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HomeMy WebLinkAbout1996-02-21 TIF Commission MinutesTAX INCREMENT FINANCING COMMISSION MINUTES FEBRUARY 21, 1996 The Tax Increment Financing Commission for the City of Riverside met on Wednesday, February 21, 1996, at 4712 NW Gateway. Vice Chairman Jimmy Karr called the meeting to order at 7:15 p.m. with the following members present: Mayor Betty Burch, David Brenner, Jim Davis, Jimmy Karr, Al Tunis, and Tim Weeks. Absent: Diza Eskridge, Ron Super, and Ed Young. Also present were Steve Warger, Greg Bricker, Steven Crystal, and Ann Daniels. A Motion was made by Al Tunis, seconded by Betty Burch, to approve the Minutes as presented. The motion carried unanimously. Mayor Burch introduced Greg Bricker, First Vice President, George K. Baum, an investment firm. Mr. Bricker presented a document listing three possible financing tools which could be used for the proposed TIF project: 1) Levee District Improvement Bonds, 2) Neighborhood Improvement District Bonds, and 3) City of Riverside General Obligation Bonds. He gave a brief definition of each program including the responsible parties for each and the likelihood of selling the bonds with each. (A copy of this document is attached to these Minutes.) Mr. Bricker had computed the funds currently anticipated to be available from the Cash donations from Trillium and the City of Riverside, and the Army Corps of Engineers, and any possible increase in grant funds from the federal or state governments. This left an approximate shortfall of $14 million necessary to construct the levee. Not included in these figures was the levee district special assessment of $400,000 annually or $500,000 annually of sales and utility taxes generated in the area. During the group's discussion of each program the following conclusions were reached: 1. Selling Levee District Improvement Bonds would be very difficult for $14 million. A reduced amount of $5 million might be easier to sell. 2. Neighborhood Improvement District Bonds could be issued only for the area which has the exact same geographical boundaries of the levee district. The dollar limit for issuance of these bonds is l00 of the City's total tax base or approximately $6 million. 3. General Obligation Bonds would probably not be accepted by the City since any default in payment by the Developer would require the City to assess a property tax against each parcel of property in the City of Riverside. Since the City does not currently have a property tax, it is not likely that the residents would support a vote for issuance of GO bonds. With regards to issuing TIF bonds for the remainder of the financing needed to build the levee, Mr. Bricker stated it would be very difficult for TIF bonds to be sold since the projected income in the project area would not include the already constructed Argosy improvements which had originally be proposed for capture to provide an immediate source of funds to begin paying on the bonds. Steven Crystal, attorney, Armstrong, Teasdale, et al, who represents several non-metropolitan cities on various kinds of TIF projects, stated the bottom line for this project may be whether there is enough revenue to be generated to pay off the bonds without having an anchor tenant in the area. He further stated it just might not be a good project and that was a reality that would have to be faced. In discussing how to proceed further, Mr. Crystal stated he believed the best course of action would be to have the