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LAKE ELMO CITY COUNCIL WORKSHOP MINUTES MARCH 11, 2014 Page 4 of 7 There are limitations to what you can use the funds for. Use of TIF in redevelopment TIF district. 90% of the TIF revenues must be used to correct the conditions that allow designation of a redevelopment TIF district. Goes over some of the TIF eligible project costs. Biggest thing to keep in mind is can’t use TIF to pay for building costs. Kathy Haggard asked about part housing part business. Could that qualify. Tammy answered that if it is substandard then yes, and if not then it still could if it would qualify for ?? (something about market rate housing) Anne asked about folks living on fixed income. Could 20% of that building be housed by those people? Tammy answered that yes, housing could be restricted to seniors. Has to income qualify the residents once a year. Bloyer asked if we establish TIF district, how would this work? Tammy answered that would go through what future development may generate. Challenge becomes that unless development materializes you’re not going to generate revenue to pay back bonds. Bloyer has fear that TIF district would be established but we would not meet the revenue. Can we be specific about what the project would be used for? Tammy answered yes, that would be done when you make a project plan. But yes, there is some risk. Wally asked about if we’re doing sewer and TIF district, City is paying for it, the risk is that the taxpayers would pay for it if we don’t get any new development? If we get revenue in, taxpayers off the hook? Tammy answered that that is correct. Anne asked that if you’re doing a TIF isn’t there an incentive for folks to come in. Tammy answered yes, increment provides an incentive but you need the development to happen to generate the revenue. Bloyer asked for an example of what we would offer through TIF. Tammy answered it depends on how much increment is generated. Depends on what you say you’re going to be spending the money on. Mayor asked if it goes over expected increment, do we continue to capture it? Tammy asnwerd yes. Something about 5 years. John Thompson asked if we want to help a contractor or pay for a building from TIF proceeds that we could not pay a contractor to develop a building. Tammy asnerwerd yes, you can’t reimburse for cost of physical building. Could pay for soil improvements though. Dean comments that incentives that are generally provided are site plan, dirt, drainage, etc. John Thompson explained that sometimes it may be advantageous to have smaller, separate TIF districts, if they can hold their own weight rather than doing one great big TIF district. Schiltz asked how many districts can oen city have. Tammy answered that there is no limit. IT just depends on if you can qualify it. Other statutory factors to be aware of. Administrative expenses limited to 10%. There is a 4 year rule – certain activities must occur on each parcel in the TIF district within 4 years of certification or the parcel is “knocked out” of the district. Pooling is the ability to spend tax increments outside of the TIF district (but within project area). 5 year rule – 5 years from the date of certification to spend or obligate TIF, after this time period passes, TIF can only be spent on prior obligations, on administrative expense, or under limited pooling authority. There is a bill being introduced in legislature eto extend that to 8 years. Mayor asked any idea on what the increment could be? What taxes it could generate? John Thompson presented an example if we establish a TIF district we’re collecting 100,000 for taxes, we estimate based on plan, now we’re going to collect 500,000 in taxes. The difference, but for, is 400,000 in taxes that we are estimating to generate. That is our TIF money. John Thompson asked if we get all of that money, and in TIF district #2 is made part multi family housing, does that change what the school district or county can come and get because the county ownes the road and kids go to school? Answered that no, it all still goes to city.