2008.06.16 EDA Packet - Laserfiche WebLink

Home

-----Original Message----- From: Paul Steinman [mailto:psteinman@springsted.com] Sent: Thursday, April 24, 2008 4:54 PM To: Bryan Bear Cc: Mikaela Huot; Ron Otkin; Rachel; Ippel, Mary Subject: RE: Hugo Downtown Redevelopment TIF District Here are our choices as it currently sits, with Frenchman Centre sort of out there in the background. 1) certify before June 30, 08. First possible receipt of increment in 09 2) certify after June 30, 08. First possible receipt of increment in 10 (which would include the first increment associated with Frenchman Centre if they build it in 08) 3) modify the TIF Plan to identify the specific year (if after 2010) in which we want to start receiving increment. The problem with this is, we are still guessing at the year we want first increment. In order to narrow these choices down I need to know the date of first demolition of the building which the council found substandard. (Rachel - can you identify this date?) Here is what we generally struggle with on these issues. Each year that passes, the value of the properties in the district generally rise (although maybe that's not the case currently). Remember that the base value will be set at the time of certification, therefore, the more the values rise in the district, the higher the base value will be. (High base value bad, low base value good) To complicate that is the fact that the base value includes the value of the parcels with the demolished buildings PRIOR to the demolition. Want more complication? What could happen because of all the demolition of buildings that has occurred and the possible stagnation in values now as an effect of the general housing market, is that Frenchman Centre could get built and assessed at the assumed value, and very little increment flows into the district. An example to illustrate this point would be assume our base value is $100, then demolition occurred which removed $25 of value. At that point the first $25 of new value created does not generate any increment, it only gets us back to the base value. Then as value is created over and above the base value, increment will be generated. We are trying to balance all of this entirely to avoid getting a TIF check from the County for some nominal amount of tax increment because that year is then counted as our first year of increment meaning we only have 25 remaining. Ideally we want our first year of increment to have the largest impact possible. Paul T. Steinman Vice President/Consultant Springsted Incorporated 380 Jackson Street, Suite 300 St. Paul, Minnesota 55101-2887