6. HRSR 05-03-2010 - Laserfiche WebLink

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ITEM # 6. REQUEST FOR ACTION ver To Item Number Housin & Redevelo ment Authori Agenda Section Meeting Date Prepared by May 3, 2010 Catherine Mehelich, Director of Economic Develo ment Item Description Reviewed by Consider Modification to Tax Increment Financing District #16 Reviewed by Action Requested The HRA is asked to authorize staff to proceed with the necessary steps to modify TIF District #16 (King & Main) consistent with recent legislation to stimulate construction or rehabilitation of private development. Background/Discussion The recently passed and executed Jobs Bill (HF 2695) contains several changes related to the use of TIF. One of the changes expands the ability to temporarily use tax increments from an existing TIF district to assist construction or rehabilitation of private development. The attached memo from the HRA's development attorney at Kennedy & Graven, summarizes the provisions. A critical limitation in the authority is the requirement that the authority to spend tax increments under this subdivision expires December 31, 2011. This allows the tax increments collected in 2010 and 2011 to be dedicated toward a viable project. The estimated amount collected in this time will be just over $100,000. The HRA established TIF District #16 in 1999 to redevelop the properties at King Ave & Main Street in downtown Elk River. The debt obligation which reimburses the HRA for eligible costs in this district will be paid in full ($39,671.78) at the end of 2010, assuming all taxes are paid. At that time the HRA will be required to decertify the district and the property taxes will be distributed to the city, county and school district. The modification proposed under the new legislation would essentially defer the HRA's final payment for 2 years in order to provide financing assistance to an eligible project. The HRA would continue to receive tax increments after December 31, 2011 until the earlier of it's debt obligation is paid or until the TIF district expires its 25-year life (2023). Staff is exploring projects that axe potentially eligible for the financing assistance. The TIF could be used for any type of costs such as construction, renovation, or land and in any form such as equity in a partnership or a forgivable loan. The modification process requires the HRA to adopt a written spending plan that specifically authorizes the assistance and a public hearing. At that time it is expected that the specific project would be disclosed. S:\Community Development\Economic Development\TIF\TIF16\5.3.10 I IRA Action Requested.doc