1997-04-18 Potential for TIF
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135-131-1997 e3:31PM
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FRo~adzwill & Couri Law Offi
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4973211313 P.132
MEMORANDUM
TO: ALBERTVILLE CITY COUNCIL; GARY HALE, : ALBERTVILLE CITY
ADMINISTRATOR
MIKE COURt, CITY ATIORNEY
POTENTIAL TIF FOR CEDAR CREEK BUSlNES~ r ARK
APRlL 18, 1997
SUB
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In Iesponse to Gary's.request for pon-mriAt TIF options in n;gard to the planned Cedar
BusiDess p~ I have the following suggestions: : : .
1. Any.TIF established on this property would be m economic ~pD1CDt TIF, which
wouW last no more than 8 years. Tithe property has not been m ~ acres within 1he
laSt Dve vears. the City can TIP the following uses:. :: .
. (1) the manufactming or production of tansible .~~~, including
. processing reSulting in the change in condition of the property;
. (2). WarehoUsing, storage, and distribution of tangible ~: property, excluding
retail sales;. . :
I (3) research and development related to the activities listed in blause:(l) or (2); .
(4) te1enwketing if that activity is the exclusive use of the property;
. (5) u)urismfacilities; or
(6) space necessary for and related to the activities listed in cl~ (1) to (5).
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If the property has been in green acres within the last :five years. the. City can only TIF
. ma:uu:facturing:facilities on this site. .
2. CaptFed TIF increments can be spent on site improvements, ~OD of utilities,
public improvemenm, soils correctiODS; parking facilities, i1td me other minor site
related cos13. TIF:funds cannot be used to construct the bui1~~V, buy equipment, etc.
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135-131-1997 e3:32PM
FR9IIIFadZWlll & Couri Law Offi
TOe
4973211313
P.133
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17S~ of the captured TIF increment must be spent on the project stte.(i.e. on the TIF
I parcel itse1f). 25% of the TIF funds can be spent on public impr~~ not on the
I site. . The off.site funds do not have to be directly related to the proj~ctJ and most likely
can inc1wie expenditures for items which generally enhance busin~ in the City (e.g.
drainage projects, street improvement projects, water/sewer upgradeS, etc.).
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The (exact amount of TIF increments captured will depen4. upon the value of the
bWMings constructed on the TIFet! parcel. These values win not: be known mtil a
. potdrtia1 business steps forward with a detailed building desigin.
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N~ that if the City sets up an economic development TJF, the Otymust contribute
10%~ of the estimated captured tax increment to the project as a ''lqcal match," or the
C~. will experience a reduction in its LGAlHACA of $p~i.j~ately 33% of the
I e~Ated captured tax increment The '1ocal match" by th~ ~ can 1be either cash or
property in kind, but must come from general revenue funds. ; As iii examp~ if a TlF
proj~ captured $35,000 per year in tax. increment, the City would:have to contribute
the equivalent of $3,500 per year to the project .;
I GiveJn these restrictions, there are several viable scenarios for; developing .these .
prop(:rties. The most obvious use of TIF incremeuu woUld be tb pay for sanitary
seW(fr1water extension to the property. Because of the. 75% .~ction noted above, no
mor~ than 25% of the TIF funds could be used to pay for ~erlwater improvements
on~perties which are not part of the TIF (e.g. the Kolles ptQperty,i~ugh which the
sani~ sewer may. nm). I have not seen the numbers yet, bUt wouW expect that 25%
of ~ TIP funds would not cover all of the cost of installing sewerlWamr on properties
whiqh are not part of the TIF. The Developer may have to kick in some money to
cover these costs, or the costs could be assessed against bendfiting properties, such as
the :kolles . property, with the Developer f;)11ding some or. all of the interest on a
I defe1red assessment against benefiting properties. Note 1hat: TIF monies can also be
I used; to fimd other "public improvements" to the TIFed parceL including streets, storm
I sewers, etc.. .
I An alternative scenario is to have the Developer install the se~/~ systems, and
I have: the City "write down" (pay for) the cost of the land which tile business will
loca.w on. This has the effect of maldng the land "free" to the bus:i:q.~, since the City
reimburses the business for what it paid for the land This scenario lnakes it easier for
! the. I?eveloper to attract potential businesses to the site.
Without a specific business development proposal before the City, we can only
speculate on how the TIF may be structured and how the TIF mo~eS may be spent
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My understanding of the City Council's position on using TIP as a tool to attract
businesses is that the City is in favor of using TIP, provided that the potential business
is one which the City finds desirable and the "local match" will not significantly
impact the City's general budget.
9. From here I would suggest that the City and Developer examine all of the potential
development costs related to Cedar Creek Business Park (including streets, sewers,
water, soils, etc.) We can then break the costs down by those costs which are "on site"
for TIP pmposes and those which are "off site" for pmposes of the 750/&"25% spending
limitations. Once this is detennined, we can get a ballpark feel for what amount of
building valuation would be needed to pay for a set amount of public and/or site
improvements. The Developer will then have a better idea as to how it can market the
property to potential businesses.
10. As potential business developments materialize, we can work with Bob Thistle of
Springstead to begin to tailor specific TIP possibilities to specific development
proposals.
cc: Mr. Pete Carlson
Mr. Don Jensen
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