R-026-2018 - Northwest Quadrant Tax Increment Reimbursement Policy to support the implementation of Salt Lake CitR 18-2
REDEVELOPMENT AGENCY OF SALT LAKE CITY
RESOLUTION NO.
R-26-2018
Northwest Quadrant Tax Increment Reimbursement Policy to Support the Implementation
of the Northwest Quadrant Community Reinvestment Area Plan
RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY
OF SALT LAKE CITY ADOPTING A NORTHWEST QUADRANT TAX INCREMENT
REIMBURSEMENT PROGRAM POLICY
WHEREAS, the Redevelopment Agency of Salt Lake City ("RDA") was created to transact the
business and exercise the powers provided for in the Utah Community Reinvestment Agency
Act.
WHEREAS, the Board of Directors of the Redevelopment Agency of Salt Lake City (the "RDA")
has approved the Northwest Quadrant Community Reinvestment Area ("Project Area") to
facilitate the capture of tax increment within the boundaries of the Project Area which is further
depicted in Exhibit A.
WHEREAS, tax increment is intended to further the purposes of the Northwest Quadrant
Community Reinvestment Area Plan ("Project Area Plan") to carry out economic development
and implementation of the Northwest Quadrant Master Plan.
WHEREAS, the Utah Community Reinvestment Agency Act grants the RDA authority to enter
into participation agreements (also known as tax increment reimbursement agreements), for the
purpose of providing incentives in the form of tax increment to implement the Project Area Plan.
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE REDEVELOPMENT AGENCY OF SALT LAKE CITY THAT THEY hereby approve
the following tax increment reimbursement policy for the Project Area:
1. GENERAL
1.1 Purpose
The Northwest Quadrant Tax Increment Reimbursement Program ("Program") provides
tax increment reimbursements ("Reimbursements") for projects that further the purposes
of the Project Area Plan. Reimbursements shall allocate a portion of new tax growth
generated by a development that delivers substantial and measurable change within the
Project Area. Participants shall be entitled to a Reimbursement only after executing a
Participation and Reimbursement Agreement ("Agreement") with the RDA, as well as
fully funding the capital costs to improve the property and generating sufficient tax
increment.
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1.2 Eligible Projects
To be eligible for a Reimbursement, projects shall:
a. Be located within the Developable Area and/or Development Buffer as depicted in
Exhibit A;
b. Align with the Project Area Plan;
c. Provide sufficient evidence that tax increment funding is necessary for the project
to succeed and to verify that the request is reasonable; and
d. Involve significant private investment of capital improvements so as to assure
adequate yield of tax increment.
1.3 Improvement Categories
Eligible improvements shall be categorized as either project -specific improvements or
system -wide improvements, as follows:
a. Project -Specific Improvements
Tax increment reimbursements may facilitate project -specific improvements
("Project Improvements") that benefit a single parcel or parcel assemblage. Project
owners/developers will receive a portion of the new, additional taxes generated by
the Project Improvements over a limited period of time.
b. System -Wide Improvements
Tax increment reimbursements may facilitate system -wide improvements ("System
Improvements") that benefit more than one parcel and property owner. A portion
of the new, additional taxes generated by development that has been facilitated by
the System Improvements may be paid toward the cost of System Improvements
on a pro-rata basis. Applications for reimbursement for System Improvements will
be given priority based on the date the application is made, and the RDA will
commit tax increment based on priority of the application.
1.4 Design Requirements
Projects approved for tax increment reimbursement must consider the RDA's Design
Guidelines and utilize the guidelines as practicable, and promote green building standards
and encourage good planning design. Projects will be required to be in conformance with
all Salt Lake City policies, ordinances, and codes.
2. REIMBURSEMENT TERMS
2.1 Maximum Reimbursement Percentage
The maximum amount of tax increment available for reimbursement shall be seventy
percent (70%) of the annual tax increment generated from the properties within the Project
Area and collected and retained by the RDA.
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2.2 Maximum Reimbursement Term
The maximum reimbursement term shall be 20 years or the sum of the remaining operating
years of the Project Area, whichever is less.
