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HomeMy WebLinkAboutR-84-0981~~ -84-909 RESOLUTION NO. ~4' A RESOLUTION INSTRUCTING THE CITY ADMINISTRA- TION TO REVIEW THE DADE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY"S EXERCISE OF ITS POWERS IN THE PAST TWO YEARS PUR5UANT TO THE FLORIDA INDUSTRIAL DEVELOPMENT FINANCING ACT (F.S. 159.25-159.43) IN REGARD TO PROJECTS FINANCED THROUGH THE AUTHORITY'S ISSUANCE OF TAX-EXEMPT INDUSTRIAL DEVELOPMENT REVENUE BONDS~TO DETERMINE IF PROJECTS HAVE INVOLVED THE RELOCATION OF INDUSTRY FROM AN INCORPO- RATED AREA TO AN UNINCORPORATED AREA OF DAD E COUNTY WITHOUT SUCH INCREASE IN JOBS AS WOULD WARRANT THE ISSUANCE OF SUCH BONDS AND THE INDUSTRY'S RELOCATION; FURTHER AUTHORIZING LEGAL PROCEEDINGS TO PROHIBIT THE AUTHORITY'S ISSUANCE OF BONDS TO FINANCE SUCH PROJECTS. BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA. Section 1. The City Administration is hereby instructed to review the Dade County Industrial Development Authority's exercise of its powers in the past two years pursuant to the Florida Industria] Development Financing Act (F.S. 159.25--159.43) in regard to Projects financed through the Authority's issuance of tax-exempt Industrial Development Revenue Bonds to determine of any projects have involved the relocation of industry from an incorporated area to an unincorporated area of Dade County without such increase in jobs as would warrant the industry's relocation. Institution of legal proceedings to prohibit the said Authority from issuing bonds to finance such Projects is hereby authorized. PASSED AND ADOPTED this 13th day of September , 1984. ATTESTS Q City Clerk M a r i e A. F e MAORI E A. FERRE, MAY R PR$PARED AND APPROVED BYS F. Deputy City Attorney RFC/wpc/pb/006 APPROVED TO r L A City Attorney C4RRECTN6$St CITY OR MIAMI, i{.ORIOA INTtR-0FFICt MlIMORANDUM o Howard V. Gary o.~E $eptembtr 4, 1984 .,« City Manager su.~ECT Governor' a Industrial • Development Hond Allo- cation Hearing in ark Ms ill Tallahassee "O" Assistant to the City Manager for "ErE"E«cEs Intergovernmental Affairaf Cable ENCIOtuwEf The United States Congress has passed legislation entitled the "Tax Refor® Act of 1984" that places certain limits on the amount of funds that can be raised by the private and public sector through tax free Industrial Revenue Bonds (IDB). One limit is calculated by multiplying 6150 times the population of the State of Florida, which amounts to approxi~oately 31.6 billion of Band Authority per year. For comparison, last year st,T billion of IDB's were authorized in the state. On August 16, 1984, the Governor bald a workshop as the result of a provision in the federal legislation that authorized the Governor to make a state-aide distribution of IDB issuing Authority limitation among Lhe local governments and state agencies on an interim basis. At the workshop, a large number of speakers and the Florida League of Cities, recommended that 60I of the state's allocation bs assigned to local governments, 35g to state agencies (mostly far big ticket items such as resource recovery projects), and 5x for small users such as governments with less than 20,000 population whose economic development activities utilizing IDB's would exceed the a®ount that the =150 per capita lisit vould ispoas on small county allocations. Sf authorizations ere in tact detersined on a county-wide basis, it is ssti~ated that under a 60-35-5 far®ula Dads County would quality for about x160 sillian in IDB's. For comparison, thbt exceeds the =40 •illion in ID8's i:sued through Dads County Iast year. The prspandsrance of recommendations was to allocate the Band Authority to the County, to be issued locally on a first cue, first serve bads. The City of Miami rspresentitlves present at this workshop were Clerk Merrill, assistant to the City Manager, Charlotte Ga1logly,Dirsctor of Eccononic Develop~aent and Niriam Maar,Assistant C1ty Attorney. Ths City of Miami placed into the r~card, a statsAent of the City's position and a copy of a letter tray the Mayor to Rsprssentative Barry ICutun regarding ID8's, both of which srs attached. To: Noward Y. Gary September gt i9$4 from: Clark Merrill Sub~eet: IDB•s The City of Miasi has not issued any IDB's to private applicants, although it is granted the authority to do ao under the State Statutes. Please keep in rind t~iat the City`s authority to issue Tax Free Munioipal Revenue Bonds is not impaired by the federal legislation so long as private developers, other than investors, do not receive tax free benefits as a result of using IDB's. ?he federal law specifically exempts housing pro~ecta from the state-wide cap on IDB's. This wag done at the City's urging when the Bill was drafted in order to protect future housing unit develop®ent in the City that could utilize tax free financing. This