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longer the business is there it should be offsetting some of the residential cost and holding taxes down for the residents, although it takes a while. Finance Officer Lund explained if there is a property paying $5,000 in taxes that is acquired through the EDA, and there is then a building with the property paying $40,000 in taxes, there is a $35,000 gain in taxes. That $35,000 does not go into the general fund; the $5,000 goes into the general fund and the new business is able to use those tax dollars to build their project. Chairperson Strommen pointed out there are also other projects in the district and dollars go back to the infrastructure and investment in the TIF district. She asked when the TIF District where the KIH parcel is located will be certified. Finance Officer Lund replied she believes this district will be certified in 2011. Councilmember Elvig commented he would agree that in relation to cash flow, the infrastructure and value is being built while the cash flow to offset taxes may not be coming in. There is an investment. He requested clarification that the EDA purchases are not all TIF projects. Finance Officer Lund indicated the Council can choose to pull a parcel out of a TIF district; they could choose to offer an incentive to the business. Chairperson Strommen noted the EDA could purchase the land for $345,000 and sell it for that same amount. The deals are all individually negotiated between the individual business and the Economic Development staff; there may be no subsidy. Councilmember Look stated with his dealings on a couple of projects, if a business brings in a large 80,000 square foot facility they will be given the land for free. The reason is because of the competition with other communities that do this. It is difficult for the City to say they will not give a business the full boat when the neighboring community is doing that. The challenge he has is that this is an additional levy that in the short run hurts residents, with a long term payout. Councilmember Elvig stated there are more dynamics involved with the County matching dollars to the TIF district. Finance Officer Lund indicated the School District and County portion are picked up with a TIF project. If there are road improvements, instead of having the levy or bond go against the taxpayer they would use the TIF dollars generated from those TIF projects to help pay for the improvements. Councilmember Elvig stated there has been discussion by the EDA that they may be starting to run low on ground, and to go for a different caliber or quality for deals depending on the value, and that they may want to hold on to some of their assets. This would likely be a good policy discussion to bring forward. Chairperson Strommen indicated that is a policy discussion the EDA has been having regarding when and when not to give incentives to businesses. The EDA has discussed whether the City's Finance Committee / September 11, 2007 Page 3 of 6