Agenda Packets - 2004/04/05 - Laserfiche WebLink

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rates on business properties have been reduced more than the rates on residential property. Hence the difference between the rates has been compressed. Each successive property tax change has reduced the taxes paid into TIF districts. This has caused TIF district deficits as districts struggled to pay obligations incurred based upon earlier projections made when TIF revenues were higher. The City of Mounds View also moved in 2000 to create the Community Fund. This was based upon actions of other cities, which had been upheld by the Office of the State Auditor, to capture interest earned prior to 1996 on the investment of TIF funds and allocate those earnings to a non-TIF fund. This transferred $2,276,116 from the TIF funds to the Community Fund. Tax rate compression, plus the transfer to create the Community Fund, created a deficit in the TIF District #1 Fund. This was compensated for by an internal loan from the Community Fund back to TIF District #1. The loan reached a maximum value of $1,819,910 as of December 31, 2002. It shrank to $816,730 as of December 31, 2003 and may be completely repaid in 2004. Excess Increment: Tax increment law requires that any increment not used to pay obligations or budgeted expenditures must be returned to the county for redistribution to the taxing authorities. Currently, obligations of the TIF districts include:  Transfer to the EDA to pay its operating expenses and redevelopment activities.  Final transfers in 2004 to the debt service funds.  Payments to several developers under pay-as-you-go agreements that in some cases continue to the year 2013.  Payments on the bonds of 2001A continuing through 2013. We are currently reviewing the situation with Ehlers & Associates, the City’s financial advisor for TIF issues. The City may be required to make a payment of excess TIF to Ramsey County as early as this spring. Strategy: All of these districts were established under laws that are less restrictive than for districts that are established under current TIF laws. This gives the City flexibility it wouldn’t otherwise have. Once these districts are finished, the use of TIF within the City of Mounds View will become much more restricted. Currently the EDA activities are primarily funded through transfers from the TIF districts. These transfers will not be available after 2015. Although that seems to be a long way off, planning for alternative funding sources in the future will need to be addressed.