City Council Worksession

South St. Paul MAYOR/COUNCIL WORKSESSION SSP City Hall 125 3rd Avenue North Training Room Monday, December 10, 2018 7:30 p.m. AGENDA: 1. Financial Impacts of Concord TIF District Decertification in 2024 2. Closed Session: Bargaining Contract Negotiations – No Attachments 3. 2019 Meeting Schedule 4. (8:15 p.m.) Solar Proposals Review – Peter Lindstrom - Clean Energy Resource Teams (CERTs) SSP School Board will also be present 5. Council Comments/Questions A COUNCIL WORKSESSION REPORT DATE: December 10, 2018 1 DEPARTMENT: Finance and Economic Development ADMINISTRATOR: JRH AGENDA ITEM: Financial Impacts of Concord TIF District Decertification in 2024 ACTION TO BE CONSIDERED: Discuss financial impacts of Concord TIF District decertification in 2024. OVERVIEW: Tax increment Financing (TIF) is an economic development tool that allows the City, EDA or HRA to capture and use most of the increased local property tax revenues from new development within a defined area for a defined time period. Revenue from tax increment financing districts helped fund infrastructure, land acquisitions and cleanup in the Concord Street Redevelopment project area that enabled private development. This district is planned to be decertified on December 31, 2024. One of the main purposes in utilizing TIF is the overall increase in market value from when the district was created to when it is fully developed. The original market value from 2009 was $19,873,771. The Payable 2017 Market Value was $123,743,262, a 509.10% increase in value. About 14.3% of the City’s tax capacity is currently in TIF districts. Upon decertification of the Concord District, the percentage is anticipated to drop to 1.7%. This is a projected increase in tax base available for ad valorem taxing purposes of $2,213,173. Using our 2019 budget, the City’s tax rate was 63.84% and if we remove the captured TIF value, the City’s tax rate would drop to 56.85%. That would roughly equaled a $50 decrease in city taxes on our average valued residential property. It is important to note that these estimates are based on 2019 numbers. Any additional development between now and decertification will only enhance the positive impact to our taxpayers. SOURCE OF FUNDS: N/A