02-28-2024 Council Packet - Laserfiche WebLink

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STAFF REPORT TO: Mayor Fischer and Members of City Council FROM: Chris Heineman, City Administrator Sam Magureanu, Finance Director DATE: February 28, 2024 RE: Amendment No. 1 to Payment in Lieu of Taxes with International Union of Painters and Allied Trades Council 82 Building Corporation, Inc. BACKGROUND: Payments in Lieu of Taxes (PILOT) are payments that help local governments offset losses in property taxes due to the existence of nontaxable properties within their boundaries or a change in status from taxable to tax-exempt property. Tax-exempt properties are not required to make such payments; however, agreements can be reached between local governments and entities for such payments. Prior to October of 2022, the City of Little Canada had in effect two PILOT agreements, one with AFSA Charter School and one with International Union of Painters and Allied Trades Council 82 Building Corporation, Inc. In both of these instances the loss in tax base occurred due to a change in status of the buildings from taxable to tax-exempt. As of October, 2022, the agreement with Painter’s Union has expired. In 2012 the City entered into a PILOT agreement with International Union of Painters and Allied Trades Council 82 Building Corporation, Inc. The PILOT Agreement was entered since in 2003 the City provided Tax Increment Financing assistance to International Union of Painters and Allied Trades Council 82 Building Corporation, Inc to assist in the development of building on the former Knox property. A portion of the property has been used for apprenticeship training programs and due to law changes in 2008, that portion of the building qualified for tax exempt status. At that time, as it can be noted in the agreement, the only thing that prevented the organization to apply for tax exempt status was a remaining TIF obligation to the City in the amount of $47,397.20. This payment was taken care of by the Painter’s union in 2012 which allowed them to obtain a tax- exempt status for that portion of the building. Since the new exempt status resulted in a decrease in the tax base of approximately 75% the PILOT payments are intended to reduce the overall financial impact to the City due to the tax-exempt status. The original agreement expired in October of 2012. City staff has reach out to the organization and mutually agreed to reinstate the agreement. AFSA PILOT: The obligation to make PILOT payment to the City with AFSA Charter School is in effect to the extent the property remains tax- exempt.