is will encourage capital investment, particularly in the inner city areas of Miami. At the present time IDB financing is being considered for the Bayside Garage and passably far several other garages being planned by the City's Off-Street Parking Department. The State Statute provides for the creation of Industrial Development Authorities as well as establishing certain requirements that apply to issuing IDB's in Florida. Industrial Developaent Authorities are oreated only by counties. They are autonomous, and nerve the entire county. By law, each Authority has a five .ember Beard of Directors and are funded at least partially through charges made to the bond applicants. The Dade County Industrial Development Authority Issued appraxi- Lately i40 million in bonds during the past year. Since 197Q there were 8 pro3eets in the City of Mismi~valued at approximately =12.7 million when the last pro~sct is completed. The Authority has a staff of nine, many of whom are eoono~ic speoiaiists and provide services beyond the issuance of IDH's. The County Industrial Development Authority bolds several public he~srin;a on every project before it is approved, It voula be diffioult and expensive for the City to duplioats this prooess in light of•the limited number of IDB's issued in Miami. The best approach in securing the Miami interests in the IDB issuing prooess vould bs to establish a member from the City of Miami on their Hoard. Rasiistically, the Authorities ward Nemberahips should be sxpande~ to include a broader representative base, i.s., me®bera from the largest cities plus 2 ,. To: NoxarO Y. Gary September 4, 1984 Froe: Clark. Merrill Subject: IDB'a one or two •smbers selected by the Dadc League of Cities to represent the sealler citi:a which would be in addition to representitivea of other related interests. (This same process now provides for the Mayors representation on the South Florida Regional Planning Council). To aeeo.pliah this expanaian would require a change in the state tax. Such a propasl oould be included in Lhe City's legislative proposals for the 1965 legislature.This proposal would also require the County Industrial Development Authority to notify the City of all proposed industrial development pra3ects that are seeking federal tax exempt financing within the City. It should be noted that the federal cap on IDB's is aimed at reducing tax exempt financing on certain private and some public projects in order to reduce the impact that this tax exemption has an the federal budget. Florida, unlike some other states, has not atade excessive use of this method of tax exempt financing. Thls process created by the new legislation, has directed significant attention to the IDB method of financing, and may create an inereasad number of applications for IDB's in the near future. IL is reasonable to assume that additional reatriotions vould be made if Congress detera-ines that the tax lose exceeds the economic general benefit provided by IDB's. The Governor x111 ^ake his decision on the allocation of IDB funding authority by proalasation. This decision will be effeotive until the Legislature •ests, but not longer than Deaesber 31, 1985. The 19$4 Legislature vas considering IDB Legislation (H8.12$1), during the 1984 session, that did not pass. This allocation process will be a legislative concern in the 19$5 legislative ssssion. Also attache the Governors published by CM/arua finals. d is the Florida League of Cities reooaaasndations, aeeting notice and a suawary of the IDB legislation the Governatsnt Finance Officers Aaaoaiation. 3 ~: 3. 7 ~ ATTACHMENT 1 OFFICE OF THE GOVERNOR TM C~oitol, TN1d~, Flerid~ 32301 T~MOhem: !0~l4p-ti34 MEMOAANt~lM Te: AL=, ZIi'PERESTED PARTIES ~~"~ Howard E. "Gene" Adams, Director, Legislative Affairs MOAxSHOp - Industrial Development Bond Allocations ~~ July 18, 1984 The Executive Office of the Governor intends to conduct a public meeting and workshop on August 16, 1984 in the Cabinet Meeting Aooo, Lower Level, the Capitol, Tallahassee, Florida, commencing at 8x30 a.m., Eastern Daylight Savings Time, for the purpose of discussion and taking testimony from intarastsd parties relating to the allocation procedures for tax exempt private activity bonds (industrial development bonds). A copy of the notice as it agpears in the Florida Administrative pteekly, is attached for your information. The Office of the Gov#rnor, pursuant to authority granted by Souse Joint Resolution. 