01-09-2012 Council Workshop Minutes

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MINUTES CITY COUNCIL JANUARY 9, 2012 District 2 -2 was established after 1990, so there are more restrictions on the use of TIF dollars. This district will likely decertify early in 2013 when the interfund loan is paid. Vogt reported that once the loan is paid, the Office of the State Auditor (OSA) says the district must shut down and property returned to the tax rolls. The projected ending balance of $65,000 in 2013 is within the calculated 25% pooling limitation and thus can be spent outside the district. Blesener noted that once the loan has been paid, the Painter's Union would have the ability to seek tax exempt status for the portion of the building that is their training facility. Next reviewed was District 3 -2 which has sufficient cash to meet its current debt obligation. Vogt noted that the City has a request from Sherman & Associates for relief from the town home development agreement and TIP shortfall guarantee. Vogt indicated that it appears the TIF district could accommodate the request, but Ehlers recommended including protection measures such as holding the developer accountable for commercial development and clean -up of the remaining undeveloped parcel. Vogt also recommended the City consider special legislation to extend the five year rule to allow it to repay itself for improvements to Middle Street and Market Place Drive, and potentially assist US Bank with reconstruction of its building. Vogt indicated that these public improvements are in the TIF district, but the costs were incurred after the five year rule. Without special legislation, Vogt estimated $125,000 per year would be available to be spent outside the district beginning in 2013 and continuing through the remaining life of the district. Vogt reviewed District 3 -3 and indicated that cash flow and fund balance are adequate for this district. Administrative costs should be monitored to ensure they do not exceed the 10% allowed. Districts 5 -1 and 6 -1 are new districts and difficult to project at this time. Vogt then reviewed the "4 Year Rule" which required that within four years from certification date certain activities must have taken place on each parcel within the TIF District. This includes demolition, rehabilitation, renovation, and site improvements. If the activities have not taken place, the parcel is "knocked down" from the district, meaning that no increment may be collected from that parcel for the duration of the district. Little Canada has no parcels knocked down from its individual districts. Vogt reviewed the "5 Year Rule" which states that for post -1990 districts tax increment is only considered to be expended on an in- district activity if certain financial activities occur. For redevelopment and renewal and 3