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I I I I I I I I I I I I I ! I I I I I for as long as it takes to p~y for those public imp{orients; at that time, a/1 taxes revert back to the City, Oounty and State. Ms. Waelti stated that cities should take care in using tax increment financing to create new development and not as a loop hole to grab develo~ent that would have occurred anyway. Ms. Waelti stated that in another year or two, tax increment financing may be the only way that cities can partici~te in development as Federal and State funds are shrinking. Ms. Waelti stated that it is the city's responsibilty to decide what develoD~ent {x)mes in, b~w the funds are to be used, how best those funds can leverage ino~ming development and to be able to say 'no' once in a while. MS. Waelti stated that State law requires a contract between city and development when tax incr~ent financing is used; developers gain as much from tax incr~ent financing as the city. Limitations in the law keep cities fr~ doing anything that oould get the city into trouble. Ms. Waelti stated that she has been tracking Ramsey for years and r~e~bers when Ramsey became a city and went from single taxation to double taxation and Ramsey's realization that the city did not have that industrial/commercial base that other cities have and aid formulas worked against Ramsey. Ms. Waelti stated that in her personal opinion, tax incr~ent financing is a good tool for Ramsey if used responsibly. It is very important for Ramsey to knc~ what tax increnent financing is, have City Staff full informed on hc~ to use tax increment financing, and City Council should be very involved in development work and understand tax incr~ent financing thoroughly. Ms. Waelti stated that tax incr~ent financing involves a project area with tax increnent financing districts within the project area. The project area is where the City wants public improvements to occur; it is that area where public funds can be spent; and it need not be a contiguous area. Tax increnent financing districts are specific areas within the project area in which those funds are generated. Ms. Waelti stated that tax increment financing must be used to serve a class of people; it can be used for peril~heral lighting around a site; any utilities that were previously brought in by special assessments; and to clear blighted land. Council~nber Cox brought up Ham Lake's situattion for discussion; }{am Lake used tax incr~ent financing to provide public improvements and to lend to developers to build facilities; there was concern with generating money to take care of the bond issue. Ms. Waelti stated that Ham Lake had an eoon~ic development district and was not aware that the base property value, which is frozen in tax increment districts, can be raised, thereby decreasing the amount of increment co~ing into the city to pay off those bonds. Ms. Waelti stated that Anoka County is fairly sophisticated in that they allc~ the combined use of IDB's and tax increment financing. Tax incr~ent financing cannot be used for structures; it is for ground preparation and is public funds. IDB is for on-site construction and is private funds. In order for a city to meet those bond April 30, 1985 Page 2 of 5