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CITY COUNCIL MEETING STAFF REPORT
REPOR
T TO: The Honorable Mayor Patrick Moeller & Members of the City Council
REPORT FROM : Mark A. Zimov, Budget Analyst & Ana Ramanathan, Chief Finance Manager
AGENDA ITEM: The appropriation of Tax Increment Financing (TIF) and Residential Incentive District (RID) project funds in order to meet obligations and to reapply these resources to economic development‐driven infrastructure needs in the City of Hamilton.
POLICY ISSUE Does Council wish to appropriate TIF and RID funds in order to meet obligations to schools, repay the Commercial Revolving Loan Fund (CRLF), and to reimburse the General Fund and certain capital funds for past improvements, reinvesting non‐obligated resources in capital improvements that are designed to promote economic development in the City of Hamilton?
APPROVALS/REVIEWS All staff who review this report shall initial and check the appropriate box
nceDirector of Fina Department Head
wDirector of La Other: City Manager Other:
ORDINANCE OR RESOLUTION To be completed by the Law Department, if necessary Ordinance
1st Reading – Date: 3/28/2012
Public Hearing Date:
nd eading – Date: /2012
2 R3/28
PRIOR ACTION/REVIEW If this item was discussed on a prior Council agenda or other agenda, please note
City Council: Other:
CONTRACT Contract Required Additional Document(s) Attached
FISCAL IMPACT Budgeted $: 5,799,420 Please see further, more detailed information regarding the fiscal impact in the summary section of this report Expenditure $:
Source Funds: TIF & RID Service Payments, Lowes & Wal‐Mart Project Income Tax
M eeting Date 12: March 28, 20
Agenda Item: #G.17 & I.10
POLICY ALTERNATIVE(S)
m s a1. Council ay choose to approve the recommendations as ubmitted, ppropriating the maximum amount of available resources for currently‐planned capital improvements in the City.
2. Council may choose to omit unrestricted portions of recovered revenues from the capital improvement appropriations, thereby directing these funds to the General Fund.
STAFF RECOMMENDATIONS It is recommended that Council appropriate the identified resources in the manner specified below. This approach will make best use of the recovered funds in order to meet current obligations and address important infrastructure initiatives that promote the City’s Strategic Plan. Projects that will immediately receive funding in 2012 from TIF and RID projects are South Hamilton Crossing, Main Street Intersections, and the East High Street Corridor improvements. Funds that are reimbursed to capital unds and the General Fund, as well as direct transfers from TIF funds and the Lowes/Wal‐Mart income ax verification fund are earmarked for use on these projects. ft
TIF/RID FUND12/31/2011
UNENC'D CASH BALANCE
2012 EST PROJECT
INCOME TAX
FUND 213 CURRENT BALANCE
(50%)
2012 EST TIF/RID
SERVICE PMTS
2012 TOTAL AVAILABLE
RESOURCES2012 SCHOOL
PAYMENTS
X-FER TO FUND 311
