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41 <br /> At this time, I would not feel comfortable in recommending that the City designate <br /> $150,000 of the HRA Projects Fund to support the Community Center Project in 2002. <br /> My recommendation that this source of funding be viewed as a three-year funding source <br /> of$50,000 each of the years 2002, 2003 & 2004.. <br /> Conceptually, this would leave remaining funds on hand for potential payments to <br /> developers, purchase property or fund small redevelopment projects. The down side of <br /> three-year funding is that the inflationary nature of construction costs, could require that <br /> additional funding be necessary if projects costs are higher over three years versus a one- <br /> time appropriation of $150,000. <br /> Apache PlazalReserves for LGA losses. <br /> In 1996, the City of St. Anthony entered into an agreement with the Ste. Marie Company <br /> for the clearance and redevelopment of a portion of Apache Plaza. The intent of the <br /> agreement was to provide aid and assistance to the developer(SuperValu, Inc.) through <br /> tax increment financing. <br /> As part of the agreement, the HRA agreed to pay Ste. Marie $1,800,000 from proceeds of <br /> a bond sale. The property taxes from redevelopment (Cub Foods) provide the tax <br /> ® increment that pays for the annual bond payments through year 2013. <br /> In addition, Ste. Marie agreed that upon payment, it would immediately make a <br /> contribution to the City in the amount of$300,000. These funds were to offset any losses <br /> or potential losses in Local Government Aid (LGA). <br /> Last year was the first year the City incurred a loss in its LGA because of the Apache <br /> Plaza TIF District. The loss totaled $4,207 and was transferred to the General Fund. <br /> In 2001, the loss is $1,953, leaving a balance in the account of$293,840. <br /> The recent Legislative changes made to the property tax system negate any future losses <br /> in LGA. Under the terms of the agreement (Page 6, Section 3.3), the City can apply this <br /> payment in any manner it determines. <br /> If Council wishes, a portion of these funds could support the $150,000 necessary to fund <br /> the improvements and renovations to the Community Center. <br /> Prior to approval, I feel it important the City obtain written reassurance from Jerry <br /> Gilligan that the funds are available to spend "as the City chooses." In addition, <br /> Springsted should finalize its tax increment review, to determine if shortfalls exist in our <br /> Tax Increment Districts caused by the Legislative changes. <br /> • <br />