I-1 - Preliminary Official Statement - UR Loan Agreement

(8) Development and Rebate Agreements The City has entered into various rebate agreements to assist in certain urban renewal projects. The agreements require the City to rebate portions of incremental property tax paid by the developer in exchange for the construction of buildings and certain infrastructure improvements by the developers. The total to be paid by the City under the agreements is not to exceed $1,919,500. The total amount rebated during the year ended June 30, 2019 was $57,458. The outstanding balance of the agreements at June 30, 2019 was $1,207,000. These agreements are not general obligations of the City. However, the agreements are subject to an annual appropriation and only the amount payable in the succeeding year is subject to the constitutional debt limitation. (9) Tax Abatements Governmental Accounting Standards Board Statement No. 77 defines tax abatements as a reduction in tax revenues that results from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax receipts to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments. City Tax Abatements The City provides tax abatements for urban renewal and economic development projects with tax increment financing as provided for in Chapters 15A and 403 of the Code of Iowa. For these types of projects, the City enters into agreements with developers which require the City, after developers meet the terms of the agreements, to rebate a portion of the property tax paid by the developers, to pay the developers an economic development grant of to pay the developers a predetermined dollar amount. No other commitments were made by the City as part of these agreements. For the year ended June 30, 2019, $20,434 of property tax was diverted from the City under the urban renewal and economic development agreements. (10) Construction Commitments The City has entered into construction contracts totaling $18,277,375 for streets and wastewater treatment plant improvement projects. As of June 30, 2019, $11,850,572 has been paid on the contracts. The remaining $6,426,803 will be paid as work progresses. (11) Subsequent Events In August 2019, the City issued $4,500,000 of general obligation corporate purpose bonds, series 2019A for the purpose of paying the cost of constructing street, storm water drainage, sidewalk, sanitary sewer and water system improvements and acquiring and installing street lighting, signalization and signage. 32