10-26-2005 Council Agenda - Laserfiche WebLink

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515 Little Canada Road, Little Canada, MN 55117 -1600 (651) 766 -4029 / FAX: (651) 766 -4048 www.ci.little-canacta.mn.us MEMORANDUM TO: Mayor Blesener & Members of the City Council FROM: Joel Hanson, City Administrator DATE: October 21, 2005 RE: Call for Hearing on Tax Abatement MAYOR 13111 Hlesener COUNCIL Jim LaValle Rick Montour Barbara Allan John Keis ADMINISTRATOR Joel R. Hanson Attached is a resolution and related notice calling for a hearing regarding the adoption of a tax abatement program we contemplated with the Hidden Acres development. This program will allow us to recover the costs associated with right -of -way acquisition for Nadeau Road and Condit Street relative to the development and the future reconstruction of Condit. Also attached is a spreadsheet depicting the abatement generation potential and our estimated acquisition costs. While I am still finalizing the specific details of the abatement program with Ehlers & Associates, we should call for the public hearing to initiate the adoption process. Tentatively, I am planning that the abatement program will start in 2007 and run for 10 years to generate approximately $70,000 in income. I have included computations for interest on the costs we advance. We will be funding the advances from cash balances and repaying ourselves with interest. (2007 is proposed to ensure full value is achieved on most lots to generate the projected income. With most houses constructed in 2005, full value will not be achieved until 2007.) We could extend the abatement term to 15 years if we requested another political subdivision to abate their share of property taxes and they refuse. The only reason I would propose this is out of concerns for possible declining real property values due to the "housing bubble ". If values dropped precipitously, we may not generate the targeted amount on a 15 -year basis. However, rather than tie up the tax base for that period of time, our fall back position would be to offset the unfunded costs within our Infrastructure Fund. I believe this is the appropriate course of action. Subject to any last minute revisions from Ehlers, I would recommend adoption of the resolution calling for the public hearing as presented.