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AGENDA ITEM:
DISCUSSION:
CITY COUNCIL AGENDA REPORT
JULY 17, 2000
9A
DONALD RYE, PLANNING DIRECTOR
CONSIDER APPROVAL OF RESOLUTION OO-XX
CLARIFYING AND APPROVING THE BUDGET
MODIFICATION FOR DEVELOPMENT DISTRICTS 1 AND 2
History In October 1996, the City Council approved a Modification
of Tax Increment Financing Districts 1-1, 1-2 and 2-4. This
Modification expanded the geographical extent of the Districts and
increased the project budget. The original budget for TIF District 2-4
was $418,000. The Modification increased the budget to $2,850,000
but this figure also included TIF Districts 1-1 and 1-2.
Issues The major issue is the fact that the 1996 Modification
combined the budgets for the three TIF Districts. In order to expend
funds for a particular TIF or Development District, the budgets must
be separate in order to track costs within each District. The proposed
Modification which is the subject of this report is intended to allocate
costs between Development District I (which includes TIF Districts I-
I and 1-2) , which is the Downtown area, and Development District 2
which includes the Park-Nicollet and Priordale Mall area. This area
includes TIF District 2-4. The cost allocation proposed does not
change the total budget amount of $2,850,000 adopted in 1996. It
simply clarifiea the allocation of money to each Development District.
A greater amount ($1,900,000) was allocated to the Downtown District
while the remainder went to District 2 on the premise that the
Downtown redevelopment effort would likely have greater need for
the funds.
Mary Ippel, the City's bond counsel, has reviewed and approved both
the process and this agenda item modifying the Development Districts
budgets.
ALTERNATIVES: 1. Approve Resolution oo-xx as presented
2. Approve Resolution OO-XX with amendments as determined by the
City Council
3. Deny Resolution OO-XX
RECOMMENDED
MOTION: Motion to .cvlresolution DO-XX
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RESOLUTION OO-XX
RESOLUTION OF THE PRIOR LAKE CITY COUNCIL CLARIFYING AND APPROVING
THE BUDGET MODIFICATION OF DEVELOPMENT DISTRICTS 1 AND 2 IN THE CITY
OF PRIOR LAKE
MOTION BY:
SECOND BY:
WHEREAS: on October 7, 1996, the City of Prior Lake approved a Modification to Tax Increment
Financing Districts 1-1, 1-2 and 2-4 and Development Districts 1 and 2, and
WHEREAS: the Modification authorized certain Project costs in Development Districts 1 and 2, and
WHEREAS: the allocation of Project costs were combined for Development Districts 1 and 2, and
WHEREAS: the Estimate of Public Cost on page 11 of the document titled Tax Increment District
Nos. 1-1, 1-2 and 2-4 Modification dated October 7, 1996 authorizes expenditures
totaling $2,850,000 for Districts 1-1, 1-2 and 2-4 over the life of the Districts, and
WHEREAS: it is necessary to allocate authorized expenditures specifically to Development Districts
1 and 2, and
WHEREAS: it is proposed that the existing budget established for the Development Districts be
revised to reflect expenditures as outlined in Attachment A (the "Modification")
undertaken within the Districts pursuant to Minnesota Statutes 469.175 (the Act), and
WHEREAS: the City has performed all actions required by law to be performed prior to the approval
of the Modification,
NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PRIOR LAKE, MINNESOTA, that it hereby finds, determines and declares that, with respect to
the Modification:
a) The Modification conforms in all respects to the requirements of the Act and will
help fulfill a need to develop an area of the State which is already built up to provide
employment opportunities, to improve the tax base and to improve the general economy
of the State and thereby serves a public purpose and will afford maximum opportunity,
consistent with the needs of the City as a whole, for the development or redevelopment
of the project area by private enterprise with the intention of providing only that level of
public assistance necessary to make private developments financially feasible; and
b) Any amounts to be expended on project costs authorized in the Modification will be
explicitly approved by subsequent Resolution; and
the City Council is hereby clarifying the budget and authorizing tax increments to be expended
according to the budget modification in Attachment A and that the Modification is hereby approved.
r6OJ8Io5fegg~l'e?r~~~m~0~~2~.rg~~~~for Lake. Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
Ac; t.QUAL OPPORTI:\ITY EYlPLOYER
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Passed and adopted this _th day of ,2000.
