10-24-88 Council Special Minutes

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MINUTES City Council October 24, 1988 Wi 1 son agr•eed that ther~e was a di ffer•ence i n market val ue fr~om the val ue on the books for• tax purposes, and the cost of a pr~oject for development. Wilson pointed out that developer•s must make a pr•ofit on a development, the question is how much is a fair• pr~ofit. 4lilson reported that in this instance the "but for" question was not answered until after the public hear~ing was held on the project. ldilson also pointed out that the value of a pr~oject for tax pur•poses will be different than the actual cost of development since pr•ofit is included in the actual cost of development. W.ilson pointed out that under TIF the "but for•" r~ule means that without TIF assistance the project would not work. The Auditor r•eported that he did a telephone sur~vey of other cities using TIF assistance, and the neighbor to the north has some fair~ly r•igid. standar•ds and provide 10% of assistance using the value set by the Ramsey County Assessor•'s Office. This city gets the Assessor's Office involved with each TIF Development Agreement and the tax value is determined for~ the project. This city also bonds only once per year for all TIF pr•ojects. Idilson pointed out that the plans and specs for the Lar•ry Lee project have been at the Assessor~'s Office since July. Wilson r~eported that ther•e are other cities' pr•ojects which ar•e hung iap in the Assessor•'s Office waiting for values. Ther•efore, there is the need to wor~k backwar~ds into the pr~ocess with the developer• r•equesting a certain amount of assistance, and the value decicied on the pr~oject in order~ to make the number•s wor•k. Scalze asked how the $1,083,000 value was ar~r~ived at. Wilson reported that Pat Pelstring of Business Development Services developed that number. Wilson repor•ted that most cities handle their TIF pr~ojects in the same manner as the Larr•y Lee project was handled, tdilson pointed out that Pelstr•ing helped develop the City's TIF policy and negotiated the TIF deal with Lar•r•y Lee so that 10% of assistance would be pr~ovided the developer. Collova pointed out the need for the County's assessed market value. Scalze pointed out that the City is ending up with pr•oviding 13% of the market value of the pr•oject to the developer in TIF. Wilson stated that it is 13% of the taxable value, but 10% of the project costs. Scalze pointed out that the goal of the Economic Development Committee is to lower taxes within the City. Wilson pointed out that initially TIF costs money to pr•ovide gr•owth for the City and a larger tax base in the future. Wilson pointed out that in addition to a lar~ger• tax base, TIF will assist in attracting employment to the City. Page -3-