4170, pragosss to issue an Executive Order if warranted, providing for allocation procedures different from those spe~ifisd in the federal act. The allacation of industrial development bonds has serious ecbnoonic consequences for our state and the Office of the Governor is interested i.n r:ceivinq as much input as possible prior to issuance of this Executive Order. Any cosxaents, written responses, snggested allocation formulas or other information, will be walcaad. Tba workshop and mretinq is open for all parsons to attaad aAd it is hoped that a broad range of input and ideas ca~a be alured at this meeting in order to develop allocation procedures for the Efate of Florida. As stated in the notice, written testimony or written cosssents should be torwarded to the Office of the Gowraor, Gene Adams, Director of Legislativs Affaiss, Raoors 210, ?he Capitol, Tallahassee, Florida, 32301. ?he office slay be reached by telephone at 1904) 488-S1S2. d .e ' tr3 ~ ~ tea ~ , . • ~" -.; : ~ '' , ~~ ~ ~ {y S ' X71• tMr. !• P._ I }' ~~!; ~~ .. s :, -- ---- -- -____ ATTACHMENT ~ POSITION PAPER POSITION OF' THE CITY OF MIAMI, REGARDING INDUSTRIAL DEVELOPMENT BOND ALLOCATIONS UNDER THE DEFICIT REDUCTION ACT OF 1984 (H.R. 4170, as modified by H.Con'. Res. 328) This Position Paper is being submitted in connection with a workshop on Industrial Development Bond Allocations to be held on August 16, 1984 by the Executive Office of the Governor of the State of Florida. The City of Miami, Florida has the same economic development goals as Dade County, Florida. These goals are the creation of jobs, an increased tax base, the stimulation of economic growth and tourism, and downtown revitalization. Such revitalization is increasingly important in light of the high rate of vacancy in the major downtown office buildings and hotel§. Although the City has not development revehue bonds ("IDRB") consideration the following joint revitalize the downtown area: The proposed tourism related facility Theater in the Coconut Grove area, Island, the Dinner Key development plan for said area including a par marina, the Florida East Coast Rai a performing arts complex to be to financing may be required in order economically viable. heretofore issued industrial the City has under private-public ventures to Rouse Bayside project, a adjacent to the Players State a cultural facility on Watson in accordance with the master king garage and full service lroad property development and cared within the City. IDRB to make the above projects Additionally, the City has had concern for some time about present policies which allow the Dade County Industrial Development Authority to finance the construction of facilities which remove businesses from the area within the City and relocate them to areas in unincorporated Dade County or to other municipalities within Dade County. This is particularly troublesome to the City in the light of the need to~revitalize the downtown area and eliminate the vacancy rates in office facilities and hotels. In order to accomplish its goals in revitalizing the downtown area the City must be in a position to attract businesses and facilities which make it attractive for companies utilizing office space to locate in~the downtown area. Further, the City has foc same time expended resources to develop the downtown area, including the Gusman Cultural Center. the restaurant arcades along Flagler Street, the Noquchi-Hayfront Park area, the World Trade Center and parking garaq~t. and the City of Miami/James L. Knight Convention Center. This public ?. ~'~ investment was made to increase utilization of the downtown area particularly in tht evenings and on weekends, and among other things was intended to bring people back into the City and t~ reduce the crime rate within the City. The City risks losing its public investment in these projects unless it is in a position to allocate IDRB bonding authority to projects which the City considers to be of the highest priority in its overall economic development. The Deficit Reduction Act of 1984 provides for the smallest unit of overlapping geographic areas to receive the first part of the allocation to local governrsent units, such allocation to be in proportion to its population. The City believes that the Congressional intent was to'give local governments the opportunity for self-detezmination as to the priorities of projects in their areas and to allow the elected officials of such local goverments to fulfill their fiduciary responsibilities to the citizenry. The City, therefore, urges the State to allocate bonding authority for IDRH in such a way that effectuates this Congressional inten . Specifically, the City recorrrnen s~ that it receive an allocation of IDRB bonding authority ~propartion to its population. The "first come, first serve" basis which has been recommended by the County is inadequate to provide for the making of choices betwEen projects which serve private entities solely and projects which, in addition to creating jobs and stimulating economic development and tourism, would also permit the City to target this resource to the areas where it will provide the greatest economic impact. The City would further recommend that khe provision for allocations be drafted in such a way that to the extant a governmental entity does not use any of the allocation allotted to it, it would be able to turn that allocation back to the County or to the State for worthy projects. -2- '' ...y,~`' ;••`~1 Icy %~~, r ~ , .