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EDA Worksession Agenda Memo <br /> November 9, 1998 <br /> Page 4 <br /> • <br /> A pay-as-you-go tax increment note with Associated Developers is proposed <br /> to be lowest on the priority list for tax increment payment. This priority list <br /> deals with the length of term of the tax increment district and amount of tax <br /> increment that is generated in each given year. Such priority list is proposed <br /> as follows: <br /> First Priority Pay annual installment on general obligation bonds. <br /> Second Priority - Pay increment to the new partnership (industrial) <br /> and Associated Developers (commercial) in an amount equal to the <br /> assessments against the property for public improvements. <br /> Third Priority- Pay annual installment on bond issued for $600,000 <br /> for mass grading/wetland remediation on industrial piece (still in <br /> negotiation regarding who will pay this cost upfront). If the EDA <br /> were to pay this up front it would become a higher priority. <br /> Fourth Priority - Pay annual installment on pay-as-you-go note to the <br /> new partnership for the purchase price of the industrial property. <br /> (This property may be based on development rather than a guaranteed <br /> annual payment) <br /> Fifth Priority Pay annual installment on pay-as-you-go note to <br /> Associated Developers for gas pipeline relocation costs - $350,000 (still <br /> in negotiation regarding who will pay this cost up front). If EDA were <br /> to bond and pay this up front it would become a higher priority. <br /> This priority scenario shows that Associated Developers' pay-as-you-go note <br /> would bear a good deal of risk in that if there aren't enough tax increments <br /> generated in any given year to make payment on this note, then repayment <br /> would not occur in that given year. If enough increment is generated in <br /> following years,full repayment of the note could still be accomplished within <br /> the term of the tax increment district. <br /> Example: <br /> TIF Priority Priority Priority Priority Priority Excess <br /> Generated 1 2 3 4 5 <br /> Year 1 $100 50 20 20 10 0 0 <br /> Year 2 $120 50 20 20 10 20 0 <br /> Year 3 $150 50 20 20 10 30 20 <br /> Year 4 $170 50 20 20 10 30 40 <br />