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MAYOR <br />Michael L Fahey <br />COUNCIL <br />Beverly Scalze <br />Jim LaValle <br />Steve Morelan <br />Bob Pedersen <br />515 Little Canada Road, Little Canada, MN 55117 -1600 ADMINISTRATOR <br />(651) 484 -2177 / FAX: (651) 484 4538 Joel R. Hanson <br />Email: cityhall @ci.little - canada.mn.us <br />To: Mayor Fahey & Members of the City Council <br />From: Joel Hanson, City Administrator <br />Date: November 19, 1999 <br />Re: Montreal Court Payment in Lieu of Taxes <br />As you may recall, the City approved the issuance of tax exempt mortgage revenue bonds to finance the <br />acquisition and renovation of Montreal Courts in 199x. In doing so, we established a provision to <br />generate a payment in lieu of taxes should they pursue a 4(d) class rate designation. (This was done to <br />protect the City's property tax base.) This provision remains in effect throughout the term of the bond <br />issue. (The bonds are not retired until 2027, although they can be called in 2007.) <br />This provision came into play in 1999 based upon the attached calculation. You will note it resulted in a <br />payment to us of $25,871. (This amount has already been received.) The issue for the Council to <br />consider is where do you want this money posted and how should it be handled in future budgets. <br />Some options are as follows: <br />♦ Place it in the General Fund. In 1999, this would generate additional surpluses that would <br />then transfer to the General Capital Improvement Fund. (It could specifically help with the <br />additional costs of lighting Pioneer Park.) In future years, it could help offset expenses <br />thereby holding the line on tax increases. <br />♦ Place it in the General Capital Improvement Fund. As was discussed at our last meeting, <br />needs outweigh revenues. This would help alleviate that problem. It would also avoid <br />creating a dependency situation that would arise if it were placed in the General Fund. <br />♦ Place it in the Infrastructure Replacement Fund. This is pretty much the same analysis as the <br />previous option. The difference is the importance placed on the need for funding. <br />♦ Place it in a fund for economic development. Assuming the Rice Street/Little Canada Road <br />project moves forward at some point, dollars will definitely be needed in this area beyond <br />what TIE and land sales will generate. <br />My recommendation would be option #2 as I think the needs warrant this usage. However, the call is <br />yours. <br />Page 92 <br />