UG adjusts TIF policy

The Unified Government has adjusted its TIF policy after a staff analysis requested by commissioners.

Left with a number of nonperforming residential TIFs after the economic downturn of 2008, the UG has changed the way it handles the financial instruments in the future. The policy was changed at the April 24 UG meeting.

TIF stands for tax-increment financing, a method of government financing of developments. After the recession, Wyandotte County was left with some housing subdivisions that were started and not completed.

In general, the UG staff analysis found the UG’s commercial TIFs were doing better than its residential TIFs.

The staff noticed a trend that some of the older TIFs weren’t performing as well, and commission members had questions why the newer ones were better, said George Brajkovic, director of economic development for the Unified Government. This study of TIFs was initiated at the request of Commissioner Jim Walters. In the past, other commissioners, including Commissioner Ann Murguia, have addressed the subject of nonperforming TIFs.

A comparison showed that residential TIF debt in 2013 was $504,879, and residential TIF revenue in 2013 was $663,483, according to the UG staff report. There are some nonperforming residential TIFs, according to the study, while there also were some that have been successful and were paid off early.

Commercial TIF debt in 2013 was $3,773,879, while commercial TIF revenue in 2013 was $5,356,929, according to the report. The Village West and Kansas Speedway area was excluded from the study.

There are currently no recourse options on the current underperforming TIFs, according to the policy report. But on larger commercial TIF projects, some of the newer policy directives are being used and there are options to address any future downturn, according to the report.

Lew Levin, UG chief financial officer, described some “lessons learned” through the years with TIF projects. These lessons, now being used on TIF projects, have now been put into writing as guidelines for future use.  For example, one is to do feasibility studies  that would account for market fluctuations that might negatively affect revenue generation. Another is to prefer pay-as-you-go as opposed to general obligation bonds.

Also suggested by the policy directives is to require a guaranteed level of payment to insure the performance of the TIF. Another “lesson learned” is that before issuing financing, the property acquisition should be in place or there should be a clear letter of commitment from a bank before reimbursement, and the developer has to build a certain number of units first.

Also, project investment from property and sales tax payments would be minimized, and a sunset provision would be added between district approval and plan approval. In the future, the UG plans to look more closely at developers who were involved with failed TIFs and are proposing a new TIF project.

Among other guidelines are that there would be specific language on noncompliance included, such as options for the local government to take the property if there is nonperformance, according to Levin.

A UG official said a downturn in the market was a reason some of the earlier residential TIFs did not perform.

UG Administrator Doug Bach noted that the UG hasn’t done a single-family TIF development in a number of years, although he would not want to write a policy that says the UG will not do one in the future. He talked about one residential TIF development that was very successful and has paid off its TIF after about 20 years.

Commissioner Ann Murguia said that while she agrees the UG has had significant issues with the residential TIFS, she also agrees that they should not totally be eliminated, as that does not resolve anything and penalizes residential TIF developers who are successful. As a committee, the commissioners thought it was better to come up with other ways to review if a TIF project was a good investment, she said.

Flexibility is the key to being very successful at development, she said. Having the TIF development tool is good, it just needs to be scrutinized to make sure it will perform.

Mayor Mark Holland said the TIF report separated fact from fiction on what caused some TIF projects to fail. He said single-family home projects struggled the most, while multi-family development projects did better and commercial projects did well.

He noted there were two kinds of single-family TIFS – those before and those after the recession. The ones that went through the recession took a beating and the UG did not have the tools built-in at the time, so the UG ended up also taking a beating, he added.

He said the UG needs to make sure it is specific about where things went bad and where the policy can be adapted to be better, if a single-family project comes forward again.

UG examines overtime pay

The Unified Government Commission tonight went into overtime to discuss public safety overtime pay and out-of-class pay.

The special meeting started at 5 p.m. and went over the two-hour time slot, and resumed later after the regular 7 p.m. meeting.

Mayor Mark Holland said that costs were up significantly because of overtime and out-of-class pay.

Costs were up by millions in overtime and out-of-class pay for three public safety departments, the Police Department, Fire Department and Sheriff’s Department, he said. There was also an increase of personnel.

