Project Development Financing Policy

To describe the conditions under which Wake County will consider pledging funds for Project Development Financing projects.

Project Development Financing is specifically authorized in Article 6 of Chapter 159 of the North Carolina General Statutes.

Project Development Financing (PDF/TIF) is a pledge of the anticipated incremental increase in future tax revenues in order to finance a public infrastructure improvement as part of a new development or redevelopment project.

In 2004 the North Carolina General Assembly established a legal framework and process for structuring PDF/TIF projects. However, as a AAA-rated County, Wake County has other, more favorable financing options at its disposal. Therefore, the County will have the option to choose whether to follow the prescribed legislation or create a synthetic PDF/TIF, with the synthetic PDF/TIF option being more likely.

Wake County anticipates that there are two situations where a PDF/TIF would be applicable: 1) to spur development or redevelopment in targeted areas that are currently undeveloped or underdeveloped; and 2) to provide incentives for different development patterns than the market would provide on its own (ex: greater densities or different uses). This policy deliberately avoids defining specific geographic areas within the County where PDF/TIF Projects can be considered. The County’s position is that it is the responsibility of the municipalities to shape development patterns in their jurisdictions.

In order to be considered for funding by Wake County, all PDF/TIF Projects must meet each of the following criteria:

1.	The Project must meet at least one of the following Wake County Economic Development Objectives:

§	Increase the number of jobs that pay at least 120% of the average wage for Wake County.

The Project must be within a Municipal Jurisdiction and formally approved by the municipality’s governing body before Wake County will consider participating in the Project. For the purposes of this policy, Municipal Jurisdiction is defined as the land contained within a municipality’s corporate limits, its Extra-Territorial Jurisdiction (ETJ), and its Short Range Urban Services Area as defined in Wake County’s Land Use Plan.

3.	Wake County may consider PDF/TIF projects in the Unincorporated Areas of the County if the Project meets Wake County Economic Development Objectives. For the purposes of this policy, Unincorporated Areas are defined as Long Range Urban Service Areas, Non-Urban Areas, and the Research Triangle Park.

The Incremental Revenue Stream that Wake County will consider pledging, subject to the conditions listed in the Financial Participation section below, will be defined by the following calculation:

Expected Market Value – the future value of the subject property(s) if it were developed under normal market conditions with the existing level of public infrastructure investment.

Market Value Plus – the future value of the subject property(s) if it were developed with additional public infrastructure investment.

Incremental Market Value – the marginal property value created as a result of the additional public infrastructure investment.

Property Tax Rate – the Wake County property tax rate that the Board of Commissioners establishes in its annual budget.

Incremental Revenue Stream – the revenue stream the County considers available for pledging, subject to the limitations specified in the Financial Participation Section below.

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An independent third party consultant will determine the Expected Market Value. The Developer will give the County a sum of money sufficient to pay for the independent consultant, and the County and municipality will jointly select and hire the consultant. The consultant’s client relationship will be with the County and the municipality only.

•	Prior to the County and municipality hiring the consultant, the Developer will submit to the County preliminary building plans, an investment schedule, and Project financials so that the independent consultant can perform the analysis of Expected Market Value.

Using the Increment defined above as the starting point for consideration, the County further limits its potential pledge of funding with the following conditions:

•	The County will not pledge more than 75% of the property tax value generated by the Increment.

•	In the event the County chooses to pledge funding for the Project, the County will only pledge property tax revenue as described in this section. The County will not pledge sales tax revenues or any other revenue sources.

•	Generally, the County’s funding pledge will not exceed 20 years. However, if the term of the debt used to finance the public infrastructure is greater than 20 years, the County may consider a pledge of funding up to the full length of the debt term.

•	Wake County will only consider funding up to the dollar amount of property tax revenue that the municipality provides.

•	The Developer must determine and declare the Market Value Plus for the Project and guarantee to the County and municipality a stream of income at least equal to the property tax payments that a project of that value would generate.

•	The Board of Commissioners will consider all PDF/TIF projects on a case-by-case basis and may consider any other relevant factors when deciding whether to pledge County funds for the Project.

In addition to the information required above, the Wake County Board of Commissioners may require additional information to help decide whether the County wishes to participate in the Project. The other information may include, but not be limited to, the following:

•	A summary describing the Project description, proposed PDF District boundaries, the requested public infrastructure, and the requested amount of future revenues to be pledged by the County and municipality.

•	A description of any known environmental hazards on the site and how the Developer proposes to address them.

•	A description of how the Project will benefit the owners and occupants of property in the proposed PDF District.

•	A description of the steps the Developer will take to ameliorate any negative impacts of the Project on owners and occupants of the PDF District.

•	A description of the impact the Project will have on areas outside the PDF District, if any.

•	A detailed list of Project costs (for public and private entities) and the source of funds.

Developer – the private entity that will be developing the property that benefits from the public asset being financed.

Municipal Jurisdiction – the land contained within a municipality’s corporate limits, its Extra-Territorial Jurisdiction (ETJ), and its Short Range Urban Services Area as defined in Wake County’s Land Use Plan.

PDF District – a geographic boundary identifying the property(s) on which the developer is seeking a pledge of incremental tax revenue.

PDF Project – a proposed private development and associated public infrastructure improvement for which a funding pledge is being sought.

Project Development Financing (PDF) – a pledge of the anticipated incremental increase in future tax revenues in order to finance a public asset(s) as part of a new development or redevelopment project. For a full definition, see Article 6 of Chapter 159 of the North Carolina General Statutes.

Synthetic PDF/TIF – a project agreement and financing plan that shares some of the characteristics of Project Development Financing as outlined in the General Statutes but uses alternate financing methods and contractual arrangements.

Tax Increment Financing (TIF) – synonymous with Project Development Financing.

Unincorporated Area – the land contained in the County’s Long Range Urban Service Areas, Non-Urban Areas, and the Research Triangle Park.