8.0. EDSR 09-11-1995 - Laserfiche WebLink

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TIF District No. 13 Page 2 September 11, 1995 go" TIF package has been proposed to TL Feeding. Under this option, TL • Feeding Systems would absorb the cost of the site acquisition and site preparation. As the new facility begins generating taxes, the city rebates the new property taxes (i.e. the tax increment) back to TL Feeding Systems twice a year -- in July and in December. The pay-as-you-go package is virtually the same concept as the TIF request approved for the Mowry/Neos project in June. State Aid/HACA Reduction As with the Neos TIF Plan, a consequence of creating a new TIF District is that of a state aid/HACA reduction. Because an "Economic Development TIF District" would be created for TL Feeding Systems, the state aid/HACA reduction occurs the first year an increment is generated, and, the reduction is the most significant (i.e. 100 percent of the calculated formula). A recent legislative change enables cities/EDA's to opt out of the reduction by making a "qualifying local contribution" of 10 percent of the tax increment generated from an Economic Development District. The contribution must come from unrestricted monies of the municipality or the tax increment authority. The cap on the total of these contributions is 2 percent of the city's net tax capacity. Considering the alternatives, the following calculations are • offered: State Aid/HACA Reduction Captured net tax capacity of the TL Feeding Systems project of $26,212 times the 1995 tax capacity rate of 1.04247 equals $27,325 times 35 percent equals a local government aid reduction of approximately $9,564 per year. It is estimated that the TL TIF District would generate tax increment payments for a period of six years (from 1998 through 2003, inclusive) in order to repay the $150,000 TIF grant. Therefore, the estimated local government aid reduction is calculated as follows: $9,564 per year times six years equals $57,384. Qualifying Local Contribution From Exhibit D in the TIF Plan for TIF District No. 13, it is noted that the captured tax increment of$27,266 begins in 1998 and continues through 2003. By calculating 10 percent of the estimated captured tax •