HomeMy WebLinkAbout05/09/1988 INDEPENDENT SCHOOL DISTRICT NO. 720
SHAKOPEE, MINNESOTA
INFORMATION MEETING WITH CITY COUNCIL
MAY 9, 1988
6:00 - 7:15 p.m.
Assembly Room, 111, Scott County Courthouse
A G E N D A
1. Call to Order and Introductions - Joan Lynch, Chairperson
2. New Tax Increment/Referendum Levy Legislation - Bob Martin
3. Background Information from School District and City -
Gayden Carruth and John Anderson
5. Adjourn
School District Attachments: City's Attachment:
- Legislation - 1988 Anderson memo in re:
- School District Background Information New Tax .Increment/Referendum
- 1986 Anderson memo in re: Policy and Levy Legislation
Program Issues Involving Shakopee's - 1987 Voxland memo in re :
Use of Tax Increment Tax Increment Funding for
Projects (Informational)
Y
32 Sec. 24 . Minnesota Statutes 1987 Supplement, section
33 469 .177, is amended by adding a subdivision to read:
li 34 Subd. 10 . (PAYMENT TO SCHOOL FOR REFERENDUM LEVY. ) The
35 provisions of this subdivision apply to tax increment financing
36 districts and projects for which certification was requested
1 before May 1, 1988, that are located in a school district in -
2 which the voters have approved new millage or an increase in
3 millage after the tax increment financing district was certified
4 (1) if there are no outstanding bonds on May 1, 1988, to which
5 increment from the district is nledoed, or ( 2 ) if the referendum
6 is approved after May 1 , 1988, and there are no bonds
7 outstanding at the time the referendum is approved, that were
8 issued before Mav 1, 1988, or ( 3 ) if the referendum increasing
9 the mill rate was approved after the most recent issue of bonds
10 to which increment from the district is pledged. If clause ( 1 )
11 or '( 2) applies , the authority mustannuallypay to the school .
12 district- an -amount of increment equal to the increment that is -
13 attributable to the increase in the mill rate under the
. 14 . :referendum. If. clause ( 3) -applies, -uoon. approval by a. majority
15 ' vote of the governing body sof the municipality and the school
16 board, the authority must pay to the school district an amount
17 of increment equal to the increment that is attributable to the
18 increase in the mill rate under the referendum. The amounts of
19 these increments may be expended and must be treated by the
20 school district in the same manner as provided for the revenues
21 derived from the referendum levy approved by the voters.
5/09/88
INDEPENDENT SCHOOL DISTRICT 8720
SHAKOPEE, MINNESOTA
SCHOOL DISTRICT BACKGROUND INFORMATION
During the 1988 Legislative Session, a change was made in the current
tax law (Omnibus Tax Bill ) regarding tax increment financing/school
district referenda. In the past, school referendum taxes were paid
by the tax increment districts but those taxes were "captured" by
the cities. This provision resulted in school referendum taxes going
into a city's TIF Fund, and those school tax revenues were then ,
available to city governments to use as desired, i .e. , no restrictions.
This particular provision has never affected the amount of foundation
(basic school funding formula) revenue to which a school district
is entitled. The State's per pupil aid formula picks up the difference
in the basic formula. However, the tax rate (number of mills) which
must be requested for school referendum purposes is affected.
School formulas require us to levy dollars not mills. In a referendum,
the district determines the amount of revenue it needs and converts
that revenue to a mill rate based on the current taxable valuation
of the school district. Tax increment property valuations are not
included in the "taxable valuation of the school district" calculation.
Therefore, a higher mill rate is needed from the other property
taxpayers in order to raise the specified revenues. Because referendum
revenues are local funds only, there is no participation by the State
in picking up the difference as on the basic formula.
The school referendum millage is also then levied against the property
in the tax increment district. Thus, the tax increment properties
pay the school referendum tax to the city.
Before the inability of most school districts to operate in the absence
of a referendum, no particular attention was paid by school districts
in regard to this practice. In fact, school districts have basically
supported tax increment financing because it, in the long run, increases
the school tax base and we lost no basic foundation revenue through
our state funding formula. But school districts were unaware that
any school referendum taxes were accruing to cities -- the assumption
being that if a tax increment property was not "on the tax rolls"
(part of the taxable valuation of the school district) , school
referendum taxes were not levied against the property.
Through our Association of Metropolitan School Districts (AMSD)
affiliation and the consultant who did our finance study, an awareness
that all school referemdum taxes were not going to the school district
was brought to our attention. As a result, AMSD school districts
proposed legislation to require that school referendum taxes collected
in TIF districts automatically go to school districts, not cities.
This provision would apply to new or increased levies which would
be certified in 1988 and collecte3in 1989 and other future referenda.
rage t /
• Our position did not prevail . There were two provision which applied
if there were no revenue bonds outstanding and the levy occurred after
May 1, 1988. In those two cases, the school referendum taxes
automatically went to the school district. A third provision applied
if there were outstanding revenue bonds and the levy occurred before
May 1, 1988. This provision was that there needed to be approval
from the city council to receive these funds. The Shakopee School
District is affected by this third provision.
The referendum history in Shakopee is as follows:
1. In 1982, 11.5 mills for three years was approved. Six mills was
a trade-off in the debt service and capitalfunds, and 5.5 mills
was for a general fund mill rate increase.
2. In 1985, 5.5 mills for three years was approved. Revenue from
the first year was $484,000; the second year, $540,000; and the
third year, $527,945.
3. On March 8, 1988, 19.79 mills was approved with 9 continuing mills
and 10.79 mills for three years. Revenue from the first year
is anticipated to be $1.9 million.
Like all school districts, we believe all school referendum taxes
should go to school districts. Our legislators (Representative Kelso
and Senator Schmitz) as well as the new legislation's chief authors
(Senator Metzen and Representative Milbert) have indicated their intent
was for the schools to receive the money. We certainly believe that
this is the taxpayer's intent.
The 5.5 mills generates approximately $100,000 per year for the city
TIF fund. The 19.79 mills will generate approximately $400,000 per
year.
The Shakopee School Board exercised a great deal of courage in even
requesting a 19.79 mill excess levy from the public. Had we been
able to have the referendum taxes now going into the TIF fund our
request of the taxpayers may have more nearly been 16 mills instead
of almost 20.
Our projected general fund balance for June 30, 1989 is deficit and
will be in the range of a -$240,000 to a -$317,000, very closely
skirting statutory operating debt. Part of our referendum request
of 19.79 mills was designated to reduce and ultimately eliminate our
operating debt.
While we have for the first time obtained 9 continuing mills, we will
most likely be returning to the taxpayers in three years (when the
10.79 mills expires) to request a portion of the 10.79 mills as
continuing millage. Our promise to taxpayers was to explore all
alternative funding sources. The tax increment/referendum legislation
was a primary alternative funding source, and one to which we feel
rightfully entitled.
Senator - Metzen has indicated to South St. Paul that is is not
legislative intent for approval to be obtained annually but to be
obtained once for all future years. Thus, this legislation has
significant implications for taxpayers on our current or any future
referendum efforts.
MEMO TO: Mayor and City Council
FROM: John K. Anderson, City Administrator
SUBJ: New Tax Increment/Referendum Levy Legislation
DATE: May 6, 1988
INTRODUCTION:
During the 1988 Legislative Session a change was made in the
current tax law regarding Tax Increment Financing/School District
Referendum. The change is outlined in the May 9, 1988
Independent School District 720 memo included in the School
District's Agenda for our joint meeting at 6:00 p.m. on Monday.
Please read the School District background information which
summarizes the changes in the law and the School District's
position/interpretation of the intent of the law.
CITY TAX INCREMENT FINANCING (TIF) DISTRICT FINANCING UPDATE:
Attached is a memo from Gregg Voxland with computer runs
from Springsted that updates our TIF district financial
commitments. The financial analysis is based upon the assumption
that the total mill levy for the City, School District and County
will never drop below 110 mills. Gregg Voxland and I reviewed
our recent total mill rate experience and it is as follows: 1982
- 116.2 mills, 1983 - 122.7 mills, 1984 - 110.6 mills, 1985-
124.5 mills, 1986 - 118.0 mills, 1987 - 139.0 mills, and 1988-
119.4 mills for an average of 121.5 mills over the seven year
period.
The City of Shakopee has five active tax increment districts
currently receiving tax increment revenues. Springsted's fiscal
analysis of the City's tax increment commitments, they have made
certain assumptions. From a review of the computer analysis it
is clear they did not skip any tax payments in any given year in
any of the districts. We do not know how secure this assumption
is. Clearly the racetrack has been under significant financial
stress and we have not received total tax payments from other
districts/projects that have been recently constructed or are
under construction. We also do not know what the impact of the
recent "tax reform" proposals will be on the combined mill rate
of the City, School District, and County.
PRELIMINARY EVALUATION OF ALTERNATIVES:
Under the new State Statue the City Council and the School
Board can jointly decided whether or not the School Board will
receive the captured value in the TIF Districts. This
determination will not occur in the future because all school
operating referendum will automatically be available to the
School District (they will not be captured in the TIF Districts) .
It is difficult to sort out the implications of this given the
school districts 5.5 mill levy which is lapsing this year, and
the passage in March of a two part 19.79 mill levy (9 mills
permanent and 10.79 mills for three years) .
1. The City could agree to send all TIF District revenue
generated 19.79 mills to the School District (estimated at
$400, 000) . This alternative provides the maximum benefit to
the School District and the maximum exposure to the
stability of the City's TIF District finances.
2. The City could retain the revenue generated by the 19.79
mill levy. This alternative maximizes the benefit to the
financial security of the City's TIF Districts and provides
the minimum benefit to the School District.
3. The City could release 14.27 mills of the 19.79 mill levy.
The rational for this approach is that it represents the net
increase in School District's operating referendum millage
(19.79 new mills minus 5.5 old referendum mills) . This
approach provides the School District with the bulk of the
March 8th referendum proceeds ($300, 000 according to the
School District estimate) , and provides the City's TIF
Districts with the income from the 5.5 mill operating levies
that have existed for the last six years and constitute part
of the 121.5 mill average the City has experienced over the
last seven years. Note: Our computer runs are based on 110
mill average if 5.5 mills are subtracted from 121.5 mills we
would be averaging 116 mills which provides for a 6 mill
cushion compared to Springsted's earlier 10 mill cushion.
