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The Mounds View Vision A Thriving Desirable Community Item No: 6A Meeting Date: May 28, 2019 Type of Business: EDA Business Administrator Review: ____ City of Mounds View Staff Report To: EDA President and Commissioners From: Brian Beeman, Assistant City Administrator Item Title/Subject: Resolution 19-EDA-323 A Resolution Authorizing an Interfund Loan for Advancement of Certain Costs in Connection with Tax Increment Financing for Skyline Motel Site Introduction: The EDA is purchasing the Skyline Motel site as a redevelopment opportunity. The expected closing date is the end of May 2019. A TIF analysis is underway. Should the results of the TIF analysis allow for the creation of a TIF district, an interfund loan can be used as a method to pay the City back for costs associated with the project. Ehler’s the City’s financial consultant eluded to this in their presentation to the EDA at the May 13, 2019 regular meeting. Since that meeting, Ehler’s and Kennedy & Graven have completed the resolution necessary to allow the interfund loan. Discussion: A resolution has been prepared for the EDA’s consideration allowing an interfund loan in preparation for the creation of a TIF district. A TIF can be used to pay back the developer or it can be used to make the City whole in a situation where the developer is not able to pay the price that the City has into the property. Therefore, Ehler’s recommends that the City consider authorizing an interfund loan which can be authorized before a TIF district is established. An interfund loan authorizes the City to loan funds to the EDA for qualified costs (the “interfund Loan”) in the amount of up to $2,500,000 at 5%. The Authority, if utilizing this privilege would pay the City back from tax increments derived from the property within the TIF District. In order to authorize the interfund loan a resolution is required. Strategic Plan Strategy/Goal: Create and maintain a positive business climate where businesses want to locate and remain in Mounds View. Maximize utilization of development space and current redevelopment sites. Fill vacant space and support redevelopment & development. Financial Impact: Redevelopment projects typically take a loss on the front end of the deal. However, revenues are recovered in the long-term through property taxes, community investment, the creation of more jobs, and an improvement to the property. There would potentially be no financial impact to the EDA in a situation where the EDA would be able to recover the money invested into the purchase of the property. If the EDA is successful in creating a TIF district then according to Ehler’s the EDA can recoup their costs of the project. Recommendation: Consider resolution 19-EDA-323 by motion.