ProposedProposedEconomic Economic

DevelopmentDevelopment Policy Policy

For the City of For the City of TuscaloosaTuscaloosa

Qualified Private DevelopmentQualified Private Development

Public Infrastructure Improvement Public Infrastructure Improvement Assistance Policy Assistance Policy

of the City of Tuscaloosaof the City of Tuscaloosa

(A05-0278)(A05-0278)

GOALSGOALS

Establish principles of economic Establish principles of economic development for the City development for the City

Identify types of development that the City Identify types of development that the City deems eligibledeems eligible

Further Core BeliefsFurther Core Beliefs Inform potential developersInform potential developers Maintain flexibilityMaintain flexibility

FUNDAMENTAL PRINCIPLES OF ECONOMIC DEVELOPMENT

Must serve the general public

Only incidental benefit to private development

Principles Of Economic Assistance:

City’s financial interest shall never be placed at risk

Must meet public purpose: promotion of public health, safety, security, prosperity

and general welfare of the community the expenditure by the City must confer a direct public

benefit or a reasonably general character to a significant part of the public

No City funds may be devoted to the benefit of any private person

Principles (cont’d):

Must be beneficial and needed by community: Must offer opportunities not currently available Should not duplicate existing commercial and/or retail activities

City must have a legal interest in the land upon which public assistance is to be conducted

No adverse impact on taxes: no rebate of Sales or Use Taxes no legal authority to abate ad valorem taxes

Principles (cont’d): Must be proof of adequate tax revenue generation

to guarantee annual payment amount

Must be a development of distinction based upon size, scope, features, location, and creation of new jobs or retailers

Developer must be experienced and qualified and able to provide references and proof of experience with prior, similar developments

Transaction must be in a lawful manner

Developer must demonstrate financial ability to fund the development and produce a realistic, viable financing plan

BASIC CONCEPT OF ASSISTANCE

Essentially, for qualifying developments, the City may elect to engage in or pay for certain “Public Infrastructure Improvements” if the “Development” will generate sufficient “Annual Tax Revenues” to pay for them over a period of time.

Key Terms

To fully understand the policy one must be familiar with the definitions. The policy defines 24 terms. The following terms are some of the most important:

“Public Infrastructure Improvements”

“Annual Payment Amount”

“Annual Tax Revenue”

“Development”

“Substitution Effect”

TYPES OF PUBLIC ASSISTANCE AVAILABLE

May include assistance with the following activities on public

property, public right of way or easements dedicated to the City:

Turn lanes, acceleration and/or deceleration lanes

Relocation of all or portions of existing City water and/or sewers

Half or full street improvements

Traffic signals, signage, and other traffic-control

Pedestrian amenities including sidewalks, bicycle paths, and lighting

Public parking

Street scaping and/or landscaping

Fire suppression and water services

Water and/or sanitary sewer main extensions

Drainage structures and storm sewer systems including retention facilities, system extensions, etc.

Similar public infrastructure improvements

“Public Infrastructure Improvements” does NOT include any of the following which are not consistent with the Public Purpose Doctrine

any structures or improvements within or upon the development property

parking lots or parking decks serving only the development

lighting within the development

pedestrian amenities serving only the development

architectural enhancements of structures

street scaping and/or landscaping in the development

drainage structures benefiting only the development

grading or filling the site

Four Categories of Development

“Qualified Development” : a development which has been determined to be “qualified” due to an application of the evaluation process in the policy

“Qualified Enterprise Zone Development” : “Qualified Development” but in a defined geographic area of the City that has been determined to be economically depressed and in greater need of development than the City as a whole. An Enterprise Zone must be within an area designated as low to moderate income in accordance with applicable Community Development Block Grant requirements

Categories of Development (cont’d)

“Merit Development” : a development that does not meet all the criteria of a “Qualified Development” but meets a sufficient number of the criteria to be of special merit as compared to other developments in the City or other unique features and therefore eligible for limited public assistance