Mayor, financial adviser, and legal counsel meet with the Developer and tell them what the financial adviser believes the project would support, how much funding we have available, and to ask what additional commitments were they willing to provide to meet the shortfall. David Brenner asked what the TIF Commission's role was in determining the financing for this project. Mr. Bricker stated the responsibility rests fully with the City and Levee District and the TIF Commission has no responsibility in these matters. Mayor Burch reviewed how she had arrived at a City contribution of $2.3 million by determining the number of businesses in the project area which had been flooded during the 1993 flood, and dividing that by the 23 years projected payments on TIF bonds. She felt this was a fair and reasonable amount for the City to offer as support for those local businesses who continue to support the City by their presence. The Commission members expressed support for this formula. Furthermore, they expressed the opinions that this was an amount which could be justified to the citizens of Riverside but that any more financial commitment from the City would probably not be well received or supported. It was noted that no Plan has been received from Trillium and that the meetings currently being conducted by the TIF Commission are informational in nature and in preparation for speeding up the educational process by determining what the proposed dollars might be able to support if the plan is presented as anticipated. From questions asked and answered it was determined that the likelihood of TIF bonds working in this project area is slight but that the role TIF might play would not really be to develop any additional revenues but to support and enhance the investment made for certain portions of the project, i.e. infrastructure, etc. Mr. Bricker was thanked for his input and excused from the meeting. He will be available to assist in preparations of a Resolution to the Board of Aldermen stating what the Commission members feel is reasonable for this project and what alternative sources might be considered when the Board determines what level of financial commitment they are willing to support if the project is to go forward. The Commission members then interviewed Steven Crystal for consideration as the Commission/City's legal counsel for this project. Mr. Crystal stated he had represented Trenton, Cameron, Excelsior Springs, Higginsville, and Kearney in several TIF projects and it was his philosophy that the City doesn't take the risk. Any risk involved in the project belongs with the developer. Crystal reviewed the legislation pending at the state level with regard to tightening the TIF legislation or reducing the authority involved with TIF. He further stated he believed a Resolution stating the Commission supports the general concepts involved in the project and seeks the encouragement and support of the Board of Aldermen to continue on with negotiations. It was his opinion that no one could fault the City for wanting all the parties to sit down together and discuss their positions frankly as a deciding factor in whether the project should continue any further. Mr. Crystal was excused from the meeting. Commission members stated confidence in both Mr. Bricker and Mr. Crystal for their knowledge and background in these issues and recommends that the Resolution to be drafted to the Board of Aldermen recommends that Steven Crystal be hired to provide legal counsel to the