Minutes - Council Work Session - 05/19/1998

Home

service on outstanding general obligation tax increment bonds. No annual pay-as-you-go agreements for this district were identified by City staff. The increment bonds are as follows: 1985A G.O. Tax Increment Bonds ($100,000 original amount, final maturity on 6/1/99); 1989C G.O. Tax Increment Bonds ($235,000 original amount, final maturity on 2/1/99 paid from 1998 increment); 1993A G.O. Refunding Tax Increment Bonds ($2,225,000 original amount, final maturity on 2/1/07 paid from 2006 increment (refunded the 1981A G.O. TIF Bonds, original mount $2,800,000); and 1996A G.O. Refunding Tax Increment Bonds ($330,000 original amount, final maturity on 2/1/07 paid from 2006 increment) (refunded the 1987B G.O. TIF Bonds, $400,000 original amount). Annual projected surplus (revenues over expenditures) from the district should be approximately $295,000 - $320,000 through the year 2006, when all current obligations of the district are retired. There were no identified expenditures from the district during the last four years of its maximum duration. Mr. Winkelhake suggested that TIF District No. 1 appears to be financially healthy, and cumulative fund balances of the district are projected to become substantial over the life of the district. He explained that such balances must be used to pay for TIF eligible costs specified in the TIF plan budget, be used to prepay or defease outstanding bonds of the district, be remitted back to the County for redistribution, or be used for some combination of items 1-3. If increments are used to pay for additional expenditures either inside or outside of the district, an amendment to the TIF plan budget will be necessary. City staff will need to monitor and examine the adequacy of the current budget over time to meet all past and future tax increment expenditures from the district. Should the budget need to be expanded or modified, a TIF plan amendment will need to be approved which requires various notifications and a public hearing. He noted that the TIF plan budgets for Districts No. 1 and No. 2 are currently very intertwined. It is recommended that these two budgets be amended to accurately break out and update how tax increment from each district will be spent over the life of each District. City staff should contact legal counsel to assist in this endeavor. Upon inquiry, Mr. Winkelhake explained that you can amend your budgets to allow more spending. It can be used for land acquisitions, public improvements, site improvements for private development, relocations, etc. It has to be used for pure public improvements. Community centers are allowable - social/recreational is okay. Mr. Winkelhake described TIF District No. 2 (Gateway). This district was approved in June, 1986, as a "redevelopment" TIF district. It may remain in existence through the year 2012, at which time it must be decertified. The district currently contains 114 parcels of property, consisting of a combination of commercial/industrial and residential properties. Established prior to May 1, 1998, this district does not have a frozen total tax rate. The projected cash flow schedule for the district, and projected annual tax increment is approximately $321,000 for taxes payable in 1999 and beyond. Other revenues from the district include projected tax increment and/or deficiency payments from a number of new developments which will begin paying taxes in 1999. The project cash flow does not reflect any revenue which may be produced by the agreements being negotiated. Current obligations of the district include debt service on the 1995A G.O. Council Work Session/May 19, 1998 Page 3 of 10