Opinion ID: 1360775
Heading Depth: 1
Heading Rank: 3

Heading: tax increment financing

Text: Tax increment financing of the costs of urban renewal was enacted in 1983. [10] Tax increment financing is a statutory mechanism whereby municipalities may dedicate future ad valorem tax revenues for the payment of the costs of undertaking and carrying out urban renewal and urban redevelopment projects. Summarizing the 1983 legislation: Section 1 amended 11 O.S. 1981, § 24-108, which authorizes the Oklahoma Municipal Power Authority to issue bonds, and is not germane to the issues herein. Section 2 amended 11 O.S. 1981, § 38-115, which authorizes an Urban Renewal Authority to issue bonds, leaving intact the provision that notes and bonds of an urban renewal authority are not debts of the state or municipality. The amendment to § 38-115 allows payment of the principal and interest of urban renewal authority bonds from taxes on incremental property values allocated to a special fund of the city and appropriated by the city to the Urban Renewal Authority. Section 3, codified at § 38-120, permits the governing body of a municipality to designate an urban renewal area to be a tax increment allocation district, upon notice and public hearing and subsequent determination that the designation is necessary and desirable in achieving the objectives of one or more urban renewal or urban redevelopment projects. Section 4, codified at § 38-121, declares that the costs of urban renewal and repayment of interest and principal on urban renewal bonds are valid and lawful objects to which ad valorem taxes authorized in art. 10, § 9(a) may be applied. Section 5, codified at § 38-122, provides for a base year net assessed valuation of all real property in the tax increment allocation district. The base year net assessed valuation is the starting point for determining the millage to be apportioned for urban renewal. Section 6, codified at § 38-123, requires the county excise board to apportion a part of the millage authorized by art. 10, § 9(a) to the municipality and provides the apportionment formula to be followed by the county excise board. The apportionment formula arrives at a millage rate for each year which is proportionate to the increased value of the urban renewal property, the increment, divided by the total assessed value of property in the city, to a maximum of one-half a mill. The county excise board is required to apportion the millage and revenues therefrom to the city for urban renewal and urban renewal redevelopment in accordance with § 2495 of Title 68, for a maximum of thirty years. Facially, the 1983 legislation establishes a scheme for a municipality to fund the renewal or redevelopment efforts of its urban renewal authority through various means. In relation to the instant case, the legislation authorizes the following: a municipality may create an urban renewal authority; [11] the urban renewal authority is considered an instrumentality of the municipality; [12] the urban renewal authority may incur debt to fund urban renewal by issuing notes or bonds; [13] the note or bond is considered a debt of the urban renewal authority and not of the municipality; [14] the municipality may include the urban renewal authority's debt in its annual estimate of need or budget; [15] the county excise board must apportion to the municipality those revenues generated by the millage determined in accordance with the statutory formula and levied upon all the property in the municipality; [16] and, the municipality may allocate the ad valorem tax revenues to the urban renewal authority to fund urban renewal including the payment of interest and principal due on the urban renewal authority's note or bond. [17]