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Councilmember Elvig stated he has had an opportunity to work with Economic Development Consultant Mulrooney on a couple of projects for the EDA and Council. Mr. Mulrooney does more than consulting; he is really helping the City land the deals. He is a highly regarded consultant and is doing a great job. Councilmember Look verified with Ms. Lund that the City has both an HRA and an EDA levy. He stated his concern with the EDA levy is that he has seen in the past where the City has taken these dollars and acquired properties, and has tom down the buildings with whatever additional costs there are. He commented in some cases TIF is granted for a 10 to 25 year period to a business that comes to the City. Finance Officer Lund indicated each business is. different; it is up to Council to determine whether a TIF project will be done. Businesses have been granted TIF, but when the property is sold back to the business it goes into the TIF fund. The land is not always given to the business; some have purchased the land. Chairperson Strommen stated she does not believe businesses have been given the land in any recent TIF deals. There is usually a business subsidy agreement that includes a certain dollar amount the City puts towards the package, and in exchange the business agrees to a certain number of new jobs at an established amount of wages. Councilmember Look verified with Finance Officer Lund that the EDA levies across commercial and residential properties. He stated his concern is that the City has an imbalance with its TIF in regard to property taxes. The taxes are heavily weighted on residential contributions. He is concerned in taxing an additional EDA levy, taking that money and applying TIF to something else that will not go towards offsetting the general fund for the next 10 to 25 years. In his opinion healthy communities have a healthy commercial tax base and are not so heavily weighted to the residential. As they focus on taking money from the residential tax base and applying it to attracting new businesses there is a significant lag time to any sort of benefit that the residential base might see to offset their taxes from a general fund standpoint. Councilmember Elvig asked if although Councilmember Look thinks this is an off-balance to the residents to support business, that he likes the idea that business is being brought in because it brings a better tax base than the residential tax base. Councilmember Look replied that would be a true statement ifTIF was not involved. Councilmember Elvig stated if the business is paying full bore taxes above and beyond the value of the property before the City got the project, TIF is not a tax reduction program. In the project he was involved with in the City of Anoka, rather than being subsidized every year on a 25 year district, in actuality he was subsidized on the initial purchase of the property and saw a reduction of the property cost because of the TIF distribution. However, the day he moved in he paid above and beyond normal taxes, which went into the general coffers. His analysis is that if the City grants a subsidy to a business they are taking dollars from the EDA tax levy and gifting it to a qualified business to pay a portion of that back the first year they are here. Supposedly the Finance Committee / September 11, 2007 Page 2 of 6