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HomeMy WebLinkAbout6.t. Decertification of Business Park Tax Increment Financing Districtw I CITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION City Council Meeting Date: December 7, 2004 AGENDA ITEM: Decertification of the Business Park Tax AGENDA SECTION: Increment Financing District Consent PREPARED BY: Kim Lindquist, Community Development Director A N Q,_ 6 ATTACHMENTS: Draft Resolution, October 19 Port Authority APPROVED BY Memo and Minutes RECOMMENDED ACTION: Motion to adopt the resolution decertifying the Business Park TIF District within the Rosemount Redevelopment Project of the City of Rosemount ACTION: DISCUSSION Decertification of the TIF District will allow the properties to go unto the tax rolls sooner than initially anticipated when the District was setup. The Port Authority and City Council are being asked to approve resolutions to decertify the District. Those resolutions will be forwarded to the County. This action will mean that the various taxing jurisdictions will receive their share of the property taxes for the Business Park businesses in 2005, two years earlier than anticipated by the District Plan. The ability to decertify the District means that an additional 15,893,800 of valuation will be added to the City's total market value (2004 estimated market value, payable 2005). This additional valuation translates into approximately $80,000 in new tax revenue for the city's general fund with approximately $100,000 being returned to various other taxing jurisdictions, such as the County and School District. Early next year the Council will be asked to take formal action on defeasance of the outstanding bonds to retire the last remaining financial obligations of the District. CONCLUSION The ability to decertify the District early returns tax dollars to the various taxing authorities ahead of schedule. This demonstrates prudent money management and would indicate that the District has been successful in that the District could meet its financial obligations ahead of schedule. Staff recommends approval of the draft resolution. CITY OF ROSEMOUNT COUNTY OF DAKOTA STATE OF MINNESOTA RESOLUTION 2004- RESOLUTION APPROVING THE DECERTIFICATION OF THE BUSINESS PARK TAX INCREMENT FINANCING DISTRICT WITHIN THE ROSEMOUNT REDEVELOPMENT PROJECT OF THE CITY OF ROSEMOUNT BE IT RESOLVED by the City Council (the "Council ") of the City of Rosemount, Minnesota (the "City "), as follows: Section 1. Recitals 1.01. On March 6, 1996, the City of Rosemount established the Rosemount Business Park Tax Increment Financing District (the "TIF District ") within its Rosemount Redevelopment Project (the "Project "); and 1.02. The Rosemount Port Authority (the "Port Authority ") is the administrative authority for the TIF District; and 1.03. The City no longer requires tax increments from the TIF District to meet general obligation bond tax increment bond payments which are still outstanding, and all other costs of the Project have been paid; and Section 2. Approval of Decertification 2.01. The City Council desires by this resolution to cause the decertification of the TIF District after which all property taxes generated by property within the TIF District will be distributed in the same manner as all other property taxes, effective for taxes payable in 2005. 2.02 Upon approval of a similar resolution by the Port Authority, staff is authorized and directed to file a copy of this resolution in the City's TIF District files, file a copy of this resolution with the County Auditor of Dakota County along with instructions to adjust the records for the TIF District accordingly, and file a copy of the resolution with the Minnesota Department of Revenue. ADOPTED by the City Council this 7` day of December 2004. ATTEST: Linda Jentink, City Clerk Motion by: Voted in favor: Voted against: Member absent: William Droste, Mayor CITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION Port Authority Meeting Date: October 19, 2004 AGENDA ITEM: Defeasance of Port Authority Bonds AGENDA SECTION: Discussion PREPARED BY: Kim Lindquist, Deputy Director AGENDA NO. 1 ATTACHMENTS: Memorandum from Springsted dated October 6, 2004 APPROVED BY: RECOMMENDED ACTION: Provide staff direction. ACTION: ISSUE The Finance Director, Jeff May, has indicated that he would like to defease the bonds relating to the Business -Park TIF District. This means that the City would set aside money to pay off the bonds when the call date occurs. This "set aside" will be used to pay off the bonds, allowing the city to decertify the District and put the properties within the District back onto the tax rolls. DISCUSSION The opportunity to defease the bonds and decertify the District is good as it allows the properties to be put back on the tax rolls sooner than initially projected. Paying of the bonds is also the fiscally responsible thing to do, since the city has the financial wherewithal to pay them off sooner rather than later. Staff is bringing this item to the Port Authority for discussion because it is a fairly complex process. At a future regular meeting the Port Authority will be asked to adopt by resolution this process. 