4. The City and School District could investigate establishing
a floating mill rate agreement. This might take the form of
an agreement that would state that the School District would
receive the full 19.79 mills whenever the total City, School
District, and County mill rate exceeds 116 or 120 mills.
The rationale for this approach is that it provides security
for the revenue for the City's TIF Districts while enabling
the School to potentially receive the full 19.79 mills.
SUMMARY AND RECOMMENDATION:
The purpose of the joint meeting Monday night is for the
City Council and the School District to become better acquainted
with this new Minnesota Statue and to discuss the short and long
term implications while the decision before the two bodies. The
discussion should examine the effects of the new law on the
School Districts Referendum in three years so that those bodies
fully understand how the referendum in 1991 might possibly effect
a decision made in 1988. In reviewing the alternatives listed
above with our Finance Director, Gregg Voxland, we are
comfortable with either alternative 3 or alternative 4 . We
believe that the purpose of providing option clause #3 in the new
Tax Increment/Referendum Legislation was to enable Cities to
fully protect the financial capability of their TIF Districts.
If the majority of the State's Senate and House Representatives
had not intended this we can only assume that it would not have
been in the Legislation.
JKA/tiv
v
TO: John K. Anderson, City Administrator
FROM: Gregg Voxland, Finance Director
RE: Tax Increment Funding for Projects (Informational)
DATE: July 9, 1987
Introduction
Attached is a report from Springsted which, based on the assumptions
shown, projects the TIF revenues and the ability to support the projects of
downtown, bridge/bypass and upper valley drainage. Current information from
Springsted is attached and the data from previous (1986) studies is available
for any one who wants to view it. Springsted's report shows a shortage of
$218,000 in 1987 on schedule IA and 1B. The City has $310,000 on hand from
surplus TIF bond proceed from the Holmes- Basin project and the Race Track
offsite projects.
One of the key assumptions is that the two issues of fiscal disparities
will be resolved favorably.- The first is the situation where the County
Auditor worked off of the preliminary resolution for the Race Track District
and took the fiscal disparities contribution out of the district instead of out
of the city as per the final resolution. It appears that this issuewill- be
corrected for 1988 but it is not known if any adjustment can be made to recoup
the loss of TIF dollars for 1987. Bond counsel's opinion is that the City can
not at this point change the fiscal disparity election and have the
contribution come out of the district.
The second issue is the possibility that the County Auditor may not be
applying or settling tax dollars paid by a district in the manner practiced by
other counties. The tax statements for any particular parcel in a TIF district
show a levy made based on the total city mill rate and a levy based on the
fiscal disparity mill rate. Instead of the city receiving the increase in
total taxes on the parcel, we are receiving only the increase in taxes for the
city mill rate. Us are not getting the increase in taxes levied under the
fiscal disparity mill rate. The net effect is that we are getting only about
758 of the increase in taxes in the TIF districts. If in fact this is the
case, the magnitude of the dollars involved are for 1987 taxes, $488,688 for
district Rl and $326,208 for district #4. Staff is actively following up and
getting this issue clarified. The practice affects all cities in the county
with TIF districts.
SPRINGSTED INCORPORATED
Public Rnanoe Advisors
-— 85 Eag Seventh Puce.Sune loo
[�� + Saint Paul.Minnesota 551012143
6122233000
July 10, 1987
Mr. John Anderson, Administrator
City Hall
129 East Ist Avenue
Shakopee, Minnesota 55379
RE: Updated Estimate of Tax Increment Income Availability from the
K-Mart and Canterbury Downs Projects
Dear Mr. Anderson:
We have per the City's request performed an updated estimate of the
availability of tax increment income from these two Districts to finance the
Downtown Streetscape, Bridge & Bypass, and Upper Valley Storm Sewer
projects. This projection is the third we have performed, with the initial study
being done in March, 1986. Since this study is simply an update of the more
extensive initial study, we highly recommend that the City review all of the
original assumptions and conditions contained in the original study. We have
included copies of the two previous studies for this purpose.
This update changes some of the assumptions used in the previous two studies.
One fundamental assumption is the total receipt of all eligible property taxes
from the Districts without regard for any impact of fiscal disparities. In the
previous studies this condition was a given, not an assumption. In the last
week it has been determined that the County's position is that a portion of the
property tax payments from the Districts should not go exclusively to the
City, but rather to all taxing jurisdictions. The effect of this situation in 1987
is a loss of $600,000. The City Finance Director is enclosing a report more
fully describing this situation and the possible remedies for the City.
The other major assumptions of this update are as follows:
(a) No inclusion of current cash-on-hand;
(b) " No inclusion of storm sewer user fees or special benefit fees;
(c) No inclusion of reinvestment income; and
(d) All future bond issues having an average coupon interest rate of 8%.
In the two previous studies, increment income figures have come from the
original official statements of the K-mart and Canterbury Downs bond issues.
These income figures were based on an assumption of a total mill rote of 110
mills over the term of the issues. We continued to use this some 110 mills in
evaluating new development occurring in the District. The City's current mill
rate is approximately 138 mills. In this update we present two estimates of
future increment income. Exhibit IA illustrates the situation at 110 mills.
Exhibit IB is the situation at 120 mills. These two mill rates should be viewed
as alternative assumptions for determining future income.
City of Shakopee, Minnesota
July 10, 1987
Page 2
Exhibits IA and IB are set up on the following manner:
Column I Indicates the year of property valuation, and then increment
collection and bond payment;
Column 2- lists the current actual total debt service commitments of the
increment income;
Column 3 estimated increment income of the original K-Mari and
Canterbury Downs projects;
Column 4 estimated increment income of new development in the
Districts;
Column 5 difference between present debt service commitments and TIF
income;
Column o estimated net debt service for the Downtown Streetscape
project after deduction of special assessment principal of
$200,000;
Column 7 estimated debt service for the Bridge &Bypass project; -
Column 8 difference between TIF income surplus (deficit) from column 5
after deduction of debt service from the Downtown Streetscape
and Bridge & Bypass projects;
Column 9 estimated debt service for Upper Valley Storm Sewer projects;
Column 10 difference between TIF income surplus (default) from column 8
r— -
after deduction of debt service for Upper Valley Storm Sewer
-- - project; and
Column I I Cumulative position of TIF income over term of Districts.
As column I I indicates, the only deficit situation occurs in the first year in
the amount of ($218,245). This deficit occurs because of the present difficulty
with the County on the administration of fiscal disparities for the Districts.
The City staff estimates that present cash-on-hand would cover this initial
deficit.
- -We continue ta,-vtggbrously recommend that due to the number of assumptions
contained in these analyses, that the City closely monitor these Districts and
whenever possible compare actual financial experience with these estimates.
We expect to perform additional updates as more information is known or
situations change.
Please feel free to contact us should you have any questions.
Respectfully,
SPRINcorporate
/cjp
EXHIBITS
Summary: I10 Mills . .... . .. .. .... .. ... .. . .. .. .. .. .. . .. . ... ..... ... Exhibit IA
Summary: 120 Mills .. ... ...... .. . .. . .. . .. ... ... .. .. . .. .... . .. .... . Exhibit IB
Increment Income Increase from New Development: 110 Mills .. . .. .. .. .. Exhibit IIA
Increment Income Increase from New Development: 120 Mills . . .... . .. .. Exhibit IIB
Downtown Streetscape .. . .. . ..... ..... . . . .. . . . .. . .. ... ... . . .. .. .. . . Exhibit 111
Downtown.Streetscape: Assessment Income . . .... .. . . . .. ... . .. . . .. .. . Exhibit IIIA
Bridge & Bypass .... . .... . .. . . . .. . . .. ..... . .. .... ...... .. . . .. .. . . .... Exhibit IV
Upper Valley - 1987 Issue .. ... . . . . . . .. . .. . .. ...... :....... .. . .. .... . Exhibit V
Upper Valley - 1988 Issue .. . . . .. . . . . .. . . . . .. . . .. .. .. .. . . .. . . . .. .. .---Exhibit VI
--- -------
Upper Valley - Combined Debt Schedules . . . . . .. . . . . . . . .. ... . .. .. . .. .. Exhibit VII
Previous Studies . .. .... .... .. .. .. .. . .. .. . . . . .. ... .. .. . . .. . . . . .. . . . . Exhibit VIII
EXHIBIT IA
€ _
' ee -
— aa - —
mi -
- C=
- eve • - � � e _ f �
- - m Z6r
rv3m - - - -. - - e
mm . . m m m mm € :
EXHIBIT IB
`a
gM - - - - - - - - - - -
mm « m m m m m mm '
C ❑ m
EXHIBIT IIA
CITY OF SHAKOPEE, MINESOTA
INCREMENT INCOME INCREASE FROM NEW DEVELOPMENT
K-Mart District
Motel Value as of 1-2-87
Parcel l)1 $6,984,800
Parcel #2 (Parking Lot) 270,500
Total Value as of 1-2-87 $7,255,300
Assessed Volue(o) $3, 110,779
Backstretch Value as of 1-2-87(b) -0-
Assesed Value(a) -0-
Total Increase Assessed Value $3, 110,779
Mill Rate Assumed in Original District(c) 110 Mills
Annual Increment Income $ 342, 186
Collectible 1988-2004
Canterbury Downs
Grandstand Values as of 1-2-87(b) $ -0-
Assessed Volue(o) -0-
Annual Increment Income $ -0-
Collectible 1988-1994(d)
(a) Assessed Value based on commercial classification with no contribution to fiscal
disparities.
(b) New valuation from Backstretch and Grandstand facilities assumed to be included
within$43.0 million Development Agreement minimum valuation requirement.
(c) Mill rate of 110 mins was assumed in structuring original TIF revenue bond issues.
(d) Economic Development District.
EXHIBIT 11$
CITY OF SHAKOPEE, MINESOTA
INCREMENT INCOME INCREASE FROM NEW DEVELOPMENT
K-Mart District
Motel Value as of 1-2-87
Parcel #1 $6,984,800
Parcel #2 (Parking Lot) 270.500
Total Value as of 1-2-87 $7,255,300
Assessed Volue(a) $3, 110,779
Backstretch Value as of 1-2-87(b) -0-
Assesed Value(a)
Total Increase Assessed Value $3, 110,779
Mill Rate Assumed in Original District(c) 120 Mills
Annual Increment Income $ 373,300
* Collectible 1988-2004
Canterbury Downs
Grandstand Values as of 1-2-87(b) $ _0_
Assessed Volue(a)
Annual Increment Income $
* Collectible 1988-1994(d)
(a) Assessed Value based on commercial classification with no contribution to fiscal
disparities.
