Discussion and Review of FY 2026-2027 Budget

City of Tiffin Notes to Basic Financial Statements NOTE 7 – DEVELOPMENT AGREEMENTS The City has entered into a development agreement to assist in certain urban renewal projects. The agreement requires the City to rebate portions of the 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 $16,432,000. The total amount rebated during the year ended June 30, 2025, was $462,493. The outstanding balance of the agreements at June 30, 2025, was $15,454,743. These agreements are not a general obligation of the City. However, the agreements are subject to the constitutional debt limitation of the City. NOTE 8 – 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. A. 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 to rebate a portion of the property tax collected. No other commitments were made by the City as part of these agreements. For the year ended June 30, 2025, the City abated $429,529 of property tax collected under the urban renewal and economic development agreements. NOTE 9 – INTERFUND TRANSFERS The detail of interfund transfers for the year ended June 30, 2025, are as follows: Transfers In Road Use Debt Employee Transfers Out Tax Service Benefits Water Total General $ 115,290 $ 45,000 $ - $ - $ 160,290 LOST - Assessment Reduction - 100,662 200,000 - 300,662 Tax increment financing - 1,557,087 - 88,000 1,645,087 Water - 111,500 - - 111,500 Total $ 115,290 $ 1,814,249 $ 200,000 $ 88,000 $ 2,217,539 Transfers above move resources from the fund statutorily required to collect the resources to the fund statutorily required to disburse the resources. 28