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. . . . . subsidize this project to protect existing businesses as well as encourage new business development in the area. Without tax increment financing, the project could not be done because of the City's policy to assess on a REC basis; the funds that would be generated on a REC basis would not cover the cost of the project. The interest rate that would be applied will be the going rate at the time the assessment is accepted. Interest does not accrue between the time the improvements are installed and when the assessment is accepted; but the assessment, when accepted, would be based on a construction cost index which historically is less than the amount of interest that would have compounded. Commissioner Ippel stated that if the proposed area is already in the tax increment district, then the 3 year clock is running; if development doesn't occur in what is left of the 3 years, the opportunity to capture the increment is lost. Mr. Hartley replied that the 3 year time frame refers to that period of time between when the district is certified and when improvements are made; sewer and water being in place within 3 years is sufficient to set the tax increment district for the life of the bonds. Commissioner Ippel inquired if the proposed projections for incoming tax increment are still in line based on current development trends in River's Bend and Flintwood. Mr. Hartley stated that projections were figured conservatively and there should be sufficient tax increment money for this sewer and water project. Motion by Commissioner Ippel and seconded by Commissioner Fults to recommend that City Council approve the proposed extension of sewer and water to the Industrial area and options for deferments and discounts as presented, including a definition of how the project, it's funding and options for deferments and discounts were arrived at. Further Discussion: Chairman Greenberg inquired if any consideration has been given to allowing deferments until the property is sold or hooks up to the services. Mr. Hartley recalled that Coon Rapids advised Ramsey of how onerous it can be to set assessment payment at the time of property sale; at that point, the person is either building, expanding, etc. and an added assessment can be prohibitive to selling the property. Mr. Hartley stated that taking that advice into consideration, he included a condition that deferments are of a specified period of time and can be transferred with the sale of the property. Commissioner Ippel referred to Chairman Greenberg's concern and stated that the deferment/discount option presented does not specify that deferments cannot be longer than ten years; just that no discounts are offered beyond ten years. Commissioner Wagner stated that the intent is for a ten year limit on deferments. Chairman Greenberg stated that there are people who really cannot afford any assessments. Mr. Hartley stated that if this is the overwhelming consensus of the property owners, this EDC should discuss whether or not to do the project. Chairman Greenberg stated that the project is needed but the property owners have to be protected. Commissioner Vevea agreed with Chairman Greenberg. Commissioner Fults noted that it is very important for the City to get a EDC/November 12, 1986 Page 4 of 6