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MINUTES <br />City Council <br />August 4, 1987 <br />Fahey asked the status of the City's bonding pool that it is <br />participating in. <br />The City Clerk reported that according to Juran E Moody, current <br />interest rates are not high enough for the pool to operate. <br />Pelstring reported that in Vadnais Heights SBA financing and tax <br />increment financing is being used as an incentive to development. <br />for existing business with reasonable good records of profit. However, <br />for new business, 30 to 35% equity is being required. <br />Pelstring a1so reported that when a city talks to a business, that <br />business is interested in the bottom line. Pelstring reported that <br />for a new project on raw land, the City could provide between 10 and <br />15% of the project costs in tax increment financing and be comfortable. <br />18 to 18 1/2% is the maximum. Therefore, in a$1 million project, <br />3150,000 could be provided in tax increment financing. <br />Pelstring reported that in Coon Rapids in such an instance the City <br />is providing the developer of a$1 million project a$75,000 grant <br />and a$75,000 15-year loan at 8% interest. In this way Coon Rapids <br />has built up a large development fund from the pay-backs of these <br />loans. Once a development fund such as this is built up, the City <br />can use this fund. <br />Fahey asked if developers will ask for TIF on every project if a city <br />is liberal with TIF. <br />Pelstring replied that normally developers will request TIF in such <br />a city. Pelstring suggested that the City needed to target specific <br />areas to use TIF and target specific types of projectsin which TIF <br />will be used. <br />Fahey suggested TIF be used in the Centerville Road area to correct <br />soils and to get the quality construction the City is seeking. <br />Pelstring reported that Vadnais Heights provides between 10 and 12 1/2% <br />in TIF on certain projects, and asks for 20% of the principal to be <br />paid back interest-free over 10 years. This is over and above the <br />pay-back through the increment process. <br />Blesener pointed out the City Auditor's recommendation that the City's <br />tax increment districts be combined into one district so that the funds <br />from one project can be used to support another project. Blesener <br />stated that it was his feeling that tax increment projects should have <br />the ability to stand on their own. <br />Pelstring agreed that there should be independent analysis to ensure <br />that individual projects can stand on their own, however, supported <br />the Auditor's recommendation that the various TIF districts be <br />combined. <br />Page -2- <br />