(b) New valuation from Backstretch and Grandstand facilities assumed to be included
within $43.0 million Development Agreement minimum valuation requirement.
(c) Mill rate of 110 mills was assumed in structuring original TIF revenue bond issues.
(d) Economic Development District.
i
EXHIBIT 111
v
a
L
ro
0
n 0 .+ YY •-. 00MnNwOH m
m LL ro N G m m m e m n H w m r
m
H 0 9 PnmNmNl•1w w
O 0 O E
U F N mc'f nt'f ONHt•1 m
• C M rvnr•� nnnnrf in
n M -•� a PPPPPP P P QI
7 H
C1 Y N O nma• Om H U
•OZ re m W w V1VrvHO m m N
WH WO `-' 1.1 m •-I P n O N r
[G E U
O N
N c N P N m w P H O M
DIM
UI NN _ �Oeenrfn rf m
GI d N Y
WG N W
a o
0
w H
00000000 O c
I n ro n N I n OPO t•f w P n O
0Y -
0 Y —O Y
F m w m o o m m P m 0
N m n n n w w w m w
W e P P P e P P P r 0
O Y
n
000
a oin � ro
P o e
W L
rl H .dY .+ 00000000 0 yn C
0 ro ro N w 00000000 O mme t•1 ro
000 m OwN m P
W m m U
W O-
' S
Poe)
k 4
U N m t•1 w N m wM N N W
U C. Y O w In In PPP P w -ri
m -N G PeeePPPP �n G
Sr H P>1
v
Y --. 00000000 Oin M w O
0 0 0 0 0 0 0 0 O N •• 7 N
0 — OOOmOwNm a NY •• N .i
W M Y U N
N mmwNmr•1 rf N H N o 7 N
Y mmwPHmwt1 m Y O C� 'ti>i
Y
.+ o c m
ro H N+i
? TL
N ^. 000000 was C : G
N e 00000000 Ti o
04 O roY
Y �
00000000 404Z F C
ro U 0
O
0 U
O Y N W
ro•.+ UY om 00000000 o a-.+
N N O o 0 0 0 0 0 0 O
O w w Y b
Groan - d`-' 00000000 o Orom ro
% b` O -M NHOIn E N
O+i 1a U IMOe-1m m OO O
" O0 -•ice
t r-I fL G N n m t•1 In m e-1 n N P Y YI
C .0 M t•f N N t' t'1 t'f t' P w P mm MO)
-•a O N M H Gl Y -
-
N N Y ' w N m m e N PY N
a o N I O Y N m m mm m mm m m m m •• ro r
O N W HH ro0 — mmmmmmmm >�{.." or
N G
X0 31 11S e-1HHHHHHH Y Y 7
.0 O V1 m N N f0 7a ro Y M rl
>�H mnmmommmWO
tyl� N ro G NY
OOy R u O 4) — mmmmmmmm .7 aU M o
L . 3 YY m F Ca, olH Ym
•H N 0 ro ro U 0 0 > > G t
EXHIBIT IIIA
City of Shakopee, Minnesota Prepared July 7 , 1987
$2, 670,000 General Obligation By SPRINGSTED Incorporated
Downtown Streetscape Project
PROJECTED ASSESSMENT INCOME-
Downtown Streetscape
Filing Date: 10/ 1/1987
Filing Collect Interest
Year Year Principal @ 9.500% Total
_______ -----
1987 1988 28,571 23 ,789a 52,360
1988 1989 28,571 16,286 44,857
1989 1990 28,571 13,572 42,143
1990 1991 28,571 10,857 39,428
1991 1992 28,571 8, 143 36,714
1992 1993 28,571 5,429 34,000
1993 1994 28 , 574 2,715 31,289
TOTALS 200, 000 80,791 280,791
a) Includes interest from filing
date to 12/31/1988.
City of Shakopee, Minnesota Prepared July 8, 1987 EXHIBIT V
sl,800,000 General Obligation By SPRINGSTED Incorporated
Upper valley Storm Sewer Project
Dated: 12- 1-1987 SCHEDULE C
Mature: 2- 1
Total
Year of Year of Principal 105%
Levy Mat. Principal Rates Interest & Interest of Total
(1) (2) (3) (4) (5) (6) (7)
1987 1989 120,000 8.00% 168,000 288,000 302,400
1988 1990 120,000 8.00% 134,400 254,400 267,120
1989 1991 120,000 8.00% 124,800 244,800 257,040
1990 1992 120,000 8.00% 115,200 235,200 246,960
1991 1993 120,000 8.00% 105,600 225,600 236,880
1992 1994 120,000 8.00% 96,000 216,000 226,800
1993 1995 120,000 8.00% 86,400 206,400 216,720
1994 1996 120,000 8.00% 76,800 196,800 206,640 - -
1995 1997 120,000 8.00% 67,200 187,200 196,560
1996 1998 120,000 8.00% 57,600 177,600 186,480
1997 1999 120,000 8.00% 48,000 168,000 176,400
1998 2000 120,000 8.00% 38,400 158,400- 166,320
1999 2001 120,000 8.00% 28,800 148,800 156,240
2000 2002 120,000 8.00% 19,200 -139,200 146,160
2001 2003 . 120,000 8.00% 9,600 129,600 136,080
TOTALS: 1,800,000 1,176,000 2,976,000 3,124,800
Bond Years: 14,700.00 Annual Interest: 1,176,000
Avg. Maturity: 8.17 Plus Discount: 27,000
Avg. Annual Rate: 8.0007 Net Interest: 1,203,000
N.I.L. Rate: 8.184%
Interest rates are estimates; changes may cause significant
alterations of this schedule. -
The actual underwriter's discount bid may also vary.
EXHIBIT IV
0
m
Y
m
r 0 M W- o 0 0 0 0 0 0 0
m W O m r m Nn O
1 0 H 0 m W M n O O W. NM
r
O U
F " n M M N M . N
U
c w Inmin lnmutm m
r N O
> Q n 0 0 0 -
W
000
om
by -
Y
C7 ti .1Y '- 0000000 O enr c -
•O Z 0000000 O n e m ro
m M Y p• m `-' OeN Oee 1D O (O m.
a O•ti W
O
mHow m rIne e W
Om MM
. GL nnnMn -m 'r
•N G m InminNm r tr >+
am m a �
m
,W4n 0 0 0
m �n00000000 0 0 0 0 N m o
p m 0 m •• 7 m
p m -- OeNOee •O O N = Y U t0
W m
ow Noom a N o m
V Y rlmre .irn In Y00 >1 >i
m _ C rlH eiNH m row 0 to
N m m; E to
� •N Y
10 M' N M
om o a
m � 0 0 0 0 0 0 0 a w C
m e 0000000 cr1 m, m Y
Y �
0000000 a s Z. U � ;
ro
m m m Wm O m ..7 U _
c m O m
0
ro 0 0 0 0 0 0 0 0 m
YY u U "OM
n 0 000000 Ov
- dPM
mmMo
'O
m ate- 0000000 o Om Or mm
m N- - o 00 8 m m
m-I o O - - U 0IInm Om 0 - Oe M
c .-� wO e � m NSD m O inn Y m S'
G d a N L N
„� p 41
£ .y O m -- a N O m Y
w w 3
m 1+ Y m m ro 0 N
m m U m
0, c 7 I O Y N m m m m m m m .. m m m b
O m w row- mmmmmmm >.f# m c c
X [9 Y l.t £ .'I r1 ti r1 .i .i .'1 L •• Y O 7
ro m I i ro m w N m
.COC MN m y 7 b to o
w
m 0 O >' ro Y c a'
m m G m m w Y
7
W c m
00 m 01 0 > N MW Mmmm
o m -- mmmmmmm r]
>•m 10
0 n s4 14
Y -•.i Y L roF c > MH Y m
• EXHIBIT IV
m
Y
rs
a
r o Ln .i 0000000 0
mO. orsr ON '- L Nn O
mw Y -- mno * .yNn r
N o ti O
U F Nmn nNn .-1 N
n M W In IA Ict It1 In IA m Itl 01
O
> OI n 000
U 000
� F O L'1 1(1
h m Y
U r-it-IY .-
0000000 O e n r
ra
'O .Z rs rs m m 0000000 O m < A
m 0
N Y w O < N m C < m O m m U
0. -.+
rsw F U m m mmrinm < < ca
LJ.m L Y n n n n n n n ILI -.a
d M G 1[) II1 IA 1[1 1[1 1I1 1[1 r C
Fr q Cr n -M !a
q a m rs
w m
0000000 0 }J m 0
0 min 0000000 o m -• y m
C]
0 wo Y U rs
m mm '-iNOmOi < wow
m
U y a r < rirn In Y D m z >i
y C N N N N N m G U M rs
M I-i m m E E
M Y
G G m 6
N N m •N
m r A
m <
0000000 < m rs Y
Yom--
0000000 Gn, Z
- q mmmmm mm .i o
C 7 U
O m O m
rs•.'IY .- 0000000 o m m-
YY U 'rs m n 0000000 0 dP tlP j
D. rs m 0000000 0 o m 0 r Mo U
M Om OO (: m m
0. 0 0 U o min o o o < -M
G .-1 Sa c ry < mONmm- o Inn Y m H
N o m o m Si
m m m rs 0
woo
m o U N W m ON N n < In Y 0 m
" CZ m m 'Z
DOW .y .i 0 — mG
X U' Y liE NNMN •-tMN Y Y oO 7
rs m 11 rs ••-.� N m rsM
m O D
o U r Y = Q 0
m Y
000 •• m U Wq
O
0 rn w mmccmmrn rl
.
