On September 15, 2017, the Board of Directors for Tax Increment Reinvestment Zone Number Three (TIRZ No. 3) approved a recommendation to the City Council for amending the Fiscal Year 2017 budget to projections and approving the proposed Fiscal Year 2018 budget. This recommendation is made in accordance with City Ordinance No. 1667, the Zone’s creation ordinance which grants final budget approval to City Council. As a note, at the time the Board passed the recommendation the City’s proposed tax rate was .32233. Upon the adoption of the .31762 tax rate at the September 19^th City Council meeting, the TIRZ’s proposed FY18 budget was updated to reflect this change.

Fiscal Year 2017

Though Fiscal Year 2017 has closed, actual numbers will not be finalized until all accounts have been audited. The FY17 amendment is to update the budget to projections, which are based off actuals as of September 1, 2017. FY17 total revenues are estimated at $319,239, which is $5,559 less than budgeted. Expenditures are projected at $364,854, which is $5,448 less than budgeted.

The Tri-Party Agreement, approved in 2016, created a $200,000 reserve to be used for TIRZ administration. The reserve had $83,000 remaining in its balance going into FY17. It was anticipated that of the $52,000 in legal and administrative expenditures, $45,504 would be taken from the reserve, and $6,496 would be taken from the Zone’s 2 percent revenue that is dedicated to administrative expenses.  Lower revenues were received so it is now projected that $45,615 will be spent from the reserves and $6,385 will come from the 2% revenue. As a note, the reserve’s ending balance for FY17 was budgeted at $37,496 but is now projected to come in at $57,542 due to savings in FY16 expenditures and fund balance that became available in FY17. Taking into account the reserve, the ending fund balance for FY17 is anticipated to be $0, which is $39 less than budgeted. The $0 fund balance is in alignment with the Tri-Party Agreement that establishes full utilization of 100% of TIRZ revenue.

 Fiscal Year 2018

Revenues for FY18 are estimated based on fifty percent of the property tax revenue collected on incremental real value in TIRZ No. 3. Based on the proposed tax rate for each participating entity, total revenues are estimated at $627,945, including interest income. The FY18 property tax revenues are based on the following incremental values – including values still under review at 90% as well as any abatements and exemptions – and the proposed tax rates for the City and County:

*Difference in Net Assessed Values due to differences between City and County exemptions; also impacted by differing City and County approach to Nalco abatement; **City tax rate is the adopted tax rate; County tax rate has been proposed but is not yet approved

In accordance with the 2016 Tri-Party Agreement between the City, Zone, and District, 2% of all TIRZ No. 3 revenues will be allocated to administrative services for the TIRZ and the remaining 98% will be assigned to the Imperial Redevelopment District to support debt payments for infrastructure reimbursements. Total expenditures for FY18 are $650,752, of which $615,386 will be assigned to the District and $35,366 will be available to the City for administrative services under the City’s Support Services Agreement with the Zone. Of the administrative expenses, a total of $5,366 is intended for administrative support and $30,000 for legal expenses. The City will use the 2% of TIRZ revenues to fund $12,559 of the operating costs, while the remaining $22,807 will be taken from the reserve established in the Tri-Party Agreement. This will reduce the reserve’s overall fund balance from $57,542 to $34,735. The FY18 ending fund balance is $0, which is in alignment with the Tri-Party Agreement.

Staff recommends the City Council approve the amendment of the Fiscal Year 2017 budget to projections and approval of the Fiscal Year 2018 budget as proposed.