2.3 Reimbursement Standards: Project Improvements
The standards for calculating the amount of tax increment available to an applicant for
Project Improvements, pursuant to 1.3(a), shall be as follows:
a. Step 1: Calculate the Total Annual Tax Increment from the Project
• The difference between the base taxable value of the proposed project prior to
improvements and the estimated new growth in taxable value resulting from the
Project Improvements. (New Growth — Base Value)
• Multiplied by the sum of the current effective tax rate of the participating taxing
entities.
(New Growth — Base Value) x (Effective Tax Rate) = Total Annual TI
b. Step 2: Calculate the Annual Tax Increment Collected by the RDA
• Total Annual Tax Increment multiplied by the taxing entity participation rate
(the percentage of Tax Increment collected from participating taxing entities by
the RDA)
(Total Annual TI) x (participation rate) = Annual TI Collected by the RDA
c. Step 3: Calculate the 1st Year Applicant Allocation
• (Annual TI Collected by the RDA) x (Reimbursement Percentage) = Estimated
Year 1 TI Reimbursement to Applicant
d. Step 4: Calculate the Maximum Amount of Tax Increment Available to the Applicant
Over the Term of the TI Reimbursement Agreement.
• (Estimated Year 1 Tax Increment Reimbursement to Applicant) x (the Term of
the Reimbursement Agreement) = Total Tax Increment Available to Applicant
Over the Term. An annual growth multiplier may be applied to this calculation.
2.4 Reimbursement Standards: System -Wide Improvements
The standards for calculating the amount of tax increment available to an Applicant for
System Improvements, pursuant to 1.3(b), shall be as follows:
a. Step 1: Improvement Plan
In addition to standard application materials required by the RDA for tax increment
reimbursement, an applicant shall submit an improvement plan that may, depending on
the scope of the proposed project, include the following information:
• A list of tax parcels comprising the area to be served by the System
Improvement ("Improvement Area"), including owners and parcel numbers.
These parcels shall be located within the Project Area and be determined to be
directly affected and substantially benefited by the System Improvements.
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• A map or drawing clearly identifying the boundaries of the Improvement Area,
including the location of the System Improvements.
• The total estimated cost of System Improvements, and the proportion of the
total cost that will be paid by the Applicant.
• Any non -tax increment sources of revenue and/or financing known at the time
of application.
• The proposed period of time for which tax increment will be collected from the
Improvement Area for reimbursement on the System Improvements.
• The anticipated impact the System Improvements will have on future property
development.
• An estimate of anticipated development and future value resulting from System
Improvements.
b. Step 2: Determination of Proposed Tax Increment Structure
Based on the information provided in the Improvement Plan and the polices contained
herein, -the RDA shall make a determination on the following:
• The geographic area and tax parcels that tax increment shall be captured, on a
pro-rata basis, for the System Improvements.
• The total amount and schedule that tax increment shall be reimbursed to offset
up -front expenses incurred by the Applicant to develop System Improvements.
2.5 Sufficient Tax Increment
The actual total of the tax increment reimbursement may fluctuate. Tax increment
reimbursement is dependent on the development of property and increment being
generated, and projects that do not generate sufficient tax increment during the
Reimbursement Term will not qualify for the full tax increment reimbursement amount.
2.6 Tax Increment Obligations
The RDA shall only be obligated to capture and reimburse tax increment generated from
property taxes paid on behalf of the property.
2.7 Interest
Interest will not accrue against the RDA on the anticipated or projected tax increment to
be reimbursed to the developer.
3. EVALUATION AND APPROVAL PROCESS
3.1 Application and Review by RDA Staff
Applications for a new reimbursement agreement shall include an estimate of anticipated
total future value, projected construction schedule, recommended future assessed value,
the year for commencing tax increment collection and disbursement, and other information
as deemed necessary to complete a financial analysis. Applications must be complete to be
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considered for approval or denial, and if either the applicant or proposed project fails to
demonstrate the ability to meet application requirements, RDA staff may deny the
application.
