HomeMy WebLinkAbout[06c] TIF 1-3 DecertificationGi'1'~' 4F tiT.,~i~Slt.Ptl
Council Agenda Item 6 C
MEETING DATE: June 4, 2009
AGENDA ITEM: TIF 1-3 Decertification
SUBMITTED BY: Finance
BOARD/COMMISSION/COMMITTEE RECOMMENDATION: EDA recommended decertifying TIF 1-3
at their May 27, 2009 meeting.
PREVIOUS COUNCIL ACTION: September 1998 the City Council approved the TIF Plan for Borgert
Products for the expansion of their facility.
BACKGROUND INFORMATION: The City Council established Tax Increment Financing (TIF) 1-3 Borgert
Products in September 1998. The district is in project area 1 and located on the North east corner of the
industrial park (see attached map), The project consisted of a 20,000 square foot addition to the
existing facility. Based on estimated market values, it was anticipated that the increment would result in
$ 175,202 in assistance which would be spread over a nine year period. The tax increments began is
May 2000 and ended in December 2008. As can be seen from the following information, the actual
assistance received was $ 174,599.47.
Since the tax increments are finished, TIF 1-3 can be decertified effective immediately. There are no
remaining tax increments in the City's funds so the decertification is a simple notification to Stearns
County and the State once Council passes a resolution to decertify the district.
BUDGET/FISCAL IMPACT: Beginning in 2010 the City will receive the full tax benefit from the
expansion of Borgert.
ATTACHMENTS: Resolution 2009-014 Approving the decertification of TIF 1-3 -Borgert Products of
May 20, 2009; May 27, 2009 EDA Information; Anticipated Increment; Actual Increment received;
Location Map.
REQUESTED COUNCIL ACTION: Adopt Resolution 2009-014 Approving the decertification of TIF 1-3 -
Bogert Products effective June 4, 2009
RESOLUTION N0.2009-014
RESOLUTION APPROVING THE DECERTIFICATION OF TAX INCREMENT FINANCING DISTRICT 1-3 -
BORGERT PRODUCTS OF THE CITY OF ST. JOSEPH
WHEREAS, on September 22, 1998 the City of St. Joseph created its Tax Increment Financing District No.
1-3 within its Municipal Development District No. 1 (the project); and
WHEREAS, as of the date hereof all bonds and obligations to which tax increment from the district have
been pledged have been paid in full defeased and all other costs of the Project have been paid; and
WHEREAS, the City wishes to decertify the District pursuant to Minnesota Statutes, section 469.177,
subdivision 12 effective on June 4, 2009; and
WHEREAS, the City desires by this resolution to cause the decertification of the District after which all
property taxes generated within the District will be distributed in the same manner as all other property
taxes.
NOW THEREFORE, BE IT RESOLVED by the City Council that the City's staff shall take such action as is
necessary to cause the County Auditor of Stearns County to decertify the District as a tax increment
district and to no longer remit tax increment from the District to the City.
ADOPTED by the City Council of the City of St. Joseph this 4`h day of June, 2009.
Alan Rassier, Mayor
ATTEST
Judy Weyrens, Administrator
~'TI'1' OF tiT. Jik4N~NH
Memorandum
To: Cynthia Smith-Strack, St. Joseph EDA
CC: Judy Weyrens, Administrator
From: Lori Bartlett, Finance Director
Date: May 20, 2009
RE: TIF 1-3 Decertification (SKN Properties)
As you are aware TIF 1-3 is scheduled to expire in 2009. According to the development plan for
TIF l -3, Borgert Products, the tax increments for the district would be paid for nine (9) years or
until the Pay As You Go Note was paid off. In reviewing the tax records SKN Properties
received increment payments from May 2000 through December 2008 (nine years). As can be
seen from the attached TIF payment summary, the increments received did not cover the entire
debt incurred for the tax increment project. This is not unusual as TIF Plans are based on
estimated values. Since the project has exhausted the maximum years for TIF, no further
increments will be received from Stearns County.
At this time TIF 1-3 can be decertified. Per Minnesota State Statutes, any excess tax increments
will be returned to Stearns County to be redistributed to all taxing jurisdictions of the district. As
of May l 5, 2009, TIF 1-3 has a balance of $6,020.75. Final allowable administrative costs will
be deducted from this balance to determine the excess tax increment collected. Once the
decertification is approved, the remaining balance will be returned to Stearns County.
I am requesting St. Joseph EDA to consider recommending to the City Council decertification of
TIF 1-3, Borgert Products, effective immediately with any remaining excess tax increments to be
returned to Stearns County.
If you have any questions or need additional information please feel free to contact me
Sincerely,
CITY OF ST. JOSEPH
Lori Bartlett
Finance Director
Encl.
ESTIMATE OF MARKET VALUE AND TAX INCREMENT
The following table shows the estimate of market value and tax increment used to establish a
budget in this Plan.
TABLE 1: TAX INCREMENT CALCULATIONS
Local Tax Rate = 132.261% (St. 3oseph, Payable 1998) Classification: Industrial
ASSESSOR'S ESTIMATED COMPLETED MARKET VALUE: $871,980
(assume 50% completion prior to 1-1-1999 and 100% completion prior to 1-1-2000)
Less
Estimated Captured Administra-
Year Base Tax Tax Tax Tax tion Net Tax
Payable Capacity Capacity Capacity Increment Expense Increment
1998 631 631 0 0 0 0
1999 631 631 0 0 p 0
2000 631 14,472 13,841 18,306 1,831 16,476
2001 631 28,944 28,313 37,447 3,745 33,702
2002 631 28,944 28,313 37,447 3,745 33,702
2003 631 28,944 28,313 37,447 3,745 33,702
2004 631 28,944 28,313 37,447 3,745 33,702
2005 631 28,944 28,313 37,447 3,745 33,702
2006 631 28,944 28,313 37,447 3,745 33,702
2007 631 28,944 28,313 37,447 3,745 33,702
2008 631 28,944 28,313 37,447 3,745 33,702
2009 0 0 Decertified 0 0 0
TOTALS 17 $31.788 $ 6.094
PRESENT VALUE AT 8.0%. ..... $194,669 $175,202
LIlVIITATION ON USE OF TAX INCREMENT; GENERAL RULE
Pursuant to Minnesota Statutes, Section 469.176, Subd. 4, "All revenues derived from tax
increment shall be used in accordance with the tax increment financing plan, The revenues shall be
used solely for the following purposes: (1) to pay the principal and interest on bonds issued to finance
a project; (2) by a rural development financing authority for the purposes stated in Minnesota Statutes,
Section 469,142, by a port authority or municipality exercising the powers of a port authority to
finance or otherwise pay the cost of redevelopment pursuant to Minnesota Statutes, Sections 469.048
to 469,068, by an economic development authority to finance or otherwise pay the cost of
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