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AGENDA ITEM 6A <br />STAFF ORIGINATOR: Mary Alice Divine <br />DATE: 7/25/05 <br />TOPIC: Public Hearing: Consideration of approving a Tax <br />Abatement for the Chain of Lakes YMCA <br />VOTE REQUIRED: 3/5 <br />BACKGROUND: <br />On June 27, 2005 the City Council called for a public hearing to consider <br />providing a business subsidy with tax abatement as a source of funding for its <br />commitment of $1.5 million toward construction of the YMCA. This is a <br />commitment that dates back to a 1999 agreement to partner with the YMCA to <br />bring a facility to Lino Lakes. The YMCA is anticipating beginning construction <br />this fall in the Legacy at Woods Edge development, with a completion target in <br />the fall of 2006. <br />Springsted, the city's financial consultant, and Kennedy & Graven, the city's bond <br />consultant, have analyzed various methods of meeting this commitment and are <br />recommending the use of tax abatement and the issuance of tax abatement <br />bonds for a 15 -year term as the most appropriate method for financing this <br />commitment. Issuance of abatement bonds produce the lowest interest rate <br />possible, is a simple transaction compared to other options, and the abatement <br />levy is offset by growth anticipated in the Legacy at Woods Edge project. <br />Tax abatement is not an actual abatement of taxes. Using tax abatement permits <br />a levy of taxes to be used for development purposes. In this case, properties <br />have been identified in the new Legacy at Woods Edge development (outside of <br />TIF District No. 1 -11) totaling approximately $60 million in residential and <br />commercial property taxes as the source of the property taxes to meet the tax <br />abatement bond obligations. <br />The City of Lino Lakes adopted a Tax Abatement Policy in 2001. The objectives <br />for using tax abatement include providing assistance in the Town Center, <br />encouraging additional unsubsidized private "spin off" development in the area, <br />and fulfilling defined city objectives such as those identified in the <br />Comprehensive Plan. This project meets the goals and objectives of the policy. <br />Springsted reviewed the use of tax abatement with the city's Economic <br />Development Advisory Committee (EDAC). The committee voted 7 -0 to <br />