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Request for Information
<br />APA is inerested in learning about the soft:,•are for
<br />r;anners that has been:+~ritten for microcomputers (e.g..
<br />Apple II or III, IB~1 Personal Computer. '~orthstar,
<br />`: IZS-80 Model III, or an}• others. Specifically ~,•e:+•euld
<br />like to know:
<br />• lti'hat the programs do;
<br />• t1'hat types of systems they require tmemory,-disk
<br />drive requirements, printers, manufacturers, etc.);
<br />• Whether the programs are available to others; and
<br />• Cost.
<br />V~'e also are interested in hearing from planners who
<br />ha:•e been using commercially mailable programs (e.g.,
<br />spreadsheets, database, graphics, etc.) in their :,•ork.
<br />~~'hich programs are you using, and what are }=ou using
<br />these programs for? Are }=ou satisfied or dissatisfied with
<br />their performance?
<br />Please send an}= information to Duncan Erley, APA,
<br />1313 E. 60th St., Chicago, IL 60637, or phone
<br />312-955-9100, ext. 203.
<br />revenue increment financing. Eliminating this confusion
<br />with tax abatement would help make TIF believers out of
<br />many doubting elected officials and the public.
<br />Another frequent concern expressed about TIF is that
<br />it :+•il] adversely affect the abilit}= of local government to
<br />provide services. This concern stems from the fact that all
<br />tax increases from the higher assessed value of properties
<br />in the TIF district are allocated to the trust fund, rather
<br />than to general municipal services. Actually, the ex-
<br />perience of most cities in California, according to a 1976
<br />report by Ralph Andersen and Associates of Sacramento,
<br />is that "tax increment financing has not- created serious
<br />fiscal problems for local tax agencies, and has not con-
<br />tributed in any significant way to property tax rate in-
<br />creases." Moreover, the cost of servicing a deteriorating
<br />area is frequently more than that for servicing a redevelop-
<br />ing area.
<br />An additional tax consequence of TIF is that tax incre-
<br />mentlegislation sometimes exempts school district millage
<br />from making contributions to the trust fund. And, as
<br />redevelopment occurs, all of the increased tax revenues
<br />o:,•Pd the school district H=ill continue to flow into school
<br />budgets in those states.
<br />The bond consequences of TIF generally do not extend
<br />to affecting the cit}='s statutory debt limit. Ho:+•ever, }=ou
<br />can expect the scrutiny of area bankers to be especially
<br />thorough :,•hen TIF is not considered a general obligation
<br />of the city. Although bond ratings for TIF bonds are
<br />t}=pically class "A" or less, the bonds still can be insured
<br />b}• municipal bond insurance sen•ices.
<br />Start-up costs for the redevelopment agency frequent-
<br />Ivcan be recaptured, once the incre:;;ent begins flo:+-ing.
<br />Ho:•: ever, legislation may limit the allo:•: able planning and
<br />administrative costs to those directly attributable to the
<br />redeve}opment proiect. And it should be remembered that
<br />recapture kill be risky until revenue actuali}° enters the
<br />trust-lurid.
<br />Experience ir. states ha:•ing an extensive history with
<br />TIF, such as California (:,here some 5700 million:,•orth
<br />of redevelopment bonds has been issuedl, suggests that TIF
<br />can be a po:+•erful tool. In these times of budgetar}' cut-
<br />backs and tight :none}•, TIF can be a dealmaker.
<br />Getting the most out of TIF, however, :,•ill involve com-
<br />bining it ti.•ith other available tools in order to produce the
<br />maximum in pri~•ate investments and public im-
<br />provements. TIF should be only one element in an overall
<br />package of development incentives. Used in that ti+•ay, it
<br />can become an almost indispensable part of your
<br />redevelopment im•estment strategy.
<br />Hov`• to Estimate the Usable Proceeds
<br />A frequent question that arises after a tax increment
<br />financing system is unden+•ay concerns how much money
<br />:,=ill be available for public improvements as a conse-
<br />quence of a given development project. The fastest way
<br />to make this preliminary estimate is by using a program-
<br />mable calculator or computer. The author has pro-
<br />grammed a He:+-lett-Packard HP-12C calculator to take
<br />into account such factors as current tax rate, current in-
<br />terest rates, bond years to maturity, bond coverage ratio,
<br />bond issuance costs, and bond reserve requirements. This
<br />program estimates the net proceeds of a TIF bond issue for
<br />any given increase to the tax base.
<br />However, if you do not have a programmable
<br />calculator, you can achieve somewhat slower and more
<br />laborious results by follov,=ing these steps:
<br />1. Estimate the cost of the project and the increased tax
<br />base that would result. Your local tax appraiser can
<br />help figure out the prospective increases.
<br />2. Estimate the annual tax yield by applying the cur-
<br />rent tax rate to the additional tax base.
<br />3. Estimate the annual debt service by dividing the an-
<br />nual tax yield by the bond coverage ratio. Your
<br />city's financial advisors can help you determine a
<br />reasonable coverage ratio.
<br />4. Using current interest rates and the number of years
<br />it takes long-term revenue bonds to mature, estimate
<br />the principal amount of the bonds. Either a finan-
<br />cial calculator-or a standard table of loan constants
<br />:,=i11 help you complete this step.
<br />5. Subtract an estimated factor for bond issuance costs.
<br />Your city's financial advisor may be able to suggest
<br />a reasonable percentage of the principal amount, say
<br />four percent.
<br />6. Subtract an estimated reserve fund amount. Again,
<br />financial advisors ma}' be of help, or use the amount
<br />of one year's debt service as an estimate.
<br />7. After performing steps 1 through 6, you ha:•e a
<br />preliminar}' estimate of the net proceeds of the tax
<br />increment bond issue. This amount is t+•hat you can
<br />reasonably e:~pect }•our redevelopment agency to
<br />have available for public purpose improvements.
<br />,.
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