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EHLERS & ASSOCIATES INC To: St. Anthony Planning Commission OFrom: Stacie Kvilvang—Ehlers and Associates W Date: August 15,2006 Subject: Modification to Redevelopment Project No. 3 and TIF District No. 3 (Cub Foods) After completing TIF reporting for the City for the first time this year it was noted that the budget for the above referenced district was not in compliance with the Office of the State Auditor(OSA) requirements and therefore was producing what is termed "excess increment." Excess increment is best defined as increment generated in excess of what was budgeted. TIF District budgets that do not account for all the TIF that is generated is not atypical of districts created over 10 years ago (this district was created in 1993). This due to the fact that when TIF districts are created the City makes assumptions as to what will be developed, when it will be developed and the valuation of the project after completion. As time goes on, the assumptions can change dramatically (Le a larger development with a higher value can be built or inflation may be greater than anticipated), which can result in more increment being generated than was budgeted. We are recommending that the HRA and CC modify the TIF budget for the District to reflect actual project activity/development to date and expected revenues (this TIF district is now fully developed). Since the City and HRA are modifying the TIF budgets, the modification is required to go through the entire public hearing process as if the City and HRA were creating a new TIF district. As part of this process, the Planning Commission needs to find that the development plan for this district is in conformance with the City's general development/redevelopment plans of the City. Please contact me at 651-697-8506 with any questions. cc: Jerry Gilligan—Dorsey& Whitney File LEADERS IN PUBLIC FINANCE 3060 Centre Pointe Drive Phone: 651-697-8506 Fax: 651-697-8555 Roseville,MN 551 13-1 105 skvilvang®ehlers-inc.com