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FREERS <br />& ASSOCIATES INC <br />To: Mike Mornson —City Manager <br />0 <br />From: Stacie Kvilvang —Ehlers and Associates <br />W <br />Date: August 22, 2006 <br />Subject: Modification to Redevelopment Project No. 3 and TIF District No. 3 <br />(Cub Foods) <br />After completing TIF reporting for the City for the first time this year it was noted that the budget <br />for the above referenced district was not in compliance with the Office of the State Auditor (OSA) <br />requirements and therefore was producing what is termed "excess increment" ($247,405 in 2005). <br />Excess increment is best defined as increment generated in excess of what was budgeted. <br />In 2005 the .Legislature changed TIF law to require communities to spend or return any excess <br />increment within nine(9)months after the end of the ear(bySe tember 1st of followin ear . <br />� p following ) <br />We are recommending that the HRA and CC modify the TIF budget for the District to match it to <br />expected revenues (needs to be completed prior to September 1, 2006). This modification will <br />show that the increment is being spent to provide the City and HRA maximum flexibility for use of <br />future increment. It should be noted that we do assume that the majority of the increment will be <br />needed to satisfy payment of the outstanding bonds for the District. We will be completing an <br />analysis to determine what will be generated over the term of the District (will be decertified in <br />2023) and what is needed to pay off the bonds. To the extent there is any increment not needed to <br />pay for obligations in this District, we would recommend that we "pool" the funds to pay for <br />redevelopment costs in TIF District 3-5 (Silver Labe Village Redevelopment) or for any <br />redevelopment projects in Project Area No. 3. <br />Since the City and HRA is modifying the TIF budget, the modification is required to go through <br />the entire public hearing process as if the City and HRA were creating a new TIF district. As part <br />of this process, the Planning Commission found that the development plans for this district is in <br />conformance with the City's general development/redevelopment plans of the City at its' August <br />15, 2006 meeting. <br />Please contact me at 651-697-8506 with any questions. <br />ce: Jerry Gilligan -- Dorsey & Whitney <br />File <br />LEADERS IN PUBLIC FINANCE <br />3060 Centre Pointe Drive Phone: 651-697-8506 Fax: 651-697-8555 <br />Roseville, MN 55113-1105 skvilvang@ehlers-inc.com <br />16 <br />