Minutes - 2001/06/11 - Laserfiche WebLink

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Mounds View City Council June 11, 2001 Regular Meeting Page 3 Economic Development Coordinator Parrish indicated that, while nothing is known at this point, the state legislature is considering property tax reform that would affect TIF and the overall financing structure of the City. He indicated that the two major considerations are the compression of the commercial/industrial property tax rate yielding lower taxes and a takeover of general education funding by the state. He then indicated that the school district is the largest component of the property tax bill and taking that away takes away from TIF revenue. Economic Development Coordinator Parrish indicated the City is hitting its big years in terms of TIF general obligation bonds. He noted that in 2001 TIF bonds are at $1.4 million and stay that way out to 2003. He then noted that if, due to legislative changes, revenue does not cover the obligations there are grants that can be applied for. Council Member Thomas indicated she had read the article in the Star Tribune and was not impressed by the author's interpretation of the TIF situation. She then noted that while she would not call the article flat out false there were scare tactics and the article was not really gripping to the actual situation. Council Member Marty stated that in an effort to look out for the City's general obligations and before pledging more or spending more he thinks the City should put a moratorium on TIF expenditures and wait for a decision from the legislature. He then noted that if there was a decision from the legislature by the time of the next work session the matter could be on the work session agenda. Council Member Thomas clarified that the agreement between the House and the Governor has a grant pool to keep all cities at an even balance in all current TIF districts and the ones to be set up would be funded through 2005 or 2007 meaning the City would not lose that as grant money. She then noted that if the changes go through it will be much harder to set up a new TIF district. She further commented that the Senate has not yet made a decision on the matter. It was the consent of Council to wait until there is a decision from the Senate before further expending TIF funds. Economic Development Coordinator Parrish indicated that any changes that are made by the legislature will not have implications on the City's overall structure as any revenue generated on those parcels with go to repay the obligation as it is a pay as you go note. He then noted that, to the extent bond obligations are not repaid, the existing pay as you go obligations have funds that are pledged to repay the debt prior to any disbursements being made on the general obligation debts. He further noted that pay as you go versus general obligation debt is fairly secure and the City has no risk up front. Council Member Stigney commented that he feels if tax compression is approved developers may have a limit as to what can be done on projects and the amount of development that the developers can afford.