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Department A proval: Manager Approved: Date: 8/11/ 2003 Item Igo; Agenda Section* Reports and Recommendations Item Description: Discussion on Use of Proceeds from the Arona Site Background At the August 4, 2003 City Council meeting, Staff presented an overview of the Arona site. The overview included the following: 1} Review of the City's overall Tax Increment Financing (TIF) structure 2} Historical review of TIF District #12 which includes the Arona site 3} Overview of the eligible uses of tax increment generated from TIF #12. 4} Request from the HRA to utilize future increment from TIF #12 5} Identification of potential uses of both future tax increment and land sale proceeds. For the benefit of facilitating the Council's discussion, Staff prepared a memo detailing the items noted above. A copy of the memo is included as Attachment A. At the conclusion of Staffs presentation, the Council held a brief discussion regarding Item #5 - the potential use of both future tax increment and the proceeds of the City -owned Arona site. The Council directed Staff to bring forth additional information that would help frame the discussion. The remaining portion of this memo deals with this subject. D 0 10 iscussion Items When considering the potential uses of future tax increment and land sale proceeds, it is advised that the Council consider not only the legal restrictions on the use of these monies, but also the overall needs of the City, as well as opportunities that may present themselves today and in the future. In short, it's a decision that has the potential for great impact across many policy levels. Although the use of future tax increment and land sale proceeds are somewhat related, it's perhaps best to consider there independently in the onset. Potential Use of Future Tax Increment When considering the use of future tax increment, it is suggested that the Council consider two factors; 1) the Original purpose of the district, and ) the restrictions on the use of the monies. The District was created in 1990 with the purpose of facilitating the development of the Axona site. In other words, "but for" the creation of this district, development of the Arona site would not otherwise occur. In short, the increment from the district was to be used to offset the development costs. The Council should consider whether the original purpose remains valid.