CR 95-209 Resolution Electing District 1-2November 27, 1995
Proposed Action
Overview
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RESOLUTION ELECTING TO MAKE LOCAL, QUALIFYING
CONTRIBUTION TO TAX INCREMENT DISTRICT 1 -2
Staff recommends adoption of the following motion: Move to approve Resolution 95 -107,
electing to make qualifying contribution for Tax Increment Financing District 1 -2.
For tax increment districts created after 1990, the City's Local Government Aid/Homestead
Agricultural Credit Aid ( LGA/HACA) is reduced on an annual basis. This reduction usually
amounts to approximately 33 percent of the total tax increment received.
In 1995, legislation was passed which would exempt a city from experiencing a reduction in their
LGA/HACA payment due to creation of a tax increment district, based upon the following:
• The tax increment district was created between June 30, 1994, and July 1, 1995.
• The City Council approved action electing to make a contribution equal to 7.5 percent of
the annual increment to be received from the subject tax increment district.
Star is presently proposing that the City Council elect to make the local contribution payment for
Tax Increment District 1 -2 (former Suburban Chevrolet property). The LGA/HACA penalty for .
this district would be approximately $250,000. The local option payment would be approximately
$85,000.
Primary Issues to Consider
• What would be the source of funds for the local option payment?
Supporting Documents
• Resolution 95 -107
Jo - s D. Kerrigan
Director, Economic D elopment
Council Report 95 -209
Council Report 95 -209 - Page 2
Primary Issues to Consider
What would be the source of funds for the local option payment?
Funds for the local option payment have to be what are identified as unrestricted (i.e., not TIF
funds, pension funds, etc.). The City's local Economic Development account would be utilized
for this purpose. Funds would be used to pay for a portion of eligible tax increment
redevelopment costs.
Alternatives
The HRA has the following alternatives regarding this issue:
1. Approve the action as recommended by staff. With this action, staff would undertake the
necessary steps to ensure that non -tax increment dollars were expended in accordance
with necessary statutory requirements.
Continue for additional information. It needs to be noted that if the HRA wishes to use
the local, qualifying contribution, action on this matter needs to be taken by December 31,
1995.
Deny the request. With this action, the normal LGA/HACA deduction will occur.
RESOLUTION ELECTING TO MAKE QUALIFYING CONTRIBUTION FOR
TAX INCREMENT FINANCING DISTRICT 1 -2
WHEREAS, the City of Hopkins approved on April 4, 1995, the creation of Tax
Increment Financing District 1 -2;
WHEREAS, pursuant to Minnesota Statutes, Section 273.1399, the District will
cause a reduction in state aids paid to the municipality unless the District qualifies as
an exempt district;
WHEREAS, the 1995 Minnesota Legislature amended the Tax Increment
Financing Act to permit a district to be exempt if the municipality elects, at the time of
approval of the district, to make a qualifying local contribution; and
WHEREAS, the 1995 amendment allows the governing body of a municipality by
December 31, 1995, to choose to make a qualifying contribution for a tax increment
financing district whose request for certification was made after June 30, 1994, and
before July 1, 1995.
THEREFORE, BE IT RESOLVED by the City of Hopkins City Council that it elects to
make a contribution of 7.5 percent of the annual increment estimated to be
generated from Tax Increment Financing District 1 -2, and that the contribution will be
paid from unrestricted money, will not be made directly or indirectly with tax
increments or developer payments, and it will be used to pay project costs and will
not be used for general governmental purposes or for improvements or costs that the
City plans to incur without the project.
Adopted this day of , 1995.
ATTEST:
James A. Gene!lie, City Clerk
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 95-107
Charles D. Redepenning, Mayor