HomeMy WebLinkAbout9C - Tax Abatement District 1
AGENDA ITEM:
DISCUSSION:
CITY COUNCIL AGENDA REPORT
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JUNE 17, 2002
9C
DONALD RYE, COMMUNITY DEVELOPMENT DIRECTOR
CONSIDER SETTING A DATE FOR A PUBLIC HEARING TO
ESTABLISH TAX ABATEMENT DISTRICT 1 AND
AWARDING BUSINESS SUBSIDIES
History Recently, Larry Gleason and Charlie Anderson contacted the
City about the possibility of moving Mr. Gleason's gymnastics school
to Mr. Anderson's building located in the Waterfront Passage Business
Park. It was determined that three things needed to be accomplished
for this to happen. First, the TIF District in which the building is
located would have to be "de-certified" because of the restrictions on
the amount of non-manufacturing and warehouse space in the District.
Second, a Tax Abatement District would need to be established in
order to provide the remaining financial assistance provided by the TIF
District. Third, the zoning ordinance would need to be amended to
provide for a larger gymnastics school with expanded hours of
operation. This report deals with the Tax Abatement District. The
zoning amendment process has been started and will be before the
Planning Commission on June 24th. The de-certification process will
be initiated with the County if the Council decides to proceed with
creating an Abatement District.
Current Circumstances The attached schedule shows the timing for
the establishment of the Abatement District. Part of this process deals
with the granting of business subsidies which is a relatively recent
requirement of State law.
We have reviewed this information with the property owner, Charles
Anderson, He understands the financing implications of abatement
versus tax increment. He has asked us to proceed with the tax
abatement process as confirmed by the attached e-mail.
Ehlers and Associates have prepared a cash flow analysis both for the
remainder of the existing tax increment district and for the proposed
abatement. The schedule is attached, A summary is shown on the
following page:
162W~~I~~S~r~t~cAtk~O~~~i?8f Lake, Minnesota 55372-1714 / Ph, (952) 447-4230 / Fax (952) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
r
AL TERNA TIVES:
RECOMMENDED
MOTION:
REVIEWED BY:
L:\02FILES\02eda\CC6] 702ABA TE,doc
Tax Increment District
The existing tax increment district expires in four years or 2006. In
that time period the district will generate a total of $84,003.34 to pay
off the Tax Increment Note in semiannual increments of $14,080.
City Tax Abatement
Under State Statute an alternative to tax increment is tax abatement.
Using tax abatement, the City and County could agree to dedicate
taxes they would otherwise receive to the project for up to 20 years, In
this case, the County has advised us that this project would not meet
their abatement guidelines. Therefore only City taxes would be
abated.
Abatement of City taxes will generate a semiannual increment of
$4,619. The tax abatement cannot generate the full $84,003.34
required unless the City were to agree to forgo a portion of the 10%
administration fee we receive for administering the program. Without
such a contribution, 15 years would be required to generate $75,238.
Issues The primary issue here is whether the Council wishes to further
defer the receipt of City taxes from this property, If the Council is
satisfied there is a public benefit to proceeding with this approach, a
public hearing date should be established to consider the creation of
the Abatement District.
1. Direct staff to publish notice of a public hearing on the
establishment of Abatement District 1 and awarding business subsidies
for the July 15th, 2002 City Council meeting.
2. Do not establish a public hearing date,
3, Defer action for specific reasons.
Alternative 1
2
SCHEDULE OF EVENTS
CITY OF PRIOR LAKE
fir'/..
FOR THE ESTABLISHMENT OF~BATEMENT DISTRICT NO.1
As of June 6, 2002
June 17,2002 City Council calls for public hearing on the establishment of Abatement District No.
1 and awarding business subsidies,
June 29, 2002 Date of publication of the City Council hearing notice and map for the establishment
of Abatement District No.1 and awarding business suhsidies (at least 10 days but not
more than 30 days prior to hearing), [Prior Lake American publication deadline
June 27J
July 15,2002 n the establishment of Abatement
District No, 1 and passes resolution ap District, and on awarding business
subsidies. [Council packet information sent by July 3J
By August 30,2002 Ehlers certifies District with county and state
06/06/2002
District:
I nflation Rate
Pay As You Go Rate, Developer
First Year Of Tax Abatement
Total Years Of Tax Abatement
Last Year ofTax Abatement
Tax Capacity (Extension) Rate, City 0.39893
Tax Capacity (Extension) Rate - County 0,00000
Tax Capacity (Extension) Rate - School District 0,00000
Tax Capacity (Extension) Rate, Other 0.00000
Tax Capacity (Extension) Rate - Total 0.39893
Amount of abatement will vary depending upon market value, tax rates, class rates, construction schedule,
and inflation on market value.
