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4 Mr. Jim March City of Cer'lterJille 1880 Main St. Centerville, MN 55036.9794 orthern Forest Products 050 Main Street Centervdle, Minnesota 55038 ?h01e 651-429-9990 t=ax 651-429-99~ptember 6, 2000 Dear Jim: I would like to express my concerns regarding the prOPo$ed documents for the City Council meeting on Septemcer 13,2000. There has been much discus!lon regarding t!1e reasons for the tox Increment available being less than the 'amount shown or. tl'le original payment schedules. 1 would li!<! to comment briefly on each item 1) Reduction In commerclal.lndustrial rates. H has been stated tl'1at "most o~ the oecrease" in the available tax increment IS related to this area. I do understand that the Ciass rates have decreased from 1997 through 1999. but I also ~ee that the Local7ax Rate muitipiier has prcgressed from 134.036% in 1997 to 153.788% in 1999. This multiplier has effectively negat@d the redudon in the class rates. The bottom lil"\6 is that my property taxes have not gone down, if you evaluate the taxes in 1 e97 through 2000 assuming a flat marKet value. I would imagine jf 1 had the time or energy to delve I~to the formula for defining available tax increment, I may discover that the Local Tax Rate mu:tiplier has no bearing on the calculatio". This does not r'leke sense to me but maybe this is rlow It [$ da1'll1ed in the "Tax Increment Act.. I do Know that this is in direct contradiction to the spirit of how the Tl F' incentive was presented to me by the former city administration. I did..mdersta!'1d that available tal< increment c:ouilJ be lowered by my taxes being lower, but that seemed like a pretty even trade at the tirre. 2) ,997 market value of $327,700 VS. minimum $527,700 Thl$ item is very straightforward. Northern Forest Products obviously received the bene'flt of paying a lower property tax than was assumed in the T1F documents for tne first year. It especially makes sense th91: Rehbein's payment schedule shOuld not be impacted by tf\ls set of circumstances, I de have ar issue with how Ehier's compucEld the $17,255.(;2 'oack taxes am::unt." I may not be rooking at this correctly, but I would think my additlor;al taxes for the extra $200,000 of market value would have been approximately $12,331 ($200,000 x ,046 x 1.34036). It $eems tha: this Eimount would then be reduced by some magic formula to come up with the available tax increment that WOJld have been ge:Jerated from my additIonal payment. If my ca)ct.;lat:on is correc~ this will only make the ending balance at the end cfthe T1F dIstrict larger than currenty preser,ted. It would also maKe me sven more skeptical tI'1an I already am of whet:1er the most recent Ehler's schedules a~e represented with current lilr:c accurate information (the 2/10/99 and 8{11/99 payments to developer shoulc be shown on the proper lines). 3) Lerger-thei1-ex!:lee~ed base value inflation faotor . I believe that it was estimated at an earlier ~etin9 thet thiS "small portion" of the shortfall was approximately $3000. This appears to be an area that no or.e wants to spend much time discussing, maybe because of the so-called insignificant amou nt, but maybe because of the continued embarlClssment to Ehlers and the way they handled this situation too III Sl)naOHd lS~Od NH3HLHON C666 6in TS9 XV.:! CZ: tt cra1\ 00/90/60