Commission and the City during the consideration of this project on through to its completion. Motion to adjourn was made by Tim Weeks, seconded by David Brenner, and the meeting was adjourned at 9:50 p.m. C~ ~~~~" Ann Daniels, Secretary TIF Commission George K. Baum & Company INVESTMENT BANKERS MEMBER TWEWE WYANOOTTE PU2A NEW YORK STOCK EXCHANGE, INC. 120 WEST tiTH STREET CHICAGO STOCK EXCHANGE, INC. KANSAS CITY. MISSOURI 6N 05 FEBRUARY 21, 1996 TELEPHONE (E1E~Ob1100 HON. BETTY BURCH MAYOR CITY OF RIVERSIDE 4500 N.W. HIGH DRIVE P.O. 9135 RIVERSIDE, MO 64168 DEAR BETTY YOU HAVE ASKED ME TO PROVIDE YOU WITH FINANCING OPTIONS THAT COULD BE UTILIZED TO FUND THE LOCAL SHARE OF THE RIVERSIDE-QUINDERO LEVY PROJECT. IT IS MY UNDERSTANDING THAT THE TOTAL PROJECT COST IS APPROXIMATELY $55,000,000. THE UNITED STATES ARMY CORPS OF ENGINEERS IS EXPECTED TO FUND APPROXIMATELY $28,500,000 (52% OF INFLATED PRICE) AND THE BALANCE (APPROXIMATELY $26,500,000) IS THE OBLIGATION OF THE LOCAL ENTITY ("LOCAL SHARE"). YOU HAD INDICATED THAT THE LOCAL SHARE MAY BE FUNDED IN PART WITH A COMBINATION OF CASH EQUITY CONTRIBUTIONS FROM THE CITY OF RIVERSIDE, A MAJOR LANDOWNER IN THE LEVY DISTRICT, THE STATE OF MISSOURI AND THE U.S. ARMY CORPS OF ENGINEERS, TOTALLING AS MUCH AS $12,500,000. THIS WOULD LEAVE THE UNFUNDED BALANCE OF THE LOCAL SHARE AT $14,000,000. THERE ARE THREE FINANCING TOOLS THAT CAN BE USED TO FUND THE $14,000,000 LOCAL SHARE. THESE THREE CAN BE USED INDEPENDENT OF EACH OTHER OR IN COMBINATION. THE FIRST OPTION WOULD INVOLVE THE ISSUANCE OF LEVY DISTRICT ASSESSMENT BONDS. THERE CURRENTLY EXISTS A LEVY DISTRICT THAT INCLUDES APPROXIMATELY 1340 ACRES OF LAND. BONDS CAN BE ISSUED UNDER A PLAN OF RECLAMATION APPROVED BY THE CIRCUIT COURT THAT WOULD BE USED TO FUND PART OR ALL OF THE LOCAL SHARE. REPAYMENT OF THESE BONDS WOULD BE MADE FROM ASSESSMENTS COLLECTED EACH YEAR BY THE PROPERTY OWNERS. THE AMOUNT OF THE ASSESSMENT ON EACH PARCEL OF PROPERTY WOULD BE DETERMINED BY THE PROPORTIONATE SHARE OF BENEFIT THAT PARCEL RECEIVED AS A PERCENTAGE OF THE ENTIRE BENEFIT GENERATED IN THE ENTIRE LEVY DISTRICT. THIS PERCENTAGE IS THEN APPLIED TO THE TOTAL OBLIGATION DUE THAT YEAR. THE ASSESSMENT DUE ON A PARCEL OF PROPERTY BECOMES AN ENFORCABLE TAX LEIN ON THE PROPERTY IF UNPAID. THE THEORY IN THIS TYPE OF FINANCING IS THOSE PROPERTIES WHO RECEIVE THE GREATEST ECONOMIC BENEFIT FROM THE CONSTRUCTION OF A LEVY WILL BE RESPONSIBLE FOR THE LARGEST PORTION OF THE COSTS TO BUILD THE LEVY. IF THE LEVY DISTRICT ISSUED $14,000,000 OF LEVY DISTRICT ASSESSMENT BONDS, YOU COULD EXPECT AN ANNUAL PAYMENT OF APPROXIMATELY $1,220,000 PER YEAR ON A 20 YEAR PAYOUT. IF IT WAS ASSUMED THAT ALL PROPERTY IN THE DISTRICT RECEIVED EQUAL BENEFIT, YOU COULD MAKE A ROUGH ESTIMATE OF THE PER ACRE ASSESSMENT NECCESSARY TO COLLECT 1,220,000 ANNUALLY. YOU WOULD DIVIDE $1,220,000 BY 1340 (THE NUMBER OF ACRES IN THE DISTRICT) AND THE RESULTING FIGURE IS $910.45 PER ACRE PER YEAR FOR 20 YEARS. I WOULD EXPECT THAT THE ASSIGNMENT OF BENEFIT WOULD NOT BE EXACTLY EQUAL DISTRICTWIDE AND THAT SOME PARCELS WOULD BE ASSESSED AT A HIGHER RATE AND SOME AT A LOWER RATE. THE SECOND OPTION THAT CAN BE UTILIZED IS THE NEIGHBORHOOD IMPROVEMENT DISTRICT ("NID"). A NID COULD BE CREATED WITH IDENTICAL BOUNDARIES AS THE LEVY DISTRICT. THE CREATION OF THE NID REQUIRES THE APPROVAL OF THE PROPERTY OWNERS IN THE DISTRICT. THE NID CAN ISSUE BONDS THAT ARE USED TO CONSTRUCT THE LEVY. THE BONDS THE NID WOULD ISSUE ARE ISSUED THROUGH THE CITY OF