Minutes - Council Work Session - 01/21/2014

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of County Road 116.. She added the City has a 10 -year rule during which obligations have to be in place to qualify for TIF assistance. She noted the City should consider which allowable TIF projects will be viable during the next 10 years. Ms. Kvilvang stated only 3 of the 331 parcels are increasing in value, so no TIF is expected in 2014: She added a solution would be to reduce the District from 331 parcels to 92 parcels. She noted 196 of the parcels are townhomes, 43 are other parcels, including a large vacant tract that will likely be warehouse /manufacturing per discussions with City staff. She noted another TIF district could be created to include the land that will be used in the Highway 10 expansion. Ms. Kvilvang stated tax increment would then be generated in 2015. She added the County has started to release preliminary values but nothing has been finalized. She added the residents at The COR will only receive 85% of the TIF that is generated, which does not over the fees that have been waived for them. She noted that is still a significant amount. Ms. Kvilvang stated only 5 parcels meet the 4 -year knockdown requirement as 23 parcels are owned by the HRA, which is exempt, and a new base value will be assigned when the property is sold to be developed. She added there is no qualifying activity at the Ramsey Office Plaza or the remaining 39 parcels so there is no negative impact, and they will start generating TIF when there is an improvement. Ms. Kvilvang stated all parcels owned by the City or HRA are tax exempt and not subject to the 4 -year rule. She added 19 parcels are owned by the HRA with a base value of zero. She stressed the importance of realistic forecasting with relation to development opportunities. Ms. Kvilvang stated since The COR is leased up to 38% capacity at $1.32 per square foot, they are probably performing financially as they anticipated, although less revenue will be generated. She added they plan to be in discussion with their lenders for TIF financing in 2014, and hope to be fully leased by summer 2014. Ms. Kvilvang stated, with regard to changing the election, the City can change it at any time with no financial impact. She added, in summary, the City does not need to pursue special legislation, since it can repay itself with interest, satisfy the "pay as you go" financing obligation to Flaherty & Collins, and reduce the size of TIF District #14. She noted parcel recertification can be done at any time. Finance Director Lund asked whether 4% interest is based on current principal. Ms. Kvilvang confirmed it is based on present value, and all TIF that comes in will get the additional 4% interest. City Administrator Kurt Ulrich stated this is a good direction for the City to take, and prepares TIF District #14 for successful future development. He added City staff had anticipated necessary legislative changes to the 4 -year knockdown rule, but eliminating the need for special legislation puts the City in a good position. He added removal of some parcels and adding to the general fund will prepare the Highway 10 corridor in anticipation of the proposed interchange. City Council Work Session / January 21, 2014 Page 2 of 11