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CR 93-11 Request For TIR "( y 0 , ~ c. '" 1:0 .;aJanuary 20, 1993 .ac. Council Report 93-11 "'~))~ - '" .y '" OPKI~ - Request from School District for Tax Increment Reimbursement .. Proposed Action. staff recommends adoption of the following: "Resolution 93-8 approving payments from TIF District 1-1 to Independent School District 270 for the period 1991-1995, attributable to the increase in local tax rate due to the Nov. 6, 1990 School levy referendum, subject to staff conditions." This motion will give staff approval to process the requested payments for 1991 and 1992, along with future payments until 1995, to Independent School District 270. Overview Minnesota Statute 469.177 authorizes the School District to request payment from TIF Districts created before May 1, 1988, of the portion of the increase in the tax rate due to a referendum levy. Hopkins has two such districts: No. 1-1 ~and No. 2-1- Independent School District 270 has submitted a letter requesting payment of Tax Increment which is attributed to the increase in the tax capacity rate under the Nov. 6, 1990 School levy referendum. This request also includes a tll'Solution of the School Board dated September 13, 1991. If the council solution is approved, payments would be provided for the length of the 'ferendum, which is 5 years. _ne request is for payment from taxes payable 1991 and 1992. The School District will be making an identical request for the remaining years of the referendum thru 1995 based on an annual billing from the School District. primary Issues to Consider 0 Does State Statute require the HRAjcityto make payment to the School District? 0 How is the requested payment calculated for each District? 0 Why is staff recommending approval of the School's request? 0 Have other city's agreed to make these payments to the School District? 0 What are the staff conditions? supportinq Information 0 Resolution 298 0 Letter from School District 0 School Board action 0 Hennepin County TIF calculation , ~ - paul~ :telnman - Community Development Specialist lilt _1 '. ~f Council Report 93-11 ~hOOl District Request ge 2 W. . Pr1mary Issues to Cons1der Based on the action recommended the Council has the following issues to consider: 0 Does state statute require the HRA/city to make payment to 'the Sohool Distriot? staff had received an opinion from legal counsel in December, 1990, that the HRA/City is required to make payment to the School District from TIF District 2-1. state statute requires that if there are no outstanding bonds in a TIF District prior to May 1,1988, as in District 2-1, that the HRA/City is required to pay the School District the amount of Tax.Increment attributable to the tax rate increase due to the referendum. This equals a payment of $16,373.67 for 1991 and 1992 combined. state statute requires that if there are outstanding bonds in TIF District, such as in TIF District 1-1, the HRA/City is not required to make payment. However, by resolution, the HRA/City can elect to honor the request of the School District. Staff is recommending approval of the payment from TIF District 1-1, even though it is not required by State Statute. The payment ,r 1991 and 1992 combined would be $104,040.55. (This amount reflects bt~action of a 5% administrative fee) 0 How is the requested payment oaloulated for eaoh Distriot? Attached is a letter from Hennepin County which identifies an in-depth calculation of the amounts being requested from TIF District 2-1 and 1-1. Payment is based on a School District referendum rate of 4.798%. As stated previously, this will be applied to the Hopkins tax rate through 1995 to calculate the amount owed each year. 0 Why is staff reoommending approval of the Sohool's request? Staff is recommending approval of the School's request for the fOllowing reasons: 0 Maintain a positive relationship between the City and School District. 0 The amount being requested was received by the City as tax increments specifically because of the increase in the tax rate due to the School District referendum. . (The city would not have received the $125,890.03 in increment if the School District did not pass the Nov. 6, 1990 referendum) - 0 Public concern expressed regarding the use of Tax Increment and how it affects the School District levy. 0 Have other City's agreed to make these payments to the Sohool Distriot? , Council Report 93-11 --School District Request :ge 3 ~ChOOI District 270 has made similar requests to the cities of Golden Valley and Plymouth. It appears that neither cities are planning to approve this request. The city of Plymouth has denied the School Districts request, and the city of Golden Valley has not yet responded. Mr. Ken Zastrow, Director of Business Affairs for the School District did note that the city of st. Louis Park has agreed to pay the st. .Louis Park School District the requested amount. 0 What are the staff oonditions? 1) The city retain 5% of the requested amount from TIF District 1-1 for administrative purposes. 