RIVERSIDE AND ARE RECOGNIZED BY THE MARKETPLACE AS A GENERAL OBLIGATION OF THE CITY. PAYMENT ON THESE BONDS WOULD BE MADE BY ASSESSMENTS ON THE PROPERTY. THE DETERMINATION OF ASSESSMENTS ON THE PROPERTY DOES NOT, HOWEVER, REQUIRE A DIRECT CORRELATION TO BENEFIT RECEIVED. ANY FORMULA THAT IS DEEMED FAIR AND EQUITABLE CAN BE USED TO BASE THE ASSESSMENTS. THE MAJOR ADVANTAGE TO A NID IS THE MARKETABILITY OF THE BONDS. UNLIKE A LEVY DISTRICT ASSESSMENT BOND, A NID HAS AN IMPLICIT FULL FAITH AND CREDIT OF THE CITY BACKING THE BONDS. THIS WILL CAUSE THE INTEREST RATES TO BE LOWER. THERE IS A LIMIT TO THE AMOUNT OF NID BONDS THAT CAN BE ISSUED BY A CITY. THE MAXIMUM AMOUNT IS 10% OF THE CITY'S TAX BASE. THE CITY OF RIVERSIDE CURRENTLY HAS A TAX BASE OF APPROXIMATLEY $60,000,000. THIS MEANS THE MAXIMUM AMOUNT OF NID BONDS THAT COULD BE ISSUED IS $6,000,000. IN ADDITION, THE NID LEGISLATION THAT CREATED THIS OPTION IS CURRENTLY UNDER REVIEW BY THE MISSOURI STATE SUPREME COURT. THE ABILITY TO ISSUE NID BONDS IS TEMPORARILY ON HOLD UNTIL A DECISION IS RENDERED. THE THIRD OPTION IS TO APPROVE VIA A CITY WIDE ELECTION THE ISSUANCE OF GENERAL OBLIGATION BONDS. THE ELECTION WOULD REQUIRE A 4/7THS OR 2/3RDS MAJORITY VOTE DEPENDING ON THE ELECTION DATE SELECTED. THE BONDS WOULD BE REPAID BY REVENUE OF THE CITY. IF THE CITY HAD SUFFICIENT FUNDS IN ITS GENERAL FUND TO MAKE ITS ANNUAL PAYMENT NO INCREASE IN TAXES WOULD BE REQUIRED. IF NECESSARY, A SPECIAL TAX LEVY COULD BE IMPLEMENTED ON A CITY WIDE BASIS TO RETIRE THE BONDS. THE CITY IS LIMITED TO 10% OF ITS TAX BASE IN THE AMOUNT OF GENERAL OBLIGATION BONDS THAT COULD BE ISSUED TO CONSTRUCT A LEVY. THIS WOULD BE $6,000,000. MY EXPECTATION IS THAT TO CONSTRUCT THE LEVY IT WILL BE NECESSARY TO COMBINE TWO OR MORE OF THE OPTIONS DESCRIBED ABOVE. I HAVE ATTACHED DEBT SERVICE SCHEDULES THAT CAN BE USED TO FORMULATE DIFFERENT COMBINATIONS OF THE OPTIONS DESCRIBED. IF A PARTICULAR COMBINATION IS IDENTIFIED I WOULD BE HAPPY TO PROVIDE MORE DETAILED SCHEDULES DOCUMENTING THE PAYMENTS. SINCERELY YOURS, GREGORY A. BRICKER FIRST VICE PRESIDENT GEORGE K. BAUM 8 COMPANY RIVERSIDE QUINDERO LEVEE IMPROVEMENT DISTRICT FINANCING OPTIONS LEVEE DISTRICT IMPROVEMENT BONDS 5 MILLION DOLLAR BOND ISSUE (20 YEAR TERM (c~ 6.5% ) AVERAGE ANNUAL PAYMENT TOTAL NUMBER OF ACRES AVERAGE ANNUAL PAYMENT PER ACRE $453,612.50 1,340 $338.52 NEIGHBORHOOD IMPROVEMENT DISTRICT BONDS 5 MILLION DOLLAR BOND ISSUE (20 YEAR TERM CcD 5.75% AVERAGE ANNUAL PAYMENT TOTAL NUMBER OF ACRES AVERAGE ANNUAL PAYMENT PER ACRE $426,525.00 1,340 $318.30 CITY OF RIVERSIDE GENERAL OBLIGATION BOND 4 MILLION DOLLAR BOND ISSUE (10 YEAR TERM @ 5.50% 1 AVERAGE ANNUAL PAYMENT TOTAL NUMBER OF ACRES AVERAGE ANNUAL PAYMENT PER ACRE $530,900.00 N.A. N.A. RIVERSIDE QUINDERO LEVEE IMPROVEMENT DISTRICT LEVEE DISTRICT IMPROVEMENT BONDS $1,000,000; 20 YEAR PAYOUT --------------------- Debt Service Schedule --------------------- --------------------- Date Principal Coupon - Interest --------- --- Period Total ------------- Fiscal Total --- 9/ ----- - 1/96 ---------- --- ---------- - 32,500 .00 32,500 - .00 ----------- --- 3/ 1/97 25,000 .00 6.500000 32,500 .00 57,500 .00 90,000 .00 9/ 1/97 31,681 .50 31,687 .50 3/ 1/98 25,000 .00 6.500000 31,687 .50 56,687 .50 88,375 .00 9/ 1/98 30,875 .00 30,875 .00 3/ 1/99 30,000 .GC 6.500000 30,875 .00 60,875 .00 91,750 .00 9/ 1/99 29,900 .00 29,900 .00 3/ 1/ 0 30,000 .00 6.500000 29,900 .00 59,900 .00 89,800 .00 9/ 1/ 0 28,925 .00 28,925 .00 3/ 1/ 1 35,000 .00 6.500000 28,925 .00 63,925 .00 92,850 .00 9/ 1/ 1 27,787 .50 27,787 .50 3/ 1/ 2 35,000. 