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25 To: Mike Mornson — City Manager From: Stacie Kvilvang Date: June 22, 2010 Subject: Chandler TIF District Update The Chandler TIF District is a housing district that was created in 1985 for the Chandler Place apartments. The District term is 25 years after the receipt of the first increment from the project. The City received the first increment in 1986, therefore the District would expire on December 31, 2011. In 2008, as part of the financing of the abatement bonds issued for Emerald Park, the City Council discussed and approved decertifying the "TIP district one-year early. This would allow the City not to have an increase to the General Fund tax levy because it would benefit from the increased property valuation and tax capacity due to the district being decertified (the property valuation increase and tax capacity would no longer be "captured" for TIF and would be available to the General Fund). Due to levy limits being imposed by the Legislature for 2009-2011, the City may be unable to "capture" this valuation or tax capacity increase based upon the levy formula, prior year levy, etc. In light of this, staff is recommending not to decertify the district early, and allow it to go its full term (one additional year). It is estimated that the City will receive approximately $200,000 in TIF in 2011 (based upon 2009 amounts). Based upon preliminary direction given to staff to keep the General Fund Property Tax Levy at the same level as 2010, the City would need to transfer approximately $69,000 from the Chandler TIF District to the Bond Fund for payment on the road improvement bonds as shown below: Levy Without Chandler TIF With Chandler TIF Difference General Fund Property Tax $2,945,511 $2,945,511 $0 Road Improvement, Bonds $1,368,492 $1,299,683^_ ;$68,809 Chandler TIF Offset to Road Im rovement Bonds $0 $68,809 $68,809 Lease Revenue Bonds/Public Facilities $406,676 $406,676 $0 HRA $110,500 $110,500 $0 Tax Abatement (Centra]/Emerald Park) $145,066 $145,066 $0 PERA Rate Increase $7,500 $7,500 $0 TOTAL _ $4,983,745 $4,983,745 $0 -- As noted, this transfer would decrease the overall road levy by the same amount. This would not only allow the Council to maintain its goal of no tax increase/impact from the Emerald Park financing, but would actually allow the Council some flexibility to either lessen the tax impact to residents or provide dollars for capital or service needs. In addition, in 2011 the City will have the remaining $130,000 in the District to utilize for future road projects and/or housing and redevelopment projects. Please contact me at 651-697-8506 with any questions. E H L E RS 3060 Centre Pointe Drive _ _ Roseville, MN 55113-1105 LEADERS IN PUBLIC FINANCE Phone: 651-697-8506 Fax: 651-697-8555 skvilvang@ehlers-ino,com