CCP 05-08-2006 - Laserfiche WebLink

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~ . ~~HILLS MEMORANDUM DATE: May 2, 2006 Agenda Item 7.D. TO: Honorable Mayor and City Council Members Michelle Wolfe, City Administrator FROM: Murtuza Siddiqui, CFO/Treasurcr SUBJECT: Indykiewicz Property Loan Repayment Backl!round In the late 1990's the City of Arden Hills purchased the Indykiewicz property to develop thc Round Lake area. This is part ofTIF District #2. The district borrowed $650,000 from the PIR Fund (inter-fund loan) in anticipation of paying back the principal in the future with accrued interest. As of last summer, the loan balance, including interest, amounted to $880,835. In the summer of2005, the City sold a portion of this property to Holiday Gas Station Stores. The property sale yielded the City a profit of $796,300. The difference between the outstanding loan balance and the proceeds from sale ofthe land is $84,535. . Discussion The remaining loan balance in TIF District #2 fund is $84,535. The fund has approximately $300,000 in net working capital (fund balance). Therefore, the City could pay off the remaining outstanding balance from this fund. This would be an eligible expense that could be charged to TIF District #2. The City Council could also consider forgiving the loan balance and keep the funds in reserves for future use. Please notc that any unspent funds at the expiration of a TIF districts tenn are distributed to Ramsey County, Mounds View School District, and the City of Arden Hills genera] fund. Currently, the TIF district is gencrating adequate tax revenue to meet the debt service requirements for the outstanding bonds the City had issued for the improvement of this district. Last year, the district generated approximately $100,000 more in revenue than the debt service requirements. City staff is not surc if an excess of this magnitude will continue in the future due to future law changes or the possibility of the property going into forfeiture. Although, staff does believe that the current fund has adequate reserves to absorb any unanticipated reduction in tax revenue collected and is recommending that the City Council consider paying off the remaining balance to the PIR Fund. Recommended Action Staff recommends that the City Council authorize staff to payoff the remaining loan balance in the amount of$84,535 to the PIR Fund from TIF District #2 Fund as of the close of year end. .