Negotiators dispute TIF caps, debt term in S.127 housing conference

House and Senate negotiators meeting on S.127, an omnibus housing measure, traded detailed counteroffers on tax-increment financing rules and review timing, leaving no final decision on several key provisions.

Negotiators said they would not accept the other side’s proposal and offered three counterpoints: keep the but‑for exemption limited to “affordable” units rather than extending it to moderate‑income units; maintain a $40,000,000 cap on TIF with an additional $5,000,000 allowance while removing a sunset provision; and set increment‑retention percentages at 70 and 85 rather than the other side’s 75 and 85. They also proposed shortening the period used to assess and adjust increment retention to eight years instead of 10.

The disagreement centers on how broadly projects would qualify for TIF treatment and how quickly municipalities and developers would need to return for a statutory review. A negotiator summarized the position as keeping the exemption to truly affordable projects to avoid expanding the overall value of projects that could tap TIF resources.

Jessica Hartleben, representing the Black Economic Harvest Council, said the bill’s drafters had intended to keep language consistent with the existing tax increment financing statute. Hartleben described the statutory review process and the rationale for a 10‑year check: “during the tenth year, following the creation of the tax increment financing district, the municipality would submit an updated tax increment financing plan to the council, which would include adjustments and updates of appropriate data and information sufficient for the council to determine based on tax increment financing debt actually incurred and the history of increment generated during the first 10 years, whether the percentages approved under subsection F of this section should be continued or adjusted to lower percentages…,” she said. Hartleben added that because many of the projects contemplated under the bill are “smaller in nature and may not generate enough increment,” a 10‑year review gives municipalities and developers a longer runway before any downward adjustment: “Extending it out to 10 years gives the municipalities and the private developers a longer period of time before they have to come back…We’re not gonna be able to ever go up.”

Negotiators also debated the appropriate debt‑incurrence or look‑back window. One team proposed an eight‑year period, arguing that the bill’s debt incurrence period is five years with a possible three‑year extension, which together total eight years; others pushed for a 10‑year statutory review tied to the existing practice under the TIF statute.

No formal motion or vote was recorded during the excerpted discussion. A negotiator asked to hear further expert testimony, and one participant requested that a person identified as Betsy be given the floor for additional comment; Jessica Hartleben provided the technical statutory explanation during the session.

What remained unresolved in the recorded discussion: whether the but‑for test in the bill should include moderate‑income units or be limited to affordable units; whether the bill should remove a sunset on TIF authority while keeping a $40,000,000 cap plus $5,000,000; whether to set increment retention at 70/85 instead of 75/85; and whether review of increment retention should occur at year 8 or year 10. The group continued to negotiate without arriving at a final decision in the excerpted portion of the meeting.