>,nO m c r. .. .y .a .y •m m n
m
-•iN v r, rs m o o >> >
-city of Shakopee, Minnesota Prepared July 8, 1987 EXHIBIT VI
$1,800,000- G.O. Upper Valley Storm Sewer By SPRINGSTED Incorporated
1988 Bond Issue
Dated: 6- 1-1988 SCHEDULE D
Mature: 2- 1
Total
Year of Year of Principal 105%
Levy Mat. Principal Rates Interest & Interest of Total
(1)- (2) (3) (4) (5) (6) (7)
1988 1990 120,000 8.00% 240,000 360,000 378,000
1989 1991 120,000 8.00% 134,400 254,400 267,120
1990 1992 120,000 8.00% 124,800 244,800 257,040
1991 1993 120,000 8.00% 115,200 235,200 246,960 -
1992 1994 120,000 8.00% 105,600 225,600 236,880
1993 1995 120,006 8.00% 96,000 216,000 226,800
1994 1996 120,000 8.00% 86,400 206,400 216,720
1995 1997 120,000 8.00% 76,800 196,800 206,640
1996 1998 120,000 8.00% 67,200 187,200 196,560
1997 1999 120,000 8.00% 57,600 177,600 186,480
1998 2000 120,000 8.00% 48,000 168,000 176,400
1999 2001 120,000 8.00% 38,400 158,400 166,320
2000 2002 120,000 8.00% 28,800 148,800 =- - 156,240
2001 2003 120,000 8.00% 19,200 139,200 146,160
2002 2004 120,000 8.00% 9,600 129,600 136,080
TOTALS: - 1,800,000 1,248,000 3,048,000 3,200,400
Bond Years: 15,600.00 Annual Interest: 1,248,000
Avg. Maturity: 8.67 Plus Discount: 27,000
Avg. Annual Rate: 8.000% Net Interest: 1,275,000
N.I.C. Rate: 8.173%
Interest rates are estimates; changes may cause significant
alterations of this schedule.
The actual underwriter's discount bid may also vary.
EXHIBIT VII '
Combined Storm
Levy/Collect-Pay - Sewer Debt Service
1987/1988 $ 302,400
1988/1989 645, 120
1989/1990 524, 160
1990/1991 504,000
1991/1992 483,840
1992/1993 463,680
1993/1994 443,520
1994/1995 423,360
1995/1996 403,200
1996/1997 383,040
1997/1998 362,880
1998/1999 342,720
1999/2000 322,560
2000/2001 302,400
2001/2002 282,240
2002/2003 136,080
$6,325,200
MEMO TO: Mayor and City Council
FROM: John R. Anderson, City Administrator
RE: Policy and Program Issues Involving Shakopee' s Use
of Tax Increment Financing
DATE: February 17, 1986
Introduc'ion-
several issues involving the use of tax increment financing
during 1985 led City Council to include a review of tax increment
financing policies in the city Council 's goals and objectives
for 1986. Part I of this memo will identify specific policy
questions, review the history of tax increment financing (TIF)
use in Shakopee, review the impact of TIF on taxes and services.
Part II of this memo will discuss specific program issues.
PART is BROAD POLICY ISSUES
A. Policy Questions:
Based upon the City Council's discussion at the 1986 goals and
objectives session and questions regarding overall policy that
were raised during 1985 the following policy questions have
been identified:
5 1. What amount of the City's total assessed valuation is captured
by increments today, and what total amount is deemed desirable
by the City?
2. What impact does the City's use of T- districts have on
local taxes (City, county and school district)?
b 3. What impact does the use of TIF districts have on the cost
of City and county services?
S. Just what does the "but for" test mean, and 'now has it
been applied to the City's TIF districts?
5. When, where and under what conditions (circumstances) will
the City consider doing a TIF project?
6. Will the City use eminent domain for -rivately initiated
TIF projects? If so, under what circumstances will the
City use eminent domain and with what effect?
E. History and Policv:
Sc=_te Law - This summary is from the January 186 Legistative
Auditor's Report on TIF:
The Minnesota Tax Increment Financing Act of 1979 must be used
to establish a tax increment district and its financing plan.
According-to the act, districts may be one of three types: (1 )
a redevelopment district, which is designed to induce development
on blighted land; (2 ) a housing district, which is intended
to encourage housing development for low and moderate income
individuals and families ; or ( 3 ) an economic development district,
designed to increase cries ' tax base and employment, as well
as to discourage Minnesota businesses from moving to other states.
Districts established _prior to August 1 1979 are a fourth type
of district. These districts are not subject to the most of
the 1979 law' s provisions.
The 1979 law placed additional restrictions on new tax increment
districts and modifications of existing districts. For example,
the Legislature established blight criteria for cities to use
when establishing redevelopment districts. Also, the Legislature
placed restrictions on "excess increments" or those tax increments
in excess of the amount required to finance project costs in
a district's financing plan.
one of the important components of the 1979 law was the distinction
between a "tax increment district" and its "project area".
In general, a tax increment district consists of those parcels
which generate tax increment revenue. The district's project
area consists of those parcels on which tax increments may be
spent. Prior to 1982, cities could not spend tax increments
outside of the district in which those increments were generated.
However, 1982 amendments loosened this restriction_ The changes
permitted cities to spend increments anywhere in the project
area, even outside the tax increment district.
The creation of a tax increment districtandthe expenditure
of tax increments are city axions. The county and school district
are given the opportunity to comment on T-F pians prior to imple-
mentation. However, it appears that the state finances more
T-7 costs than these other tarring jurisdictions. This occurs
indirectly, primarily -nrouan increases in sate education aids.
A forthcoming report by the Minnesota House Research Department
estimates teal sate costs for 1985 to be more than 522 million.
State Police *ssues - From the January ' 80' Legislative Auditor's -
Report on T_- .
Tax increment financing has been used productively by many cities
in Minnesota to induce commercial and retail development of
blighted areas and to help stimulate the construction of housing
for low and moderate income persons. . 2n addition, some cities
have used TIF to prcmcte the expansion c£ manufacturing businesses.
However, not all uses cr tax increment financing nave been successful
in reducing blight, stimulating needed housing construction,
or increasing emplcy^ ent in the state. It times, TIF has been
rsed in ways that are inconsistent with the basic intent behind
TIF. Among the major problems with tax increment financing
are:
-2-
• In some instances, cities have established tax increment
districts that intentionally caputure taxes from development
that is already occurring rather than induce new development.
This practice prevents other taxing jurisdictions Prom
collecting taxies they would otherwise receive.
• The "but for,, test, which many view as sufficient evidence
of the need for a tax increment district,
by cities in man different 's interpreted
Y Perent ways. The test does not ensure
that the public benefits of a project exceed the public
costs. '
• The statutory restrictions on the types of expenditures
that can be financed with tax increments do not prevent
a city from using tax increments to pay for general public
improvements that are normally financed by special assessments
or a city's own funds.
• Increasingly, cities are pooling tax increments among districts
or establishing large project areas in which tax increments
can be spent. These practices enable a city to spend excess
tax increments from an existing district rather than decer-
tifying the district. This weakens the statutory restrictions
on the use of excess increments that apply to districts
established after August 1 1979, Furthermore, pooling
and the creation of large project areas may encourage cities
with pre-1979 districts to use tax increments for new expen-
ditures rather than to retire the districts before August
1, 2009.
• Existing statutes
no not require that the tax increments
generated within a redevelopment district must be used
to correct the blighted conditions that per:::it the district
tobe established. As a result, some cities have estab=i-h=-d
redevelopment c_stri—s that have done little or ncting
to improve the b_ic:-aed conditions cited as reasons..- r
establishing the districts. Some cities: 1) have es-ab'• -Sed
a redevelopment distr_ct on the basis o
existing on certain - - blighted e:=.ted ccgene_ati
Parcels within the city, 2) are generating .
tax increments from other parcels where private development
is occurring anyway, and 3 ) are spending the increments
on projects unrelated to the blighted cond` ticns. e
Permitted use of T-"-
noncontiguous districts, the lack of an
effective "but for" clause, and the Pact that not all Parcels
in a district must be blighted permit tax increment financing
to be used in these ways.
• The existing blight criteria that a redevelopment district
must meet have been generously interpreted by some cities.
As a result, the cr-teria have not provided a good mechanism
Per the state to target public subsidies to those areas
most in need of redevelopment.
• Several cities have established housing districts to capture
tax increments from a housing project being undertaken
without assistance from tax increment financing and have
not used the increments to induce the construction of low/
moderate income housing. _
• Some comz Ll ance problems exist because there is 'little
state oversight of tai: increment financing and because
it is not clear who has the responsibility to ensure that
cities and counties comply with key provisions of the statutes
relating to tax increment financing.
In addition, there is the question of whether. tax increment
financing results in an excess Public investment in development
activities. To the extent that cities use tax increment financing
to induce retail and commercial development, TIF may only succeed
in shifting - where that development occurs within the state.
This is _ particularly true in the Twin Cities metropolian area.
A subsidized development that brings more jobs and tax base
to one city may ultimately result in fewer jobs and decreased
tax base elsewhere in the metropolitan area. Because the direct
effects of= tax increment financing (more jobs and tax base in
the city using TIF) are easier to see and measure than its indirect
effects (fewer jobs and decreased tar, base elsewhere in the
area) , TIF may appear to be creating jobs and increasing the
state's tax base when it is not.
There is. reason to be concerned about this problem. Cities
have used redevelopment districts primarily, though not exclusively,
to induce retail and commercial development.
• To the extent that _'F' s primary effect is simply to shift
the location of jobs and tax base, it is important to ask
whether TIF targets the redevelopment of those areas that
need it the most.
The last of adequate criteria defining blight and the lack of
a requirement that tax increments generated within redevelopment
districts be used to address blighted conditions are impediments
to a reasonable targeting of the use of tax increment financing.
It is also worth :c-eer_ng whether '_coal incentives are an
impediment to effective targeting. For example, small suburbs
may have a greater ability than large central cities to shift
the costs Of P,v,=__ redevelopment activ-zv to taxpayers outside
the municipality. This may be inconsistent with the goal of
encouraging T__ usein those areas most in need of redevelopment.
• The purpose of economic development districts can also
be called into question.
According to law, a municip_lity can create an economic development
district consisting of any parcel ar parcels of property as
long as the district meets one of three criteria: 1) t will
discourage commerce, industry or manufacturing from moving to
another state, or 2) it will increase employment in the municipality,
or 3) it will preserve or enhance the municipality's tax base.
The majority of the economic development districts we exam ned
Probably could not have qualified under the first criterion.
