2009.05.18 EDA Packet - Laserfiche WebLink

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City of Hugo, Minnesota May 14, 2009 Page 4 In certain cases,the City must comply with the requirements of the Business Subsidy Law indicated in Minnesota Statutes, Section 116J.993 through 116J.995. There are several exemptions in which the City would not need to meet the requirements. If the Developer's investment in the purchase of the site and in site preparation is at least 70%of the assessor's current year's estimated market value or if the principal amount of assistance is less than $150,000. Since the developer is the current property owner,the investment costs associated with the redevelopment are not at least 70%of the current market value. However,following the City's current TIF Policy and limiting the amount of TIF assistance to 15 years and using the above outlined assumptions, results in a total principal amount of the TIF Revenue Note of less than$150,000. Therefore the assistance will be considered exempt from the Business Subsidy Law requirements. TIF District 1-2 As the City Council addresses the current TIF request from Carpenter's, it is important to note that due to the timing of approval and certification(yet to occur) of TIF 1-2, a possibility exists that, even with the additional new value that the Carpenter's project will create,the District as a whole, may not generate increment in its first years. This could occur if the current market value of the entire District is lower than the base market value designated at the time of approval of the District. One of several possible remedies to this occurrence is to drop the"dragging"parcels out of the District(those parcels which have a current market value less than the base market value). We recommend an analysis of this issue be completed prior to certification of the District so that the appropriate decisions can be made. Conclusion In conclusion, it appears such assistance for write down of certain redevelopment costs and additional security for bank financing is necessary to obtain the redevelopment results the City desires on the proposed site. Thank you for the opportunity to be of assistance to the City of Hugo. Please contact us at (651) 223-3000 or mhuot(a.springsted.com and psteinman(@springsted.com with any questions or comments.