Bonding with TIF: November 2014 Key Considerations in TIF Bond Issuance Peter J. Raphael
Initial Key Considerations of TIF Bond Issuance • Determine the Type of TIF Financing • Determine the Structured Enhancements • Assess the Status of the Development and the Developer 1
Why Consider Revenue Bonds? • Save G.O. Borrowing Capacity • Limit Downside Risk • Instill Market Discipline 2
Why Consider General Obligation Bonds? • Lower Rates • Ease of Execution 3
Potential Enhancements • General Obligation • Additional Revenues o Benefits Assessments o Sales Tax o Other Taxes – Business District, Transportation District, Amusement Tax o Other Income from the project • Bond Rating 4
Structural Issues • Capitalized Interest • Debt Service Reserve • Debt Service Coverage • Priority of Lien • Order of Funding • Conflicts with the Development Agreement 5
Third Party Reports • Market Study • Feasibility Report • Appraisal? 6
Status of the Development • Construction Issues • Historical vs. Projected Increment • Diversification of Taxpayers • Leasing Status 7
Status of the Developer • Developer Equity • Developer Experience • Bank Loans/Other Funding 8
Current TIF Bond/Note Market • Fund Flows • Credit Issues • Interest Rates • Continuing Disclosure 9
Why Haven’t We Seen More Connecticut TIFs? • Structure of your taxing bodies • Structure of your sales tax • No comprehensive TIF law 10
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