06-22-2000 - Laserfiche WebLink

Home Browse Search

City of Mounds View Staff Report June 14, 2000 Page 3 jurisdiction has the option of specifying the percentage of taxes that could be pledged for a particular project. The political subdivision also has discretion in the number of years that a project could be funded (Bubul et al 11). Pay-as-you-go financing is the preferred method of finance due to the limited liability incurred by the grantor. However, there are some projects that will not be viable without an up front injection of equity. In this instance, it may be necessary to issue bonds on behalf of the project. (Bubul et al 11) Economic development is a function that is commonly associated with local government. However, the property taxes collected at the municipal level are typically the smallest of the three primary taxing jurisdictions. Thus, the ability to generate revenue based simply on a municipal abatement is rather limited. For example, the overall tax rate for property located in the City of Mounds View is 124.556 percent. Of that 124.556%, 25.551 % can be attributed to the city, or approximately 20.5% of the total property tax liability for a Mounds View taxpayer. Comparatively speaking, Ramsey County and the Mounds View Public School District account for approximately 79.5% of the total. Needless to say, this places a significant constraint on a city's ability to generate abatement revenue individually. The following calculations are illustrative: 2000 Abatement Calculation: City of Mounds View Only Total Tax Capacity ($1,000,000 Commercial Project): $40,481 City Tax Rate: 25.551% Percent Abated: 95% 2000 Abatement Payment: $9,826.14 5 Year Revenue Projection: $49,130.70 2000 Abatement Calculation: City of Mounds View & Ramsey County Total Tax Capacity ($1,000,000 Commercial Project): $40,481 City Tax Rate: 25.551% County Tax Rate 44.839% Percent Abated: 95% 2000 Abatement Payment: $27,069.85 5 Year Revenue Projection: $135,349.25 N:\DATA\GROUPS\ECONDEV\EDC\Staff Repoits\Staff00\06-6A.doc