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8f - Funding Mechanics
Tax Increment Financing iv CITY OF �_W Federal Way Finance Considerations Revenues Expenses Cashflow - timing Policy direction needed 1. 2. The TIF Premise We want Private Sector Development, that City investment encourages, but 3. City Budget ic.- 4. A TIA capture so that 5. ted , so ency revenue, Newly -created rIMPR�s pay for new infrastructure. The result is 6. New City infrastructure, New Private Sector businesses, new value and new residents, who 7. Thrive, as do all participating agencies Tax Increment Financing Finance Considerations Revenues II Expenses III Cashf low IV Policy direction needed CITY OF �_W Federal Way TIF Revenue is Restricted TIF Revenues are restricted for paying for public improvements within the Tax Increment Area 400. 19 a MR61 .y IRaTIa I: to 1_ Tax Rate Summary Table City of Federal �hrav Tax Code Area Taxing District 1202, 1205 County -wide regular levy (non -voted) 3 0_5735 13.3 % AFIB (Fingerprint ID) Lid Lift 3 0.0319 0_74% Parks Lid Lift 3 0_1858 4.3 % Human SrvsfVets Lid Lift 3 D_D916 _13% hildren/Familty Justice Dtr_ Lid Lift 3 - D_GG% Best Start for Kids Lid Lift 3 D_ 19DD 4.41 % Radio Communications Lid Lift 3 D_D491 1.14% County -wide Transport levy 3 D_D44 1 _D3% County Cons_ Futures 3 D_D31 0_7 % County Flood Zone S D.D815 1.89% County Ferry District S D_DD91 D_ 1 % Port General Fund S D.D579 1.34% EMS (voted) S D_ 484 5.77% Sound Transit D.1841 4_ 8% City General Fund 0_8169 18_97% Library General Fund 3 D_ 9 5 6_79% Fire 39 General Fund 3 1.4186 3_D4% Total $ 4.3062 1 DD_DD°lo Ah I Assessed Value Tax Allocation Increment Tax Rate Revenue $ 132,237,451 $ $ 277,443,728 $ $ 436,597,702 $ $ 610,744,357 $ $ 800,998,986 $ $ 982,537,163 $ $ 1,179,989,441 $ $ (40,193,121) $ $ 1,627,316,549 $ $ 1,879,726,299 $ $ 2,153,129, 800 $ $ 2,449,011,896 $ $ 2,768,954,281 $ $ 3,114,641,516 $ $ 3,487,867,406 $ $ 3,890,541,759 $ $ 4,324,697,561 $ $ 4,792,498,562 $ $ 5,296,247,332 $ $ 5,838,393,794 $ $ 6,421,544,262 $ $ 7,048,471,023 $ $ 7,722,122,482 $ $ 8,445,633,923 $ $ 9,222,338,897 $ 3.6727 $ 485,671 3.3736 $ 935,971 3.2432 $ 1,415,969 2.9693 $ 1,813,476 2.8545 $ 2,286,489 2.7442 $ 2,696,317 2.6382 $ 3,113,041 2.5362 $ 3,536,814 2.4382 $ 3,967,787 2.3440 $ 4,406,114 2.2534 $ 4,851,947 2.1664 $ 5,305,442 2.0826 $ 5,766,751 2.0022 $ 6,236,031 1.9248 $ 6,713,438 1.8504 $ 7,199,128 1.7789 $ 7,693,259 1.7102 $ 8,195,989 1.6441 $ 8,707,479 1.5806 $ 9,227,889 1.5195 $ 9,757,380 1.4608 $ 10,296,117 1.4043 $ 10,844,261 1.3500 $ 11,401,982 1.2979 $ 11,969,444 $ 148,824,186 AhXwiAhV a ■ M rAM cumulative $ 485,671 $ 1,421,642 $ 2,837,611 $ 4,651,087 $ 6,937,576 $ 9,633,893 $ 12,746,934 $ 16,283,748 $ 20,251,535 $ 24,657,649 $ 29,509,596 $ 34,815,038 $ 40,581,789 $ 46,817,820 $ 53,531,258 $ 60,730,386 $ 68,423,645 $ 76,619,634 $ 85,327,113 $ 94,555,002 $ 