Agenda - Council Work Session - 07/18/2023 - Special

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FREERS = PUBLIC FINANCE ADVISORS (approximately $50k1year for city and county) and to repay the above referenced obligations (net after land sales) of $33.8 million. If we assume no more land sales, development and property values and tax rates stay at the pay 2023 level, the City will accumulate approximately $18 million over the next 18 years (end term of the District is 2040). If we add onto that the increment above the $1.063 million that is no longer needed to pay the paygo notes (paid off in 2024 and 2028 respectively (Affinity Apartments and COR Apartments), this amount increases to $26.8 million ($8.8 million more). As noted, that would leave an unpaid principal balance of approximately $7 million ($33.8 - $26.8). The District currently has approximately $2 million in cash that could also be applied to the unpaid balance, bringing unpaid principal down to $5 million. We are aware that there are several developments that will likely commence in 2023 (98-unit Hilton hotel, Aldi, COR Trust Bank, and a 133-unit mixed use apartment). The land sale proceeds of $1,551,551 (doesn't include the apartment parcel) and the annual TIF generated of approximately $298,000/year (total of $3.3 million), would negate the unpaid principal balance of $5 million. Staff provided some estimates of future development beyond those noted above. If we look at the total TI F generated by those over time, in theory the District could accumulate a cash balance of approximately $5.7 million. Summary As noted above, the current annual increment not needed to pay existing paygo obligations is approximately $1.063 million. This increment could go to repay the City for its prior expenditures as was anticipated when the District was created and affirmed by a Council policy on the waterfall of land sale proceeds and TIF approved in 2014. If the Council would like to forego that policy for the time being to pay for the road reconstruction west of Armstrong Boulevard (Ferret Street, etc.) that staff inquired about, the City could: 1. Use the existing cash balance to pay for the project (approximately $2 million) and use future unobligated TIF to repay the prior expenditures; 2. Wait a year or two to build additional cash balance before completing the project (build to $3 million or $4 million) which would allow some cash to go to prior expenditures; 3. Complete an IFL from a City fund to pay for the project and reimburse the City with TIF over time (allows cash balance and some of the future TIF to go to repay the older expenditures); or 4. Issue general obligation TIF bonds for a short term (5 years) to pay for the project (allows cash balance and some of the future TIF to go to repay the older expenditures). If the City is confident that development as proposed by staff will happen as anticipated, the City should have adequate cash above what it needs to pay the principal balance of any of the outstanding prior expenditures it has. Special Legislation in 2023 It is our understanding that the City is looking to have the 5-year rule date extended this year at the legislature. We would recommend that you add to that legislation some language that makes it clear that expenditures for land acquisition, Transit Station or public improvements constructed before or after the creation of the District can be reimbursed with TIF and does not require an interfund loan (IFL) resolution. The City does not have IFL resolutions for many of the expenditures because they were made prior to the District being created. The $3.8 million for the Transit Station does not have an IFL either since it was assumed this cost could be reimbursed without one since it is explicitly call out in the TIF legislation. We recommend pursuing this to provide clarification in case the Office of the State Auditor (OSA) determines some or all of these expenditures are non -reimbursable with TIF due to lack of an IFL. Please contact me at 651-697-8506 with any questions. BUILDING COMMUNITIES. IT'S WHAT WE DO. E info@ehlers-inc.com '. 1 (800) 552-1171 40 www.ehlers-inc.com