00 6.500000 27,787 .50 62,787 .50 90,575 .00 9/ 1/ 2 26,650. 00 26,650 .00 3/ 1/ 3 40,000. 00 6.500000 26,650. 00 66,650 .00 93,300 .00 9/ 1/ 3 25,350. 00 25,350 .00 3/ 1/ 4 40,000. 00 6.500000 25,350. 00 65,350 .00 90,700. 00 9/ 1/ 4 24,050. 00 24,050 .00 3/ 1/ 5 45,000. 00 6.500000 24,050. 00 69,050 .00 93,100. 00 9/ 1/ 5 22,587. 50 22,587 .50 3/ 1/ 6 45,000. 00 6.500000 22,587. 50 67,587 .50 90,175. 00 9/ 1/ 6 21,125. 00 21,125 .00 3/ 1/ 7 50,000. 00 6.500000 21,125. 00 71,125 .00 92,250. 00 9/ 1/ 7 19,500. 00 19,500 .00 3/ 1/ 8 50,000. 00 6.500000 19,500. 00 69,500 .00 89,000. 00 9/ 1/ 8 17,875. 00 17,875 .00 3/ 1/ 9 55,000. 00 6.500000 17,875. 00 12,875 .00 90,750. 00 9/ 1/ 9 18,087. 50 16,087 .50 3/ 1/10 60,000. 00 6.500000 16,087. 50 76,087. 50 92,175. 00 9/ 1/10 14,137. 50 14,137 .50 3/ 1/11 60,000. 00 6.500000 14,137. 50 74,137. 50 88,275. 00 9/ 1/11 12,187. 50 12,187. 50 3/ 1/12 65,000. 00 6.500000 12,187. 50 77,187. 50 89,375. 00 9/ 1/12 10,075. 00 10,075. 00 3/ 1/13 70,000. 00 6.500000 10,075. 00 80,075. 00 90,150. 00 9/ 1/13 7,800. 00 7,800. 00 3/ 1/14 75,000. 00 6.500000 7,800. 00 82,800. 00 90,600. 00 9/ 1/14 5,362. 50 5,362. 50 3/ 1/15 80,000. 00 6.500000 5,362. 50 85,362. 50 90,725. 00 9/ 1/15 2,762. 50 2,762. 50 3/ 1/16 85,000. 00 6.500000 2,762. 50 87,762. 50 90,525. 00 - ----------- 1,000,000. -- 00 --- --------- 814,450. -- 00 ------------ 1,814,450. -- 00 ACC RUED - - 1,000,000. ----------- ----------- 00 -- -- --- --- 814,450. --------- --------- 00 -- -- 1,814,450. ------------ ------------ 00 -- -- Date d 3/ 1/96 with Del ivery of 3/ 1/96 Bond Years 12,530.000 Aver age Co upon 6.500000 Aver age Li fe 12.530000 N I C % 6.500000 % Using 1 00. 0000000 T I C % 6.500000 % From Del ivery Date PREPARED BY GEORGE K. BA!1M & COMPANY Micro-Muni Debt Date: 02-21-1996 @ 18:10:46 Filename: LEVY Key: LEVEE CITY OF RIVERSIDE, MISSOURI GENERAL OBLIGATION LEVY BONDS $1,000,000; 10 YEAR PAYOUT Debt Service Schedule Date Principal Coupon - --- Interest -------- --- Period Total ---------- Fiscal Total -------- ----- - 9/ 1/96 ----------- -- - -------- 27,500 .00 27,500 .00 3/ 1/97 80,000. 00 5.500000 27,500 .00 107,500 .00 135,000. 00 9/ 1/97 25,300 .00 25,300 .00 3/ 1/98 80,000. 00 5.500000 25,300 .00 105,300 .00 130,600. 00 g/ 1/gg 23,100 .00 23,100 .00 3/ 1/99 85,000. 00 5.500000 23,100 .00 108,100 .00 131,200. 00 g/ 1/gg 20,762 .50 20,762 .50 3/ 1/ 0 90,000. 00 5.500000 20,762 .50 110,762 .50 131,525. 00 9/ 1/ 0 18,287 .50 18,287 .50 3/ 1/ 1 95,000. 00 5.500000 18,287 .50 113,287 .50 131,575. 00 9/ 1/ 1 15,675 .00 15,675 .00 3/ 1/ 2 100,000. 00 5.500000 15,675 .00 115,675 .00 131,350. 00 9/ 1/ 2 12,925 .00 12,925 .00 3/ 1/ 3 110,000. 00 5.500000 12,925 .00 122,925 .00 135,850 .00 9/ 1/ 3 9,900 .00 9,900 .00 3/ 1/ 4 115,000. 00 5.500000 9,900 .00 124,900 .00 134,800 .00 9/ 1/ 4 6,737 .50 6,737 .50 3/ 1/ 5 120,000. 00 5.500000 6,737 .50 126,737 .50 133,475 .00 9/ 1/ 5 3,437 .50 3,437 .50 3/ 1/ 6 125,000. 00 5.500000 3,437 ------- .50 --- 128,437 ----------- .50 --- 131,875 .00 - ----------- 1,000,000. -- 00 --- - 327,250 .00 1,327,250 .00 ACCRUED 1,000,000. 00 327,250 .00 1,327,250 .00 Dated 3/ 1/96 with Del ivery of 3/ 1/96 Band Years 5,950.000 Average Co upon 5.500000 Average Li fe 5.950000 N I C % 5.500000 ~ Using 100. 0000000 T I C % 5.500000 % From De livery Date PREPARED BY GEORGE K. BAUM & COMPANY Micro-Muni Debt Date: 02-21-1996 @ 18:06:09 Filename: LEVY Key: CITYGO