Agenda Packets - 2024/05/13 - Laserfiche WebLink

Home Browse Search

NOTE 12 — FLEXIBLE BENEFITS PLAN The City has a flexible benefit plan that is classified as a "cafeteria plan" (the Plan) under § 125 of the IRC. All full-time employees of the City are eligible. Eligible employees can elect to participate by contributing pretax dollars withheld from payroll checks to the Plan for health and dental insurance, medical expenses, and dependent care benefits. Payments are made from the plan to participating employees upon submitting a request for reimbursement of eligible expenses actually incurred by the participant. Before the beginning of the Plan year, which is from January 1 to December 31, each participant designates a total amount of pretax dollars to be contributed to the Plan during the year. At December 31, the City is contingently liable for claims against the total amount of participant's annual contributions to the plan, whether or not such contributions have been made. An independent contractor serves as trustee and handles all plan record keeping. Employee contributions are included as personal services expenditures in the funds the employee is charged to. All property of the Plan and income attributable to that property is solely the property of the City subject to the claims of the City's general creditors. Participants' rights under the Plan are equal to those of general creditors of the City in an amount equal to the eligible healthcare and dependent care expenses incurred by the participants. The City believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. NOTE 13 — TAX ABATEMENT AGREEMENTS The City, in order to spur economic development and redevelopment will enter into private development and redevelopment agreements to encourage a developer to construct, expand, or improve new or existing properties and buildings or clean-up and redevelop blighted areas. These agreements may in substance be a tax abatement but will depend on their individual circumstances. The City currently has two agreements that would be considered a tax abatement under GASB Statement No. 77. In 2018, the City entered into a development agreement with Boulevard Apartments, Limited Partnership to construct a 60-unit workforce rental building. This site was previously two parcels of tax forfeited land and two residential parcels. The City will abate $546,000 of the incremental taxes received through the execution of a tax increment revenue note to be retired over 25 years or sooner. In 2005, the City entered into a development agreement with Medtronic, Inc. to purchase land held by the City and construct a corporate campus on the site. The site was previously a golf course owned by the City. The City used an economic development vehicle known as tax increment financing whereby tax increment revenue is generated on the incremental increase in value above a base value established on the date that the tax increment district is created. The City will abate 95 percent of the incremental taxes received through execution of a tax increment revenue note to be retired over the life of the district with district statutory decertification to occur in 2033 or sooner if the revenue note is retired. The City is authorized to create a tax increment financing plan under Minnesota Statute 469.175. The criteria that must be met under the statute are that, in the opinion of the municipality: • The proposed development or redevelopment would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. • The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the plan. The requirements of this item do not apply if the district is a housing district. Irew