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05-13-19-R
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05-13-19-R
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<br />-46- <br />NOTE 8 – DEFICIT FUND BALANCES/NET POSITION <br /> <br />The City had deficit fund balances/net position at December 31, 2018 as follows: <br /> <br />Amount <br />Governmental funds <br />Nonmajor – Parks 5,816$ <br />Nonmajor – Public Safety Capital Equipment 19,456 <br />Nonmajor – TCAAP 164,132 <br />189,404$ <br /> These fund deficits will be eliminated with future contributions, grants, and internal fund transfers, if <br />needed. <br /> <br /> <br />NOTE 9 – TAX ABATEMENT AGREEMENTS <br /> <br />The City, in order to spur economic development and redevelopment will enter into private development <br />and redevelopment agreements to encourage a developer to construct, expand, or improve new or existing <br />properties and buildings or clean-up and redevelop blighted areas. These agreements may in substance be <br />a tax abatement, but will depend on their individual circumstances. The City currently has <br />two agreements that would be considered a tax abatement under GASB Statement No. 77. <br /> <br />In 2013, the City entered into a development agreement with Presbyterian Homes of Arden Hills, Inc. to <br />aid in financing certain public development costs and administrative costs of a project undertaken. For <br />this agreement, the City used an economic development vehicle known as tax increment financing <br />whereby tax increment revenue is generated on the incremental increase in value above a base value <br />established on the date that the tax increment district is created. The City will abate 90 percent of the <br />incremental taxes received through February 2019, and 75 percent of the incremental taxes received <br />through February 2028, through execution of a tax increment revenue note to be retired in 2028. The <br />outstanding principal balance as of December 31, 2018, was $688,831 and the City rebated $228,512 in <br />the current year. <br /> <br />In 2016, the City entered into an abatement agreement with Land O’Lakes, Inc. The City did not have <br />any collections or rebate of property tax increment in the current year. <br /> <br />The City is authorized to create a tax increment financing plan under Minnesota Statutes, <br />Chapter 469.175. The criteria that must be met under the statute are that, in the opinion of the <br />municipality: <br /> <br />• The proposed development or redevelopment would not reasonably be expected to occur solely <br />through private investment within the reasonably foreseeable future; <br /> <br />• The increased market value of the site that could reasonably be expected to occur without the use <br />of tax increment financing would be less than the increase in the market value estimated to result <br />from the proposed development after subtracting the present value of the projected tax <br />increments for the maximum duration of the district permitted by the plan. The requirements of <br />this item do not apply if the district is a housing district;
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