FOR S HAM X-ING PROJECT
X-FER TO FUND 311
FOR MAIN ST I-SECTN, S
HAM X-ING
REIMB GEN FUND &
APPROP X-FER TO FUND 311
FOR EAST HIGH ST PROJECT
X-FER FROM INCOME TAX FUND 213 TO
FUND 311 FOR MAIN ST I-
SECTN, S HAM X-ING
REIMB CRLF LOANS
REIMB STREET FUND
281 & APPROP FOR
MAIN ST I-SECTN, S
HAM X-ING
REIMB INFRSTRCTR
RENEWAL FUND 311 &
APPROP FOR MAIN ST I-SECTN, S
HAM X-ING
REIMB WATER
CAPITAL FUND 535
Matandy Steel MPITIE Fund 308 $230,366.89 $40,997.28 $271,364.18 $9,622.36 $261,741.81
Robinson/Schwenn MPITIE Fund 309 1,609.02 1,233.94 2,842.96 2,842.96
Quality Publishing MPITIE Fund 351 10,523.85 8,496.58 19,020.43 2,064.21 16,956.22
Shoppes @ Hamilton MPITIE Fund 352 159,957.12 113,391.63 273,348.75 273,348.75
RID - MPITIE Citywide District Fund 348 243,867.51 115,149.48 359,016.99 359,016.99
RID - MPITIE North District Fund 349 9,208.39 7,799.20 17,007.59 17,007.59
RID - MPITIE South District Fund 350 23,029.19 11,839.22 34,868.41 34,868.41
Lowes MPITIE (TCSD) Fund 303 / 213 1,003,714.11 31,057.00 27,110.52 144,364.30 1,206,245.92 140,476.96 224,100.06 292,267.11 221,532.55 194,657.64 133,211.61
Walmart MPITIE (HCSD) Fund 304 / 213 1,558,960.89 54,956.00 47,972.61 298,110.30 1,959,999.81 1,065,744.64 191,980.29 102,928.61 241,940.67 211,922.20 145,483.39
TOTALS $3,241,236.97 $86,013.00 $75,083.13 $741,381.93 $4,143,715.03 $1,217,908.17 $410,892.98 $416,080.35 $535,090.56 $395,195.72 $2,842.96 $480,429.44 $406,579.84 $278,695.00
SUMMARY OF APPROPRIATION OUTCOMES
CAPITAL RESOURCES APPROPRIATED TO FUND 281 FOR MAIN ST INTERSECTION & S. HAM. X-ING PROJECTS 480,429.44
CAPITAL RESOURCES APPROPRIATED TO FUND 311 FOR MAIN ST INTERSECTION & S. HAM. X-ING PROJECTS $822,660.19
UNRESTRICTED RESOURCES APPROPRIATED TO FUND 311 FOR MAIN ST INTERSECTION & S. HAM. X-ING PROJECTS 395,195.72
UNRESTRICTED RESOURCES APPROPRIATED TO FUND 311 FOR EAST HIGH STREET CORRIDOR & S. HAM. X-ING PROJECTS 535,090.56
RESOURCES APPROPRIATED TO FUND 311 FOR S. HAM. X-ING PROJECT 410,892.98
RESOURCES APPROPRIATED TO WATER UTILITY CAPITAL PROJECTS FUND 535 278,695.00
$2,922,963.90
RESOURCES APPROPRIATED TO REPAY REVOLVING LOAN DEBT 2,842.96
RESOURCESS APPROPRIATED FOR PAYMENTS TO SCHOOLS 1,217,908.17
$4,143,715.03TOTAL - APPROPRIATED RESOURCES FROM TIF FUNDS
SUBTOTAL- APPROPRIATED RESOURCES FOR CAPITAL PROJECTS
APPROPRIATION
UNRESTRICTED AMOUNTS
RESOURCES
STATUTORY/POLICY AUTHORITY EOR2000‐1‐8, EOR2000‐10‐115, EOR2001‐10‐112, EOR2005‐7‐69, EOR2007‐5‐44, EOR2004‐6‐60, EOR2005‐12‐130, EOR2005‐12‐131, EOR95‐3‐16, EOR2005‐9‐97, EOR97‐1‐8, OR2011‐11‐108
Page 2 of 6
FISCAL IMPACT SUMMARY Gross funds in the amount of $5,799,420 are appropriated to the various accounts as specified below. Note that some amounts must move between multiple funds before residing in the fund for which they will be expended for a stated purpose. All values represent adjustments to current budgeted amounts. Net TIF/RID appropriated resources are $4,143,715.