3.2 Application Analysis
Applications that result in, if approved, a reimbursement agreement that reimburses one
million dollars ($1,000,000) or more of tax increment shall complete the following steps to be
considered by the RDA. If the tax increment reimbursement is below $1,000,000, the third
party financial analysis may be waived by RDA staff.
a. Third Party Financial Analysis
RDA staff shall consult with a third party financial analyst to provide a
recommendation with a supporting analysis on 1) the public benefit anticipated to
be derived from the proposed project and 3) determination of financial need and
whether or not the proposed project might reasonably occur through private
investment without the Reimbursement. The third party will also, if applicable,
conduct an analysis of comparable values of equivalent properties (both the
difference and the percentage relative to comparable values) to ensure that the
Reimbursement is not being used to reimburse overvalued land costs. The third
party financial analysis shall be provided to the Board prior to the Board's
consideration of the Reimbursement application.
b. RDA Finance Committee Review
RDA staff shall forward complete applications that meet minimum requirements to
the RDA Finance Committee. The RDA Finance Committee shall evaluate
applications, supplemental materials, and other documentation necessary to
thoroughly review the application and formulate a recommendation to the Board.
The RDA Finance Committee shall provide a recommendation of approval or
denial of applications to the Board for consideration.
3.3 Board Review and Approval Process
The application and RDA Finance Committee recommendation shall be forwarded to the
RDA Board within thirty (30) days of receipt of a completed application. The Board will
use best efforts to consider the application within sixty (60) days of the Board's receipt of
the application from RDA staff and to take action on the application as soon as reasonably
practicable thereafter. The Board shall have the authority to provide tax increment
reimbursement approval or denial. Any approval, and the terms of the tax increment
reimbursement, shall be made by resolution.
3.4 Agreement Finalization
Once an applicant receives approval from the Board, RDA and the Applicant shall execute
an Agreement.
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4. AGREEMENT TERMS
4.1 Participation and Reimbursement Agreement Terms
In addition to standard terms outlining the tax increment reimbursement process as
recommended by legal counsel, the following terms shall be included in the Agreement:
a. Reimbursement to Benefit Project Owner: RDA Discretion.
The RDA intends that the beneficiary of the tax increment reimbursement will be the
owner of the project for the life of the Agreement. In the event of a transfer or sale of
the property, the Agreement and all benefits conferred under the Agreement shall
benefit the project and be recorded against the property to run with the land, with the
intent that all tax increment reimbursements will remain with the owner of the real
property and project. In the event that the ownership of the real property and
improvements are severed, the RDA will have sole discretion to determine the
beneficiary of the tax increment.
If the Agreement is executed and the real property and project are conveyed to a third
party while the improvements are still being constructed, the RDA will retain the right
to consent to the transfer the Agreement to the new owner, in order to ensure that the
benefits the RDA anticipated receiving under the original Agreement with the original
developer are consistent with the new developer. If RDA does not consent to the
transfer of the Agreement, the tax increment reimbursement will cease and the
Agreement will terminate.
b. Tax Appeals.
All reimbursement recipients shall be required to notify the RDA if they have applied
for a property tax appeal with Salt Lake County related to the tax increment
reimbursement. In the event that any such appeal results in a reduction in property
taxes, the percentage share of the tax increment payable to the recipient shall be
decreased, and the percentage share of the tax increment payable to the RDA shall be
increased, so that the dollar amount payable to the RDA is the same as if no appeal of
the assessed value had been made.
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Passed by the Board of Directors of the Redeye
day of August, 2018.
Transmitted
Approved as to
gency
.t&F
Derek Kite en, Chairman
to the Executive Director on August 22, 2018
if
form: if Uv
Salt L .ke City Attorney's Office
Katherine N. Lewis
Date: % (; I
f Salt Lake City, this a 1
The Executive Director:
✓ does not request reconsideration
Att
ity Recorder
HB ATTY-#71283-v2-NWQ_TI_Policy_Final_(KNL).docx
requests reconsideration at the next regular
ncy meeting.
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J.cqueline M. Biskupski, ExiutiveeDiirector
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Exhibit A
Project Area Map and Development Framework
4,100 8,200 Feet
TO TOOT! F
SALT LAKE CITY NORTHWEST QUADRANT
DEVELOPMENT FRAMEWORK
• • CRA Boundary Planned Streets
ME Development Buffer i Conceptual Streets
_ Development Area Existing Railroad
Landfill Area (closed) Canal
_ Natural Area
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St..CRDA