PL PACKETS 09211999 - Laserfiche WebLink

Home Browse Search

Section 4 TAX IMPACT OF DIFFERING ACQUISITION COSTS Property Tax Impacts of Acquiring the Salvation Army.Property Six different acquisition cost structures were run at $9 million, $10 million, $11 million, $12 million, $13 million, and $14 million and are shown in Appendix B. Several factors were involved in how the debt was structured: 1. A dated date of August 1, 1999 was used with maturities spread over 20 years from the year 2001 through the year 2020. 2. Changes in interest rates, timing, or size of the bond issue may cause significant alterations of this information. 3. The underwriters discount and other costs of issuance were not added to the issue size in structuring in order to keep the analysis simple. Were the Community to issue debt, these costs would add to the issue size. 4. As the City does not have sufficient debt capacity, the issue was structured around the District's outstanding debt. 5. The structures were sized to obtain level net debt service., 6. The District does not qualify for State Equalization Aid. The impacts of each of the six scenarios are shown in Table A. Table A assumes that a referendum would be required. The reason this is important is that the tax impacts are calculated on slightly different numbers depending upon whether a referendum is required. Debt issued by the District to acquire property would require a voter referendum. A referendum is required for cities and school districts under Minnesota Statutes, Chapter 475.58, except under certain circumstances. The exceptions are: bonds to pay a judgment; refunding bonds; improvement bonds or tax increment bonds where special assessments or tax increments pay at least 20% of the cost of the project financed; revenue bonds; bonds issued under a charter provision or statute that permits the issuance without an election. The effect of those exceptions is that, in almost all cases, only general obligation bonds payable solely from ad valorem property taxes need be approved by the voters. Based on the current information, neither the City nor the District meets any of the exception criteria. Therefore, a referendum would be required. In Table A, the property tax impacts are based on referendum market value. For a property owner with a referendum market value of $150,000, taxes would increase $272 per year at an acquisition price of$9 million. The increase for an acquisition cost of$14 million would be $413 per year. For a property owner with a referendum market value of $300,000, taxes would increase $545 per year at an acquisition price of$9 million. The increase for an acquisition cost of$14 million would be $826 per year. 0 SPRINGSTED \stantho7.tx1 Page 4-1