09-12-2018 Council Packet - Laserfiche WebLink

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MINUTES CITY COUNCIL SPECIAL MEETING AUGUST 22, 2018 2 how much the property value could increase based on the expected property investment. She explained that an economic development TIF district would allow up to nine years of increment. She stated that economic development TIF districts must be for manufacturing, warehouse or distribution so this buyer’s business would qualify. Ms. Eldridge recommends the district be set up as a pay-as-you-go and reimburse the company as they incur costs, rather than giving the funds upfront. Fischer pointed out that the business is calculating that the property value will be substantially more than it is right now, which is likely not the case since the improvements are to the interior and fixtures and that does not typically increase the property value much. Ms. Eldridge stated there would be administrative costs incurred to set up this district. She explained that it will need to be looked at to see whether enough increment can be captured to make it worth using an economic development TIF district. Keis stated that the realtor mentioned both tax abatement and an economic development district. Ms. Eldridge explained that tax abatement is completely different than TIF. Keis asked how long tax abatement can last. Ms. Eldridge stated the law allows it to go for 15 years, although other factors can allow it to go up to 20 years. Mr. Heineman explained that tax abatement has limits, and it can also be used for road projects, which City has possibly done in the past, so we may want to look at other options instead. Fischer stated he might want to use this option for other projects such as large park improvements that are more difficult to finance, rather than this situation. Ms. Eldrige explained that if the property value after the improvements does not reach what was first estimated, the city only pays out what taxes they actually receive. Mr. Heineman stated that this company prefers to use the State’s Job Creation Fund, and it is rare that both the Jobs Creation Fund and the Minnesota Investment Fund are used. McGraw asked if the City needs to do anything with DEED in order for this company to get funding from the state. Mr. Heineman stated the City would only need to provide a letter of support for the state funding. He noted that DEED has likely done a lot of due diligence on this company in order to agree to fund them. McGraw stated that this buyer is a growing company and he would hate for this building to sit empty. He is not in favor of tax abatement, but there does not seem to be much of a downside to an economic