FUND A
CCOUNT DECREASE INCREASE
GENERAL100.001.001 Unappropriated Balance 40,854100.980.900.311 Transfer To Infrastr. Rnwl Fund 40,854 TOTAL GENERAL FUND $40,854 $40,854
SPECIAL REVENUE213.001.001 Unappropriated Balance 372,266 213.100.850.170 MIT Agr/Ver- Talw Schl Dist 32,000213.100.850.175 MIT Agr/Ver- Haml Schl Dist 160,000213.980.900.100 Transfer To Gen Fund 282,133213.980.900.311 Transfer To Infrastr. Rnwl Fund 282,133281.001.001 Unappropriated Balance 480,432 281.100.700.401 Infrastructure Streets 480,432
TOTAL SPECIAL REVENUE FUNDS $1,044,698 $1,044,698
CAPITAL PROJECTS303.001.001 Unappropriated Balance 1,148,080 303.100.850.179 TIF RE Taxes - Talw. Schl Dist 374,577303.980.900.281 Transfer To Street Fund 221,533303.980.900.311 Transfer To Infrastr. Rnwl Fund 418,758303.980.900.535 Transfer To Water Cap Impr Fund 133,212304.001.001 Unappropriated Balance 1,885,338 304.100.850.180 TIF RE Taxes - Ham Schl Dist 1,065,745304.980.900.281 Transfer To Street Fund 241,941304.980.900.303 Trnsfr To Lowes MITIE Talw.Fund 28,266304.980.900.311 Transfer To Infrastr. Rnwl Fund 403,902304.980.900.535 Transfer To Water Cap Impr Fund 145,484308.001.001 Unappropriated Balance 18,264308.100.850.180 TIF RE Taxes - Ham Schl Dist 10,375308.980.900.311 Transfer To Infrastr. Rnwl Fund 7,889 309.001.001 Unappropriated Balance 1,457309.100.850.108 CRLF Loan Payment 1,457 311.001.001 Unappropriated Balance 1,515,687 311.100.107.002 CWIP - Contracted Construction 1,515,687348.001.001 Unappropriated Balance 359,017 348.980.900.311 Transfer To Infrastr. Rnwl Fund 359,017349.001.001 Unappropriated Balance 17,008 349.980.900.311 Transfer To Infrastr. Rnwl Fund 17,008350.001.001 Unappropriated Balance 34,869 350.980.900.311 Transfer To Infrastr. Rnwl Fund 34,869351.001.001 Unappropriated Balance 1,235351.100.850.180 TIF RE Taxes - Ham Schl Dist 1,235 352.001.001 Unappropriated Balance 33,175352.980.900.311 Transfer To Infrastr. Rnwl Fund 33,175
TOTAL CAPITAL PROJECTS $5,014,130 $5,014,130
Page 3 of 6
BACKGROUND INFORMATION The City has recently segregated TIF and RID project balances in Fund 303 (OR2011‐11‐108). This was the first step in allowing these funds to be used for their intended purposes. Additional service payments will be received in 2012 for all active TIF/RID projects, as well as income tax revenue that is no longer shared with school districts, providing an estimated $4,143,715 in total resources. A portion of these resources is owed to school districts and to the City’s Commercial Revolving Loan Fund. The remaining resources are needed for certain capital projects across the City, including South Hamilton rossing, East High Street Corridor, and intersection improvements along West Main Street. These
n. Cprojects are designed to meet economic development goals that are vital to the City’s Strategic Pla The proposed appropriation nets the following budgets* for capital projects totaling $2,922,964:
• • $416,080 earmarked for Main Street Intersection Improvements,
idor and/or South Hamilton Crossing, • ntersections and/or South Hamilton Crossing,
$535,091 that can be used for East High Street Corr Street I
• ossing, $1,282,205 that can be used for either Main$410,893 earmarked for South Hamilton Cr
• $278,695 for Water Utility Capital Projects. This breakdown is slightly different than that depicted in the Caucus Report, providing more flexibility for project priorities *in light of other potential funding sources. In addi $1,220,751: tion, under the appropriation, the following obligations will be paid totaling
2,843 for the Community Revolving Loan Fund $• • $1,217,908 for outstanding and current year obligations to school districts
The lion’s share of these resources is from reimbursements to capital funds for miscoded improvement projects that should have been partially‐funded from the Lowe’s and Wal‐Mart TIF projects. These funds were intended for such improvements on the west side of the City, but were unavailable due to the fact that they were comingled with other TIF/RID funds – the precise available balances were unknown. Here is a breakdown of the $1,148,748 in reimbursements that are now available for new capital projects within the City:
Lowes Assess %
Wal-Mart Assess % COMPL YEAR / DESCRIPTION
PROJECT TOTAL
INRASTRUCTURE RENEWAL FUND
311
STREET MAINTENANCE
FUND 281
WATER UTILITY CAPITAL
