To: Honorable Mayor and Members of Town Council
From: Trish Muller, Finance Director
Title
Discussion/Direction: Use of the Downtown Development Authority TIF (2012-2014)
Body
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Executive Summary
The Downtown Development Authority (DDA) was created in 2008 to revitalize and further develop the downtown area. One of the funding sources available to the DDA is the Sales Tax, Tax Increment Financing (TIF). This funding is only triggered once the sales tax collected exceeds the amount established in the base year and the Town has issued debt on behalf of the DDA, per state statute. Since the Town had not issued debt on behalf of the DDA, the excess sales tax was not transferred to the DDA special fund. However, Council has acknowledged the TIF from prior years and as part of the strategic priorities, has budgeted the TIF in the General Fund, earmarked for downtown projects.
The DDA Board, with support from Town management, has recommended a portion of the funds be used to fulfill two purposes:
• $172k to reimburse the Economic Development Fund for the Town investment in the DDA’s wedding district project.
• $208k to be paid to the Philip S. Miller Fund for the payment in full on the loan the Town gave to the DDA for the construction of the Rink at the Rock.
Although these items were presented in concept to Council earlier this year, staff wants to confirm Council’s affirmation of the fund uses as noted above and recommended by the DDA Board.
Discussion
The Downtown Development Authority was created in 2008 to provide a mechanism for the revitalization and further development of the Downtown area. Part of the funding mechanism for the DDA is Sales Tax TIF. The TIF is calculated as any dollars collected in the DDA boundaries which exceed the sales tax revenue base established in the creation of the Authority. However, based on State Statute for DDA’s, the sales tax TIF is not technically revenue available to the DDA unless the Town has issued debt on behalf of the DDA and created a special fund to account for the TIF dollars. Although there was sales tax generated in the DDA exceeding the based amount by approximately $1.2M for the years 2012-2014, there was no debt issued by the Town on behalf of the DDA. As such, these funds are not allocated to the special fund and remain in the general fund, designated for Downtown projects.
In January 2015, former Town Manager, Mark Stevens, presented several strategic priorities to Council for discussion and direction. Included in these strategic priorities was the prior year TIF money for the DDA. The DDA board recommended and it was presented to Council during that presentation, a portion of the amount would be used to repay the Town for their investment made in the Wedding District, approximately $171k. The DDA board recognized the Wedding District did not achieve the desired goals or outcomes and wanted to repay the Town for their investment in the concept. The initial investment by the Town in the wedding district came from the Economic Development Fund. Repayment of the investment will be credited to the Economic Development Fund.
The second use of this money, as recommended by the DDA Board, was to pay off the loan the Town made to the DDA for the construction of the Rink at the Rock. In 2011, the Town loaned the DDA approximately $240k for the construction of the ice rink. Since then the DDA has been making annual debt service payments bringing the balance on the loan to approximately $208k. The DDA Board is recommending a portion of the prior year TIF be used to pay the loan in full. The loan was originally created out of the Philip S. Miller Trust Fund and the payment in full will be credited to that fund.
Although these items were presented in concept to Council earlier this year, staff wants to confirm Council’s affirmation of the fund uses as noted above and recommended by the DDA Board. This use of funds is recommended by the DDA Board as fulfillment of their commitment to the Town Council to repay the wedding district and Rink at the Rock before using increment to accomplish new projects in Downtown.
Budgetary Impact
The prior year DDA TIF funds are currently budgeted in the General Fund and earmarked for downtown projects.
Staff Recommendations
Town staff recommends approval of the use of the prior year DDA TIF for the repayment of the wedding district program and payment in full of the Rink at the Rock loan, as presented herein.
Proposed Motions
“I move to authorize and direct Town staff to proceed with using the prior year’s DDA TIF to repay the Economic Development Fund for the Town’s investment in the DDA’s wedding district in the amount of $171,965 and to make payment in full to the Philip S. Miller Fund on the amount the Town loaned to the DDA for the construction of the Rink at the Rock, in the amount of $208,156.”