6. SR 10-30-1995 - Laserfiche WebLink

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East Elk River Trunk Sewer Page 3 October 30, 1995 ----------------------- of these properties coming out of Green Acres and paying off assessments • uncertain. Nonetheless, the city should be able to make enough assumptions in putting together the bond structure so that the Green Acres situation should be able to be handled without a small city wide tax levy. If our assumptions are overly optimistic or incorrect, a small city wide levy may be necessary to make the bond payments. In addition to the city not being able to use the bond structure for the holding costs, it should also be noted that the city may not be able to use TIF money from Districts No. 1 and No. 3 for these expenses. This is because TIF 1 and 3 money, which is about $450,000, may be needed if the city is to subsidize the industrial assessment rate. The St. Cloud appraisal report indicated that the benefit to industrial properties for trunk sewer and water is about $3,900 per acre. If the city assesses out the project at $5,500 per acre across the board, then the city will have to subsidize the industrial assessment rate by $1,600 per acre. Before any adjustment in the zoning districts based on the Comprehensive Plan update, there is approximately 135 acres of industrial land in Phase I. This amounts to a city subsidy of approximately $216,000 or one half of the funds in TIF Districts No. 1 and No. 3. These monies are not scheduled to be recovered. The second benefit analysis or appraisal has been received from Patchin and • Associates. This analysis shows that the industrial properties can absorb assessments in excess of $5,000 per acre. If this report is the one the city endorses and uses, we may be able to assess industrial properties at a higher rate than what was previously assumed based on the St. Cloud Appraisal report. This would then possibly free up some TIF money for these "holding" expenses. So, if the city cannot use the bond structure for the "holding" expenses, and if TIF funds are only 1/3 of the total holding costs; then where does the balance of the "holding'' money come from? This is a very big issue that needs to be addressed before we move too much further along with this project. Staff does not have any answer to this question, but the solution will be easier to find if the holding expenses are less and this may be determined through additional information derived from the second appraisal. The current Springsted analysis (before the Patchin report) using existing zoned areas, some Green Acres assumptions, and the St. Cloud Appraisal rate of assessments ($3,900 for industrial properties, $5,700 for residential properties, and $10,900 for commercial properties) shows the project cash flowing with only a very small city tax levy being necessary. It should be noted that this includes approximately 160 acres of commercial property in • Phase I and I do not know if we will find it appropriate to assess these properties at the rate of $10,900 for trunk sewer and water. This decision