Mader Mader
Gundlach Gundlach
Ericson Ericson
Petersen Petersen
YES NO
{Seal}
City Manager
City of Prior Lake
I :\OOfiles\OOeda\OOedamin\cc2-4mod .doc
FINANCIAL PLAN - I ~~ ~ ~ 01;), ~ l C. A THO t.J
ESTIMATE OF PUBLIC COST
The following is an estimate of public costs including cost of District indebtedness, source of
revenue, most recent tax capacity, and estimate of captured tax capacity.
1. Activities. Activities within the Project area consist of property acquisition, infrastructure
improvements, demolition and site improvements. Costs which may be funded in Development
Districts Nos. 1 and 2 as a result of the modification of Districts Nos. 1-1, 1-2 and 2-4 include:
A. Property acquisition, demolition and site improvements
B. Relocation
C. Infrastructure
SUBTOTAL
$2,000,000
150,000
600.000
$2,750,000
? Public Cost Other Than Activities. The follo'Wing is a listing of costs other than costs
directly attributed to undertaking of the Project area improvements:
A. Administration, planning and legal
SUBTOTAL
$100.000
$ 100,000
3. Financing Cost. Totaling activities costs and othc costs as outlined in items 1 and 2 above,
results in the total financing cost.
A. Activities Costs
B. Other Costs
TOTAL FINANCING COST
$2,750,000
100.000
$2,850,000'"
4. Source of Funds.
A. Annual tax increment revenues
B. Qualified local contribution
TOTALSOURCEOFFU~~S
$2,707,500
142.500
$2,850,000
* This amount is based on preliminary cost estimates, therefore the city reserves the right to shift line
item expenditures \\ithin the overall budget proposed herein.
SOURCES OF REVENUE
The proposed sources of revenue to be used to finance public costs associated 'With the develop-
ment projects in the District may include developer payments and tax increment generated as a result
of the taxation of the land and improvements in the District. At a future time, the City may elect to
issue bonds for undertaking some or all of the identified improvements. If this were to occur they
would pledge increment revenues to repay the bonds. Tax increment financing refers to a funding
technique that utilizes increases in tax capacity and the property taxes attributed to new development
to finance, or assist in the financing of public development costs. The improvem<;:nts resulting from
development of the property by private business within the District are currently generating $64,OOO/ye-
ar. It is anticipated that annual tax increments of up to $300,000 per year may be generated when all
of the potential developments occur.
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ATTACHMENT A
BUDGET MODIFICATION
DEVELOPMENT DISTRICTS 1 AND 2
The budget for Development Districts 1 and 2 is hereby modified as follows:
1 Activities. Activities within the Development Districts consist of property acquisition,
infrastructure improvements, demolition and site improvements. Costs which may be
funded in development Districts 1 and 2 include:
District 1
(TIF District 1-1 and 1-2)
A. Property acquisition, demolition and
site improvement
B. Relocation
C. Infrastructure
$1,250,000
100,000
400,000
SUBTOTAL
1,750,000
2. Public Costs Other Than Activities
A. Administration, planning and legal
75,000
District 2
(TIF District 2-4)
750,000
50,000
200,000
1,000,000
25,000
3. Financing Cost. Totaling activities cost and other costs in 1 and 2 above results in the
total financing cost.
A. Activities Cost
B. Other Costs
TOTAL FINANCING COST
1,750,000
75,000
1,825,000
4. Source of funds
A. Annual tax increment revenues
B. Qualified local contribution
TOTAL SOURCE OF FUNDS
1,805,000
95,000
1,900,000
1,000,000
25,000
1,025,000
902,500
47.500
950,000
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