IMPROVEMENT FUND 535
48.08% 51.92% 2004 Washington Blvd - Widening 70,274.69 70,274.69
48.08% 51.92% 2005 Washington Blvd - Water Main 320,336.30 41,641.30 278,695.00
47.80% 52.20% 2007 N Washington Blvd - Extension Ph 1 758,137.07 294,663.85 463,473.22
Total Back-Charges 1,148,748.06$ 406,579.84$ 463,473.22$ 278,695.00$
Reimburseable Projects
Page 4 of 6
Page 5 of 6
Unrestricted Resources A portion of the funds from the Matandy Steel and Shoppes @ Hamilton TIFs is owed to the General Fund for improvements performed on those sites at the onset of development ($535,091). Likewise, Lowe’s and Wal‐Mart project income tax proceeds that are no longer payable to the school districts under revenue sharing would also be due to the General Fund ($395,196). Monies owed, or due to the General Fund are unrestricted revenues until City Council designates them otherwise. These funds, if not appropriated for capital improvements, would be available to offset a portion of the City’s forecasted 2013 structural imbalance in the General Fund. Since these funds were generated by economic development‐driven capital investment, it is recommended that they be reinvested in that vein. As you know, there is a dearth of such resources in Hamilton while the need for improvements to spur economic growth is great. The recommendation to reinvest the unrestricted portion of the TIF/RID resources is based on the fact that the General Fund’s structural imbalance is only a symptom of the City’s overall economic situation, and the promotion of new economic growth addresses the problem at its root cause. While these resources could be used to offset potential cuts to future budgets, it is true that you can only pend your savings once; seeking a return on these dollars is strategic and vital to solving Hamilton’s sunderlying economic deficiency. The unrestricted revenues recovered from TIF sources represent $930,287 (31.8%) of the total TIF/RID resources available for capital purposes in 2012.
Lowe’s & WalMart TIF Projects Under revenue sharing agreements with Talawanda and Hamilton City Schools, once infrastructure improvements benefiting the properties have been certified “complete,” the schools no longer receive a portion of the City’s income tax revenue from the two commercial enterprises. In addition, eighty percent (80%) of the remaining incidental fund balances are to be paid to the schools upon infrastructure completion. With the retirement of the original debt for the NW Washington Blvd. and Carlisle Avenue extensions, infrastructure completion should be certified as of December 31, 2008. Since the funds were comingled at the time, certain qualifying improvement projects had occurred but were not charged to the TIF accounts, the costs borne entirely by other capital funds. Under the recommendations, these project costs are to be reimbursed to the capital funds from the 12/31/2008 TIF fund balances, leaving small incidental balances to be shared with the school districts. These reimbursed amounts then become
iavailable for new cap tal projects throughout the City.
After completion of the period of specified infrastructure improvements, the schools are due their portion of service payments to make them “whole” for lost school property tax revenue for years after revenue sharing. With infrastructure complete at the end of 2008, three years’ service payments (2009‐2011) are owed to the school districts. In the case of Hamilton City Schools, the revenue sharing agreement specifies that the school district will receive 100% of the service payments in the two years immediately after infrastructure completion (2009, 2010). As mentioned above, neither school district is due income tax revenue after 2008, although Talawanda City Schools was incorrectly paid $234,099.59 for years 2009 and 2010. Under the recommendations, these funds will be recovered from the school’s share of TIF funds for the Income Tax Aggregation/Verification Fund, eliminating the need to invoice
Page 6 of 6
TCSD for the overpayments. econciliation of the 12/31/2011 Lowe’s and Wal‐Mart TIF fund balances, with infrastructure ending 2/31/R1
2008 will produce:
• $1,148,748 in new capital project funds$234,100 in recovered income tax paym
from reimbursements, • ents (overpayments to Talawanda City Schools), • $272,729 in useable TIF project funds.
