HRA 04/29/1985 JOINT - 6747LL
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MEMORANDUM
TO: NASIM M. QURESHI, QTY MANAGER
FROM: SID DOMr DIRECTOR OF CENTRAL SERVICES
SUBJECT: BRA FUND BALANCES
DATE: AMIL 26, 1985
Attached is sane information regarding some projections on fund balances
for the Fridley HRA. These projections of large fund balances are due to
the projects that are currently planned or on -line in the districts. I
have also attached for your review some short paragraphs about each
district which indicate the laws governing haw long properties stay
within those districts.
There are currently two problems that the ERA has regarding this
inf ormation.
1. In most of the districts some sort of activity must take place, or
according to the law; property will no longer remain as a portion of
a tax increment financing district. At the current time, this has
been loosely enforced but as pressures from other taxing
jurisdictions and other sources increase, it is our predictions that
the enforcement of these laws will become much more stringent.
2. The auditors have made it very clear to us that we can no longer have
large suns in fund balances without some specif is purpose for that
money.
In summary, it is important that the ERA be aware of the fact that unless
they have active projects in the district(s), we probably will be forced
to remove the property from those district(s). Also, if they accrue large
suns of excess cash within their fund balances, without any specific
purposes, they may be ordered by the auditor to return some of that to
the taxing jurisdictions.
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Center City is a TIF district and was established before the Tax Increment
Financing Law. The legal length is 30 years. It was established on May 15,
1979, therefore, it can extend until May 15, 2009. The State Law states that
the amount of increment that we are collecting will roll back to the other
taxing jurisdictions when all public costs are paid. The project area and the
IV districts are contiguous thus exactly the same.
Moore Lake is a Redevelopment District which was established on May 4, 1981.
It can run for 25 years or until May 4, 2006. 7he Redevelopment District area
and the TIF District area are different. Unless improvements are made to a
property within four years or if the City does not issue bonds or make
improvements within four years, we can no longer collect TIF on it.
North Area is a Redevelopment District which was established on November 23,
1981. It can run for 25 years or until the year 2006. The Redevelopment
District area and the TIF District area are different. Unless improvements
are made to a property within four years or if the City does not issue bonds
or make improvements within four years, we can no longer collect TIF on it.
DISTRICT LAMER FOUR (J0HNSCK PRIWIW41SKYWOOD)
District NLnber Four is an Economic Development District which was established
on December 19, 1983. It and can run 10 years (until 1993) or eight years
from the collection of the first increment, whichever is least. The Economic
Development District and the TIF District are the same. Unless improvements
are made to a property within four years or if the City does not issue bonds
or make improvements within four years, we can no longer collect TIF on it.
DISTRICT NLMER FIVE (PASCHKE)
District Number Five is an Economic Development District which was established
on February 27, 1984. It can run 8 years (until February 27, 1994) or eight
years from the collection of the first increment. The Economic Development
District and the TIF District are the same. Unless improvements are made to a
property within four years or if the City does not issue bonds or make
1sprovements within four years, we can no longer collect TIF on it.
Date: April 26, 1985
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MEMORANDUM
TO: NASIM M. =ESHI, QTY MAWER
FROM: SID nom, DIRECTOR OF CMAL SERVICES
SUBJECT: BRA AND SCHOOL DISTRICT #14 MEETING
DATE: APRIL 26, 1985
The BRA staff and the School District staff have had a number of
meetings to discuss the impact of the BRA on School District #14. I
have been working with Mr. Jerry Seemon, Director of Finance, for
the School District and we have generally agreed that the effect of
the BRA activities on School District #14 is approximately 13 mills.
Using this mill levy as a base, the staff has projected that the BRA
activities cost the District #14 approximately $57,000.
After discussing this further with the School District, we
determined that such an amount of money would have relatively little
impact on the City of Fridley's BRA activities but would help School
Distric #14 immensely. We attempted to determine how we could
transfer the money and received a copy of an opinion f rom the BRA
Attorney, Mr. David Newman (copy attached), dated March 7, 1985. As
you will note, there is a number of restrictions in transferring the
money. We do feel, though, that if the City of Fridley BRA chooses
to pursue this matter there may be other alternatives for
transferring the money.
Could you please discuss this with the BRA and the City ODuncil and
if they agree with this type of transferring concept, we will
proceed to determine how and what methods could be used to
accomplish this.
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Attachment
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a2IGOAL
ADJUSTED
EXPIRATION CURRENT AV ASSESS C/C CAPTURED
DISTRICT DAZE 01/O /84 VALUE 83/84 IIXQtWMTT
#1 Center City 2009
A2
A8
#2 Moore Lake 2007
A5
#4 Johnson Printing 1993
B9
TOTALS
Percent of Total AV
Levy per Mill
Heather Hills West
13 -43 -74 to 13 -43 -86
(Part of #2 Moore Lake)
Percent of Total AV
Levy per Mill
Total AV District #14
1984/1985
5,016,494 (1,948,296) 589,861 3,658,059
836,646 (624,380) 212,266
1,103,878 (666,191)
437o,687
152,723 (81,520) 71,203
7,1097M 13,320, 589,861
4.18
4,379.22
341,770 -0-
0.3%
341.77
105,588,396
341,770
u, I
C
LOSS OF INDEPENDENT SCHOOL DISTRICT #14 REVENUE
BECAUSE OF TAX INCREMENT DEVELOPMENT
1984 PAYABLE 1985 LEVY
1. General Fund (01)
a. 6.5 mill referendum
2. Transportation (03)
A. Hazardous transportation
$120,000 s $105,588,396* = 1.1 mills
3. Community Education (04)
a. $138,753 levied
$138,753 i $105,588,396 = 1.3 mills
4. Capital Outlay (05)
a. $434,301 levied
$434,301 * $105,588,396 = 4.1 mills
S. Debt Service (07)
a. $330,703 levied
$330,703 . $105,588,396 = 3.1 mills
TOTAL
Information Received From City of Fridley
Captured increment from development = $4,379,215
(4.1% of assessed value)
Levy/mill = $4,379.22
Mills
6.5
1.1
1.3
4.1
3.1 x
16.1
Loss of School District Revenue = $4,379.22 x 16.1 = $70,505
*1984 Assessed Valuation = $105,588,396
March 6, 1985
PREPARED BY
Jerry T. Seeman
Director Finance /Personnel
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PAIDLET YINNefOTA *Ni=
M E M O R A N D U M
TO: Sidney C. Inman
FROM: David P. Newman A91
RE: Fridley — HRA
DATE: March 7, 1985
On February 27, 1985 you asked me to research the procedure that
the HRA would need to follow in the event that they were to elect
to return to the school district a portion of the excess tax
increments.
