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Item No. 1 <br />Meeting Date: August 23, 2004 <br />Type of Business: Work Session <br />City Administrator Review: ______ <br /> <br />City of Mounds View Staff Report <br />To: Honorable Mayor and City Council <br />From: Charles Hansen, Finance Director <br />Item Title/Subject: General Fund Budget <br /> <br />After discussing some alternatives for reducing services at the August 9th work-session, <br />the City Council reached a consensus that no drastic changes should be made to the <br />delivery of city services. If the initial draft of the budget is balanced solely by means of <br />a property tax increase, the levy will be placed at about $3,839,000, or a 27.5% <br />increase over the 2004 levy. <br /> <br />Several ideas are still under investigation. Some of these are discussed below. Others <br />will be reported on at the September 7, 2004 work-session. <br /> <br />Selective De-certification of Parcels from the TIF Districts <br />Background: <br />The City of Mounds View has three Tax Increment Financing (TIF) Districts that were <br />created in the late 1980s. District 1 is required to de-certify no later than December 31, <br />2013. District 2 is required to de-certify no later than December 31, 2015. District 3 is <br />required to de-certify no later than December 31, 2014. <br /> <br />All three districts have experienced financial stress due to changes in the property tax <br />system by the State of Minnesota during the 1990s that reduced TIF revenues. These <br />stresses eased in the last couple of years as obligations of the districts were satisfied <br />and surplus revenues became available to pay back internal loans to other city funds. <br /> <br />TIF District 1 should be close to breaking even at the end of 2004 with internal loans <br />mostly or entirely paid back, but little or no cash on hand. Districts 2 and 3 should end <br />2004 with modest cash balances. <br /> <br />Important obligations of Districts 1, 2, and 3 are also close to being satisfied. The TIF <br />bonds, series 1996A and 1996 B will make their final principal and interest payments on <br />February 1, 2005. The TIF districts will make their final transfers to the debt service <br />funds on December 31, 2004. <br /> <br />After that, the only remaining obligations of the TIF Districts will be some developer pay- <br />as-you-go agreements, operating costs of the EDA, TIF bonds, series 2001A and any