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Home My WebLink About9B - Downtown Redevelopment MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: CITY COUNCIL AGENDA REPORT September 7,1999 ~~nald Rye, Planning Director iff CONSIDER APPROVAL OF RESOLUTION ~ CERTIFYING LEVY UNDER MINNESOTA STATUTES . 469.033 FOR DOWNTOWN REDEVELOPMENT FOR THE PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY History At the June 21, 1999 EDA meeting, the EDA appointed a subcommittee consisting of Tom Kedrowslci and Bob Jader to review . the proposed EDA budget for 2000 for consideration of whether the EDA should seek the authority to levy taxes for redevelopment purposes. At the July meeting, the EDA considered this issue and continued the discussion at the August 16 meeting. At, that meeting, the EDAvoted unanimously to propose to the' City Council that the Council approve a levy on behalf of the EDA. Discussion State statute allows the City to levy taxes on behalf of the BOA subject to the provisions of the statute. There are two separate methods of levying for the EDA. The tirstmethod,under provisions of MS 469.107 allows the City to levy on behalf of the EDA. The amount of the levy may not exceed 0.01813 per cent of the taxable market value of the City or $137 ~683.oo. This levy counts against the City levy limits. The City Council is aware that the proposed 2000 budget includes $54,491 for BOA operating expenses. The second method involves the City authorizing the BOA to levy under it's powers as a Housing and Redevelopment Authority pursuant to MS 469.033. In this case, the levy may not exceed 0.0144 of the taxable market value of the City or $109,357.00. This levy does not count against the City ,levy limits. The statute also provides for a levy of an additional 0.0013 per cent for informational services and relocation. Since none of these activities are anticipated nex:tyear, this additional levy has not been considered. In it's discussions, the EDA considered these options and also reviewed their budget for 2000. The proposedEDA budget (copy 162~~~~, Minnesota fi5372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER $76,000 in support of Downtown redevelopment. This levy request is $33,357 less than the maximum amount which could be levied. The proposed levy would add $26.20 a year to the taxes on a home with a taxable market value of$200,000. The allocation of the proposed levy would be $60,000 to establish a land acquisition fund for the Downtown project and $16,000 for the Revolving Loan fund which currently exists. Options If the levy is not approved, the EDA will have to consider other options. The obvious option is to do what is being done now under the current General fund levy. This implies little support for the Downtown project as the current budget covers some personnel costs and consultant fees. Another option is to delay consideration of a levy until the Downtown Redevelopment Plan is complete and has been reviewed by the Council and EDA to determine priorities for expenditure of funds. This provides no rnore support for the Downtown effort than the previous alternative, but it does hold out the likelihood of additional funding in 2001. A third option may be for the EDA to utilize land sale proceeds from the Business Office park for Downtown purposes. The current fund balance in this account is (coincidentally) $76, 817.72. There is also money in the Downtown Tax Increment Fund amounting to $128,177.82. While it appears there is over $200,000 available immediately, it should be kept in mind that the streetscape improvements and utility upgrades in the Design Concept Plan had a cost well over $800,000. It is almost certain that redevelopment costs, which could involve land acquisition, would be considerably higher. If the funds are levied in 2000 and not spent, the balance remaining at years end can be carried over as a fund balance and be available for expenditure in the subsequent year. Issues The obvious question to be asked is what benefit will there be for the community if additional taxes are levied for redevelopment purposes. As noted above, a $200,000 house will pay $26.20 a year in additional property taxes. Prior Lake residents are understandably concerned about the property taxes they pay. However, experience shows there is also a high awareness of the previously failed Downtown redevelopment efforts. The public seems to desire a revitalized downtown commercial area. This objective will not be realized without both public and private investments. For communities which have undertaken successful economic development and redevelopment projects, the