•`~~'~ ,nubuat ls, 1454 }ion. F+arrl• }:utu*i, C1~ai~;^an Crn~crnor's .adiTiso~y Cc~~~mittEe on lndustri al Ile~•elo~nlent Bonds T1ie Capitol 204 House Office Building Ta11al~:~a~ee, Fla. 32301 roar Cl~sir-:~-~ };uttm end Ce^•~-r,ittee '•~;nhers: 11TTACHMI~/T 3 RE~'~~+Y~Lf. .•r rr~rk ~. _..~ _ . t~ It is rm• uidersiti•~dins ~~ou a7-e l a},in~ bath ~}erbal and ~.•ritten testimony on the }~ali~• undea- the fec}~ral ~vSclel~nes for IndiLtrial Itie~te]ant Bands. 7?ye Cit,• of ?~~ia~sti's }}c=iti~ ti<ill he presented U~• A4s. Charlotte Gallogl}', the Cit}''s Director of Econcrnic A~•eIapMent, Ais. ?~Siriarn ;~'.aer from our Cit~• ~,.tornel•'s office ~~~d ?~fr. Clark ~~~errill, Special ASSls- tanx to our Cite `•:ana~,er. Briefly, it is wr interpretation that it is the intent of Congress that the 1rn.•est grn•ernmental emit}• be the recipient of the aI]ocAtion of tht I DB's . It is my position that ~~ cannot accept the aarrent proposal by Metro- politan Dade Crnmtlt to allocate these IDB's an a first-cane basis. The fact that Aii amt has not issued IDI3's in the pa.~t should not be a factor, l:e are >n desperate need of industrial del~elop~nt bands in our f ashian district and in hecorat ors For: , currently t~tset try coc~e- titian outsidr Made County. It is our intenticm to pursue aggressi`=eljt the issuance of II~'s for the econarnic de~lelopn~ent and rede~-elolxnent of A:i aml . fieccntiy, I:~etropolitan Made County approved an II7~ }+herein Coopers ~ L~/brand is using tax-free bonds to laser its office rental by mrn-ing 1 :' S ~~ `+l L-iii, lit 1~~1i;>>>>i. ~;fl~~i-il:~ f•!A~rR tCC h r t R F[ ,•..~s Hen. ?';,r»• t':1~tDl, C!,si~~;;an f:rn•r rnor's : ~~;~~i so~-1• C~~ er~i t t e~c on lndt:strial P:~~c]c;..~cnt raids :~u~11.ai ] S, 1954 rage r,,~o iron the City of Atiami to the ~u~inco>>>or:~ic~d area. It is precisely this misuse of IDB's that has so ~uigc red Con?;rc«n;an Pickle and has mop-ed Congress to add restrictions a~~d t o }~revi de ~~i del Ines for the rase of IDB's. By the aclmi«irn~ of ?,Sr. Robert E71~•~on, the 1~S~~aging Partner of Coo, ors 5 Lybrand, not one s ins]e r,eti; j oh ti,i ] ] har=e peen created by Coc+pers f, L~•brand's mo~~e fro- the city to the iu~ii~co~~~orated area. As ~•ou loio-t, pane elates prohibit the use of ]DB's for the transfers of h~uine<<es from one part of the state to ~>>other. 1=~e ~~~ould strongly urge that this paliel incorporate this },~o?-~ihition into the guidelines in its d~liheratio-~s. 'this blatant abase of 1DB's by hietrol~olit.an 11ade Co~uity in the Coopers case lea~~es me little cm~fidence in its obiecti~=ity or its ability to dedicate itself to the eco;iomic, and to the pro}per ind~~strial, deg=elop- mcnt of Fade CGUnty. I1;~ring this sane period -;l~,en tax-free monies are used to e-.~pt~' office space from drn•.nte~~.n Dade Coln~t~• to the imincor- porated area, Racal-?~Silgo Corp. mop=ed from T'liami to Broti~ard CoLmtl=, and the Cordi s C~~rp. has a,v~o~~n~ced its }areference of an e~-}a;3nsi~n of its facilities in fira~ee c~•er e~7,andins its pant in Dade Count}-. In ~=ie~•: of tl;ese };amt dct i c*~s , I rc ~)~ectfu] 1~' ~•,c~tr] d su~~mit to the Com- mittee, Gad through )'ou to the ~o~e»iar, and et~ent~:ally to the Legis]a- ture, that y~~ pel~rnit r.~u;icipa]ities, like ASiami, to act in their best interests. ~o as not to let IDB's get lost through inaction of m~micipalities, I kbuld, he~:e~~er, reco:-rnend ;~ou set a deadline by ~.fiich that allocation, eithex directly or through 1,Setro on a population basis, be utilized; othercise, that allocatiaz ~•~ould go into a general pool, then to be sought on s first-cage, first-serve bads. Si cerel}-, ~~l~M ASauri ce A. Ferro 1•iAF:pas ria~=or of ?~iismi T °° , }~ LORIDA LEAGUE OF CITIES, wc. a.,e...~ ~. s:,oo~- :MORANDUM T0: The Hoanorable Hob Graham Oowrnor, State of Florida FRCDI: Harry I~rriaoa, Jr. As:istaat fleaeral Couaael Florida Ua~tse of Cities RE: Ta: Aefors Act of 198+ Private Activ2ty Bonds • Florida A2lccatione DATE: August 10, 1984 Ist the latter part of June, Coaareaa passed HR 4170, the Tu Reform Act of 1984. Part of thin le~ialatiaa placed aSaniSiasnt reatrlctians oa the use of iaduatrial developsrat boada (IDB'a). t3eaerally, the leFialation imposes a 1150 per capita mate-bT•state limitation oa the iasuaace of IDB'a. Basically, the le~lalatloa reserves SOx of the state per capita allavaace to the State Gad the r+wiaias S0~ to local Eover~t. The ls~ialatioa further providra, harem, that the Oo~arnor W provide