104,312,382 $ 114,608,499 $ 125,452,760 $ 136,854,742 $ 148,824,186 O sodo N Sa tang a ch �Cee dui I Ah Assessed Valuation 2022 AV was $17 billion (19.6% increase over 2021 $14 billion) TIA max is $200 million (1.2% of total AV) The TIF creates $12 million in on -going annual revenues by improving 1.2% of the city, Tax Increment Financing Finance Considerations Revenues ii Expenses III Cashflow IV Policy direction needed CITY OF �_W Federal Way Pay As We Go Spend/save incremental revenue as it comes in + City stays out of debt + We spend what we get as we get it - Private sector development would have to precede infrastructure investment? H Ob oMne FTNTUF M. Year Assessed Value Increment Tax Rate Tax Allocation Revenue cumulative 2024 $ - $ - $ - 2025 $ 132,237,451 $ 3.6727 $ 485,671 $ 485,671 2026 $ 277,443,728 $ 3.3736 $ 935,971 $ 1,421,642 2027 $ 436,597,702 $ 3.2432 $ 1,415,969 $ 2,837,611 2028 $ 610,744,357 $ 2.9693 $ 1,813,476 $ 4,651,087 2029 $ 800,998,986 $ 2.8545 $ 2,286,489 $ 6,937,576 2030 $ 982,537,163 $ 2.7442 $ 2,696,317 $ 9,633,893 ° 2031 $ 1,179,989,441 $ 2.6382 $ 3,113,041 $ 12,746,934 �1ote �° 'PubU 2032 $ (40,193,121) $ 2.5362 $ 3,536,814 $ 16,283,748 'Pr�vat e 2033 $ 1,627,316,549 $ 2.4382 $ 3,967,787 $ 20,251,535 stment 2034 $ 1,879,726,299 $ 2.3440 $ 4,406,114 $ 24,657,649 2035 $ 2,153,129,800 $ 2.2534 $ 4,851,947 $ 29,509,596 2036 $ 2,449,011,896 $ 2.1664 $ 5,305,442 $ 34,815,038 2037 $ 2,768,954,281 $ 2.0826 $ 5,766,751 $ 40,581,789 2038 $ 3,114,641,516 $ 2.0022 $ 6,236,031 $ 46,817,820 2039 $ 3,487,867,406 $ 1.9248 $ 6,713,438 $ 53,5311258 2040 $ 3,890,541,759 $ 1.8504 $ 7,199,128 $ 60,730,386 2041 $ 4,324,697,561 $ 1.7789 $ 7,693,259 $ 68,423,645 2042 $ 4,792,498,562 $ 1.7102 $ 8,195,989 $ 76,619,634 o ^ n 2043 $ 5,296,247,332 $ 1.6441 $ 8,707,479 $ 85,327,113 ` 2044 $ 5,838,393,794 $ 1.5806 $ 9,227,889 $ 94,555,002 $A48 2Pj to rl tha 2045 $ 6,421,544,262 $ 1.5195 $ 9,757,380 $104,312,382g.' m°re 2046 $ 7,048,471,023 $ 1.4608 $ 10,296,117 $ 114,608,499 �s 6°.1 2047 $ 7,722,122,482 $ 1.4043 $ 10,844,261 $ 125,452,760 2048 5.633.923 $ 1.3500 $ 11,401,982 2049 $ 9,222,338,897 $ 1.2979 $ 11,969,444 $ 148,824,186 Total $ 148,824,186 wNyAgph rRUr[a: P4 0iROF Year Assessed Value Increment Tax Rate Tax $ Allocation Revenue - cumulative 2024 $ - $ - 2025 $ 132,237,451 $ 3.6727 $ 485,671 $ 485,671 2026 $ 277,443,728 $ 3.3736 $ 935,971 $ 1,421,642 2027 $ 436,597,702 $ 3.2432 $ 1,415,969 $ 2,837,611 2028 $ 610,744,357 $ 2.9693 $ 1,813,476 $ 4,651,087 2029 $ 800,998,986 $ 2.8545 $ 2,286,489 $ 6,937,576 2030 $ 982,537,163 $ 2.7442 $ 2,696,317 $ 9,633,893 2031 $ 1,179,989,441 $ 2.6382 $ 3,113,041 $ 12,746,934 2032 $ (40,193,121) $ 2.5362 $ 3,536,814 $ 16,283,748 2033 $ 1,627,316,549 $ 2.4382 $ 3,967,787 $ 20,251,535 2034 $ 1,879,726,299 $ 2.3440 $ 4,406,114 $ 24,657,649 2035 $ 2,153,129,800 $ 2.2534 $ 4,851,947 $ 29,509,596 2036 $ 2,449,011,896 $ 2.1664 $ 5,305,442 2037 $ 2,768,954,281 $ 2.0826 $ 5,766,751 40,581,789 2038 $ 3,114,641,516 $ 2.0022 $ 6,236,031 , 2039 $ 3,487,867,406 $ 1.9248 $ 6,713,438 $ 53,531,258 2040 $ 3,890,541,759 $ 1.8504 $ 7,199,128 $ 60,730,386 2041 $ 4,324,697,561 $ 1.7789 $ 7,693,259 $ 68,423,645 2042 $ 4,792,498,562 $ 1.7102 $ 8,195,989 $ 76,619,634 2043 $ 5,296,247,332 $ 1.6441 $ 8,707,479 $ 85,327,113 2044 $ 5,838,393,794 $ 1.5806 $ 9,227,889 $ 94,555,002 2045 $ 6,421,544,262 $ 1.5195 $ 9,757,380 $ 104,312,382 2046 $ 7,048,471,023 $ 1.4608 $ 10,296,117 $ 114,608,499 2047 $ 7,722,122,482 $ 1.4043 $ 10,844,261 $ 125,452,760 2048 $ 8,445,633,923 $ 1.3500 $ 11,401,982 $ 136,854,742 2049 $ 9,222,338,897 $ 1.2979 $ $ 11,969,444 148,824,186 $ 148,824,186 Total re'menta` rues gets to r e� e 40 ,m\Xx\of` �3 yeas 1 �n � Issue Debt Improvements are immediate New Private additions enjoy new infrastructure Smooths cost over life of project Financing cost borne by restricted TIF revenue - Interest expense - City is committed when debt proceeds are spent - Should development stall for any reason, debt payments must be paid Principal 40,000,000 Term 25 Interest rate lu 5.0000% Year BaA.Rm-4., Payment Principal Interest End Bal 40,000,000 40,000,000 ____ _ _, _ _ , _ 39,161,902 �2,838,098� 2,838,028 __ _ _ (838,098) 880,003 ____g000,000) 1,958,095 __39,161,902 38,281,899 _____1 2 3 38,281,899 2,838,098 924,003 1,914,095 37,357,895 4 37,357,895 2,838,098 970,204 1,867,895 36,387,692 5 6 36,387,692 2,838,098 1,018,714 1,819,3q5 1 35,368,978 35,368,978 2,838,098 1,069,649 1,768,449 34,299,328 7 _34,299,328 _33,176,197 _ __L2,838,098 (2,838,098)a_(1,179,288) _�1,I23,132 1,714,966 (1,658,810) 33,176,197 31,996,908 8 9 (2,838,098) 1,238,253 1,599,845) 30,758,655 _31,996,9_08 _ 10 11 30,758,655 2,838,098 1,300,166 1,537,933 29,458,490 29,458,490 _ 2,838,098 1,365,174 1,472,924 28,093,316 12 28,093,316 2,838,098 1,433,432l (1,404,66§1 26,659,883 13 26,659,883 2,838,098 1,505,1 N 1,332,994 25,154,779 14 15 v 16 25,154,779 2,838,098 1,580,359 1,257,739 23,574,420 23,574,420 21,915,043 2,838,098 �2,838,098 1,659,377 _�1,742,346 1,178,721 �1,095,7522 21,915,043 20,172,697� 17 18 20,172,697 _ 18,343,233 �2,838,098 2,838,098 _�1,829,463 1,920,937 _�1,008,635� 917,162 18,343,233 16,422,296� 19 20 16,422,296_�8211115) 14,405,313 2,838,098 2,117,833 720,266 14,405,313 12,287,4801 21 12,287,480 2,838,098 2,223,724 614,374 10,063,756 22 __ 23 24 10,063,756 2,838,098 2,334,910 503,188 7,728,846 7,728,846 2,838,098 2,451,656 386,442 5,277,190 5,277,190 2,838,098 2,574,239 263,859 2,702,951 25 1 2,702,951 2,838,098 2,702,951 135,148 0 (70,952,457) (40,000,000) (30,952,457) Computation of Limitation of Indebtedness General Debt Capacity - (Limited) Councilmanic Total AV 1.5% AV @ 100% Add Cash reserve Less outstanding December 31, 2021 FDecember 31, 2022 $ 14, 210, 298, 330 21311541475 3,192, 943 (29, 686, 656) $ 186, 660, 762 (est.) $ 17,142, 528, 580 2571-1371929 363,121 (271.983 000) $ C229,518,05D Summary of Oustanding Debt Description Bal $ 2019 SCORE 9,785,000 2013 Community Center 7,750,000 Interfund Loan (Target) 4,862,000 2019 PAEC 3,510,000 2019 HUD Sec. 108 (PAEC) 2,076,000 27,983,000 12% 229, 580, 050 Tax Increment Financing Finance Considerations Revenues II Expenses III Cashflow IV Policy direction needed CITY OF �_W Federal Way Cumulative Cumulative Year Payments Revenue Difference 1 ----------------------------- 298389098 4859671 ----- 2,352,427 2 5,676,1971 1,421,642 4,254,555 3 8,514,29§j 0_2,837,611 _ 5,676,684 4 11,352,393 4,651,087 6,701,306 5 14,190,491 6,937,576 7,252,915 6 1179028y590 9,633,893 7,394,697 7 19,866,688 12,746,934 7,119,754 _ e_8 _122,704,78�j ___ 16,283,748 _ _ 6,421,038 9_ _125,542,885) 20,251,535 _ _ 5,291,350 _ 10 _128,380,983 24,657,649 _ 3,723,334 11 31 219 081 29,509,596 (1,709,485 12 34,057,180 34,815,038 757,858 _ 14 _ _ 399733,376 46,817,820 , 7,084,444 15 42,571,474 53,531,258 10,959,784 16 45,409,573 60,730,386 15,320,813 17 (48,247,6ZIIJ 68,423,645 20,175,974 18_ - - _151,085,769) ___ 76,619,634 - -- --- _25,533,865 - -- ___ 19_ _153,923,868) ___ 85,3271113 _31,403,245 20 _ (56,761,966) 94,555,002 _37,793,036 21 _ _159,600,064) __104,312,382 _44,712,318 22 62,438,162 114,608,499 52,170,337 23 65,276,261 125,452,760 60,176,499 24 68,114,359 136,854,742 68,740,383 25 70,952,457 148,824,186 77,871,729 Am H `N d�est th�S � \,N OfV ' Ah tv 70.0.4300 50- CrC UCC 40.0DOXIcc 34,4a4,4�� i 1 $ 2,400,0C 2 1,900,0( I--------3-�--------1,400,0C 4 ! 1,000,0C 5 600,0( _ OC 10,000,000 or (ZQ,�44,DQ0; ZTiM irm : em��Tl: Ipp- sks UP Ar°nt ved .o reC revenues 11 12 13 14 15 16 17 18 19 2a 21 22 23 24 25 Managing Breakeven Variables include: • Different financing structures (i.e. lower initial payments, deferred principal) • Phasing construction • Delaying debt • Other cost -sharing arrangements with developers and participating agencies Risk Summary =� $5M existing debt on property. y City takes on risk of debt payments should construction lapse. y Belt -tightening required in 1 St few years if City takes on risk of initial $7 M? Tax Increment Financing Finance Considerations Revenues II Expenses III Cashflow iv Policy direction needed CITY OF Federal Way Financing Policy Questions To decide whether to create a TIA, the Finance policy questions are: • How probable is development if we make the infrastructure investment? • Is the resulting outcome worth the investment? Financing Policy Questions To decide whether to issue debt, the Finance policy questions are: • What is our confidence and risk tolerance locally? • How reasonable are the assumptions and timeline on the return on investment? Next Steps What questions can staff pursue answers to as we move forward? wAl- P. %r4s LG 047.27792 - F 100 LG 04TZ7792 100