“Residential Enterprise Zone Development” : a residential development that meets a substantial number of the relevant criteria for a qualified development, is in an Enterprise zone, and offers a realistic opportunity for redevelopment by eliminating blighted or inadequate housing while providing quality low and/or moderate income housing to a significant number of citizens

THE PROCESSThe Policy establishes a detailed application and review process. Examples of some of the required application criteria are as follows:

A detailed application

Statement of how the development meets the fundamental principles of economic development

A description of the specific public infrastructure improvements for which City participation is being requested

Maps and plats prepared by a professional engineer depicting the property

A market feasibility study conducted by a reputable source. The developers must be able to provide demonstrable proof substantiating the projected or forecasted Annual Tax revenues

Application Criteria (cont’d)Application Criteria (cont’d)

A traffic impact analysis

An estimate of probable construction cost

A detailed written description of the types and kinds of retail and/or commercial operations

A statement that the Developer is willing to provide in a development agreement a guarantee of Annual Tax Revenue and/or, at the option of the City, a lease covenant

A covenant to maintain a net worth of 35% of the estimated worth of the development

A commitment to complete the construction and retail operation of the development by a date certain

The percentage of requested cost of public infrastructure improvements participation to the cost of the development (for qualified developments cannot exceed 10% or 15% for a qualified enterprise zone development)

Evaluation Criteria Evaluation Criteria

Each application is then graded based upon the following Each application is then graded based upon the following criteria:criteria:

A detailed written description of the types and kinds of retail and/or commercial operations (Up to 14 pts)

The number of square footage of retail space of the development (for qualified developments, a minimum of 100,000 square feet is required; for qualified enterprise zone developments, a minimum of 50,000 square feet is required) (up to 10 pts)

The amount of private investment in the complete acquisition, design

and construction of the development (for qualified developments, a minimum of $20 million is required; for qualified enterprise zone developments, a minimum of $10 million is required) (up to 16 pts)

Evaluation Criteria (cont’d)Evaluation Criteria (cont’d)

The estimated Annual Tax Revenue from all forms of taxes to be paid to the City by the Development (for qualified developments, a minimum of $1 million annual after a 50% substitution effect; for qualified enterprise zone developments, a minimum of $500,000 after 50% substitution effect) (up to 20 pts)

The number of new full time jobs and part time jobs to be created (up to 18 pts)

Any aspects of the development that make it unique or enhance the development (up to 12 pts)

Annexation or redevelopment of blighted property required (up to 10 pts)

RESPONSE TO APPLICATIONSForm of The Mayor’s Recommendation:

• The development is not qualified, no public infrastructure improvements participation is recommended

• The development is not qualified; however, due to stated reasons it is considered a “Merit Development” and is eligible for some public infrastructure improvements assistance

• The development is qualified but due to other stated reasons the City should decline to participate

• The development is qualified and identifies the specific types of public infrastructure improvements and their cost in regard to which the City could participate

• The development is qualified; however, further discussions with the developer are required to refine the parameters of the City’s participation

• Undecided or more information required. This response indicates that the City has neither rejected the proposal or accepted it but requires additional time, information, and/or analysis before deciding

City Council Consideration of the Recommendation of the Mayor

The Council may by resolution duly enacted, elect to authorize the Mayor to proceed with negotiating a development agreement

If the Council has taken no action in regard to the Mayor’s recommendation concerning the development within thirty (30) days of the receipt of the Mayor recommendation, the application will be deemed denied

Upon completion or termination of negotiations, the Mayor shall make a report to the City Council containing his recommendations

Council members will not engage in any negotiations or discussions concerning the terms and conditions of City assistance to the Development at any time with any one other than the Mayor and City staff

Requirements to Bind the City

The City will not be bound by any proposal, response, resolution, recommendation, negotiation, communication or other action or inaction, unless and until the following conditions are met:

The Finance Director certifies that sufficient funds exist or are anticipated or budgeted for the City to perform its obligations under the proposed agreement

The City Attorney prepares or approves a written agreement between the pertinent parties

The City Council duly adopts a resolution or ordinance approving the written agreement and the agreement is duly execute by the Mayor and all pertinent parties