an altsraative allocation Mthod. The E~cecuti~-e Ottice of the tbveraor has aaaouaced Tour intent to provide an alteraatire allocation procedsure for I~~a in Florida. Zt la q uadentandinf that your office intenda~ to use ~ ].Z81, Proposed duriaf th+e 198k I,esialature, as the Dania troy sshich to Qetraine Florida's allocation prx~dure. FlD~RAL IialSLATSOII - ALiACiT20r Tlse Fedtral legislation pro~ridea that each 8tate~s ceilios is allocated equal],~- betwsn (1) t1:e State sad its apnaies , and (2) the local ~sisaental units . Tbrr oar-bal~t allocated to 3oasZitias is divided uos~ for Stt p~rvportloct to tl~wlir pap- si].atiwu. i~sa the is~ictiesas of tiro Ioaal Borernasntal smite arerlap (e;. oosmtylait~-), the unit vith ~titrisdiction oar the wallert dcal asea (+~, !br larpr ~vrisdiat~ (K~oanat~-;~iyoeti~ iloos3lti~rs ~ 3Q~ of 1~brs oail,lxsi. thr mrber of residrsta otlrr than the raldrta of~Wse aaalla-r ~nrisdictioa~ iBr tan BosrrrseMatal emits hale ~urisdictiort ar+er the Gar po~iaal area (e~. city/oaw~.tf t~elopMat aps~cT? , oa1T the ~uriadiatloa Frith the broae~er aEr- eres.;pa powrs rivei~w toe ceilias allocation (et. city?. F: i` E 84",~ a04ffi~NOA'3 ALLOCATION POWLA.S ~e Federal allocatioaa may be changed by state law or by action of a atats~s governor. The C3overaor~a allocation will be eftective until such time as the State Le~ialatuss sakes a different allocation by law or until coweace- sent of the 7'Kr after the brat reNu].ar session of more than 60 dyra of the State L•tialature follovias the enactment of the Federal lesialatia~n. Thus, it the 1985 State Le~ialature paeaea a state lax providia~ for as allocation, the gonrnor~a allocation will expire. Otherwise, the Qoveraorta allocation will expire at•the end of 1985 sad x111 be replacsc! by the allocation provided la the Federal leSialation. Baaed on the fore~oin~, the League recommends that the followiaN propositions be Incorporated into say allocation procedure provided by the governor: 1. The c3overaor should provide fora 60/35/5 allocation 64x doing to local govermu`ata, 35x Qaing to the State and 5~ being reserved to local govermeatal waits la couatlss xith populations of 20,040 or leas. Z71s State has sot is the recent past issued IDB~s sad the only State bond Issues that would be aub)ectsd to the ca in the foraeeable PU,ture would be State bonds issued pursuant to Sec. 240 .39-240.463, Fla. Stet., to finance student loans sad, is some cases, Stets bonds issued pursuant to Ssc. 403.1834, Fla. Stet., to fiaaace the construction of vasioua water supply sad dlstri- bution facilities, air sad water pollution control sad abatese~nt facilities, sad solid xaate disposal facilities. Accordingly, it mould appear that the State is therefore not is arced o! its entire 50x allocation. Qa the other bawd, local ~+overamenta have hiatorlcallp been. the Issuer of IDH'a sad would appear to be the ~aTSraa~atal units that will issue IDB~a is the forseeabie ititure . a. The Sx allocation reserved for local tov~erasaatal units is wall oonatie~r attempts to address the problw Soveraseaatal units in awll cro~mtiee have Incurred as a result of an allocation cap bassi oII popalatioII. TLia problea ms~- bmat be illustrated bT the follovia` aopa#pla. It the allocation cap vas is ea~iatemae duria: 1983, local sovermental snits to Citrus tbvat~- would here bvea allocated appr~c- laatelT ~i6,000,00t? oa a 60/35/5 allocatiaa~. ?et, la 2983, 21~'a in ~ ae~at of (96,500,000 w.r• iasaed in Citrna Oovmt~, f8~,000,Q~0 of tL~ I't~~ a more iaewK! for tLr oooatrnotico of a polluti.cm or.~trol taaliitt (1e. a oat-shot his ticloet it+~a~ . Cleerl~r, rilati»2,T fit, the coat of ooastrnatian of the poll~ttsos oontroi faoilit~r moald Lsve been ago tore Lad 1t Deed ooastivatrd 3n Dade ~tT; Wiz, lobe 3,apaat an tL. allocatl,am oep mcrold sot Lave bey ear drastio w 2mQa1 Vital tmita la Dade Oonat~- se- it could Lam Geed oo S+as+e:mw~tal uai.ta is Citrna Conaty. Bwoe t?ae wall ocmat~r allocation pool rill have the effect of eorrbat ottsi tbee mooa+eeionsbU result the allooation sap will here oa pAr:~eo~tsl vttita io e~all. oo~mtiea ~ thrp attempt to 3seoe I1S3 ~ • for his tieioet itew . 84-9l~p ~a'il~, ~,,,, b. Kith retard to the local allocation, it has bees sussersted that the Qovsraor do stray frith the IDB allocation specifically reserved to citier in the Federal lssislatioa. This ausseatiaa has been tads priaariiy because the federal local allocation, vhea applied to Florida's caller cities, does not provide smaller cities with encash of an IDB allocation to isstu .aa IDB u a practical natter. For emYple, over htlt thr eitirs is the State of Florida have populations of 5,000 or less. Generally a city frith a population of 5,000 under the Federal local allocation xlll receive an amaual IDB allocation of only =37'S,000.