Minutes - Council Work Session - 03/23/1998

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out to the year 2012. The fund balance was positive $98,000 in December 1997, the bond payment was due February 1, 1998, so this is maybe short term fund borrowing. Councilmember Haas Steffen inquired if the Council should be getting TIF reports at least annually. Mr. Winkelhake responded that Council should be getting updated reports annually. The next TIF District is #3 - Rum River Plaza and that has been decertified. District #4 is Front Street. This District has a cash fund balance of about $500,000. The projected tax increment on an annual basis is about $110,000. The Comfort Inn will be coming on line and, based on the construction dates, will be generating additional increment in the year 2000. With regard to obligation - there is very little with this payment. There's a couple pay as you go to the Sports Center and to the ComfOrt Inn. This District was created in 1987, and is regarded as a development TIF District also. This one has some flexibility and goes out to the year 2013. The annual surplus after obligations is about $150,000. TIF District #5, Wood Ponds, is an economic development TIF - generally for all residential. The County thinks this District is due to expire in 1999. There are a couple revenue notes - one outstanding that will be paid up in 1998. As of February, 1998, the fund balance was at $110,000. The projected increment is $345,000 and that would all be surplus for a couple of years. This District was approved on April 24, 1990, with a request for certification on April 26, 1990. It was approved and certified before May 1990. It should be a housing district and, instead of expiring in 1999, it should have another 21 years. It would have to go away April 20, 2000, if it is an economic development district. TIF District #6 is the AEC District. The fund balance from 12-31-1997 to 2-1-1998 is a couple of thousand dollars. The projected tax increment is about $150,000 to $160,000 a year. There will be some additional development for Vision-Ease Lens in 1998 and 1999. There will be additional for the shop starting in the year 2000, and a number of pay as you go projects also. This District will have an excess increment of about $150,000 to $225,000 beginning in 1998. This District was set up in 1995. This is generally restricted so the City will have to spend 20 to 25% of the increment within the boundaries of the district. You could not use this for a road unless the road is inside the District's boundaries. Mr. Winkelhake stated there are no restrictions on expanding District boundaries - some cities include the entire city. Councilmember Haas Steffen stated she is thinking of not having to use money from the general fund for a community center, a second water tower and another well. Mr. Winkelhake stated that all the Districts look healthy. He suggested the following: 1) Look back and make sure how you have spent your tax increment money - has it been documented and spent according to State Statutes. 2) Make sure the budgets in the TIF plans are current and up to date to cover what you are committed to in the development district, then build budgets. 3) Amend the boundaries to allow flexibility. Do not put that off for three to four years - do it in 1998. Try to get this done by the end of 1998. Staff and the auditors should be tracking this. Discussion ensued relating to a special audit with regard to the TIF Districts, what kind of bonding can be done and still keep the funds healthy, what can the TIF monies be used for, etc. Timetables for extending boundaries were talked about as was the process. (Changing boundaries would require a public hearing with a 30-day notice and then it is done by resolution. City Council Work Session/March 23, 1998 Page 3 of 8