Minutes - Council Work Session - 09/11/2012

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City Administrator Ulrich explained the EDA budget was reduced because of the shifting of staff dollars. The EDA's concern was seeing the reduction in its budget and if the same levy was kept, it would generate additional money for land acquisition (like the Nordvik property), business subsidy agreements, revolving loan fund, and retention and expansion opportunities. Councilmember Strommen noted if the budget reduction was largely the result of a shift of staff dollars, the Council could increase the EDA levy and reduce HRA levy by that amount, resulting in a wash. Finance Director Lund noted when a business calls and asks for the City's tax rate, it is better to have a 44% rate versus a higher amount, which may be important in its decision in where to locate. She explained the HRA levy is not incorporated in those percentages. Councilmember Strommen stated it is basically a wash if the rate goes from 44.7% to 45% and the higher percentage would restore the. EDA's budget and give them something with which to work. Councilmember Backous stated he does not understand why one is counted in the tax capacity rate formula but not the other, but he would prefer to keep the City's tax capacity rate lower. He noted with a $104,000 levy, the EDA's working capital would remain the same and not reduce its ability to complete functions. Councilmember Backous agreed that the City's tax capacity rate is looked at. Councilmember Strommen stated she understands about the tax capacity rate but it seems like a "shell game' to move funding to the HRA. She noted the EDA can still use the staff and the Council has somewhat "hamstrung" the EDA budget by tying up its fund balance in a property parcel on Armstrong Boulevard. City Administrator Ulrich clarified that the EDA recommendation is to generate additional monies, beyond the staff reallocation, resulting in an increase. Councilmember Tossey stated his support to keep the EDA budget at $104,000, which covers its working budget, noting it also has $450,000 in the bank. He stated he thinks the HRA should also not ask for more than it will need. Councilmember McGlone explained the EDA's conversation was to have more working capital rather than caring where funds are allocated. He stated he had made a point that day that the EDA has $300,000 in one account, $600,000 in another account, and a $600,000+ asset the EDA voted to approve to purchase. Councilmember McGlone stated he support a $104,000 EDA levy. Councilmember Wise agreed the EDA -owned property may be worth more than $600,000. Mayor Ramsey supported an EDA levy of $104,000. City Council Work Session / September 11, 2012 Page 2 of 5