Most of the districts involved retail, commercial, and other
development that would qualify under the second and third criteria.
The effect of using tax increment financing for these latter
"types of development may only be to determine where development
occurs, not to cause any significant increase in nobs
Cr tax
base within the state. As a result, the use of economic deve_lc7
districts involving retail and commercial development that does`
not create jobs for the state and does not take place in blighted
areas can be questioned. While there clearly is a role for
TIF in attracting new businesses to Minnesota and keeping existing
businesses in the state, it is worth asking whether the state
should encourage (and financially support) districts that do
not result in statewide benefits. (See table I titled "League/NAHRO
TIF Survey Findings. )
Local History of TIF - As of 1984, all of Shakopee ' s tax increment
mstricts are in a single project area. This area encompasses
about one-third of the city, including downtown Shakopee. The
summary that follows is from the January ' 86 legislative Auditor' s
Report on Tax Increment Financing.
• K-Mart Distribution Center TID (pre-1979, 1979) , This
29-acre site houses K-Mart's regional distribution center,
which serves nine states. Prior to creation of the TID,
the site was primarily vacant industrial land with soil
problems. The city issued a 53.5 million bond to finance
a land write-down, site development (grading, drainage
improvements) , widen County Road 83, and 'build a water
well. Shakopee refinanced its bonds in 1984 and issued
an additional 52.4 million in bonds to make Off-site roadway
improvements near the racetrack site (a portion of which
is in this TID) and the distribution center. The district
is generating surplus tax increments, which Shakopee hopes
to use for storm sewers and downtown improvements.
• Senior High-rise TID (redevelopment, 1979 ) . The city issued
a 6365,000 tax increment bond to Subsidize 66 units of
Section . 8 housing for seniors on land ---t previously had
one home and two vacant parcels. The t --,ary uses of TIF
in the district were land write-down and _provision of water
service through a limestone bed.
• Downtown TID (redevelopment, 1982) . The district contains
four properties, each containing - u- ness that planned
expansion prior. to creation of the d s-ric-. The four
businesses (bank, grocery, realty f _
all expanded with - zbscract have
bee
witho= T_F assistance. No ^ds ;ave been
issued. Touate tax increments have funded aplanning
consultant and construction of a parking - - nexto `.n
abstract company's building. Shakopee also planned to
use TIF to fund interest write-downs on commercial rehabili-
tation loans downtown., but no write-downs have been done
to date.
• Racetrack T_D (economic development, 1984) . Shakopee issued
S4.2 million in tax increment bonds to assist development
of the Canterbury Downs horse-racing track. The primary
uses of TIF were land write-down and grading. Previously,
this site was vacant industrial land. The city thinks
tax increments may be hiaher than a=ected, in which case
the excess will probably be used for storm sewers and downtown
improvements. -
• Family Chow Mein TID (redevelopment, 1984) . This one-parcel
site was a gas station before being placed in a TID. Developers
converted :the station into a Chinese restaurant without
TIF assistance. Shakopee hoped to use tax increments for
downtown improvements, but the restaurant is currently
aenerating- fewer taxes than the gas station did.
C. Tax Increment Financing (TIF) District Impact on Taxes and
Services:
This section of the memo focuses on the total amount of tax
increment captured to-date, its impact on the City and county
mill rates .and its impact on the five homes we have been following
as a part of our annual budget process. In reading the following
tables the reader must decide how be/she will interpret the
"but for" test on each of the City' s existing tax increment
projects. If you agree the project would not have occurred
in Shakopee .."but f _ the TIF assistance, then a stable City
mill rate would indicate the projects have not detrimentally
affected other property taxpayers in the City or County. If,
after you answer the "but for" question, you believe that the
projects would have occurred in Shakopee without _TIF, the inter-
pretation of the graphs should be that the City and county mill
rates should have dropped substantially since 1981-82 when the
.first tax increment district came on line. Please review Tables
III, IV and V.
The City and county have no specific accounting of the service
impacts of the five Shakopee tax increment districts. Subjectively
we know that there as been little inpact on City services from
a_l of the districts except the Racetrack. Table No. VI is
an attempt to take w:-:at little we know regarding service impacts
and clearly outline them.
PART -I: SPECIFIC PROGRAM ISSUES
IntrodUZtio.
The City has generally received benefits in the form of street
and/or utility ir.,provements from its TIF projects that '-all
outside of the specific benefits accrued to the private devel-
oper(s) . These benefits have enabled the City to keep one of
the lowest monthly water rates in the metropolitan area, Hake
county roadway improvements much sooner than improvements have
been scheduled in the county's CIP, and develop the financial
resources to do detailed planning for downtown redevelopment.
As noted in Part I under Policy Issues Identified by the Legislative
Auditor these and similar uses of TIF may be eliminated or curtailed
Sy legislation passed in the 186 legislative session.- while
the legislation will not affect the past projects the City benefitted
from, it may of-feet projects that the City has programmed for
the future.
F Proceeds Committed to Future Programs:
The City has made tentatively commitments to use excess TIF
from R-Mart and the Racetrack on its master storm sewer construction
program, the detailed design for the Trunk Highway 101 By-pass,
design and construction o£ the Trunk Highway 169 and 101 Junction
improvement and streetscaping improvements as part of the downtown
redevelopment plan. The available increments and project options
were discussed in my memorandum of May 15, 1985 which is attached.
The financial analysis supporting my memorandum was provided
by Bob Pulscher of Springsted, Inc. in a letter dated July 12,
1985 which is also attached.
Revised Analysis of Increment Available Through Existing Tir
D_strlczs.
City staff met with staff from Springsted, Inc. and O'Connor
Hannan on February 13 , 1986 to Pull together information that
would allow us to accurately update revenue forecasts from our
existing TIF districts. The revised revenue estimates from
Springsted, Inc. will be available at Council's March 11th meeting.
Imnlications of Pendino State and Federal Legislation:
The
e islation:The tax reform package passed by the U.S. House of Representatives
prior to the end of '_9E5, wh= ie ye- to receive zpproval from,
the Senate and President, has had the effect of law because
Of its implementation date of January 1, 1986. This law has
placed private purpose industrial development bonds, bonds sold
For nor.-essential municipal services, under a new cap that includes
bonds sold by SO1C-3 _rstituticns (private non-profit colleges,
etc. ) and nor.-essential TIF bonds under one state-wide per capita
lir,.itatioa. This means that non-essential IDBS (these are
the type we have always used) , non-essential 501C-3 bonds and
non-essential TIF bonds will all be competing for the same 11-iced
pot of money controlled by t_e State under an allocationsystem
.new syse .
In addition, new processing^ requirements require that 58 of
the bond issue be expended within 30 days of the bond sale and
that the project be completed within 3 years. These and numerous
other regulations imposed by the bill that passed the House
of Representatives will require significantly more work by cur
Finance Department when and if we are able to sell any non-essential
bonds.
The sale of essential purpose bonds for tradition municipal
Projects that have less than a 10% benefit 'lowing to a private
developer are not subject to the state-wide per capita pot lim`t-
ation. . They must however, meet the other regulations including
the requirement to expend 5% of the proceeds within 30 days
and all of the bond proceeds within 3 years.
Proposed State legislation resulting from the 1986 legislative
auditor' s report sited in Part 1 of this memorandum could have
an affect that Interestingly contradicts the direction taken
by the Federal legislation. The Legislative Auditor has called
into question the use of TTF bond proceeds (captured increment)
for projects that fall into the essential municipal services
category and which lay outside the TIF district but within the
described .redevelopment plan area. Thus while the Feds are
clamping .down on non-essential - private purpose uses of IDBS
and TIFs, -the State is clamping down on essential uses of TIF.
The affect of -the two legislative proposals together could mean
the elimination of 758 of the financing tools Shakopee and other
cities . have -:used to remove blight, initiate low and moderate
income housing projects and create jobs and tax base through
industrial development.
Ontions for Procram Implementation for Committed Proarams:
The City has two options available if it chooses to finance
the three programs for which commitments have been made.
1. Sell taxable bonds. This option has been discussed by
Miller : and Schroeder but has not yet been implemented in
the state of Minnesota. Miller and Schroeder are investigating
this option for a number of cities. They are looking at
this option in conjunction with the application for TIF
from wally Bakken. The latest word from Miller and Schroeder
is that state legislation maybe required for this to be
a viable ontior.. In addition, use of taxable bonds will
increase project costs, thereby extending the term of the
bonds .and the loss of general taxes to the City.
2. Sell non-taxable essential purpose TIF/GO bonds prior to
August li 1986. This option assumes that the federal government
will not .change the implementation date on the House of
Representatives proposed tax reform bill, and that the
Minnesota State Legislature will make significant amendments
to the present tax increment fina=ing laws effective August
'_ 1986. -if this option is pursued the City will need
to work closely with Springsted, Inc. and O'Conner Hannan
to specifically delineate the programs, analyze their financial
viability and pass the necessary resolutions to implement
the projects prior to August 1, 1986.
In selecting .one of the options listed above Council will want
to review the six policy questions outlined in Part I of this
memo. I propose a thorough discussion of the six policy questions
and possible implementation of committed projects through use
of 1) taxable bonds or 2) non-taxable essential purpose SIF/GO -
bonds prior to August 1st. The purpose of the discussion would
be to 1) assist staff in drafting addition background/position
_s_
mantus regarding the City's position on use of TIF for new projects
in the future so that staff understands the parameters for an
"acceptable" project when discussing tax increment with future
developers and 2) insure financing for implementing committed
future tax-increment improvements.
Proposed Guidelines for Po'-icv Oues`ion Discussion:
The following guidelines are listed to assist and guide Council's
discussion of the key policy questions listed in Part I cf this
memo.
1. What amount of the City's total assessed valuation is captured
by increments today and what total amount is deemed desirable
by the City? For 1965-86 8.31% of the City' s total assessed
value (see Table III) is captured for tax increment purposes.
When the Racetrack comes on line we expect the percentage
of captured increment to increase. At the present time
I have found no accepted standard for total captured assessed
valuation used by other cities. Council could establish
a value such as 108 as a guideline. This would force more
selectively in use of tax increment financing, but Council
might find itself amending the guideline much as it amended
the guideline for the total value of Industrial Development
Bonds (IDBS) that could be outstanding at any one time.
