund such costs or bond payments, and that
the term of the redevelopment district does not exceed a mutually agreed upon
period of time.
5.
The applicant
and City will enter into a Redevelopment Agreement upon satisfactory completion
of the Redevelopment Plan.
SECTION FIVE: APPLICATION AND SERVICE
FEES. This resolution
establishes a non-refundable TIF fee of one percent (1%) of the total TIF
assistance authorized. The service fee,
which is a TIF eligible cost, should be paid as follows:
Initial application fee* |
|
5%**
or $2,500 whichever is less |
||
|
Redevelopment Plan
Approval fee |
|
15%** or
$7,500 whichever is less |
||
|
Ordinance approving
plan and issuance of bonds |
|
80%** or
$40,000 whichever is less |
||
|
|
|
|
||
|
Maximum fee – due
at a prescribed time (includes initial application fee) |
|
$50,000 |
||
|
|
|
|
||
|
|
|
|
||
|
* |
|
To be paid at the time of submittal
of the application. |
||
|
** |
|
Portion of 1% of
total TIF assistance requested. |
||
|
Reapplication fees
for substantial changes will be charged at the same rate as the schedules
shown above. |
||||
In
addition to the fees listed above, the applicant shall pay to the City at the
prescribed time an administration service fee, as shown below, to cover the
administration and other City costs for each approved TIF Project. Such service fee shall be in addition to the
application fee. Such service fee may be
paid from tax increment generated from the project, bond proceeds or from a
direct billing to the applicant. The
payment method of the administration service fee shall be determined on a case
by case basis and only to the extent tax increment is available. The administration service fee shall be
reduced to the amount shown below if only property tax increments are related
to the project.
TIF Administration Service Fee
|
||
|
|
|
|
Property
Tax increment projects only
|
|
An amount equal to .5% of the annual
increment |
|
|
|
|
|
Property tax,
sales, and other tax increment projects |
|
An amount equal to 2.5% of the annual
increment |
|
|
|
|
The
applicant may be required to pay additional costs such as outside consultant
and attorney fees. Application fees
(excluding non-refundable), additional consultant and attorney fees may be
reimbursed to applicant or paid to City from bond proceeds or TIF revenues.
SECTION SIX: REQUEST FOR PROPOSAL. The City may initiate a Request for Proposal
for a redevelopment project. The fees
shown above are for both city initiated and non-city
initiated redevelopment projects. The
City reserves the right to reduce or waive the above fees if a redevelopment
project is city-initiated and it is determined to be in the best interest of
the City to do so. Upon the filing of an
application that is non-city initiated, the City reserves the right to cause a
public notice to be inserted in a newspaper of general circulation in the City
or on the City’s website requesting proposals for development in the proposed
project area.
SECTION
SEVEN: DESIGN CRITERIA. Development proposals
under a TIF application are expected to meet the “highest development standards”
as outlined by the City’s adopted development policies for commercial and
industrial buildings, as well as all
Design Guidelines adopted by the Planning Commission and City Council. Development proposals are expected to
demonstrate innovative design with human scale that exceeds the design
standards of conventional development throughout the City. A TIF project requires the use of high
quality building materials, noteworthy architectural design and site design to
achieve visual interest, provide human scale, place a premium on developing
land in harmony with existing natural features, and enhance the value and
function of adjacent properties.
All TIF projects will be required to utilize a Planned
Zoning District and will include strict architectural, site, and landscape
design requirements. As well, the
redevelopment plan and agreement, development review process, and zoning
ordinances will establish land use controls, allowed uses and materials, traffic
improvements, environmental preservation areas and other design criteria to
ensure the development will achieve the highest development standards
possible.
The compatibility of the TIF project with
land use and development plans of the city and the availability of existing
infrastructure facilities and essential public services will be a
consideration. The project must be
environmentally acceptable to the location intended as well as the surrounding
area. Preference will be given to
businesses that do their own pre-treatment or do not require extensive
environmental controls. The proposed use
must be clean, nonpolluting, and consistent with all policies, ordinances, and
codes. Based upon future growth, the
applicant must be willing to provide a traffic study on any projected traffic
impact increase on the City.
SECTION
EIGHT: EMPLOYMENT AND BUSINESS
RELOCATIONS.
TIF Applications are expected to include the following:
1. If the TIF
Application is being recommended based upon job creation criteria, language
will be included in the redevelopment plan which stipulates that the City’s
obligation to the developer may be reduced if satisfactory evidence shows that
the indicated number and quality of jobs have not been generated.
2. If
businesses are to be relocated from other areas of the City, sufficient
justification will be included to indicate why this relocation should be
considered. If existing businesses are
to be relocated to the TIF area, the base year activity for purposes of
determining the sales tax increment will be the last twelve month period at the
businesses current location, immediately preceding the relocation.
SECTION
NINE: METHOD OF FINANCING. TIF Applications may request that TIF assistance be provided
in one of the following forms:
1. Special
Obligation Bond Financing;
2. Direct
Reimbursement to the Applicant;
3. Pledge of
tax increment financing revenues to pay private financing; or,
4. Any
combination of the foregoing methods.
In deciding which method of financing to use, the prevailing
factor in making the determination will be total costs and the security for the
bonds. The City will not provide credit
enhancements for the special obligation bonds; however, credit enhancement
provided by the developer on any bonds will be viewed favorably. The City shall not issue General Obligation
Bonds for TIF eligible costs. The
proposed method of financing will be clearly shown in the application and the
Plan. The City has sole determination of
the method of financing.
SECTION
TEN: CERTAIN ECONOMIC ACTIVITY TAXES. Only
City sales taxes, except those designated for
city dedicated taxes, i.e. park sales tax will
be considered for purposes of the tax increment derived from TIF economic
activity taxes. Generally, the City will
only make available 50% of the general City sales tax for TIF projects. Economic activity taxes shall not include
utility franchise taxes collected from private utilities or as payments in-lieu
of taxes from publicly owned utilities to the extent such exclusion is
permitted by law. Transient Guest taxes
may at the discretion of the City be used as part of the tax increment, but
generally the City will only make 50% of the transient guest tax
available. For STAR Bond projects that
meet state required criteria additional revenues may be available.
SECTION
ELEVEN: TERM. The
projected term of the TIF will be a factor with shorter terms being viewed more
favorably than longer terms and will be consistent with Section 3, Paragraph 3.
SECTION
TWELVE: OTHER CONDITIONS. The City reserves the right to modify or waive any or all of
these policies in accordance with the approved redevelopment plan and/or
redevelopment agreement.
SECTION
THIRTEEN: That
all other Resolutions or parts of Resolutions in conflict herewith are hereby
repealed.
SECTION
FOURTEEN: AUTHORITY OF GOVERNING
BODY. The Governing Body reserves the right to
deviate from any policy, but not any procedure set forth in this Resolution or
any other procedural requirements of state law, when it considers such action
to be of exceptional benefit to the City or extraordinary circumstances prevail
that are in the best interests of the city.
SECTION
FIFTEEN: EFFECTIVE DATE. This Resolution
shall take effect immediately.
ADOPTED by the
Governing Body this ______ day of ________________, 2003.
SIGNED by the
Mayor this _____ day of __________________, 2003.
________________________________
ATTEST:
___________________________
City Clerk
(SEAL)
APPROVED AS TO FORM:
__________________________
Municipal Counsel