Amounts provided by this reconciliation represent $1,655,577 of the appropriated resources for capital improvements. In addition to amounts recovered through the reconciliation process, the City’s share of the projects’ estimated 2012 service payments and a portion of the projects’ 2012 income taxes, totaling $304,447, are included in the resources available for capital purposes. This brings the total contribution of the Lowe’s and Wal‐Mart projects to $1,960,024, or 67.1% of the appropriated resources for capital improvements. Future service payments from these important TIF projects will fluctuate with property values, yet will provide a steady stream of revenue to help finance eligible capital improvements on the est side of Hamilton. Please see the attached spreadsheet showing the complete reconciliation of the owe’s and Wal‐Mart 12/31/3011 balances. wL ATTACHED INFORMATION
Revenue Sharing Agreements with Talawanda and Hamilton City Schools • d of Infrastructure and disclosing •
Letter to school treasurers dated 2/24/2012 certifying the En
• amounts owed to the schools through 12/31/2011. 12/31/2011 Lowes & Wal‐Mart TIF Reconciliation Spreadsheet
• Spreadsheet showing related amendments to 2012 budgeted resources. COPIES PROVIDED TO N/A
12/31/2011 Lowe's & Walmart TIF Fund Reconciliation - 2008 Infrastructure Completion
Lowes TIF
(TCSD)
Wal-Mart TIF
(HCSD) Totals
12/31/2008 Preliminary Balance 549,401.95$ 611,574.58$ 1,160,976.53$
Less 2004 Wash. Blvd. Widening (Fund 311) (33,790.56) (36,484.13) (70,274.69)
Less 2005 Wash. Blvd. Water Main (Fund 311) (20,022.61) (21,618.69) (41,641.30)
Less 2007 N Wash. Blvd (Millville Conn) Ext. Phase I
(FUND 281) (221,532.55) (241,940.67) (463,473.22)
Less 2007 N Wash. Blvd (Millville Conn) Ext. Phase I
(FUNDS 311) (140,844.46) (153,819.39) (294,663.85)
Less 2007 N Wash. Blvd (Millville Conn) Ext. Phase I
(FUND 535) (133,211.61) (145,483.39) (278,695.00)
12/31/2008 Incidental Balance 0.15$ 12,228.32$ 12,228.47$
12/11/31 Reconciliation
12/31/2011 Preliminary TIF Fund Balance 975,448.35$ 1,587,226.65$ 2,562,675.00$
Adjustments for Post-Revenue Sharing Parcel Split, TY04
ST_609 (JE) 28,265.76$ (28,265.76)$
Less Back-Charged Projects (549,401.80) (599,346.26) (1,148,748.06)
Subtotal 454,312.31$ 959,614.63$ 1,413,926.94$
Less 80% of 2008 Incidental Balance Due Schools (0.12) (9,782.66) (9,782.78)
2009 Service Payment Due Schools (89,327.44) (305,821.61) 100% (395,149.05)
2010 Service Payment Due Schools (98,907.94) (315,533.67) 100% (414,441.61)
2011 Service Payment Due Schools (96,680.05) (225,144.71) (321,824.75)
Adj for 2009 Income Tax Pmts to TCSD (Xfer to Fund 213,
General Fund) 203,901.55 203,901.55
Adj for 2010 Income Tax Pmts to TCSD (Xfer to Fund 213,
General Fund) 30,198.04 30,198.04
Subtotal (Amount Due School District) (50,815.96)$ (856,282.64)$ (907,098.60)$
12/31/2011 Adjusted TIF Fund Balance (before transfer of income tax proceeds)
403,496.35$ 103,331.99$ 506,828.34$
TIF Fund Balance (after transfer of income
tax proceeds) 169,396.76$ 103,331.99$ 272,728.75$
ORDINANCE NO. ___________________ AN ORDINANCE APPROVING THE APPROPRIATION OF TAX INCREMENT FINANCING (TIF) AND RESIDENTIAL INCENTIVE DISTRICT (RID) PROJECT FUNDS.
WHEREAS, pursuant to Ordinance No. OR2011-11-108, adopted November 21, 2011, the Council
of the City of Hamilton, Ohio approved the segregation of Tax Increment Financing (TIF) and Residential Incentive District (RID) project balances in Fund No. 303 as the first step in allowing these funds to be used for their intended purposes; and
WHEREAS, Council desires to appropriate gross funds in the amount of $5,799,420 of Tax
Increment Financing (TIF) and Residential Incentive District (RID) project funds in order to meet obligations to schools, repay the Commercial Revolving Loan Fund (CRLF), and to reimburse the General Fund and certain capital funds for past improvements, reinvesting non-obligated resources in capital improvements that are designed to promote economic development in the City of Hamilton; and
WHEREAS, projects that will immediately receive funding in 2012 from TIF and RID projects are
South Hamilton Crossing, Main Street Intersections, and the East High Street Corridor improvements and these funds will be reimbursed to capital funds and the General Fund, as well as direct transfers from TIF funds and the Lowes/Wal-Mart income tax verification fund are earmarked for use on said projects;
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of Hamilton, Ohio: SECTION I: That the sum of Five Million Seven Hundred Ninety Nine Thousand Four
Hundred Twenty Dollars ($5,799,420.00) is hereby appropriated, as set forth in detail in Exhibit No. 1, attached hereto and made a part hereof.