The other approach to limiting TIF usage is specifically
stating what types of projects will be eligible. This
will be discussed under policy question No. 5 below.
2. What impact does the City's use of TIF districts have on
local taxes (City, county and school district) ? Table
III clearly demonstrates the impact TIF districts have
on City and county taxes. It is clear that -TIF districts
have not increased the City's or countv' s mill rates.
On the other hand, if one does not subscribe to the "but
for" test and believes the additional tax base would have
been added any way, then the City and county mill rates
would have been lower .than they currently are. School
district tax rates are not affected by T'F districts; however, .
the State's per pupil aid formula picks uD the difference.
This currently amounts to 517-20 million state-wide.
Here again, one must decide how you answer the "blit for"
question.
Not shown on Table VI are spin c_` benefits from the TIF
districts the City has create=. _hose statistics are i pressive
in terms of the number of jobs created through the K-Mart
and Canterbury Downs projects. They are also impressive
in terms of the tax base those two projects will add to
the City, county and school district when. the TIF districts
are terminated. The highrise project created 66 new section
8 subsidized rental units for elderly in Shakopee. The
project has been a success under almost any measurement
one would choose to use. Additionally, the project has
provided spin off benefit to downtown merchants who do
business with the elderly who live in the project.
_o_
We are just now beginning to see the spin off development
benefit's from the Racetrack. The Shakopee House remodeled,
the Rock Spring expanded, Superamerica is expanding, Super
B is building a new motel, Suite Quarters Inc. has received
approval for a new motel, Scottland has broken ground on
new ccnmerclal development and a new ist class hotel, a
new veterinary clinic has been built, and numerous projezts
are waiting to commence development this spring. None
of these projects have utilized tax increment subsidies
and only one has utilized Industrial Development Bonds.
If proper use of tax increment by a City dictates that
the City-, use tax increment sparingly as a "lost leader"
to trigger - additional development, then Shakopee ' s use
of TIF for the Racetrack has certainly accomplished that
goal. It is possible that public subsidies such as tax
increment and industrial development bonds can be used
so widely that they lose their effectiveness as a tool
for cities to target development or redevelopment. City
Council, under its discussion of policy question No. 5
below, has the opportunity to target the use of tax increment
financing in Shakopee in the future.
3. What impact does the use of TIF districts have on the cost
of City and county services? Table VI can be used to guide
Council's discussion on this item. It is my conclusion
that the . impact has been minimal and in the case of most
TIF districts service benefits received such as lower water
rates have out weighted service costs.
S. Just what does the "but for" test mean, and how has it
been applied to the City' s TIF districts? Council can
best answer this question for itself by reviewing each
Project and asking, would the proiect exist in Shakopee
without the provided subsidy? This is a policy area that
Council can address by requiring more "Proof" that a financial
deal is not possible without the T-F subsidy. Some cities
reacire letters from two or more banks stating that they
Will net conventionally finance the trcjec` unless a subsidy
is involved to lower cost and better insure profitability
of the -venture. Cities requiring written "proof" find
that it is easv for a developer to oat such letters from
banking institutions.
5. When, where and under what conditions (circumstances) will
the City consider a TIF project? The best example of a
clear answer to this question is on Table II entitled loc=al
Policies guiding use of TIF. The guidelines for low and
moderate income housing project were drafted most recently
and were drafted to target specific types of projects.
Council should review these guidelines and if they are
adequate consider the possibility of making the guidelines
for redevelopment projects and economic development projects
equally specific. The guidelines for low and moderate
income housing projects enable staff members to tell the
developers of multi-family projects that they will not
be considered unless they meet redevelopment project guide-
lines. We can also tell developers that there are seven
very specific program characteristics that must.. be met
before Council will consider a low and moderate income
housing project, Tightening up l listed
Table II, I feel, wi, , g the cu.de_-nes steel cn
'_inviting the use of be a much more effective way o`
F than trying to
added criteria under policy que __mit its use through
stion 1 or 4 above.
6• Will the City use eminent domain fortely _ +
TIF projects? If so, under what circumstances will athe
City use eminent domain and with what effect? This question,
as stated, assumes that City Council would be willing to
use eminent domain for a project or project elements that
benefit the City not the specific developer. Examples
of this include construction of roadways, utilities and
storm sewer projects. Councilmembers who are not comfortable
with this assumption should plan to discuss it at the Council
meeting.
The City has used or threatened to use eminent domain for
the Senior Highrise, the Housing Alliance project, the
County/Hospital parking lot, and roadwav extensions for
Plats such as Hauer's 3rd Addition, Prairie House 1st Addition
and the 4th and Minnesota Pzoject. Not a_lof these examples
are TIF projects or projects benefiting Private developers.
Council needs to discuss the pros and cons of completely
eliminating the possibility of the use of eminent domain
in negotiating acquisitions for private development purposes.
Summary
This memorandum is exceeding long and includes many molicv issues.
The Council should plan to discuss the issues involved
with the goal of arriving at conclusions on xev issues no og-"-=v
than its March 25th meeting. later
JKA/jms
TASI.E I
LEAGUE/NAHRO TIP=VET FINDINGS
'iit2 League/NAHRO TIF survey was sent out to 180 local governments that were
identified as using TIF. To date, 108 local governments have returned their
completed surveys for 265 TIF districts. The following graphs depict some of the
data developed through the survey.
CITIES USING TIF 1981-1985
LL
189 --
c�
= 149 -- - -
N
120 —
N 1
U 60
40
• 20 —
0 1991 1992 1983 1984 1985
STATEWIDE DATABASE
CITIES USING TIF
METROPOLrrAN/NON-METROPOLITAN USE OF TIF
Of the 265 TIF dist^e*= i^ the survey data base, 1.1 or 57% are outside vi U,e
metropolitan area while 114 or 43% are in the metr000litan area. 'the graph
demonstrates which of these districts were established before the 1979 TIF law and
which were established after the law.
290
C 188
W
120 --_--.---...—__._ ...._......
__..__
100
SO —...._..__.. .......... '
FRE 15T'.+ DIST. KIST 1919 01ST.
TOTAL OF 20 ➢ISTRIC7S
M iTATE MID-c [} METRO ONLY
IM NON-METRO ONLY
Copyright, Holmes h Graven, Chartered 1986. ' The Public Issues Update is a
periodic service provided to clients and friends of Holmes k Craven. It is intended
to highlight important legal and policy developments. The Public Issues Update is
not comprehensive and should not be relied on as substitute for the services that
are tailored to the particular needs of our clients.
• Cities are using pooling techniques to prolong the lives of districts otherwise
eligible for decertification.
• Existing statutes do not require that increments generated by a
redevelopment district be spent for blight correction within the district.
• General compliance problems have resulted from the absence of-uniform
state oversight over tax increment financing.
The report also recommends that the Legislature consider amending the TIF law.
Suggested amendments include:
• eliminating the 90 day window period;
• increasing the percentage of parcels needed to meet the blight definition;
• generally strengthening the "but for" test;
• requiring that tax increments generated by redevelopment districts be used
exclusively to induce redevelopment of blighted parcels;
• restricting the use of increments for various types of general public
improvements normally financed by other sources, such as special -
assessments;
• clarifying the permitted uses of pooling techniques.
The report was presented to the House Fiscal Disparities and Tax Increment
Subcommittee on Friday, January 31, 1986. Subcommittee members supported -
many of the Auditor's recommendations The report was also reviewed at a briefing
hearing for legislative staff on Wednesday, February 5, 1986.
LOCAL GOVERNMENT RECREATIONAL LIABILITY LEGISLATION
Ser Luther and Rep. Halbe s are authoring legislation that will grant limited tort
immunity to local governments for providing park and recreation services (S.F.
1727, H.F. xxxx). The legislation is one of several bills being considered to confront
the local government "insurance crisis." Althou¢h municiDelities provide
recreational activities which involve a risk o; Univ>- —sumec by individuals -
voiunteriic, current few provides tnat local zove-nme- z,g hence taxpave s Dai
the c= of assumma .nose nsxs. The legislation ?r000sed Dv Sen. Luther and Rep.
Halberg would remecy tnis problem be provitliie b^i rovernments the sate
limited immunity now available to state zovercmen, and certain.. private
landowners. Specifically, the )egisiation woulc:
• Provide limited immunity for claims based on the construction, operation, or
maintenance of Darks and recreation areas and for the provisions of
recreational services. -
• Provide limited immunity for claims based on the clearing of land, removal
of refuse, or the creation of trails without artificial surfaces.
• Hold municipalities liable for certain conduct — for example, creating
dangerous artificial conditions without warnings.
d E
E.0 C J O T d a ^J O C
U L 4 N a N S U d
C O U a : a i N > 3
J
p a N u o c ' U 2 d -
L N M C 9 1 O r
d C] y ro U dun T taU aCi fi w .� N C p � � C U — N U j �
U C a
-_ mO
O C
r v U
C C fL m
O � y
m r
U u U y m m ' L fL > u m O J ^
d U d 6 u W r p N a V
'O O L 9 N 2 ' T m •'� 'J U N .� a 'i m (a
m
a >
Y c yO
E
C a
C O
U r a
T
U
O O
aai u u E
p V
L d Ly
U G
Y
L
a
m L
S .. u
m m m
J S
L P E u
U - CNO CTJ
N
% e
v c
d X
� 0 0
c q
C] !J
d >'
> c
p d m
P
• N N m N .r w
_ O C
a 0
C O G a 9 > G
C E y j
O m Y
% W W T N 6w V n m LL > >
L
L OU G O O L a
C Y > O G U C 0 Y m N
F - d O O G <] T O z Y t V » O d ~ U Y N N O d y O C
5 U 3z V S � z wZ q L 3 Go u V Sar- YOU Zo: Z q G o
0
^• N 1'1 V .� N � N 1'1 V V1 �O .� N Ot ..n M
C J N N
J U fVj
U V [c
T C 6
L
� a
w °
0
r.c`
a
L N
U p
w E
° a tl
3 u E E
O C W W
N y
N
U
V C
C L
C
C u
V C
w a
w
E
'• O
F .-
a
C ° m
E E
W W
N N
d _
C U J q
>
N W O J W u
d W K Y
0 `• E >
^ - y d a a
d u o.~i o
> U -� ^
0 o
d Ll C VlJ u 3
O
EJ > c ° a E a ° m = •� �+ i m o
L U C (O = > F E C L O C U U N
2 W L
.� N (•1 � N nl V V1 �a N p) P•
N 7
S d W W
U J u
C S
U 0
J Gh
F 6 L
a .,
TABLE III
otuaeF 19, 1986
-Y oS SNiepa.