2) The School District provides an annual billing to the BRA/City for payment due from both TIF District 1-1 and 2-1, based on the computation prepared by the Hennepin county Department of Property Tax and Public Records. Alternatives 1IIte Council has the following alternatives regarding this issue: . 1. Approve Resolution 93-8 as recommended by staff. with this action, the city will make payment to the School District from TIF District 1-1 and 2-1 for 1991 and 1992, in addition to future requests for this type of payment through 1995. 2. Deny motion. The city will still be obligated to provide the requested amount of $16,373.67 from TIF District 2-1. 3. continue for additional information. - - ~- -, ' --~ --.-..........---. . CITY OF HOPKINS - RESOLUTION, NO. 93-8 APPROVING PAYMENT OF TAX INCREMENT , . ' FROMTIF DISTRICT NO. 1-1 ATTRIBUTABLE TO SCHOOL REFERENDUM LEVY BE IT RESOLVED by the city council ("Council") of the City of Hopkins, Minnesota ("city") as follows: section 1. Recitals. 1.01. The city council ("Council") in and for the city' of Hopkins is administering Tax Increment Financing District No. 1-1 ("TIF Districtn) within the city, which district was . certified before May 1, 1988. 1.02. Tax increment from the TIF District is pledged to the city's $2,145,000 General Obligation Redevelopment Bonds, Series 1988A ("Bonds"), which Bonds were issued by resolution dated April 26, .1988. , 1.03. Independent School District No. 270 ("School District") has 7equested, by ~ajority v?te ?f itsgovern~ng body, . that theCounc~l pay to the School D~str~ct the' tax ~ncrement . from the TIF. District attributable to the increase in local tax rate' under a referendum levy approved on November 6 , .1990 (the "School Levy Increment"), pursuant to Minn. Stat. section 469.177, Subd. 10 (the "Act"). 1. 04. Pursuant to the Act, the City must pay the ,School' Levy Increment to. the School oistrictupon approval by a majority vote of both the School District and the city council. 1. 05. The Council finds that it is in the best interests of the, city and the School bistrict for the City to pay the School Levy Increment as requested and approved by, the School District. section 2. payment ApDroval. 2.01. The council hereby approves payment of the tax increment from TIF District 1-1 attributable ,to the 1990 School Levy Increment to the School District pursuant to the Act on an annual basis for the period 1991 through 1995. . . Be it further resolved that payment shall only be _made based upon on annual billing request from School District No. 270. Such amount request shall be based on a calculation , . prepared by Hennepin County Department of Property Tax and PUblic Record. RESOLUTION NO. 93-8 - Page 2 " Be it further resolved that the city shall withhold on an annual basis 5% Administrative fee from the proceeds to be provided to School District 270. 2.02. The Council is authorized and directed to take all action necessary to effectuate timely payment of the School Levy Increment. Approved by the City Council of the city of Hopkins, Minnesota this 2nd day of February, 1993. Nelson W. Berg, Mayor t Attest: James Genellie, city Clerk - - . --."' , ", .. . . <';'(1;),', ADMINISTRATIVE OFFICES .....~ i. "Vl'.,~~ 4f;{~ 1001 HIGHWAY 7 _ .,.'1' HOPKINS, MINNESOTA 55343 ~~ "learning for life" "")vINS '''''iJ.-' 'I r.. "Jl\i'~ ... ... &~'.j ~<~~ ,HOOL," o/t ,Ii ~' - Il;~ KENNETH A. ZASTROW DISTRICT . Director ot Business Affairs (612) 933-9250 FAX (612) 933-6783 Decerrber 21, 1992 , , Mr. Thomas K. Hannening COmmunity Development Director Ci ty of Hopkins 1010 First Street South Hopkins, WN 55343 Dea r Mr. Ha nnen i ng : I have attached a certificate of Resolution of the Board action taken last September, 1991. This resolution requests the City of Hopkins to pay the School District an amount of the tax increment attributed to the increase in the tax capacity rate under the new 1990 referendum, which is 4.798% for Payable , 1991 Taxes and 5.205% for Payable 1992 Taxes for all TIF districts certified before May 1, 1988, according to Minnesota Statutes 469.177, Subdivision 10. Since the School District received no payments from the City for either Payable 91 or Payable. 92, consider this request for both years. Please respond to this request in writing as soon as possible. If you have any questions, feel free to contact me at 933-9250. Sincerely, ~!Ltt(l2S<mLt~ Kenneth A. Zast'row Di rector of Bus i ness Affa i rs Encl. .- - AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EDUCATOR AND EMPLOYER ._~---~-~-----'" .