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