results are usually highly visible in the form of renewed business districts which offer an expanded range of goods and services to the community and often become a source of community pride for aesthetic reasons. Over the long term, successful efforts often result in a greater share of the property tax burden being borne by non-residential taxpayers. While there is no guarantee that L:\99FILES\99EDA\REPORTS\CC9B9799.DOC 2 goods and services to the community and often become a source of community pride for aesthetic reasons. Over the long tenn, successful efforts often result in a greater share of the property tax burden being borne by non-residential taxpayers. While there is no guarantee that these benefits will accrue simply because the EDA decides to try it, if past experience is any predictor, it is far more likely that conditions will continue to worsen if the EDA does nothing. Conclusion It is the recommendation of the EDA that the City Council certify a year 2000 levy for the EDA in the amount of $76,000 under its powers as a Housing and Redevelopment Authority pursuant to MS 469.033 to assist the Downtown redevelopment effort. Adoption of the_ ~ac~on constitutes final approval of this levy since it is not subject to Truth in Taxation requirements - ..------ FINANCIAL IMP ACT: If the Council adopts the preliminary levy resolution without the additional EDA levy, there will be an estimated 1.75% reduction in the City's portion of the property tax bill. If the $76,000 levy is approved, the reduction will be 0.1 %. ALTERNATIVES: 1. Adopt Resolution 99-xx certifying a levy amount of $76,000 on behalf of the EDA. 2. Deny Resolution 98-xx certifying a levy of $76,000 on behalf of the EDA RECOMMENDED MOTION: Alternative 1 REVIEWED BY: L:\99FILES\99EDA \REPORTS\CC989799.DOC 3 RESOLUTION 99-XX \01 \.\~ ~ - RESOLUTION CERTIFYING PROPOSED 2000 CITY OF PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION MOTION BY: SECOND BY: WHEREAS, Truth in taxation provisions as specified by property tax legislation requires a proposed property tax levy certification to the Scott County Department of Taxation; and WHEREAS, Minnesota Statutes allow a property tax to be levied under EDA authority subject to City Council approval; and WHEREAS, The City Council hereby directs Scott County Department of Taxation to establish the EDA of Prior Lake as a separate taxing authority consistent with Minnesota Statutes; and WHEREAS, The maximum allowable EDA property tax levy for payable year 2000 has been determined to be $109,357.00; and WHEREAS, The Prior Lake Economic Development Authority, at its regularly scheduled EDA meeting of August 16, 1999, authorized a property tax levy in the amount of $76,000; and WHEREAS, The Prior Lake City Council acknowledges that the revitalization of the downtown business district is in the best interest of the community. . NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that the proposed EDA property tax levy is hereby approved and shall be distributed upon the taxable property in -.w City for the following purposes in payable 2000: Purpose Amount Total... $60,000.00 $16.000.00 $76,000.00 * For Land Acquisition Purposes For Revolving Loan Fund Purpose * Passed and adopted this 7th day of September, 1999. 16200 Eagle Creek Ave, S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER H:IBUDGE1\OOEDARES.DOC {Seal} ~ "::;;.,,;SL.~~'8::_;: :I1:1:I:;!'!;rrr Mader Kedrowski Petersen Schenck Wuellner YES Mader Kedrowski Petersen Schenck Wuellner NO City Manager City of Prior Lake 1: :"':r-" :E' "'-- ", ,- '" ,.... :-_~ <11" "0;".........11,""",_._._."" 'It .....,;."." :.. '!f .J SHEET 3 PROPOSED ECONOMIC DEVELOPMENT AUTHORITY BUDGET YEAR 2000 ECONOMIC DEVELOPMENT 46500 2000 PROPOSED BUDGET Personal Services General Fund Special EDA (Economic EDA Revolving Development) Levy Loan Fund 101 Full Time Employees Regular $16,422.00 121 PEU Contributions 851.00 122 FICA Contributions 1,055.00 123 MEDICARE Contributions 247.00 131 Health Insurance 600.00 132 Dental Insurance 60.00 133 Life Insurance 21. 00 134 Disability Insurance 0 151 Workers Compensation Insurance 60.00 Total Personal Services $19,316.00 Current Expenses 201 Office Supplies - General 425.00 203 Office Supplies - Printed Form 3,800.00 313 Professional Services - Consultant 25,000.00 314 Professional Services - General 331 Travel and Conferences 2,000.00 334 Car Allowance 600.00 433 Misc. Expense - Dues and Subscriptions 400.00 437 Misc. Expense - General 750.00 438 Promotion 4,200.00 Capital Outlay 510 Land Acquisition 60,000 Total Amounts $54,491 $60,000 $16,000 GRAND TOTAL $130,491 L:\ADMIN\BUDGE1\EDABGTOO.DOC