Regularly Review Terms of TIF Obligations

To ensure compliance with the TIF Act, authorities should annually or regularly review the terms of TIF obligations. The Office of the State Auditor (OSA) recommends authorities complete the following steps on an annual basis:

• When an authority has issued a pay-as-you-go (PAYG) obligation, review the development agreement and TIF note to ensure that:
  • The developer is not paid beyond the termination date or in excess of the maximum amount of reimbursement;
  • The developer has provided documentation of costs required by the development agreement prior to reimbursement of those costs; and
  • The developer is not in default of the agreement.
• Review the written terms of any interfund loan to ensure that principal payments are made promptly and the interest rate does not exceed the statutory limit. The interest rate cannot exceed the statutory limit as of the date the loan is authorized unless the terms allow the rate to fluctuate each year as the limit is adjusted. Therefore, it is important to be aware of the changing interest rate limit each year.
• Review debt service schedules for principal and interest payments of any general obligation or revenue bond to ensure the schedule is being followed, and to consider whether prepayment or refunding (to obtain a lower interest rate) is possible or desirable.

Last referenced December 1, 2023 in the State Auditor's Weekly Update.