City Of Prior Lake
New Project
BASIC ASSUMPTIONS
Tax Abatement District
0.0000%
9,00%
2003
15
2017
Page 1 of 1
PROJECT VALUE INFORMATION
Development Market Tax Tax Payable
Tvpe Value Rate Capacity
Commercial 1,324,000 2.0%,1.5% 25,730 2003
TOTALS 1,324,000 25,730
TAX ABATEMENT CASH FLOW
Base Property Abatement Semi-Annual Administration Semi,Annual Ending Period
Beginning Period Tax Tax Tax Gross Net Payment Date
Mth. Year Capacity Capacity Capacity Tax Abatement 10.00% Tax Abatement Years Year Mth,
01-Feb 2003 162 25,730 25,568 5,132 (513) 4,619 0.5 2003 01,Aug
01-Aug 2003 162 25,730 25,568 5,132 (513) 4,619 1.0 2004 01-Feb
01,Feb 2004 162 25,730 25,568 5,132 (513) 4,619 1.5 2004 01,Aug
o l-Aug 2004 162 25,730 25,568 5,132 (513) 4,619 2,0 2005 01,Feb
01-Feb 2005 162 25,730 25.568 5,132 (513) 4,619 2.5 2005 01-Aug
01,Aug 2005 162 25,730 25.568 5,132 (513) 4,619 3,0 2006 01,Feb
01,Feb 2006 162 25,730 25,568 5,132 (513) 4,619 3.5 2006 01-Aug
01-Aug 2006 162 25,730 25,568 5,132 (513) 4,619 4.0 2007 01,Feb
01-Feb 2007 162 25,730 25,568 5,132 (513) 4,619 4.5 2007 01-Aug
01-Aug 2007 162 25,730 25,568 5,132 (513) 4,619 5,0 2008 01,Feb
01-Feb 2008 162 25,730 25,568 5,132 (513) 4,619 5,5 2008 01-Aug
01-Aug 2008 162 25,730 25,568 5,132 (513) 4,619 6,0 2009 01-Feb
o 1-Feb 2009 162 25,730 25,568 5,132 (513) 4,619 6.5 2009 01-Aug
o 1-Aug 2009 162 25,730 25,568 5,132 (513) 4,619 70 2010 01-Feb
01-Feb 2010 162 25,730 25,568 5,132 (513) 4,619 7,5 2010 01-Aug
01-Aug 2010 162 25,730 25,568 5,132 (513) 4,619 8.0 2011 01-Feb
01,Feb 2011 162 25,730 25,568 5,132 (513) 4,619 8.5 2011 01-Aug
o 1-Aug 2011 162 25,730 25,568 5,132 (513) 4,619 9,0 2012 01-Feb
01-Feb 2012 162 25,730 .25,568 5,132 (513) 4,619 95 2012 01,Aug
01,Aug 2012 162 25,730 25,568 5,132 (513) 4,619 10.0 2013 01-Feb
01-Feb 2013 162 25,730 25,568 5,132 (513) 4,619 10,5 2013 01,Aug
o l,Aug 2013 162 25,730 25,568 5,132 (513) 4,619 11,0 2014 01-Feb
01-Feb 2014 162 25,730 25,568 5,132 (513) 4,619 11.5 2014 01,Aug
01-Aug 2014 162 25,730 25,568 5,132 (513) 4,619 12,0 2015 01,Feb
01-Feb 2015 162 25,730 25,568 5,132 (513) 4,619 12.5 2015 01-Aug
o l-Aug 2015 162 25,730 25,568 5,132 (513) 4,619 13,0 2016 01,Feb
01-Feb 2016 162 25,730 25,568 5,132 (513) 4,619 13,5 2016 01-Aug
o l-Aug 2016 162 25,730 25,568 5,132 (513) 4,619 14,0 2017 01,Feb
01,Feb 2017 162 25,730 25,568 5,132 (513) 4,619 14,5 2017 01-Aug
01-Aug 2017 162 25,730 25,568 5,132 (513) 4,619 15.0 2018 01,Feb
TOTALS 153,967 (15,397) 138,570
PRESENT VALUE 83,598 (8,360) 75,238
Prepared by Ehlers Inc, . Please review all assumptions,
Abatement of 2-7-PST
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From:
Sent:
To:
Subject:
Charlie Anderson [apexgraphics@integraonline,com]
Friday, June 07, 2002 4:45 PM
frank boyles
Tax Abatement
Hi Frank,
Thanks for taking the time to help us,
We would like to go ahead with the establishment of the abatement district
on our property at 5500 Cottonwood.
Your help is greatly appreciated,
Thanks,
Charles Anderson
1
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