•~A rMetr of the 233 IDB issnea in Florida in 1983 show that Daly 7 wrs in as accost for leas than :1,000,000 sad that there wre ao IZ>8'a issued durias 1983 itt an amotmt of 6375,000. Ia sum, it is aussestsd that the federal local TDB allocation, when applied to Florida's cities, Sa imprac- tical. iihil• the Leasue does sot neceaaarily recomuemd that the federal allocation rsaervation to cities be preserved, the UaFue does believe that 1t is iacusbsnt upon the Governor to tmderataad that the above rationed probles could be sor~rrhat alleviated by usi~as the 3-year carry tortrard provision of flu federal lesislatioa to accvtu,late as asouat stifficiest to issue as TDB. Alternatively, various local issuers could eater iataa inter-local asresmeata to jointly utilise their ZDB allocations . It it la noasthleas the t3ovsraor's latent to do axay frith the specific reservation of TDB allocatiomGS to cities, the Lrasue recorends that for local allocation available t4 the local sovernaemtal oasts in each county be based on the population vithia the teotraphical bcuudariea of each obsmty sad that the local allocation be eoasurd on a first oome- first serve buss. ?he L+radue is opposed to YT allocation process that tsotxld require a eotmty sovesussnt's approval of a city's isstaaace of as I~ or as allocation systas~ that mould be hued oa a doteruseatal entity's pt~eviovs tun of ID8's. c. Kith regard to the State sllocaticn, the I~easne voald reco~snd that a priority bs siv+an tc "private activity bonds" issued b~the State. This traola sacludr state bonds iaaard parstiant to Sec. 2 .439-240.463, lla. 8tat., for student luau sad possibly ata~ bonds issued pRxrstunt to Bea. ~03.I834, Fla. 8tat. , to tiasac:e the cceutr~nctson o! variotu toter soppl,T snd distribntloa facilities, air sad eater pol2tttiaa control +rd abate~rt facilitise, sad solid twste dispasa~, tatailit3,M • AlLaC~ 1+iaas rwal~diils i3l the State allocation pool after the ~ OT ~4T of i~ abc~ets s~snttcrd State bonds should be Qtiiised tar 3~'s of 14ca1 ~ ffi1'!ii frost oo-m~tiM thtt have rsa~ahed t3rir assual ~ bn a tirsh oo~s-first serve bYis . Zf firs Oovesaor decides flat curtaSa local ID® pro~eats sbonid bR si~sa a priority 13 the State allocation pool, flan tote Ike reoor~so+ds that s priority be sivea to IDS's issued to fiaaace the oonstroatioa of projs+cts, as defined ia. Sec. 159,25(5), Fla. Stat,, 1n enterprise sao~es, u defined la Sec. 290.004 (1) (a) , Fla. Btat . , is cwststm3tT redevelalssnt 84'960 ,, R~ ~ ~. ~ _~ area , u defined in Sec. 163.340110), Fla. 8tat., sad is otber community redevelopcent areas created purauaat to constitutional, general or special law. There is a strong state policy to provide incentives to lavaat is sad to locate in these redevelopment arena. Distressed areas are considered by the State to constitute a serious menace that is in~uroua to the public health, safety sad wlfare because the eaciateace of such area contributes substantially to the spread of discus sad crime, constitutes an ecoaosiic sad social liability SsPosing onerous burdens which decrease the taz bue sad reduce tar revenues, substantially impairs sound growth, retards the provision of Louslrig ucoaodationa, aggravates traffic problesu, and sub- stantially haapers the elimination of traffic hasarda and the Saproveaeat of traffic facilities, and otherwise consumes an e~ccesaiw proportion of gorrraceatal revenues because of e~ctra services required for police, tire, hospitalization, and other forma of public protection, services, and facilities. Additionally, each of the pro~scta authorised to bs constructed with revenues derived from the issuance of IDB'a could be located la redev- elopseat area and the location thereof would aubatantiall~- address the problems sad evils that are uniquely a product o! distressed arena. Thee, a priority of this nature would Give all pro~ecta authoria~ed to bs con- structed Eras revenues derived fraao. the iasuaace of ZDB'a a shot at the State allocation. Finally, priority given to these redevelopment arias iroul.d further tb~e Iwgialature' a and the {3ovsraor' a aclmoxledg~ed ob~ectivs of promoting sad accoaodatiag sound growth maaateamalt policies in that it would have a aubataatial effect in diacauragiag urban apraxl. The t3overaor may xaat to further consider providing a priority to ZDB'a issued to fiaaacs the conatructioa of resource recovery facilities, aewge and solid vote facilities, pollution control facilities sad hasard- oua caste disposal facilities. These are big-ticket itee~s that have the potential of eshtustia~ a county's allocation with one issue. Additionally, tLeee facilities address certain substantial environcental concerns of the State and thsa tacilitiu constitute the essential gowrncental lafrastruc- ture that la required in order to accacodate