Minutes - Council Work Session - 05/19/1998

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Tax Increment Bonds ($2,600,000 original amount, final maturity 2/1/10 paid from 2009 increment), and several pay-as-you-go agreements with local developers/owners. Annual projected surplus from the district should vary from approximately $90,000 to $183,000 through the year 2009. There are no identified expenditures from the district during the last three years of its maximum duration. This district 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. TIF District No. 3 was approved in May 1987, as an "economic development" TIF district and was located in Municipal District No. 2 (a small area in the northern part of the City). The district was decertified in 1997, after remaining in existence its maximum duration. The fund balance was ($36,655) as of December 31, 1997. City staff has indicated that this deficit balance has or will be eliminated by transferring EDA and/or PIR funds which include interest and administrative fees taken from the district in past years. Councilmember Haas Steffen asked staff to find out why there was a negative fund balance in District//3. Mr. Winkelhake stated that TIF District No. 4 (Front Street) was approved in August 1987, as a "redevelopment" TIF district. The district may remain in existence through the year 2013, at which time it must be decertified. The district currently contains 63 parcels of property, consisting of a combination of commercial/industrial and residential properties. A request for district certification occurred on May 2, 1998, and as such, the district has a frozen tax rate of 91.649%. The projected cash flow schedule for the district and the projected annual tax increment of approximately $106,000 are for taxes payable in 1999 and beyond. Other revenues from the district include projected tax increment and/or deficiency payments from the Comfort Inn project beginning in the year 2000, and a deficiency payment in 1998 from the Ramsey Sports Center project. Current obligations of the district include debt service on the 1989B G.O. Tax Increment Bonds ($235,000 original amount, final maturity 2/1/99 paid from 1998 increment), and several pay-as-you-go agreements with local developers/owners. Annual projected surplus from the district vary from approximately $88,000 - $146,000 through the year 2009. There are currently no identified expenditures from the district during the last four years of its maximum duration. As is the case with the other districts, Mr. Winkelhake stated that District No. 4 also appears financially healthy. Such balances can be used to pay the items as listed for Districts #1 and #2. City staff will also need to monitor this district Council Work Session/May 19, 1998 Page 4 of 10