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FALCON HEIGHTS CITY COUNCIL MINUTES -7- June 11, 2003 Consideration of the Development Agreements for the SE Corner Redevelopment Project (continued) Council member Lamb said that in 2002, the City, School District and County received $X in taxes from that property. According to what the City is doing here, they will continue to receive the same level they received in 2002. Any payment to the developer is generated by the increase in the value of the property. At the end of the TIF period, the property will come on the tax rolls at full value and be taxed at full value. The City will have removed a blighted property, which should have a beneficial effect on the value of neighboring properties. The value of the property, as it exists, continues to go down. If the City did nothing, it would end up with fewer dollars than in 2002. People get upset about TIF. This is why the Council makes the choices that it makes. There is a need to understand the direct and indirect effects on taxes. Mr. Prosser said that all over the community property values are enhanced. There really aren't tools around any more to help recycle properties. TIF has to be used wisely. This is a classic case where it is being used wisely. Council member Lamb said this is why the City hires consultants. He asked Mr. Prosser • to describe his firm's experience, for the benefit of the audience in attendance and the cable audience. Mr. Prosser said that Ehlers and Associates are pre-eminent specialists. Over the past five years they have assisted with over $1 billion in redevelopment in communities such as Richfield, Burnsville, Eagan. A Sherman project at Lexington and County Road E was one of the first projects that he worked on. Ehlers and Associates are very rigorous in their analyses. It isn't just a run through. They take their responsibilities very seriously. Council member Talbot said the City did not use City taxes to purchase or develop this property. It only used money to hire expertise. The City is neither a developer nor a purchaser of property. Attorney Knutson said that this is a "pay as you go" TIF district. If taxes are not generated, the City has no obligation to pay anything. The risk will be on the developer, not on the City. The sole source of payment is the taxes generated by this project. Specific improvements have to be made and documented. The City and its citizens are not on the line for one nickel. What the City wants will get built. Council member Lindstrom asked if this prohibits the sale of the project. Attorney Knutson said the documents would be recorded and go with the property. Council member Lindstrom asked about the reimbursement of City costs and how that works. Attorney Knutson referenced the State statute that stipulates reimbursement of up to $5,000, off the top, for administrative expenses. Administrator Worthington said the number in the agreement is based upon the City's current costs for maintaining the two other TIF districts that the City has.