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M M M As a result of the traffic impact fee district system, TIF revenue is divided into smaller pots, making cash flow a problem. Since many road projects are $1 million plus jobs, it takes time to accumulate that much money in a district. Financing impact fees would reduce the growth of the districts' fund balances, and could delay necessary roadway projects. With total annual TIF revenue of about $2.0 million divided among the nine benefit districts, bonding is not a viable option because of the low dollar amounts. • Cash Flow A major issue associated with TIF financing is whether spreading TIF payments over time while charging interest on the unpaid balance will significantly reduce revenue in the various TIF benefit districts, resulting in road construction project delays. In cases where large development projects finance impact fees, that could occur. TIF financing amounts would be insufficient to justify the cost of issuing bonds to raise the revenues deferred by financing TIF's. There is, however, the opportunity to use interfund borrowing to address the cash flow issue. Through this process, money is borrowed from some County fund and used for road construction projects in benefit districts where TIF's have been financed. The borrowed money is then repaid .with interest from TIF financing payments. Interfund borrowing may not be possible, however, if other county funds do not have sufficient balances, or if the money available from those funds is not available for a sufficient length of time. One other option for interfund borrowing would exist if the Board of County Commissioners agreed to impose the 9th cent gas tax. With an estimated $558,839 in revenue generated each year, the 9th cent gas tax could serve as a source for interfimd borrowing. This would involve the traffic impact fee fund borrowing 9th cent gas tax revenue to make up the shortfall caused by TIF financing. The 9th cent gas tax fund would then be repaid with interest from TIF financing payments. Although this option would resolve traffic impact fee fund cash flow problems, it could result in delays for 9th cent gas tax funded projects. • Default Another TIF financing concern relates to the implications of default of a TIF financing borrower. Considering the number of development projects in the County which have gone into foreclosure in the past decade, default is a definite possibility. According to the county attorney's office, default of a standard TIF financing agreement could result in loss of the financed traffic impact fees. Because TIF financing liens would not have priority over any previous recorded liens, standard TIF financing liens usually will not be sufficient to secure the County, based on the property value of the development project having TIF's financed. There are, however, ways to address the default issue to some extent. By requiring that a TIF financing lien be a first lien and by not allowing the lien to be subordinated to other liens, the County could enhance its prospects for repayment in case of default. With a default, the county would incur foreclosure costs in protecting its interests, and these costs would have to be covered. Another safeguard would be to prohibit transfer or assignment of the TIF financing repayment obligation. Even with these options, however, there is still risk of loss from federal tax liens or bankruptcy. If a loss does occur, the revenue lost must be made up by the general fund, since the traffic impact fee trust fund cannot lose money. 41 April 23, 1996 booK 97 PAGE, 895