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</o:shapelayout></xml><![endif]--></head><body lang=EN-US link=blue vlink=purple><div class=WordSection1><p class=MsoNormal>Hi Joe – <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Thank you for posting your understanding of TIFs it certainly unravels the mystery of why the misstatements concerning property tax revenues continue to be put forward. <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>The first nuance that has to be understood is that the site was previously zoned R55 (single-family houses) which will have a different base-valuation than with the up-zoning to M-U-TC (mixed use town center). The unimproved land that we receive a base payment upon is calculated against its up-zoning valuation, not what it was historically (a much lower number).<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Another nuance to how TIFs work that was not mentioned – i.e. the town still collects on excess tax revenues within the TIF financing. Probably easier if I just assign dollar values to it (these are not indicative of true costs – just for illustrative purposes). Let’s assume that TIF bonds are underwritten for 20 years in the amount of 3 million resulting in annual payments of 400k. Let’s also assume that the base amount of tax revenue is 100k and that the improved assessable value is 2mil. <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>In this example the town collects a net tax revenue of 1.5mil (2mil – 400k -100k). Although the town is only guaranteed the 100k for the base payment, the town still collects the delta between the obligated TIF bond service and the guaranteed base tax amount. The total taxes collected by RP over the lifetime of a bond will be equal to the Base Tax + Incremental Taxes (revenues over and above debt service). Of course the town could always apply more of the Incremental Taxes to retire the debt sooner. Under your assumption that 100% of all incremental taxes is put towards the TIF debt service the town would pay off the TIF bond by year two and retire all debt beginning in year three, not the 10-20 years suggested.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Logically speaking, if what is being suggested were true the town would never contemplate it – we would just pass a bond and collect the delta between the property taxes and the debt service. The key reason TIFs and TIF bonds are being contemplated as a financing tool is that with these, they operate functionally the same as a General Obligation Bond but the town does not pledge its full faith and credit and we better protect the town from any development defaults. The town leadership will consider any and all options for financing and proceed with one that has the lowest combination of risk and cost-benefit for all citizens.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Respectfully,<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Jonathan<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p></div></body></html>