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1 Struck Items per 3/29/2010 Meeting TIF Selection Process Whitepaper for Arden Hills February 1,2011 Summary We recommend that the City Council: 1. Establish long-term TIF assessment criteria 2. Develop a point-based assessment system Background TIF The original argument made to legislatures to create TIF was that it created a way for cash- strapped communities to finance the upfront costs associated with redeveloping blighted areas, most commonly cleanup/remediation costs and infrastructure improvements. Subsidized redevelopment in an area could then spur future,unsubsidized redevelopment. TIF has long-term effects that need to be considered when making a decision about providing TIF for a project. "Unlike property taxes, increments are not used to pay for the general costs of cities,counties, and schools. Instead, increments go to the development authority and are used to repay public indebtedness or current costs the city incurred in acquiring the property, removing existing structures or installing public services."(League of Minnesota Cities) FPAC Committee Arden Hills already has TIF Districts and anticipates the need for more TIF financing. The Financial Planning and Analysis Committee was asked to look at how the City selects TIF projects and make recommendations about the process. The Committee addressed three broad questions: • How much of the city's tax base can it afford to have in TIF Districts? • How does the city best allot its TIF dollars to support its long term goals? (First come, first served may not provide the best outcome for the city.) • Are there tools or methods that will help city leadership assess each TIF request? The committee has reviewed cases and policies from other cities around the United States as well as processes used in corporate America to evaluate long-term strategic options and projects. Page 1 of 6