SECTION II: This ordinance shall take effect and be in full force from and after the earliest
period allowed by law. PASSED: ______________________ _____________________ Mayor Effective Date: __________________ ATTEST: ______________________ City Clerk
CERTIFICATE I, Adam Helms, City Clerk of the City of Hamilton, Butler County, Ohio, hereby certify that the foregoing Ordinance No. ___________________________ was duly published as provided by Section 113.01 of the Codified Ordinances of the City of Hamilton, Ohio, by posting ten days after passage, a copy thereof in each fire station within the City for a period of ten days. POSTED: ____________________________ _________________________ Adam Helms, City Clerk CITY OF HAMILTON, OHIO
Ordinance No. ______________________ (cont’d)
EXHIBIT NO. 1
FUND ACCOUNT DECREASE INCREASE
GENERAL100.001.001 Unappropriated Balance 40,854100.980.900.311 Transfer To Infrastr. Rnwl Fund 40,854 TOTAL GENERAL FUND $40,854 $40,854
SPECIAL REVENUE213.001.001 Unappropriated Balance 372,266 213.100.850.170 MIT Agr/Ver- Talw Schl Dist 32,000213.100.850.175 MIT Agr/Ver- Haml Schl Dist 160,000213.980.900.100 Transfer To Gen Fund 282,133213.980.900.311 Transfer To Infrastr. Rnwl Fund 282,133281.001.001 Unappropriated Balance 480,432 281.100.700.401 Infrastructure Streets 480,432
TOTAL SPECIAL REVENUE FUNDS $1,044,698 $1,044,698
CAPITAL PROJECTS303.001.001 Unappropriated Balance 1,148,080 303.100.850.179 TIF RE Taxes - Talw. Schl Dist 374,577303.980.900.281 Transfer To Street Fund 221,533303.980.900.311 Transfer To Infrastr. Rnwl Fund 418,758303.980.900.535 Transfer To Water Cap Impr Fund 133,212304.001.001 Unappropriated Balance 1,885,338 304.100.850.180 TIF RE Taxes - Ham Schl Dist 1,065,745304.980.900.281 Transfer To Street Fund 241,941304.980.900.303 Trnsfr To Lowes MITIE Talw.Fund 28,266304.980.900.311 Transfer To Infrastr. Rnwl Fund 403,902304.980.900.535 Transfer To Water Cap Impr Fund 145,484308.001.001 Unappropriated Balance 18,264308.100.850.180 TIF RE Taxes - Ham Schl Dist 10,375308.980.900.311 Transfer To Infrastr. Rnwl Fund 7,889 309.001.001 Unappropriated Balance 1,457309.100.850.108 CRLF Loan Payment 1,457 311.001.001 Unappropriated Balance 1,515,687 311.100.107.002 CWIP - Contracted Construction 1,515,687348.001.001 Unappropriated Balance 359,017 348.980.900.311 Transfer To Infrastr. Rnwl Fund 359,017349.001.001 Unappropriated Balance 17,008 349.980.900.311 Transfer To Infrastr. Rnwl Fund 17,008350.001.001 Unappropriated Balance 34,869 350.980.900.311 Transfer To Infrastr. Rnwl Fund 34,869351.001.001 Unappropriated Balance 1,235351.100.850.180 TIF RE Taxes - Ham Schl Dist 1,235 352.001.001 Unappropriated Balance 33,175352.980.900.311 Transfer To Infrastr. Rnwl Fund 33,175
TOTAL CAPITAL PROJECTS $5,014,130 $5,014,130