09-12-2005 - Laserfiche WebLink

Home Browse Search

Mounds View EDA August 8, 2005 Regular Meeting Page 6 this noting that this is just one district and the City has three districts. He stated that the City has 213 to consider what they are charging the taxpayers noting that the taxpayers are picking up 214 approximately $61,000.00 a year for SYSCO for fiscal disparities. He agreed that everyone 215 would like to get the maximum dollars noting that there is a time limit for these districts when it 216 has met its’ original purpose. He stated that he believes that when the development is done it 217 should be closed out. 218 219 Director Ericson pointed out that by adopting this development agreement and authorizing the 220 three-year TIF note for this project it does not preclude the authority for having an opportunity to 221 review the financing of the TIF Districts, City obligations and expenditures to ensure that the 222 City has the necessary funds available. He stated that it is his understanding that there are no pre-223 payment penalties and the City could pay off the TIF note before a year concludes. 224 225 President Marty confirmed that it is setup so that it would come back so that the City could 226 review the TIF priorities and Districts. He referenced Page 7, Article 3, Item 3.2, No. 2, noting 227 that it states that an unpaid balance of the note shall bear simple, non-compounded interest from 228 the date of issuance of the note at 5-percent per annum and interest shall be computed on the 229 basis of a 365-day year with 12 30-day months’ and asked for clarification. 230 231 Vice President Stigney explained that what he is trying to suggest is that they make it a one year 232 district, with one payment and they pay-as-you-go one payment. 233 234 Economic Development Coordinator Backman explained that with TIF notes there is typically an 235 interest rate that is considered as part of the TIF note. He stated that a 5-percent rate is a good 236 rate and is typically used for companies with strong financials. He stated that they have had rates 237 that have ranged from the lower interest all the way up to 8-percent noting that in terms of the 238 computation, the 365-day/year is the standard calculation method and the interest rate is applied 239 to the principal for the $250,000.00. 240 241 Economic Development Coordinator Backman further explained that in terms of the calculations 242 the City is estimating that over the three-year period of time, as payments are coming in, the City 243 would be making payments back to the developer, i.e. SYSCO. He stated that under usual 244 circumstances the City is paying principal and interest noting that the way it was structured the 245 City was only able to pay on the interest and it was not being paid off. He explained that 246 ultimately the risk is on the developer because if the increment were not sufficient to pay off the 247 note, at the end of the note time period they would be out. 248 249 President Marty clarified that the City would be paying SYSCO 5-percent interest on the 250 $250,000 over the three-year time period. 251 252 Economic Development Coordinator Backman confirmed that there would be interest on the 253 $250,000. 254