2016.05.16 CC Packet - Laserfiche WebLink

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G, S =Hugo p 14669 FAzgereld Avenue NoH Hugo, MJ 55036 Ph ne(Ml )762-6300 [J Fu(651)426-2859 Memorandum TO: Honorable Mayor Tom Weidt and Members of the City Council FROM: Ron Otkin, Finance Director SUBJECT: Request to Cancel TIF Development Agreement DATE: For the City Council Meeting of May 16, 2016 DESIRED COUNCIL ACTION Motion to Approve a Resolution Cancelling Tax Increment Development Agreement HISTORY OF TIF DEVELOPMENT AGREEMENTS In 1996 the City Council established the Bald Eagle Industrial Park Tax Increment Financing (TIF) District. The City issued $1,885,000 G.O. Taxable Tax Increment Bonds in 1998 and used the proceeds to acquire and transform approximately 54 acres of farmland into an industrial park. The property was marketed and business subsidies were offered to attract development. The subsidies were in the form of land write-downs in exchange for entering into agreements that guaranteed the parcels would be developed and generate sufficient tax increments to repay the subsidies. As per TIF statutes in place at that time, land write-down subsidies could only be offered by the City within five years of establishing the TIF District. In that 5 -year period the City subsidized seven land -sale transactions. The last subsidy in 2001 involved the sale of approximately 2.94 acres to Schwieters Properties for $185,536. SCHWIETERS PROPERTIES BUSINESS SUBSIDY Although no money exchanged hands at closing, Schwieters Properties entered into a development agreement (dated 01/16/01) whereby they agreed to construct a 45,000 square foot building with a minimum assessed value of $1,483,354. They also agreed that this minimum assessed value would remain in effect for fifteen years (until December 31, 2018.) Based on tax rates in place at that time this minimum assessed value would generate sufficient tax increments to repay the business subsidy.