“We have a major fund balance crisis right now,” he said. “We are at risk of losing our credit rating if we do not find a way to curb some spending.”

He said his goal is to do a comprehensive third-party look at all three of these departments, as well as a compensation classification analysis, to make sure the UG is functioning as efficiently as possible while delivering the same services and not compromising safety.

That $5 million spent on overtime and out-of-class pay to some employees in the three departments is enough to give a 3 percent cost-of-living adjustment to each UG employee, he added.

Sheriff Don Ash, Fire Chief John Paul Jones and Assistant Police Chief Terry Terry Zeigler appeared before the commission to explain what is driving the overtime costs. They described staffing shortages in their departments, with employees being asked to cover vacancies or unscheduled leaves such as illnesses and family emergencies. They described their departments’ situations in detail.

The department heads told the commission that they were bound by contractual agreements on the issues of overtime and out-of-class pay.

Chief Jones told the commission there were currently 14 vacancies in his department and it will probably go up to 25 later in the year with retirements. The new recruit class will not be available until the end of the year, he said. The Fire Department is currently a little below national standards recommending 4 persons per truck, he told the commission. As the situation is now, he said to eliminate overtime would be a cut in service.

The commission threw out the idea of reducing the number of fire station in the city, and the mayor discussed assigning three to a truck and having a fourth arrive at a scene from another fire station.

Sheriff Ash, whose department had more than a million dollars of overtime, presented three options to the commission, including one that would save more than a half-million dollars.

He told the commission that if he could add employees, he could reduce the amount spent on overtime and out-of-class pay. Commissioner Ann Murguia asked about the possibility of adding a few part-time deputies.

Assistant Chief Terry Zeigler said late and extended calls were driving overtime in the Police Department, with officers staying on the scene to complete their work.

He said contract language had driven the staffing costs. In 2012, the department spent more than $500,000 on overtime because of contract language, he said. In 2014 a letter of understanding was signed by the Fraternal Order of Police and the Police Department that addressed the issues and the amount spent on overtime is not as much currently. About $254,000 is projected for overtime this year. Commissioner Mike Kane suggested the other departments might want to work together with the unions on contract language to reduce overtime.

The commission also discussed trying to reduce overtime associated with officers having to attend court.

UG Commission to meet today

The Unified Government Commission is scheduled to meet at 5 p.m. and 7 p.m. Thursday, April 24.

The meeting will be in the Commission Chambers, lobby level of City Hall, 701 N. 7th St., Kansas City, Kan.

The 5 p.m. meeting will be a discussion about public safety overtime and out-of-class pay. Earlier this topic came up during a budget discussion.

Topics on the 7 p.m. agenda include:

– Additional funding for operating the 8th Street YMCA during the next 12 months.

– A resolution to authorize the BPU to obtain a $13 million loan from the Kansas Public Water Supply Fund administered by the Kansas Department of Health and Environment.

– A resolution to approve a Memorandum of Agreement with Kansas City, Mo., and Mid-America Regional Council as part of the OneKC Bi-State Brownfield Coalition Grant.

– A resolution allowing the asgsignment of benefits by Speedway eights LLC to Sanders Brothers Investments LLC in connection with $21 million taxable multifamily housing revenue bonds, at the Heights at Delaware Ridge project, 130th and State.

– A resolution to update the local economic development policy on tax-increment financing.

– Authorizing general obligation bonds or temporary notes for $210,000 to cover the costs of judgments and settlements, to Johnny R. Hawkins.

– An appointment of Winfred Manning to the Human Relations Commission.

– A request to change taxes on real estate, a reduction of $13,450  from the Court of Tax Appeals to the Ciuffo Family Trust. A reduction to Mo-Kan Container Services on 28 trucks, reducing tax by $10,453.

– A resolution to approve a special permit to close 12th Street between Minnesota and State temporarily on May 3 and allow alcohol on the street durimg the downtown Cinco de Mayo Festival.

– Land Bank items also are on the agenda.

The agenda for the 7 p.m. meeting is posted at www.wycokck.org.