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• demolition <br /> • relocation <br /> III. Primary Issues to Consider <br /> Staff outlines the following issues for consideration: <br /> • What are the qualifications of a redevelopment tax <br /> increment district? <br /> In order to qualify as a redevelopment tax increment financing district, <br /> the following requirements need to be met on the site: <br /> • At least 70% of the area of a district has to be improved <br /> • More than 50% of the building have to be structurally sub- <br /> standard to a degree requiring substantial renovation or <br /> clearance <br /> • At least 90% of the increment must be used to finance the <br /> cost of correcting conditions that allow designation of a <br /> redevelopment district <br /> It is important to remember that the state now requires cities utilizing <br /> tax increment to pay a penalty in a form of a reduction of local <br /> • government aid or an election for the city to provide a local matching <br /> requirement of 5% of the total tax increment generated. <br /> • What level of tax increment assistance would be provided to <br /> the developer? <br /> Staff has been very clear with the developer regarding the issue that <br /> tax increment will not be provided for this project in order to improve <br /> its competitive position over other similar commercial projects which <br /> have recently been completed. The developer has indicated its <br /> understanding of this issue and has stated that it can show <br /> extraordinary costs which place this project in a poor competitive <br /> position with other similar projects. If the EDA is in favor of providing <br /> tax increment assistance, staff would work with the developer to <br /> identify costs for which tax increment assistance would be requested to <br /> fund. The developer's request would then be examined by the EDA to <br /> determine whether it would be appropriately funded through tax <br /> increment assistance. <br /> It is important to note that it is likely some of the extraordinary costs <br /> identified by the developer would not be eligible TIF activities. <br /> Therefore, the likely scenario would be that the EDA would determine <br /> s:\e da\meetings\agmm602.doc <br />