Agenda - Economic Development Authority - 05/24/2005

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Memorandum To: From: Date: Regarding: Ramsey Economic Development Authority (EDA) Jilll Gromberg, Ramsey EDA Member May 5, 2005 Proposed Lease Revenue Bond Issuance While I am unavailable to attend the May EDA meeting due to a prior commitment, I feel that il is important to reiterate my opposition to the issuance of the lease revenue bonds by the I,;DA fin' the new municipal center. My opposition is based upon the proposed funding meclnmism for the new municipal center and should not be construed as opposition to the proposed facility. The reasoning for the use of the proposed funding mechanism, as stated by tl~e City Council and Staff, is to avoid the possibility of a referendum by the voters on the project. Below, I bare described some issues that could be resolved by the City using the Capital hnprovement Plan Bonds (CIP Bonds) for the project. While CIP Bonds have the possibility of a reverse referendum, this has not happened in the state since the creation of this fumling source. The use of lease revenue bonds requires the EDA to create a redevelopment area that includes the site of the proposed facility and stipulates that this project will prevent the creation of blighted properties within that area. I find it hard to rationalize that the currently existing "vacant field" needs redevelopment or has any possibility of blighted conditions occurring as it is protected under the City's Town Center Zoning District ordinance and the master plan for the Ramsey Town Center. The second and even more disturbing issue is that this course of action will cost the taxpayers of the City more then $600,000 over other available funding sources. Since none of the EDA members are willing to write an annual check for $30,000, this amount is a significant expense to the EDA and City. Staff has made the comment that the $600,000 is based upon the full life of the bonds and that the City would probably refinance the debt at some future point at a lower interest rate. As an EDA, we would be naive to expect that the historically low interest rates currently being experienced would go lower. The EI)A exists to provide for the development of the City of Ramsey and continued growth ,f thc tax base, employment opportunities, and the economic well being of the community. As a member of the EDA and taxpayer in Ramsey, I would be hard pressed to rationalize how this added cost benefits businesses or the residents of the community. When we add the ethical issue of classifying vacant land as a redevelopment area for the prevention of blighh the EDA shouhl refrain from issuing the lease revenue bonds.