Unfortunately, there is no easy way to do this. MSA Section 273.75,
Subdivision 2 provides the mechanism for the return of excess tax
increments. It states that any excess increments which are being
returned must be distributed through the County Auditor and that he
will then make the distribution to the municipality, county and
school district in proportion to the respective mill rates.
Obviously, by following this procedure the Fridley School District
would only receive a portion of the increments being returned.
Another possibility is that the HRA can do improvements to property
located within a redevelopment district. For example, since the
school district is interested in selling the Riverview School, the
HRA could, if the property were in a redevelopment district, make
Improvements to the property which would benefit the school district
at the time of the sale of the property.
If you would like to discuss this matter further please do not
hesitate to contact me.
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i 273.74
47ZA prior to August 1, 1979 may be reduced
but shall not be enlarged after five years follow-
ing the date of designation of such district."
taws 1982, C. ti2.4, art 38,1 16, rsad:
. "Sections 1 to 1s are effective with respect to
distracts for which certification is requested af-
ter June 30..198?, except that the provisions of
TAMES; LiSTiNG. ASSESSMEA -T
section 6 relating to changes in the type of an
existing district shall ply to any district the
type of which is changed subsequent to the date
of final enaehnent of this set"
law Review Commentwim • .•. .. • .
Tax - increment financing, the 1979 Minrwota
Act 1961.3 Win Mitchell L.Rrr•
27a.7L Limitations :•
Subdivision 1. Duration of tax increment financing districts. Subject to the limita-
tions contained elsewhere in this subdivision any tax increment financing district ss to
which bonds are outstanding, payment for which the tax increment and other revenues
have been pledged, shall remain in existence at least as long as any such bonds continue
to be outstanding; provided, however, the tax increment pledged to the payment of bonds
and interest thereon may be discharged and the tax increment financing district may be
terminated if sufficient funds have been irrevocably deposited in the debt service fund or
other escrow account held in trust for all outstanding bonds to provide for the payment of
the bonds at maturity or date of redemption and interest thereon to such maturity or
redemption date, provided that for bonds issued pursuant to section 273.77, clauses (a)
and (b) the full faith and credit and any taxing powers of the municipality or authority
shall continue to be pledged to the payment of the bonds until the principal of and interest
on the bonds has been paid in full; provided, further, that no tax increment shall be paid
to an authority for a tax increment financing district after three years from the date of
certification of the original assessed value of the taxable real property in the district by
the county auditor or three years from August 1, 1979, for tax increment financing
districts authorized prior to August 1, 1979, unless within the three year period (a) bonds
have been issued pursuant to section 273.77, or in' aid of a project pursuant to any other
law, except revenue bonds issued pursuant to chapter 474, prior to August 1, 1979, or (b)
the authority has acquired property within the district. or (c) the authority has construct -
ed or caused to be constructed public improvements within the district; and provided,
further, that no tax increment shall in* any event be paid to the authority from a
redevelopment district after 25 years from date of receipt by the authority of the first tax
increment, after 25 years from the date of the receipt for a housing district and after
eight years from the date of the receipt, or 10 years from approval of the tax increment
financing plan, whichever is less, for an economic development district
- For tax increment financing districts created prior to August 1. 1979, no tax increment
shall be paid to the authority after 30 years from August 1, 1979.
Modification of a tax increment financing plan pursuant to section 273.74. subdivision 4,
shall not extend the durational limitations of this subdivision.
ubd. 2. Excess tan increments. In any year in which the tax increment exceeds the
�
amount necessary to pay the costs authorized by the tax increment financing plan,
including the amount necessary to cancel any tax levy as provided in section 475.61,
subdivision 3, the authority shall use the excess amount to do any of the following, in the
order determined by the authority: (a) prepay any outstanding bonds, (b) discharge the
pledge of tax increment therefor. (c) pay into an escrow account dedicated to the payment
of such bond, or (d),r1tuM the excess amount to the county auditor who shall distribute
the excess amount Co the municipality. county and school district in which the tax
increment financing district is located in direct proportion to their respective mill rates.
Subd. 3. Limitation on administrative expenses. No tax increment shall be used to
pay any administrative expenses for a project which exceed ten percent of the total tax
increment expenditures authorized by the tax increment financing plan or the total tax
increment expenditures for the project, whichever is less.
Subd. 4. Limitation on use of tax increment. All revenues derived from tax
increment shall be used in accordance with the tax increment financing plan. The
revenues shall be used solely for the following purposes: (a) to pay the principal of and
236