05/02/2011 Council Packet - Laserfiche WebLink

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distribute the cost of improvements to all benefiting properties. Alternatively, a connection charge could be established that is paid when adjacent properties connect to improvements. A feasibility study will be required in conjunction with any application review to determine the scope and cost of improvements. The improvements will require land acquisition of easements and /or property to facilitate the infrastructure expansion. Tax Increment Financing Council members raised the question of the possible use of Tax Increment Financing to assist with public improvements. Tax Increment Financing is a program that enables a city to use the additional property taxes that a proposed development generates to finance certain costs necessary for that development to occur. Taxes that were being paid on the undeveloped property or the "base value" continue to be paid to the taxing jurisdictions. Only the "increment" (the increase in taxes incurred by the new development) is available to assist with improvement costs. Often the issuance of a bond is necessary to finance these upfront costs. Bonds are repaid by the increment that is generated by the new development. In other instances, the TIF is provided on a "Pay -As- You -Go" basis, meaning the development pays the improvement costs upfront, and is reimbursed over time as taxes on the new development are paid. Normally TIF is not available to assist greenfield commercial development. Ten -year Economic Development TIF Districts are normally used for manufacturing or warehouse development. As a temporary economic stimulus, the State Legislature is considering an extension of special legislation passed last year that allows cities to TIF other uses, including commercial projects. If the Legislature extends that legislation for another year, the City Council could use the opportunity to provide TIF to assist with the cost of bringing infrastructure to the area. A 50,000 sq. ft. project valued at $7 million could generate in the range of $100,000 per year. Infrastructure costs have not been determined at this early stage, but could potentially exceed $1.5 to $2 million. Requested Council Direction Staff requests direction from the council on how it would like to proceed with the grocer development as it has been proposed. Attachment(s) None 2