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,EWLERS LEADERS IN PUBLIC FINANCE Memo To: Sean Sullivan From: Stacie Kvilvang - Ehlers Date: September 25,2019 Subject: The COR TIF District Knock Down Parcels The COR TIF District was established on December 7, 2010 under special legislation in that year, certified on November 28, 2011 and received the first TIF collection in 2015. The District has a 26- year term and will decertify on December 31, 2040. In the 2010 special legislation, the 5-year rule was extended to 10-years. This means that development projects for which assistance will be provided, have to be constructed and TIF reimbursable expenses paid by November 28, 2021. If the City desires to provide assistance to any development after this date, those developments will be limited to only 25% of the TIF generated by their project (the remaining 75%, or if no assistance provided, 100% of the TIF will go to repay the City for prior costs noted below). In 2011, the City amended the special legislation to add that the City could use TIF generated to repay themselves for land acquired and public improvements (roads/utilities) installed prior to the establishment of the District. These costs are estimated to be approximately $39 million and TIF generated from parcels that are not under a TIF agreement and from the City's portion of admin (10%) are being utilized to repay these costs (in addition to land sale proceeds). TIF statutes require that if there is not a qualifying activity of land acquisition, demolition, site improvements and/or road installation on a parcel within four (4) years of certification of the district, then those parcels are "knocked down." What this means is that those parcels are taken out of the District until such time there is a qualifying activity as noted above. Only 21 of the 93 parcels met this originally, with the remaining parcels being knocked down. These parcels can be brought back into the District when the City notifies the County that those parcels have a qualifying activity. When they are brought back in, it is at the current taxable market value of the year they are brought in. Staff reviewed this requirement in 2019 and noticed that several developments that had qualifying activities were not reported to the County as required, therefore they were not reinstated into the District. Staff has since made this request and all the parcels will be reinstated for pay 2020. However, because some of the parcels had qualifying activities for pay 2018/19 and have actual development on them (Station town homes, Stone Brook Academy, Affinity Sr. Apartments, and Greenway Terrace Apartments), when the parcels are reinstated the base (frozen) value will be the value that includes both the land and the development, which negates the TIF generated because the base value is now the same as the current value (should be brought back in as vacant land). The County doesn't have the ability to go back and reduce the base value to land only without a legal ruling requiring them to. Staff and consultants are recommending commencing an action in court for issuance of a Writ of Mandamus process to require the County to take those affected parcels back to land value. This isn't a controversial or adversarial process with the County as they have done it in the past, it is just the required process that gives them the authority to do what the City is requesting. Preliminary estimates from Briggs and Morgan (City's TIF attorney) to complete this is approximately $25,000 to $30,000 and can be paid for from TIF. Please contact me at 651-697-8506 with any questions. BUILDIN5 COMMUNITIES. IT'S WHAT WE DO. +n+44 ehlers-enc.com 1 ( co 552-1171 ' www.ehlers-Inc.com