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05-24-21-R
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05-24-21-R
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<br />-43- <br />NOTE 8 – DEFICIT FUND BALANCES/NET POSITION <br /> <br />The City had deficit fund balances/net position at December 31, 2020 as follows: <br /> <br />Amount <br />Governmental funds <br />Nonmajor – EDA TIF District No. 5 22,000$ <br />Nonmajor – Karth Lake Improvement District 13,222 <br />Nonmajor – TCAAP 194,879 <br />230,101$ <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 75 percent of the <br />incremental taxes received through February 2028, through execution of a tax increment revenue note to <br />be retired in 2028. The outstanding principal balance as of December 31, 2020 was $319,256, and the <br />City rebated $226,677 in the current year. <br /> <br />In 2016, the City entered into an abatement agreement with Land O’Lakes, Inc. (the Company) to aid in <br />the expansion of its corporate headquarters in the City. Tax abatement assistance is where the City’s <br />portion of the property tax attirbuted to the building expansion will be refunded to the Company over a <br />period of not more than 15 years. This agreement is for the increases in taxes above the base year (2017) <br />up to a maximum of $650,000, with limits on the amount of the annual payment. The City did not have <br />any collections or rebate of property tax abatement 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 statutes 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 increments <br />for the maximum duration of the district permitted by the plan. The requirements of this item do <br />not apply if the district is a housing district;
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