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5. HRA BUSINESS 5.01: Receive Presentation from Ehlers and Associates re: TIF Study HRA Executive Director Ulrich introduced the item, noting Ehlers and Associates conducted a study of The COR Tax Increment Financing (TIF) District 14 that was created by the City in November of 2011 to generate revenue to pay for adjacent public improvements. He explained it is now time to look again at this property, analyze the TIF District, and determine whether it should be modified to better meet the needs of the City going forward. Stacie Kvilvang, Ehlers and Associates, explained that TIF provides the ability to capture and use most of the increased local property tax revenues from new development within a geographic area for a defined period of time and without approval of other taxing jurisdictions. She explained how market value is established by the City's Assessor and tax capacity is determined based upon class rate or "capacity to pay" for commercial /industrial, owner- occupied housing, rental housing, and 4D affordable housing. Ms. Kvilvang noted State property taxes are not captured by payment of taxes on owner - occupied or rental housing nor property within TIF Districts. She explained how TIF captures increased value from new development and reviewed how commercial taxes are distributed. Ms. Kvilvang then presented an example of a commercial property with a total taxable market value of $3 million paying $131,682 of total taxes, resulting in an annual gross TIF of $86,862 (developer receives $.59 on the dollar). She also presented an example of a housing project with a total taxable market value of $9.5 million paying $208,169 of total taxes, resulting in an annual gross TIF of $180,129 (developer receives $.77 on the dollar after deducting 10% administration and OSA fees). Ms. Kvilvang explained how TIF is calculated as a whole for a District, not parcel by parcel, so if the current value is less than the base value, no TIF is generated. However, if the current value is more than the base value, then TIF is generated. Ms. Kvilvang displayed a map depicting COR TIF District 1 -14 comprised of 331 parcels with 123 developable areas. She reviewed the square footages available within the Primary Area for various uses and stated she finds some of the estimates may be over reaching as it is a dense development, may not be a reality for the market, and may need refinement. It was noted that COR TIF District 1 -14 was created under special legislation, certified on November 28, 2011, and is a 26 -year District. She stated TIF can be used for reimbursement to HRA for land acquisition and public improvements prior to creation of the District; future land acquisition and public improvements; construction of the Northstar Transit Station and related infrastructure; and/or, other future public improvements exclusive of parks or City facilities. Ms. Kvilvang reviewed The COR expenses to date, noting there are $66 million in TIF eligible costs and $5.15 million in non - eligible costs (Park, Administration, Marketing). She stated City staff has been aggressive in seeking grants, there are MSA and County dollars, bond proceeds, land sale proceeds, other funds pledged to projects that do not require repayment, and developer financing relating to The Residence at The COR. The net costs to the City total about $36 million and there is about $3.5 million in non - reimbursable costs for a grand total of $39,342.865 Housing and Redevelopment Authority / September 17, 2013 Page 2 of 6