Bill S.296, introduced by Senator Harrison, aims to enhance protections for municipalities involved in development agreements for projects financed through tax increment financing (TIF). The bill mandates that developers guarantee in their agreements that the projects will generate sufficient tax increments to cover the municipality's debt service payments for the duration of the TIF district. If the developer lacks assets, their parent company must provide the same guarantee. Additionally, the guarantee must be secured to the municipality's satisfaction, potentially through various forms of security such as letters of credit or performance bonds. Developers are also required to include at least one protective provision in their agreements, which could involve insurance for property value, rights for the municipality to proceed independently in case of developer failure, or an equity position in the developer.

Furthermore, the bill amends existing law regarding housing infrastructure agreements to ensure compliance with the new development agreement requirements. It specifies that housing infrastructure agreements must identify the project sponsor and developer, obligate tax increments for financing costs, and ensure that housing units are offered as primary residences until all related debts are retired. The amendment also removes a previous requirement while adding a new compliance clause with the development agreement provisions. The act is set to take effect upon passage.

Statutes affected:
As Introduced: 24-1909