05-26-2020-R - Laserfiche WebLink

Home Browse Search

-43- NOTE 8 – DEFICIT FUND BALANCES/NET POSITION The City had deficit fund balances/net position at December 31, 2019 as follows: Amount Governmental funds Nonmajor – EDA TIF District No. 5 22,000$ Nonmajor – Parks 5,816 Nonmajor – Public Safety Capital Equipment 5,197 Nonmajor – TCAAP 194,879 227,892$ These fund deficits will be eliminated with future contributions, grants, and internal fund transfers, if needed. NOTE 9 – TAX ABATEMENT AGREEMENTS The City, in order to spur economic development and redevelopment will enter into private development and redevelopment agreements to encourage a developer to construct, expand, or improve new or existing properties and buildings or clean-up and redevelop blighted areas. These agreements may in substance be a tax abatement, but will depend on their individual circumstances. The City currently has two agreements that would be considered a tax abatement under GASB Statement No. 77. In 2013, the City entered into a development agreement with Presbyterian Homes of Arden Hills, Inc. to aid in financing certain public development costs and administrative costs of a project undertaken. For this agreement, the City used an economic development vehicle known as tax increment financing whereby tax increment revenue is generated on the incremental increase in value above a base value established on the date that the tax increment district is created. The City will abate 75 percent of the incremental taxes received through February 2028, through execution of a tax increment revenue note to be retired in 2028. The outstanding principal balance as of December 31, 2019 was $516,678, and the City rebated $212,558 in the current year. In 2016, the City entered into an abatement agreement with Land O’Lakes, Inc. (the Company) to aid in the expansion of its corporate headquarters in the City. Tax abatement assistance is where the City’s portion of the property tax attirbuted to the building expansion will be refunded to the Company over a period of not more than 15 years, beginning in 2020. This agreement is for the increases in taxes above the base year (2017) up to a maximum of $650,000, with limits on the amount of the annual payment. The City did not have any collections or rebate of property tax abatement in the current year. The City is authorized to create a tax increment financing plan under Minnesota Statutes, Chapter 469.175. The criteria that must be met under the statute are that, in the opinion of the municipality: • The proposed development or redevelopment would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future; • The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the plan. The requirements of this item do not apply if the district is a housing district;