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35 be available for all of the taxing authorities and assuming all other variables remain constant, ss each will receive the higher level of taxes that are now created by the redevelopment which 37 should make the use of TIF revenue positive over the long term. A city is authorized to keep a sa district open to fulfill all district obligations and eligible expenditures as outlined in the TIF Plan, ss up to the maximum term of the TIF District. All projects financed with TIF must meet the `but - 40 for' test, meaning that the proposed development and redevelopment project would not proceed 41 `but for' the use of TIF. There can sometimes be negative feedback from the public or other 42 taxing authorities regarding the `but for' test and use of TIF if cities leave districts open in place 43 for the maximum term to finance multiple projects as outlined in the TIF Plan. At times TIF 44 funds are being accumulated for certain projects (such as future phases of development, planned 45 capital improvement projects, etc.) To a lesser extent, TIF districts can also generate negative 46 feedback because they do not adjust the baseline values to account for inflation, but the scale of 47 that issue is generally dwarfed by the positive gains from the redevelopments over time. 48 TIF districts now have what are referred to as "knockdown rules" to ensure that the district is 49 sized at the minimum size to accomplish the policy objective and that development activity is 50 occurring. The knockdown rules as well as the constantly ticking expiration clock on TIF 51 districts provides some incentive to create smaller, project specific districts rather than large, 52 "catch all" TIF districts. 53 By law, TIF may not be used for general government purposes 54 RISKS AND BENEFITS RELATED TO How TIF IS PROVIDED 55 Pay as you go: The lowest risk method for providing TIF is with the "pay as you go" model 56 because the City is not incurring a financing risk. The structure of the "pay as you go" 57 agreement can be structured in ways to transfer virtually all risk to the developer through the use 58 of minimum assessment agreements and placing caps on the maximum amount of benefit which 59 can be received by the recipient. The proposed project is generally known at the time of the so financing commitment and therefore the City can negotiate directly with the end users to ensure 61 the development is meeting the goals that the City has for the project. 62 Un front: Risk can be minimized with the use of minimum assessment agreements and other ss techniques as well, but because there is a financing component to this type of TIF financing, 64 there is more risk than with "pay as you go". In "up front" financing, the proposed project is 65 generally known at the time of financing commitment and therefore the City can negotiate ss directly with end users to ensure the development is meeting the goals that the City has for the 67 project. sa Public infrastructure funding: Another way to use TIF is by constructing infrastructure in order ss to create an environment that is improved for development. This is particularly useful in 70 situations where the infrastructure is difficult to finance through assessments, such as due to 71 extraordinary technical difficulties or because the infrastructure is introducing important 72 amenities that are critical for becoming the catalyst for the new development, which is common 73 with streetscape and stormwater amenities. 74 Public infrastructure funding often occurs before the projects are proposed which can generate 75 some risks. Since the City has already invested prior to any development negotiations, the 76 investment may not assist in attracting the desired end users since the City would not have any n input beyond regulatory controls in the end users. In addition, the redevelopment benefit can be 78 muted because the initial underlying property owners may absorb a lot of the infrastructure 79 benefits by raising land prices which doesn't assist the end users with any gap financing. 80 Page 2 of 5