the other ID8 uses. 2, the Leatue reaoslisada that the tZowrnor's allocation procedure provide a ~ecLanisa vLereby a county's recalalag all.ocatioa will be retrieved sad placed into the State allocation !or ase b7 other local goveramrntal Haifa in oouaties that bars reaQbed tLeir raps dwriag a Particular Tear it the local gowrnantal emits is a particular oouaty do sot utilise the caumty's I~ allocation vithia a t3as oerta3a daring each calendar year. For emsple, in 1985. it is satlci- patad that fire goTei~ocsatal twits vithia 8rovard Cosmty, on a bOl3S/5!I allocation, will receive over =9'-,000,000. It by October 1, 1985. for ea~s~le, tLe emits Ot 3~OOa1 ~!elacent vitJf tLe geb~raphical bOtmdariM Ot S!"otiard Cutmty bar! sot at111sed eta allocation, the Co>mty's recaiaiag allocation sLoald be shitted to the State allocation pool !or use by twits of local ~owrmisnt lII oaastiM that Law alres~ reached their sap tar 1985. ?~ Sf "snail couat~- issuers" allocation sbonid be treated la a lilts canner. ~' „';: ~~ !"~rWashington Updata, ATTACHMENT 5 C`~~,~G '~; ~~~ _e ~ 8 44 t ~dl~p 13, 1984 SUMMARY OF MAJOR PROVISIONS IN THE DEFICIT REDUCTION ACT OF 1984 iH.R. 4170? AFFECTING STATE AND LOCAL GOVERNMENTS Industrial Develo went Bonds tIDBs) -- Imposes a 5150 per cap to or 0 mil ion annua vo uaie cap on industrial development bonds and student loan bonds beginning in 1984. The per capita limit falls to 5100 in 198 when most small- issue IDBs sunset. Exempted from the cap are bonds used to finance multifamily residential rental property, certain refunding bands, and IDBs used to finance convention ar trade show facilities, airports, docks, wharves, certain parking facilities, and mass transit facilities that are publicly owned .f or tax purposes and where rents charged to users are not front-loaded. A statutory formula provides 50 percent of the state cap allocation to state ageneies and SO percent to local issuers. If local issuers overlap, the cap is allocated to the one with the smallest geographic area. If the geographic area is identical, the governmental unit having broader sovereign powers obtains the allocation. Governor: are given interim authority to reallocate the cap. This power terzsi- nates within a certain period of time after the state legis- lature meets in regular session. 11 three-year carry-forward of a state's volume cap for certain projects tsix years for pollution control hoods) is permitted. The carry-forward is not applicable to small- issue IDBs. A two-y:ar phase-ia is allowed in states whose 1983 volume exceeded the state-wide limit. A transitional role exempts bonds having an inducement resolution adopted before June 19. 1984 from the cap if the bonds are said De- fore January 1, 1985. Allocation priority must bs given to bonds with an indueem:nt resolution bsfore October i9, 1983 in the year in which the bonds ar• sold if construction had begun or a binding contract existed by the samlt date. Public officials responsible, for bond allocations ender the cap swat certify that no consideration for allo~atioe was received. t:riminal penalties will apply whaze it can !ve shown that any bribe, gift, gratuity, or direct or indirect contribution to any political campaign is made. New restrictions on cost recovery requiring straight- line depreciation over ACRE periods apply to UDAG projects, sewage and solid waste disposal facilities and certain pol- lution control facilities. These rules apply to property placed fn service after December 31; 1983 Which is financed by an obligation issued after October 18, 1983. More restrictive IDB azbitrage rules will apply to obligations acquired for investment (nonpurpose obligations) effective January 1, 1985 except for those IDBs used to fi- nance multifamily residential rental housing. The change reduces the temporary period for investing bonds proceeds from 3 years to 6 months and requires a rebate to the U.S. Tres:ury of earnings on invested bond proceeds in excess of bona yield. . The use of IDBs to acquire land and existing facilities is limited for bonds issued after December 31, 1983 with an exemption for bonds issued before January 1, 198S, pursuant to an inducement resolution adopted before June 19, 198. No more than 25 percent of the bond purchase nonagricultural land. Thy percent for industrial. parks, and airports and docks is exempted. facilities is generally prohibited of rehabilitation is undertaken. first-time farmers. proceeds may be used to e limit increases to SO some land required for The purchase of existing unless a certain amount Special rules apply to with respect to small-issue IDBs, a S40 x+illion limit on the outstanding amount of all tax-exempt IDBs for the same company is imposed on bonds issued after December 32, 1983 except for where transitional rules apply. The small- issue