85 E. SEVENTH ?LACE, SUITE 100 SAINT PAUL, MV 55101 -2887 651 -223 -3000 FAX:6SI- 223 -3002 MEMOW NDUM TO: Jeff May, City of Rosemount FROM: Al Erickson DATE: October 6, 20.04 SPRINGSTED Advisors to the Public Sector VA SUBJECT: Potential defeasance of Port Authority issue, Series 2000B 6 You have asked that Springsted investigate the potential of defeasing the 2000B Port Authority bond issue. Including the principal payment due on February 1, 2005, $1,335,000 of these bonds remain. You have inf)rmed me that as of August 31, 2004 you have $853,589 available in the debt service fund for the issue. In addition, you expect to receive by year end another $119,721 in levy and $100,812 in TIF funds. Without adding interest earnings, this would give you a balance in the debt scrvice account at year end of approximately $1,174,000. You have also infonned me that your preliminary 2005 budget anticipates a levy of $236,896 for this issue and TIF receipts of approximately $220,000. According to our estimates, which are attached, you would need approximately $1,433,000 to defease the i 3sue in December. Based upon your stated cash on hand in the fund and what you expect to collect by year end, this leaves you short by about $260,000. As we discussed, if you wish to defease this issue by year end, or shortly after January 1, 2005, you would need to fund the sho tfall on an internal basis and pay yourself back during 2005 as funds become available. If you elect to keep the levy in place, you would need to find about an additional $25,000 to complete the transaction. This would allow you to decertify your TIF district if you choose. I have discussed this concept with Mary Dyrseth, City Bond Counsel, and she has indicated that on a preliminary basis she sees no legal barriers to this approach. By defeasing the issue you would save a )proximately $150,000 in debt service costs over the remaining life of the issue. Also, if you decertify the TIF district you will place those properties on the tax rolls earlier than planned. As I mentiont�d to you we have placed a call to Dakota County to ascertain details concerning the time that you should notify them as to decertification if you elect to do that. They have not returned our --all as of yet. When they do, I will follow -up with you regarding timing options for this transaction. CORPORAL romCL•: SAINT PAUL, MN - Visit our website at www.Spdngsted.rom OWA - KANSAS - MINNESOTA - VIRGrN1A - WASHINGTON, DC - WISCONSIN Page 2 Regardless of the answers that Dakota County may provide regarding timing, our in -house TIF experts have told me that if you notify the County of your wish to decertify by the end of :his year, you should not receive any TIF revenues beyond Pay 2004. The answers that we will be seeking from 1 he County will center on how they will be handling tax distributions for 2005. Our staff has also informed me that you will still need to submit a TIF report to the State Auditor in 2005 if you have a balance in that account past year end 2004. As always, we are able to assist you with the preparation of that report as well as the drafting of decertificaJon documentatioi i. After we have talked with staff at the County I will contact you and we can discuss the timing of this transaction. If you have any questions prior to then please give me a call. Excerpt from the Port Authority Work Session of October 19, 2004 Defeasance of Port Authority Bonds Finance Director May explained the status of the outstanding bond issue for the Rosemount Business Park. May noted that by defeasancing of the bonds now and decertifying the Tax Increment Finance (TIF) district the properties for the Business Park would be allowed to be put back on the tax rolls. The Port Authority would be required to approve a resolution to decertify the TIF district. This would save the City nearly $150,000 in interest costs. This would also add significantly to Rosemount's tax base. Dakota County and Independent School District 196 would also receive a share of these property taxes once the TIF district is decertified. Chairperson Baxter noted that Rosemount has used TIF funding the way the legislature intended it to be used, to build up cities. Deputy Director Lindquist noted that the TIF plan for the Business Park can no longer be amended, however, the Business Park has sold all buildable lots, and so the purpose of the District has been completed. Commissioner Droste noted that with the Downtown development in the future there will be many uses for additional projects. Lindquist noted that if the Port Authority takes action at the next meeting to decertify the TIF District, then the bonds would be defeased in January or February.