- . -- X ~/19 Board Consent Calendar " I N)EP8\I)8'IT SQ-O)L 0 I SIR I cr JIO. 270 f-OPK 1 NS, MI N'JESOfA ~ MEMO To: Art Bruning From: Ken Zastrow(~~' Date: September 13, 1991 Sub j : EXCESS TAX I~ ..: 5CHX)l REVEN.JES . . . - A tax increment financing district (TiF) whose request for certification was filed with the county auditor before ~y 1, 1988 and where the associated school districts had a new referendum tax rate approved after the tax increment financing di strict was certified is to pay to the school district.a portion of the tax increment related to the school district's referendum levy under certain conditions. The law provides that the tax increment financing districts are to make direct payments to the school districts for this referendum levy on captured .tax capacity., ' t Since we recent Iy passed the new referendum and the fi rst taxing year affected is 1991 (first referendum since ~ay 1, 1988), I have calculated the applicable referendum tax rate for TIF districts that are affected as follows : 1. Referendum Tax Rate . ISO #270 Certified Pay 1991 levy $48,429,161 Less: 'WICA (2,002,459) Fiscal disparities distribution (2,333,870) Loca I levy 44,092,832 ~ss: Bond Referendum Levy (3,941,632) Ne t Levy $40,151,200 $40,151,200 = 48.861% (rate w/o referendum dollars) $82,175,557 (Tax Capacity Value) Original tax rate (with referendum) 53.659% Less: rate w/o referendum 48.861% Rate increase due to referendum 4.798% - EXHIBIT "B" Regular Meet ing September 19, 1991 , . 2. Tax Increment Value Total tax increment value: t Hopkins $1,313,214 Golden Valley 5,021,915 Plyroouth - 2, 127,000 Since I do not know how rruch of this was certified prior to ~y I, 1988 and I do not know how rruch of these TIF districts have bonds outstanding, I recommend passing a resolution . . requesting the three cities to respond. The cities must remit excess tax increments to the district if they have no bonds outstanding fran \Wli ch the tax increments were pledged, but are not required to if there are bonds outstanding. _ At any rate, the school board rrust ask for the revenue by rrejority vote before the cities act. After corresponding with each of the cities, I do know the following: 1. Plyroouth feels the excess increments should be - retained by the city. 2. Hopkins will have to remit approximately $10,000 . to the district because same TIF districts have no bonds outstanding and does not know how the Ci ty . Counci I wi II respond on TI F' s wi th bonds outstanding. t 3. Golden Valley has. not responded. RE<X:IV1'veO\TI ~ : Pass the attached Resolution \Wlich will-do two things: I) Remind the cities.to pay us for excess increments . on TIF districts with no bonds outstanding, and 2) Officially request the excess increments fo~ TIFfs with bonds outstanding as specified in law. . - ,'; ..':;;;;;:::':'?~~"-,... -- ~ . , DEPARTMENT OF PROPERTY TAX AND PUBLIC RECORDS A607 Government Center HENNEPIN Minneapolis, Minnesota 55487-0067 Crossroads To Service June 21, 1991 Mr. Kenneth Zastrow Director-of Business Affairs Hopkins School District 1001 Highway 7 Hopkins, Minnesota 55343 Dear Mr. Zastrow: I have arrived at a "referendum tax rate" of 4.798%~ ' Below are nrj computations: ISD #270 Certified Pay 1991 Levy 48,429,161 Less: HACA <2,002,459> Fiscal DiSparities Distribution <2,333,870> Local Levy 44,092,832 , Less: Bond Referendum Levy <3,941,632> 40,151,200 $40,151,200 = 48.861% (rate without referendum dollars) $82,175,557 (tax capacity value) Original tax rate (with referendum) 53.659% Less rate without referendum 48.861% Rate increase due to referendum 4.798% Taking this llreferendum rate" against the tax increment value will give you the tax increment dollars generated by the referendum. Increment Rate due Ci ty Name County Name Value to Ref Dollars District 1-1 1151, 1152, 1153, 1154 1,114,099 4.798% 53,454.47 District 2-1 1155, 11.57 (no value) 198,623 4.798% 9,529.93 Please call me if you have any questions regarding these calculations. Sincerely, Dale G. Folstad, Director Property Tax and Public Records C~ i?~ - Cathryn L. Lindberg Tax Accounting Section Supervisor DGF:CLL:dm Thomas K Harmening HENNEPIN COUNTY c: on equal opportunity employer ,ii:" ,,' i- t DEPARTMENT OF PROPERTY TAX AND PUBLIC RECORDS A607 Government Center HENNEPIN Minneapolis, Minnesota 55487-0067 Crossroads To Service .December 28, 1992 Hopkins School District Director of Business Affairs 1001 Highway 7 Hopkins MN 55343 Attn: Mr. Kenneth Zastrow I have calculated a "referendum tax rate" of 5.334% as follows: ISD #270 certified 1992 Levy (less reduction for Debt Servo excess) $51,181,708 Less: HACA ($2,804,683) Less: .Fiscal Disparities Distribution ($3,056,573) .Local Levy $45,320,452 , Less: Referendum Levy ($3,941,632) $41,378,820 $41,378~820 = 55.969% (rate without referendum). $73,932,417 (tax capacity) ,Original Tax Rate (with referendum) 61.303% Less: Rate without referendum 55.969% Rate increase due to referendum 5.334% Tax Increment dollars generated by the referendum: TIF District Name Increment Rate due Per city per County Value to Ref. Dollars District 1-1 1151,1152,1153,1154, 1155,1157 1,051,029 5.334% $56,061.89 District 2-1 1158 128,304 5.334% $6,843.74 Please call me at 348-3255 if you have questions regarding these calculations. . Sincerely, Patrick H. O,Connor, Director Property Tax and Public Records - (/fCU~ 14~-JIj Martine M. Hewitt Tax Accounting Section supervisor cc: Thomas Harmening HENNEPIN COUNTY James Kerrigan an equal opportunity employer