.....6 Va1aa w- Caw:] :- xaa cnac
FIS.-,A-., F:SCI,: II:Cfi -n ;,t% C_FY
Ai A55]SS£D _35PAAIC:]5 visp :-les A:VJI:I 3BC.L'Yc?P WA---£ 3ACA31E Y,:_
VJ.CUE :(LOSS) . .! V:.]U£ (_(135) S at VI UE V:1C_ 0'_ VAUE ^MTS
-
:06 .S107.300,152 (S11.615.265) -1C.BB; (SB,93x,900) -6.312 $86,]09,98] 80.815 17.426
185 91,336.579 19.80].378) -]0.]41 (7,559,129) •-8.282 73,910,072 80.993 16.190
/B4 96,443,&&& (6.82],2]9) -7,082 (],67],125) -7.961 81,939,010 84.963 17.465
185 89,424,033 (12.650,525) -14.13: (7,706,378) -8.62% 69,06],130 77.243 18.]]0
/82 87,284,602 I (11.100.359) -12.72%
(2.239.051) -2.55Z 73.955,109 64.73Z ]9.1 i5
/81 76,816,133 I (8,364.698) -10.89. I 0 0.003 66.451,155 89.132 I 15.631
!80 59,618.897 (1,935,961) -13.332 0 0.002 I 5:.602.926 86.69% 18.323
/79 53.577,360 (7.242.957) -13.52. 0 0.002 46,334,403 86.483 I 17.076
170 18,409.27: I (6.729,4[]) -13.901
0 0.00- 4:,679,864 86.303 I 20.170
7]] 45.980.&98 I (5,992,118) -13.035
0 O.00S 39,988.370 86.972 I 20.180
a_: CCUYtJ
saue6 V.I.. Pep Co�yp) Iu Rate Cvazi-
R TAX
FISC.ti. 3':SA IBCalElp.1' IA)( C.,
Aa. ASSESSED DISPARIIL'S Dzsp t_LS Mb= INL'R.Ye1:I 2AXAELE TAXABLL 1011..
VALO_*' (]A33) i o= Y/va (LOSS) i e: VALUE VI M 10! I= R =-
__________I_______________
/B6 d332.096.348 � 52,89[.125 0.871 I (514,610,662)
-
1.362 I 3311.1E3,613 96.52I 95.833
.185 301,961,108 I 3,]65,86] 1.SS I (31.280,096) -3.71 294,466.899 '7.311 I 31.865
"/84 293,671,922 I 2.89x.450 0.09- (1S.2:],992) -3.622 285,318,380 97.172 I 33.004
-183 274,116.177 I (6,507,003) -2.372 I (9,972.901) -3.645 257,666,568 93.995 36.736
102 261.819,019 I (6.545,209) -3.263 I (8,525,291) -3.26% 211,747,516 93.48Z I 39.046
761 237,134,496 (5,x53.538) -2.3C-
IBC 1]9.474,9]3 (6 ) (2.15Z.132) -1.W1 I 225149.536 96.673 I 36.253
,&24,&64 -3.581 I 0 0.00- I 1]3,05:,3 I 96.42- <2.96i
:]9 163180.902 I (6,304,223) -3.86- I 0 0.00- I 156,976.680 96.][S 41.089
:78 149.052.289 I (E.270,459) -1.21.
0 0.003 I 141,783,830 93.792 40.270
"71 111.990.570 (5,4'2,374) -3.8--Z 0 O.CCS 136.96,196 9e.39i I 35.470
TABLE jV
Dollars
(Thousands)
5
o - n
V
btl
�
R c Y
.c. G I y\
X
� I
6n '
TABLE V
DoIlare
o _
:i
J I ty)
o
7
G�
1 I 1
c O J 1 I
J j _
C iC i
r
i
TABLE VI
TIF DISTRICT IMPACT ON CITY AND COUNTY SERVICES
DISTRICT CC=1 COUN^Y
1) K-Mart water rates kept Decrease in
low thru construc- direct cost
tion of a well, of county
water tower and roadway
water mains improvements
for CR 83
2) Senior High Rise Administration of Added second
Congregate dining senior citizen
space & related - club (staffed
issues exp.parking by County)
Increase No.
of Human
Services clients
3) Downtown Redevelopment Significant None
increase in
planning time for
over all downtown
projects
Improved parking
lot downtown
4) Racetrack- - Increase Police Increased
Activities. In- -ail usage
creased staff time Ave. 1. 3
on related plan- peoples
__ per
ning & zoning bay
questions. City
receives 10 cert
ticket to cover
these & other
service costs
3) Family Chow Mein None *See 3 None
above
/ sem+
2':E"O TO: Mavor and Council
91�OP:: John K. Rade=scn, C: stra _
_. F'av IS, 19c5
The City of Sha-rcpee nas received a s' ^-' = zmD•_rt ^r --
`or r`m"ci-a! projec=s `from the n-p:a=t "_____ - __ ___
Proceeds __ -==je--. _ =__e are sett_
=Dm =he is-Mart __= =-eject t -t .ave ^^t-^beet ea—ar ed
for spec_=.c proiects. In adc'-ic , -+-_-_ -- - _ _
=°m =h` -- - -- runs est_,z=ing
=he proceeds d __ _CDe _ ___&te _ - '
_zcet=act: -, - �ricant
c. moneyavailable = needed -- - for _
=ax increment dist=.c=. "_'ne _ - --=)e^s encs
_: _ r0ceecs�-om t _ racetrack 7'_- w__'
__able `_0= an eic yea= tried beyi -nc - `
City should decide _p0n =he - _ -.. ''_9a7 w on mezr_s =hem
Undertake 1 n -^- ede_ . _ - _..)e==s _= Kishes =C
_n 98'0 _ the verv�_a=est.
P.._:.17__ti ?RC:Z=S
=ne C Tv Dapa=anent head their Inst - staff mee=ia„ '
_.s=ed dol= major pr°jeers that needed zddi-icaaly =
'nose pre e=ts were - - revenue s_ppe=t'
7- 25 rDIIDB+s:
rRC :C^_•S _
D: w'c-Dwn St=eetscape C] ,ODC' Doo
2.
1c9/I01 Jn^ot_on and lCl Bc_=ss
S_'0DC'D00
The Cit" _..r_' c` - s- - -- -
__ `__----- ---"---_-- =-ss ='e =D'_ =-ejects ---__-_ E-Dve -
es�=? s_ s^ _ - - --- _ =-escar_ �_ me_=in^ w' = --- - ---- c= _.__
_�_ _�_ve ___t ejcr r,. _ _ e a r ^=five
assistance •^_-Dm^=ar. _ -c _ _ _ __
z ^_-event = _ ov9_ - — -- -- e---_ois*_
s0n_es to c= - - --=e"- =a7:=_.._=em =_
=J 0)ec=s�____n3 -ne nes- s=ever__ _ ___.
S__ - _ _ _ e•a=c.i:e s _. uses =f =az cr_ e .
_ __ _ ±=uze meet
COtn=__ r::ar_ tar. _ _
solvin3 all _mien p_c)e = —.y �= =e. r_
_. _eve a=
< __
_isCal- =msL--ant - __ _ _
_ try•-ae-. __ _n5_=e w_ _,� ___ _____e_S
KLse_ a. dD ___ _ _ _____ +m
Pace
^_scess a -_-a- ..ase 7-- _ = sets =--
t.._ r= is at arciects ___ --ccee_s can __ nsea
F._ the very m'nimnm:, =y o__ - 1 needs to resodnd to rl_ernrive
No. 1 wit:-in the ne7- few months so taa_ we can eccecivel �
y have n -
-
=sozl _e_sc'__a.t sone,� a the ese ` tax narement�-•rodeecs. At the
--ese-: time all. CiSd'1SEidnS nave - L•Sezusing. usingSt==,,St= sewer
s .cnc_u3es the --=oer ca.iey) as .o=as�__n=r_xt_ons^a
i:_^_:ON `.:i.__
I. :stz=_ish z deri�itive list c ^rojeo=s to me nrogrz.:me3 =,.r
fj- -c wit?. =as: _..orement =encs, .n=_n_a� z m.`n_rmi 59.200,000
-_r�t_he storm sewer =mnstrL=tion 52 ,000,000 for _.,_z_
...,n='-h_ ons to _;Sway =ro0ec=s.
_. 7lredt stEff___ and -s_cl v ns_-_ants t�J 7ro'v__e C__.__l with
-_ter.-.6=_ves _orhese - roDe_ts in J'-une.
�S
AI,,SPTNGS7ED !%
INCORPORATD
V /PUBLIC FINANCE
/JADVISORS
12 July 1995 -
Mr. John Anderson
City Administrator
City of Shokopee I
City Holl
129 East Ist Avenue
shokopee, Minnesota 55379
Dear Mr. Anderson:
You have asked us to examine your current and proposed debt service
requirements which are to be paid wholly or partially by tax increment, for the
purpose of developing a projection of future capocity which might be paid
from current inlremertt re`vehws. Because of the uncertainty of the schedule
--. future expenditures for storm sewer purposes to be paid partially by tax
increments, and because of the uncertainty as to the schedule of jnrnrre from
storm sewer user charges, the development of a total new debt capacity is a
difficult ore. We have attached four schedules which indicate the scope
of the
analysis performed for the purpose you requested.
Exhibit I attached represents a projection of the tax increment which may be
available to pay future debt service, after allowing for full payment of current
tax increment general oblioation and revenue bonds, and for partial Payment of
the general obligation b
$7125onds which will be required to fund the proposed
8,000 storm sewer improvement program.
We hove shown in column I of Exhibit I the total debt se.vice which must be
Paid solely from tax Increment income. This includes ;n-_ 53,100,000 K-Mart
Revenue Refunding Bonds of 1984, the $:,200,000 of Tax Increment Revenue
Bonds for Canterbury Downs and the City's 52,49,000 General Oblioatjon Tax
Increment Bonds of 19&: which financed the City's off-site track improvements.
