07-10-1995 EDA MIN - Laserfiche WebLink

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Economic Development Authority Meeting July 10, 1995 Page 2 TIF policy guidelines, the maximum TIF grant cannot exceed 15 percent of a project's finished market value. Therefore, the TIF grant will likely range from $56,250 (based on a finished market value of $375,000) to $67,500 (based on a finished market value of $450,000). In approving the TIF grant, the City Council also agreed to explore the opportunity to opt out of the Local Government Aid - Homestead and Agricultural Aids (LGA/HACA) reduction by making a "qualifying local contribution" in an amount equal to a percentage of the tax increment. For an economic development TIF district, the contribution is 10 percent. It currently is understood that the local contribution is done on an annual basis. The City/TIF authority must contribute some of its own "unrestricted" money into the project according to the required percentage contribution. The contribution may come from the general fund, a property tax levy or a federal or state grant-in-aid which may be spent for general governmental purposes. The local contribution may not be made, directly or indirectly, with tax increments or developer payments. Previously, it was offered that the "qualifying local contribution" would simply be calculated at 10 percent of the TIF grant that was requested. With the Mowrey/Neos request, the contribution may have been in a range of $5,625 (based on a $56,250 TIF grant) to $6,750 (based on a $67,500 TIF grant). It is now understood that the contribution must be done on an annual basis and is calculated as a percentage (10%) of the tax increment (new property tax) generated from the TIF district. EDA Commissioners reviewed a 1-page summary marked Exhibit D from the Neos TIF plan to help approximate the estimated annual payments. Per Council direction, the EDA is required to come up with a source of funds to make the annual contributions. At the June EDA meeting, a summary of land sales in the Elk River Industrial Park was offered as a discussion item. The EDA's obligation was to generate $210,000 in sales from the publicly owned sites. The sales and respective values are as follows: Company Value Timron Precision Gear $ 50,000 (collected from TIF payments) Tescom Corporation (Phase 1) Tescom Corporation (Phase 2) District 728 Total 100,000 (collected from TIF payments) 57,000 (collected from TIF payments) 45,000 (cash) $252,000 At the June meeting, Commissioner Dwyer suggested that perhaps revenues from land sales in excess of $210,000 should be held by the EDA to make the "qualifying local contributions" on an annual basis or for other EDA initiatives.