10-27-2000 - Laserfiche WebLink

Home Browse Search

Item No. 6A Meeting Date: October 26", 2000 Type of Business: EB EB: EDC Business IN: Informational Item City of Mounds View Staff Report To: Economic Development Commission From: Aaron Parrish, Economic Development Coordinator Item Title/Subject: Evaluate and Recommend Use of Pre -1997 Interest Earnings Date of Report: October 16, 2000 Background: The Office of the State Auditor has determined that interest earnings on TIF funds prior to July 1, 1997, herein referred to as pre -1997 interest earnings, are not subject to TIF restrictions. Mr. Jim O'Meara, the EDA's TIF attorney, has reaffirmed this position. Subsequently, the EDA has directed the EDC to evaluate potential options for the use of these funds. There is approximately $2,666,389 in such earnings. However, this number can fluctuate based on a two factors. First, the number may decrease if escrow earnings on refunded debt are taken out. Second, the figure may increase if items such as interest earned on business loans and land acquisition purchased or entered into before July 1, 1997 are included. At this point, it is recommended that t$2,666,389 be used since this is currently reported to the OSA. Ehlers and Associates, the EDA's Financial Advisor, has advised that the pre -1997 interest earnings be transferred into a new or different fund. This will enable the pre -1997 interest earnings to be distinguished from existing TIF funds. Additionally, it was suggested that a majority of the money not be obligated and/or spent immediately. This is due to some issues currently outstanding with the Office of State Auditor. More specifically, the OSA has been evaluating Mounds View's use of TIF for the acquisition and renovation of the Community Center. If the EDA is found to be in non-compliance, one of the potential penalties is repayment of all or part of funds associated with the non-compliant activity. Additionally, the pre -1997 earnings have been accounted for with TIFfunds for several years. Depending upon OSA interpretation, they may consider these funds tax increment. If that is the determination, then these funds would have the same restrictions associated with TIF. Accordingly, it would be fiscally prudent to wait for the OSA to evaluate TIF reports reflecting changes relative to the use of pre -1997 interest earnings prior to spending a significant amount of funds on non -TIF activities. Preliminary Options: After a review ofvarious planning initiatives and existing community needs, some preliminary options for pre -1997 interest earnings could include: 1. Establishing a fund to provide for any future safety improvements, infrastructure, and/or redevelopment associated with County Highway 10. 2. Establishing a fund for variety of future economic development and housing projects / improvements throughout the City. This could include a revolving loan fund, funding for economic development once the current TIF districts expire, housing programs and replacement, or a range of other activities. 3. Transfer revenue to existing funds such as the General Fund or Special Revenue Funds including the Cable TV, Community Center, DARE, Park Dedication, Special Projects (Street Reconstructions etc...), Street Light, Surface Water, Vehicle and Equipment, and the Lakeside Park Funds. Additional revenue would then be used to expand the activities of the designated fund.