Column 2 represents the total projected tax increment revenues from current
development each year from 1980 throuch 200.. The total revenues include a
rnt
theproected bah n e between 1987nsiont 0 tax and 1 1994T comingTfro", the Canterbury Dowwith
nz
property. Column 3 represents the annual projected surplus of tax increments
each year after full payment of debt service.
Columns 4, 5 and 6 represent the impact of the proposed $7.238.000 storm
sewer improvement program. Column w shows the annual Protected debt
service from 1986 through 2002, while column 5 --oresen+s ;ne total ec-'ed anticipated
revenues from special benefit and City-wide user `ees from curate;
development. Column 6 represents the annual projected deficit between
Payment of debt service for the storm sewer obligations and that revenue
stream. Column 7 represents the residual tax increment which is ovajlable for
the payment of additional obljoa;j"r
800 Osborn Building, Saint Paul, Minnesota 55102 (612) 222-4241
250 North Sunnysioae -..oad, Brookfield, ms_onsin_'3005 1414'1 7UbZ222
City of Shokopee, Minnesoto
12 july 1985
Page 2
Exhibit II cttoehed is a summary of the combined revenue and General
obiigation debt service which hos been included in column I of Exhibit I.
Exhibit III attached represents the summory of proiected storm sewer user fees
as provided by Mr. Spurrier. This income stream represents only the user fees
from current properties which total 4,814 current units. The financing program
prepared by Mr. Spurrier had a projected total number of units upon full
development within the storm sewer drainage area of 7,409 units. It "s
ont cipated thalupon full development, the additional future_uniilwould_paY on,
estimoted 5384.000 annually if all Development came on line at the some.IiLie.
Wehove'accume �n`come frorn those oddit ional developed units, and��
accorajngiany.such income would mcrease the debt capficity Seyona the ieve
Exhibit IVrepresentsthe projected level of additional debt which could be
incurred using the available tax increment as shown in Exhibit 1 from 1986
through 1994. We believe the Cit could issue an additional $3.500.000 of bonds
within this periw. ou will note in the cumulative surplus column ❑ total
projected paiance of $1,561,883 which would be ovoilable after the final debt
service payment on the proposed additional debt. That amount of moray is
required to pay the potential projected deficit in 1995 through 1997 resulting
from the insufficiency of storm sewer revenues to pay storm sewer debt
service, which deficit is also shown in Exhibit 1, column 7.
You will also note upon examination o` Exhibit I that additional annual surpluses
e - uld qe avoiiaoli-i he>=�fy between F99Q anc 2004,—w ictf n would
suQ_part addifionaL,deqW'e chase no; toat�te�np
w :_a_proje;lio�p.1 friat
additional Debt ccpa^''- ! e_ w
ry sint iI pe _nin iarge_ pert_on_whct_ever
odd.fioncl user cnaroes '.h_C11Lmia1•`D`pbje_Tp aerw_rate from ❑eW r� 1
dev_icomen? within thestd_-i sewer improvement area HDweve:, you mould
be aware that any additionaloebfincurret p�tween 1985 and 1994 beyond the �:�ti. �' �� •n.
level forecast for the storm sewer improvements and the additional 35: million
dollars, would require additional inierest payments which would hove to be paid t.,��• '�'
from the same ovaiicbie icx ir_rement income shown in column 7 of Exhibit I.
That would reduce the total principal which could be paid on new debt, and `r'(v,.rt•
might accelerate both the timing and size of the cumuiotive deficit which could
occur.
The projection of additional bonding capacity is subject to a number of
assumptions including but not limited to the following:
1. That the current tax increment from the K-Mort and Canterbury _
Downs project will not fall below the forecast ieveis made at the
time bonds were issued lost year.
? The storm sewer improvement bonds will be structured over a IS-
year even principal payment term„ at rates available under current
market conditions.
5. That the tax increment currently available can be combined and
utilized for both the storm sewer debt service payments and
City of Shakopee, Minnesota
12 July 1985
Page 3
additional debt which might be incurred for furtherance of the
downtown reaevelopment program.
k. The total level of bonds required for the storm sewer improvement
will not exceed the cost levels assumed by Mr. Spurrier in his initial
planning. -
S. That storm sewer revenues projected by Mr. Spurrier will be equal in
value, and available upon the some schedule, as assumed herein.
6. That no new tax increment revenues beyond current projected levels
will be available. Any additional increment from the downtown
project or from other portions of The tax increment financing
districts would increase the debt capacity.
Because of some recent chances in Minneoto low affecting the financing of
public improvements, the City may have some unique opportunities available to
it in financing the storm sewer projects. We would like to discuss those
possibilities with you at an early date.
If you have any questions concerning this analysis please feel free to contact us
of your convenience.
�3especttully submitte
Robert D. Pulscher
EXHIBIT 1
N^fVC '�O-V^n VC+^rr�r� _OO O C TN
V � Or N, N--V-OOG-cN n
- V VOf1C NNCV r� nPCPOOCOO N � ^_ CP
% C .. rVCN DPI-rPP -VC.O -NPO '.7 U
- DYv NC ONONrNVVNPNVry^^ CO C p d Lj
�� u ZOnnn OOPPPfNN VGO I PI - U C '
� O c
rte.-N c,N �-NRry- .r-- - -
^�NVVN^rVVGN O^ r^,J
- gip �- VNr NrNNN^ NN
i D ^NV��p pQ n� GPN kn0 L N U U
L == OOGPPP PPPP 'JGC t'1 D, ` G
D ^
-
�7 3 �� u V1N� NNNNN✓1 Yl f'1- V o o ^ -
V� n^GOON OPfNO Of'1 e't l�nl't l'f 'r' G � � ? N
L L D ONOC-N P!'IOn G-ONn - � ^ O
< u p NO VGGC VO�PYfO000.P-
LlHSV- ONNN�� OOO�P OO�nV V� � O - \ C 4
6 Z N j = ♦ V = D Y ^ =
n P
V N�NO�AC N'J IOr NN O§O ROC O
vGPC '1O-�'1PN On O'.JOOOOO
NN �ON OOR ROOD
Q ?V Imo.. rOP- nN Py;VVNN
�Z � '. NCC mecca CNNNOO' OOOO R -
jv `" - - r - rrcc -c ccocGGG n yJ) � p v �
N X
<
<
an-
> Jry
- - ?I Pcnoc -_ N�oo_�g�o�gr� _ inn ❑ ,� u
Y o n mv+NN��c
G J j � j v- .NP PPPPO�O.L�1G _.O G-r _. .r'•..1O '� _ V _
Z
^ O- OOPPPcc - O V � A �N
.V NIS NNN NNCGCn nn PI �. Y U Y j U
-
u
L.
_ l^nGPO-Nt•1�NVn GPO-N - � j U U CD
- ROGPPAPPP PPPPOOO � _
V PPPPPPAAPP AP PAOOOOO V �
T D NV^OPO-Ne^bc^^•a OO��-Ni'� j j j
J PPP APPPPPP PPPPP CCJOO C ~ P
u Y u a ,
u o _
EXHIBIT II
CITY OF SHAKOPEE, MINNESOTA
COMBINED DEBT S`RViCE OF EXISTENT
TAX INCREMENT FINANCING PRO.tECTS
S4.200,000 - 1985 G.O. TIF
Collect-Pay $3,100,000- 1984 552,4°0.000 Total ,
Year Combined Series 1964A Debt Service
(1) (2) (3)
1986 $ 848.620 $ 293
c ,623 $ 1 , 142,243
1.67 1 ,210, 145 295,853 1 ,505,998
I°8B 1 ,207, 106 296,?98 1.504, 106
1959 1 ,213, 195 2 o
96,,0.8 1 ,510, 1.c
3
1990 1 ,207.233 295.860 1,503,093
1D91 1 ,204 478 298,535 1 ,403,013
1'92 1 , 197,678 29.°,535 1 ,497,413
1993 1 , 191 ,328 298,785 1490, 113
1004 1 , 194,465 301 ,305 1 ,495,770
1995 446.678 296.565 743,443
1996 447,228 300, 190 747,41B
1997 L4E.-38 296 190 7L4.728
Total $11 ,817,094 $3,570,437 $15,387,531
Prepared By: SPRINCSTED Ir:ococ:c'.ed
12 July io25
EXHIBIT III
CITY OF SHAKOPEE, MINNESOTA
USER FEE ANNUAL REVENIF_ PROJECTION
Collect Speciol Citywide
Ya, Benefi' nwenve User Fee Total
• (U (2) (3)
19B6 $ 4E.B02 $ 152.C25 _ $ 198,E37
1967 7-,798 240,228 322,020 -
1988 106,620 352,649 461 ,469
M9 - - II8, 141 363,778 501 ,919
1990 116, 141 3v3,7,78 501 ,919
1901 11 s, 141 363,778 501 ,919
1992 118, 141 3;3,778 501 ,919
1993 IIE. 141 3E3,778 501 ,919
1994 IIE1141 363,77B 501 ,919
1°O5 116, 141 363,778 501 ,919
1996 71 ,?39 231 ,743 303,082
1997 42.343 137,550 179,843
1e06 - - F,521 30,929 40,400
1009 0 D 0
Total _ $1 , 181 ,410 $3,237,760 $5,019, 190;
Prepared By: SPRINCST=O incorporated
12 July 1965
EXHIBIT IV
= 0I NN OE. o. c.N � .� ccr co
cc nr rcN- c - _r -E,
7 ^V r JC.V VNV V V o.rr � O J.
CLO .�IV NnNrO.=nN=V =J
V an L'
F l =N
r E. Nre. n^-ni�vo -
Nvrc. c. o .
r
� n � V NNh- OAC- OpO�- V n =
C j y "" O� L•r L.O. [AGO VNE� r ^'
N y L7
J 6' On� NrvO Vr � O� N
7
dyv Np ^.?N ONr NV VNO N G
_ � CrrrpCO�O�vvN V -
Z
O J
N <
J u —
<
< N U "" N- -n DCOvO vi
Li
Lf' GNv NP -NONr NV N
L7 L7 I, N N
Y
G
L'I N V C>N NN Nt06? pN p
' OrNrry NOr N
i �.J - ' n NOrr NOLO NN ^J'
O OV1pN NL�n O\n O\
U
V
N N N N h =
U�- NO OO OLEO NN ",>
N
—
L }