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HomeMy WebLinkAbout07-31-90LAKEVILLE HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 31, 1990 The meeting was called to order at 7:00 p.m. by Chair Sindt. Roll call was taken. Present: Commissioners Harvey, Zaun, Ruhmann, Mulvihill and Sindt. Also present: B. Erickson, Executive Director; R. Knutson, City Attorney; J. Robinette, Community Development Director; Economic Development Commission members, Tushie, Detjen, Brantley, Meledandri, Matasosky, Erickson, Halbach, Emond. MINUTES The minutes of the April 25, 1990, H.R.A. meeting were approved as printed. ITEM 4 Mr. John Kirby of Dorsey & Whitney presented recent legislative changes to the Tax Increment Financing laws. Four major changes that affect cities are outlined as follows: 1. In the future, cities will local government aid (LGA) Credit Aid (HACA) from the commercial TIF district to extra school aid. The los much as 35% to 40% of the TIF district; however the the type of district being face an immediate loss of or Homestead and Agricultural State when creating a new help compensate the state for s of LGA is projected to be as captured tax capacity of the impact will vary with regard to created. 2. Economic Development Districts, in the future, will only be available for manufacturing, warehouse, research and development and telemarketing projects and are no longer available for primarily commercial projects. 3. State restriction to pool tax increments; 75% of the increment from a district must be used to pay for activities within that district. 4. Enforcement provisions; the Department of Revenue is given the role and authority to be the enforcer in tax increment activities and to audit activities as they feel appropriate. The statute also talks about certain penalties being involved if the authority includes a parcel in a TIF district that does not qualify for inclusion or retention, and for increment spent for an unauthorized purpose. LAKEVILLE HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 31, 1990 PAGE 2 Mr. Kirby provided suggestions as to what cities can do to reduce their loss of LGA with regard to future projects. He explained that a City can avoid new changes to TIF laws by expanding existing districts as opposed to creating a new one. A City can also ask the developer who is requesting tax increment subsidy to enter into an agreement with the City, as a part of the development agreement, to pay back to the H.R.A. a portion of the subsidy to help make up for the loss of LGA. Mr. Bob Thistle of Springsted, Inc. explained that the new formula which takes a certain portion of the tax increment dollars back for state purposes does not increase revenue to the school districts. It simply replaces revenue the State is being forced to pay the school districts because the tax increment district was put in place. The City has the option of making up for the loss of tax increment LGA by increasing its tax levy. Mr. Thistle stated that in light of recent changes in the TIF legislation, the City needs to establish additional guidelines as to what it deems an appropriate use of tax increment financing. Commissioner Zaun asked what impact an increase in school district levy would have, as the result of a referendum, on any tax increment district. Walt Hartman explained that the mill rate (tax capacity rate) which would result from a school referendum is not available to the tax increment district. Commissioner Ruhmann expressed his concern regarding the City, as a whole, levying taxes toward one particular school district, when three different school districts serve the City of Lakeville. Bob Erickson explained that the staff has not encouraged the Council to levy taxes to make up for the loss of LGA /HACA, and Commissioner Ruhmann's concern is one that the City must consider before taking a stand on that issue. Mr. Erickson agreed with a comment made by Commissioner Harvey that the City will have to accept applications for TIF districts and complete a careful analysis of each application to determine whether the concept can still work. He further stated that the City staff is preparing strategies for the upcoming legislative session to lobby the recent changes in the TIF laws. LAKEVILLE HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 31, 1990 PAGE 3 Economic Development Commission (EDC) member Gary Tushie asked how these legislative changes will affect housing TIF districts. Walt Hartman explained that the loss in LGA /HACA also applies to housing districts. A housing district could be created if the developer can build the project on approximately 60% of the increment and secure financing for low to moderate income housing. In other words, the City's loss of LGA equals approximately 40% of the tax increment income; therefore, the remaining 60% would be available for a housing district. In response to EDC member Jim Emond's question, Mr. Hartman explained that the amount the City makes available to the developer (60 %) for a housing project is a policy decision for the City to make. ITEM 5 Mr. Erickson presented the application of William Cooley, Lakeville Land Ltd, for an economic development district at the northwest quadrant of I -35 and County Road 70. He explained that Mr. Cooley has an opportunity to take advantage of an exception in the law which was granted to the City of Lakeville for the I -35 Redevelopment District. The exception would allow the use of tax increment financing for commercial development in that area, if it is pursued prior to September 30, 1990. The resolution before the H.R.A. would request the Lakeville City Council to call a public hearing on the proposed modification of the I -35 Redevelopment Project No. 1 and establishment of Tax Increment Financing District No. 12 (Lakeville Commerce Center) within the redevelopment project Mr. Erickson explained that calling a public hearing simply allows the exception to be utilized in this district and does not bind the H.R.A. or City Council to approve a project. 90.26 Motion was made by Zaun, seconded by Mulvihill to approve Resolution No. 90 -03 requesting the Lakeville City Council to call a public hearing on the proposed modification of I -35 Redevelopment Project No. 1, designation of Tax Increment Financing District No. 12 to be located with the redevelopment project, and the proposed approval and adoption of a modified redevelopment plan and tax increment financing plan relating thereto. Roll call was taken on the motion. Ayes, Sindt, Zaun, Mulvihill, Harvey, Ruhmann. Chair Sindt adjourned the H.R.A. meeting at 8:11 p.m. LAKEVILLE HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 31, 1990 PAGE 4 Respectfully submitted, Lyn tte Mulvihill, Secretary Betty S'indt, Chair