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CITY OF RAMSEY Notes to Financial Statements (continued) December 31, 2001 NOTE 12 — TAX INCREMENT FINANCING DISTRICTS The City is the administering authority for the following tax increment financing district: Development District I TIF TIF TIF TIF District District District District No. 1 No. 2 No. 4 No. 6 Total Economic Redevelop- Redevelop- Redevelop- Develop - Type of district ment ment ment ment Chapter 472A 472A 472A 469 Established 08/27/1985 06/30/1986 08/11/1987 09/15/1995 Duration 1985/2010 1986/2012 1987/2013 1995/2006 Tax capacity Adjusted original $ 19,589 $ 302,636 $ 85,515 $ 7,835 $ 415,575 Fiscal disparities deduction — — — 246,190 246,190 Current tax capacity 742,186 1,591,287 324,618 768,174 3,426,265 Captured tax capacity $ 722,597 $ 1,288,651 $ 239,103 $ 514,149 $ 2,764,500 The City has also established TIF District's No. 7 through 10. District's No. 7 through 9 are chapter 472A redevelopment type districts while TIF District No. 10 is a chapter 469 economic development type district. As of December 31, 2001, the captured tax capacity on these districts is $0. NOTE 13 — TAX INCREMENT FINANCING REVENUE NOTES The City has entered into several private development agreements, regarding certain tax increment properties. Contemplated in the development agreements were the reimbursements to developers for special trunk assessments. The vehicle used for this reimbursement is called a tax increment revenue note. These notes provide for the payment of principal, equal to the developer's costs, plus interest at various rates. In each case, payments on the loans will be made at the lesser of the note payment or the actual net tax increment received (or a reduced percentage received in certain cases) during specific years as stated in the agreement. Payments are first applied to accrued interest and then to principal balances. The notes are cancelled at the end of the agreement term, whether or not they have been repaid. Any additional tax increments received in years following the term are retained by the City. The outstanding principal balance as of December 31, 2001, for all of these agreements was $1,486,240. This amount is not included in long-term debt because of the nature of these notes in that repayment is required only if sufficient tax increments are received. The City's position is that these are obligations to assign future and uncertain revenue sources and as such, is not actual debt in substance. -32-