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Mounds View EDA May 22, 2006 Regular Meeting Page 3 88 7. EDA BUSINESS 89 90 A. Continue Review of City Economic Development Policy 91 92 Community Development Director Ericson stated Ms. Johnson’s comments have provided 93 background for this agenda item. He explained the EDA has reviewed all economic development 94 related policies and programs to formulate a philosophy about economic development into the 95 future. He noted there has been a number of discussions on this item and staff has looked at 96 scenarios about how the future of TIF should be structured. There are several scenarios the EDA 97 can look at to either maintain the status quo or take some action to scale back the collected 98 increment through 2015. Director Ericson presented the following options to consider: 99 1. Maximize the flow of Increment for articulated EDA purposes (status quo) 100 2. Reduce the amount of increment collected for EDA purposes 101 3. Reduce the percentage of tax capacity captured in TIF Districts 102 4. Reduce the geographic areas (acres) contained within TIF districts 103 5. Reduce the financial burden of TIF districts upon non-TIF properties 104 105 Director Ericson stated Ehlers & Associates reviewed potential scenarios and that information 106 was considered at the previous meeting. The EDA had asked how these scenarios impact the 107 owner of a median value home in regard to tax impacts. 108 109 Director Ericson drew the EDA’s attention to the financial analysis prepared by Finance Director 110 Beer. He noted that with Scenario 2, the amount of tax capacity captured would decrease from 111 22.32 percent to 19.51 percent. The amount of increment collected from the remaining two 112 districts would amount to a cumulative $12.2 million. The net effect to a property owner with a 113 median value home would be a reduction of $32 annually. Scenario 3 for Election B represents 114 the effect of a change to the fiscal disparities election for the original three districts. The amount 115 of increment collected from the three districts would be $9 million, a reduction in revenues by 116 more than $5 million. The net effect to a property owner with a median valued home would be a 117 reduction of $55 annually. Scenario 4 combines the effects of Scenario 2 and 3, decertification 118 and FD Election. With Scenario 4, the total increment generated after decertifying District 3 and 119 changing the FD Election on Districts 1 and 2 would be $7.3 million, nearly a fifty percent 120 reduction from the status quo scenario. The net effect to a property owner with a median value 121 home would be a reduction of $73 annually. 122 123 Director Ericson explained the options available to combine these scenarios and mentioned the 124 overriding issue is there are identified projects and priorities. One identified project is the street 125 reconstruction project that would cost about $50 million and could be funded by TIF. The City 126 will be collecting $14.2 million so the question is what are the priorities and would the EDA like 127 to reduce the amount of TIF collected. If so, another question is how to implement that direction 128 to fund the projects desired. 129