Community Development Authority

March 3, 2006

Community Development Authority

• Created by ordinance of City Council upon Petition by owner of at least 51% of land within CDA (Hampton Mall Associates)

• CDA has authority to issue bonds to finance the public infrastructure that is part of the Town Center

• Repayment of CDA bonds will be made through special ad valorem taxes, a special assessment on the real property in the CDA and a pledge by the City of certain incremental tax revenues as described below
• CDA Board consists of 5 members appointed by the City Council; one of which will be the City Manager or his designee

• City Manager or his designee will be designated as the "CDA Representative" - responsible for signing requisitions for bond proceeds to finance the infrastructure projects and other approvals required of CDA

• CDA is a separate political subdivision/City is not responsible for repayment of CDA bonds

• Approximately 76 acres to be included in CDA

CDA-Financed Infrastructure

• Acquisition of fee and/or leasehold interests or rights-of-way for public improvements (consists of approximately 16 acres)

• Purchase price for acquisition of interests in land to be paid by CDA will be based on MAI appraisal obtained by the City (but not to exceed $27,600,000)

• The City will pay the cost of demolition of flyover and costs of related improvements to Coliseum Drive

• Developer will agree to pay costs of improvements to intersection of Commerce and Mercury Boulevards, including signalization; but to the extent there are bonds proceeds not needed for the other improvements described above the CDA will use such bond proceeds for these improvements

• Roads, sidewalks, streetscaping, parks

• Utility improvements

• Parking facilities

• CDA-financed infrastructure will be owned by CDA

• CDA's share of the cost of infrastructure will be limited to $65,502,700

• To the extent CDA bond proceeds are insufficient to complete infrastructure, developer will covenant to pay costs to complete public improvements contemplated by initial CDA financing

• Developer will manage and maintain public infrastructure pursuant to management contracts with CDA that qualify under IRS rules for management of property financed with tax-exempt bonds

Security for CDA Bonds; Revenue Sources

• City will not be responsible for repayment of bonds

• Repayment of bonds will be provided by four revenue sources: Special Assessment (consisting of Retail Portion and Back-up Assessment); Special Ad Valorem Tax; and certain Incremental Tax Revenues

• Special Assessment will be levied on all taxable property in the CDA in an amount sufficient to pay debt service, administrative expenses and a $50,000 annual contribution to the CDA repair and replacement fund for major repairs (the "Special Assessment")

• Retail Portion: A portion of the Special Assessment (the "Retail Portion") will be collected based on retail sales equal to 1/2 of 1% per $1 of sales

• The Special Assessment, including the Retail Portion, will constitute a tax lien on the property assessed

• The landowners' obligations under the Special Assessment will be offset by the amount collected as a Retail Portion, and by an ad valorem special tax and a pledge of certain incremental tax revenues, as each is described below

• Back-up Assessment: To the extent the Retail Portion, the special ad valorem real estate tax and the incremental revenues are not sufficient to pay debt service, administrative costs and $50,000 annual reserve contribution, the remaining amount of the Special Assessment (the "Back-up Assessment") will be collected

• Special Ad Valorem Tax: The City will levy a special ad valorem real estate tax in the amount of $0.25 per $100 value

• Incremental Tax Revenues: The City will agree to pay, subject to annual appropriation, the incremental tax revenues generated within the CDA district over a fixed amount, which amount will be based on an agreed upon base year

• Base year for calculating sales tax increment will be calendar year 2004

• Base year for calculating real estate tax will be fiscal year 2006

• The following incremental tax revenues will be paid to the CDA subject to appropriation by City Council
  • 100% incremental real estate taxes

  • 50% incremental sales tax (local 1% only)

  • 25% incremental meals tax (pledge of 25% of meals tax will not reduce the 2% meals tax pledge supporting the convention center)

  • 50% incremental amusement tax

• None of the incremental personal property tax or BPOL tax will be paid to CDA

• After the CDA bonds are paid in full or defeased, all incremental taxes will belong to the City

• Under VA law, the City Council is precluded from making any payments to cover CDA debt service except those expressly authorized in the ordinance creating the CDA; such ordinance will limit the City's payments to the tax increment amount described above

• Retail Portion, Incremental Tax Revenues and Special Ad Valorem Tax will be collected in advance of debt service payment dates in order to allow for calculation and collection of amounts due under Back-up Assessment

• Method of collection of Retail Portion will be determined by agreement among the City, the Developer and the CDA; City will not be required to pay any costs of collection

• Developer will be reimbursed for payments of Back-up Assessment in subsequent years from any surplus; surplus is calculated as excess of Retail Portion, CDA share of incremental tax revenues and special ad valorem taxes available in any year over the debt service, administrative expenses and $50,000 contribution due in such year

• Any reimbursements will be paid only from incremental tax revenues and will be paid by the City, subject to appropriation, to the Industrial Development Authority or other entity authorized to make grants to the Developer

• Any surplus remaining after reimbursement to developer for Back-up Assessment paid by developer will be paid to the City