I-1 - Preliminary Official Statement - UR Loan Agreement

City of Tiffin Schedule of Findings Year ended June 30, 2019 (10) Tax Increment Financing (TIF) – Chapter 403.19(10)(b) and 403.22 of the Code of Iowa provide moneys in the Special Revenue, Urban Renewal Tax Increment (TIF) Fund shall not be used for any purpose except for the payment for the payment of loans, advances, indebtedness or bonds which qualify for payment from the TIF Fund or to provide allowable low to moderate income (LMI) assistance. During the year ended June 30, 2019 the City transferred $1,015,065 from the Special Revenue, Urban Renewal Tax Increment Fund (TIF Fund) to the Capital Projects Funds to resolve the deficit balances these funds. These transfers do not represent TIF obligations, accordingly, are not allowable use of tax increment financing receipts. Recommendation – The City should consult legal counsel to determine the disposition of the use of TIF receipts to eliminate fund deficits. Response – We believe general obligation proceeds, which were certified for payment from TIF, were not transferred to the capital projects funds when the debt was issued and TIF receipts were not transferred into the debt service fund to pay the debt. We are continuing to research this issue and will consult with our bonding attorney, Dorsey and Whitney. Conclusion – Response acknowledged. The City should return the $1,015,065 to the TIF Fund until a determination is made, through consultation with legal counsel, this is an appropriate use of the TIF receipts. (11) Tiffin Fire Association Background: Chapter 364.16 of the Code of Iowa requires the City to provide for the protection of life and property against fire. This section also states in part, “A City has the same governmental immunity outside its corporate limits when providing fire protection as when operating within the corporate limits.” The City’s Code of Ordinances states, “Pursuant to Chapter 28E of the Code of Iowa, the City has entered into a contract agreement with Tiffin Fire Association for fire protection and prevention within the City.” The Tiffin Fire Association (Non-profit Fire Department) is a private non-profit organization established under IRS Code 504 whose purpose, as documented in its by-laws, is to “foster and advance the delivery of emergency fire and medical care to the people of the Tiffin Fire District, and to those who pass through, and Mutual Aid as requested by the Johnson County Mutual Aid Association and the Johnson County Sheriff’s Office.” On April 24, 2008, the City passed a resolution to enter into an Agreement and Contract for Fire Protection with the Tiffin Fire Association. The resolution states the agreement is entered into in accordance with Chapter 28E of the Code of Iowa. The agreement does not create a separate legal entity but provides the Fire Association is to “furnish fire protection and other emergency services…in the described response area.” Pursuant to the agreement, the Association will own or lease, maintain, house and staff the fire protection and other emergency equipment used under this agreement. Also, the Association Board shall determine the annual budget for the operation of the department and for all major expenses and purchases of new fire vehicles and equipment and the City Clerk shall transmit all tax monies resulting from the fire protection levies to pay costs agreed to under the contract. Under the terms of the agreement, the agreement may be extended for periods of one year at a time by resolutions of the City Council made at least thirty days prior to March 1. 60