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 <br />MEMORANDUM <br />DATE: <br />February 25, 2013 <br />TO: <br />Economic Development Authority President and Commissioners <br />FROM: <br />Jill Hutmacher, Community Development Director <br />SUBJECT: <br />Tax Increment Financing and Business Subsidy Policy <br />Background <br />At the August 21, 2012, City Council work session meeting, Stacie Kvilvang, Ehlers & <br />Associates, led a Council discussion of priorities for public financing assistance. The attached <br />Public Financing Priority Framework (Attachment A) is a summary of the Council discussion. <br />The business subsidy policy (Attachment B) has been revised to reflect City Council priorities. <br />Section 6.2 Desired Qualifications specifically refers to Council priorities discussed in August. <br />Captured Tax Capacity <br />The City Council has discussed setting amaximum percentage of total tax capacity that could be <br />captured within a tax increment financing district. The City currently has approximately 3% of <br />its tax capacity captured within TIF districts. Once the Presbyterian Homes project is complete, <br />approximately 4.5% of the City’s tax capacity will be captured. <br />An analysis of the percentage of captured tax capacity to total tax capacity for metropolitan cities <br />is included in Attachment C. Significant differences exist among metropolitan cities. Large, <br />developing third-and fourth-ring cities may have significant commercial development but little <br />need for redevelopment at this time. Cities with little commercial development have fewer <br />demands for public investment in commercial areas. Staff suggests that comparable cities for <br />Arden Hills may be those with populations between 8,000 and 50,000 and whose <br />commercial/industrial tax capacity is at least 35% of total tax capacity. These cities generally are <br />fully developed first-and second-ring suburbs with significant commercial development. Of the <br />comparable cities, the average and median percentage of captured tax capacity to total tax <br />capacity is 8.66% and 8.51%, respectively. <br />City of Arden Hills <br />Economic Development AuthorityFebruary 25, 2013 <br />12 <br />Page of <br />