2023-04-26 CC Packet - Laserfiche WebLink

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Tax Increment Financing (TIF) The use of TIF is restricted to several categories such as Redevelopment, Brownfield Clean-up, Manufacturing Jobs Creation, etc. None of these fit the proposed use of the site as a hotel and restaurant. Therefore, TIF is not an available tool. Tax Abatement Another option for filling the financial gap here is to offer Tax Abatement. This works much like TIF, except that only the CityÓs portion of the property tax is available for reimbursement. Unlike TIF, there are very few restrictions on what type of development may use this approach. Therefore, this project would qualify. WeÓve had our consultant run a few scenarios on what would be available in terms of tax abatement over a fifteen (15) year term. Attached you will see 3 scenarios. Scenario A takes into account both the discount for the existing taxable value of the vacant land and the contribution to the Fiscal Disparities pool that would be required from this new, commercial construction. In a nutshell, Scenario A ensures the existing tax base is not affected by this abatement by only abating the portion of the taxes paid that would stay with the city and would be above and beyond the existing tax capacity of the city. For the proposed 15-year period, it offers a present value figure of $452,282. The other two scenarios are allowed by law, but result in an impact to the tax rate, albeit a modest one. In scenarios B and C, as shown on the attached, the available tax abatements are $629,545 and $685,110, respectively. The term of abatement may also be extended to 20 years, in order to create additional funds, however, staff is suggesting a maximum of 15 years to avoid having the property reach a point where it is in need of repairs and revitalization before it has even begun paying city taxes. Other Economic Development Tools Beyond TIF and Tax Abatement, the next most commonly used tool to spur development is the waiver of certain city fees. The city will charge Water Access Charges, Stormwater Access Charges and Park Dedication Fees for the development of this lot. Sewer Access Charges for this lot will go to the City of Lino Lakes, since the sewer service for the building will come from Lino LakesÓ system. Therefore, sewer charges are not ours to negotiate. An estimate of the negotiable city fees is below: Water Access Charge (WAC) $129,500 Stormwater Access Charge $8,750 Park Dedication Fees $11,500 Total Negotiable Fees $149,750 Conclusions and Recommendations Given the available financial incentive tools that the city has at its disposal for a project of this type and location, it does not appear that the city will be able to offer enough to fill the projectÓs financial gap, even if it chose to offer all of the available funds. If the