sunset was extended through 1988 for a3anufacturinq facilities. All others era schsduled to expire at the end of 2986. Avoidance of limitations on small-issue IDSs through divisioA of ownership is prohibited. The bill eliminates ID8 financing for the following prohibited facilities generally beginning in 1914: airplanes, luxury boxes, gambling facili- tiea, alcoholic beverage stores, and health clubs. Ths tax code provisions permitting advance refandings for certain convention and trade show facilities, aisports, docks, wharves, mass co~nmutinq and parking facilities art repealed. The public appzoval requizesaant passed in 2982 i• codified for public airports where the goverasept unit is- suing the bonds is the owner or the operator of the aitpost. Only the issuing governmental unit, rather than all units in which the airport is located, wilt be required to approve the IDHs issued to finance airport facilities. -2- +~'"' ,;.~ 6 ~ Governmental Leasing -- In general, the bill denies accelerate cost recovery for property leased to or used by taxexempt entities. Equiprsent must be depreciated over an extended period equal to the greater of the mid-point life under the ~-DR system (useful economfc• life) or 125 percent of the lease term. Short-term equipment leases and certain high technology equipment are exempted from the provisions, Real property must be depreciated on a straight-line basis for the greater of 40 years or 125 percent of the lea:e term ff 35 percent of the property is used by tax- exempt entities and at least one of the following circum- stances exist: 1) all or apart of the property is tax- exempt financed by a related partyt 2) the use involves a lease with a fixed price option= 3) the u:e occurs after a sale, lease, or other transfer of the property by the city oz tax-exempt entity, except for property leased within three months after being placed in service by the tax-exempt entity: or 4) the use is pursuant to a lease term excetding 20 years. The investment tax credit and the rehabilitation credit is denied far all tax-exempt property meeting the above re- quirements. Leases for 3 years or Less are exempted. The legislation establishes guidelines to determine when a service contract is mare properly characterized as a lease. The circumstances taken into account are whether the * service recipient is in physical possession of the property = * service recipient controls the property; * service recipient has significant economic or possessory interest in the property= * service provider bears significant risk of non- performance under the contract, * there is concurrent use by service provider to provide rignificant services to entities unrelated to the service recipient, and * contract price substantially exceeds rental value of the property. Service contracts far certain solid waste, energy and water tzeata+ent facilities are not treated as a lease except where the service recipient under contract with a solid waste facility operates the facility, bears significant fi- nancial burden if there is nonperformance, receives signifi- cant financial benefit if operating costs are less than standard performance or has a fixed and deters-inable pries purchase option or racy be required to purchase the facility. 1n general, the effective date of the legislation ap- plies to property placed in service after May 23, 1983. Ex- tensive and detailed transition rules also apply. -3- ~ • Mortgage Revenue Hond Program -- The Act extends the mortgage revenue bond program for four years through 1987. l~n optional program allowing issuers to exchange theft bond authority to issue swrtgage credit certificates has been craatad. ocisl Security -- Tax bill conferees did not accept the enate prove sion that would exclude municipal bond interest income from the income base of social security recipients. Co__rporata Minimum Tax -- The deduction taken by finan- cial n~st"~t'ut~ons for costs incurred for buying or carrying tax-exempt bonds will be reduced from 85 to 80 percent. !or More Infor~sation -- A copy of the Deficit Reduction Act tH.R. 4170) and the Conference Report to accompany it may be obtained from the U..S. Government Printing Office, Washington, DG 20402. 520.00. t202) 275-2091. The Congressional Record dated June 22, 1984 tNo. $7 -- Part II) cone ns statutory and conference report language for H. R. 4170 . A Summary of Tax and Spending Reduction Provisions of H.R. 4170 as Psssed b the House and the Senate has been prepare by t e sta s o the Jo nt Comm ttee on Taxation, Committee on Ways and Fans, and Committee on finance. Also available fro+~a the U.S. Government Printing Office. Cathy Spain and Cathie Eitelberg of tilt~A' a federal Liaison Center will be happy to answer any questions you s+ay have. Plsase call t202) 466-2024. _~_ ~~, ~:_ ~: ~'