HomeMy WebLinkAbout1993-05-19 NAC Communication Re Revised TIF Projections r
MEMO
Scott Richards
Date: 19 May 1993
To: Dan Wilson
Re: Oak Park Heights - St. Croix Mall - Revised TIF
(798.02 - 93.03)
Please review the attached St. Croix Mall
revised TIF projections report from Bob Voto.
If you have any comments or if a response is r
necessary, please advise.
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CERTIFIED PUBLIC ACCOUNTANTS
NAC FILE:
Client
Project
Job No
May 17, 1993
RECEIVEO MAY 18 1993
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
14168 North 57th Street
Stillwater, MN 55082
RE: ST. CROIX MALL - REVISED TIF PROJECTIONS - 1992/1993
Attached herewith are the following schedules projecting the TIF calculations and Developer
assistance for the St. Croix Mall - TIF Agreement based upon current (1993) data:
• Computations of total tax allocations (county basis) including City TIF monies based
upon an $8,410,300 final project value and based upon zero inflationary growth of
taxable valuations.
• Computations of developer assistance (i.e. allocation of TIF. tax revenue between the
developer and the City) based upon an $8,410,300 final project value and based upon
zero inflationary rg owth of taxable valuations.
The attached TIF computations for 1992/1993 again reflect a reduction from prior projections.
This years reductions is (again) the direct result of State changes to the tax capacity ratio for
industrial/commercial property. The 1991 /92 ratio was 4.75 %. The 1992/93 ratio is 4.70%
representing another 3% decrease. TIF property taxes total $242,443 for 1992/93 and will be
"shared" as follows:
Allocation Amount Percent
"Lost TIF" $62,993 26.0%
Developer (60 %) 107,670 44.4%
City (40 %) 71,780 29.6%
TOTAL $242,443 100.0%
4810 White Bear Parkway • White Bear Lake, Minnesota 55110 • 612/426 -7000 • FAX /426 -5004 • Member of HLB International
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
May 17, 1993
Page 2
When the City Council approved this TIF Agreement in 1989, it was anticipated that payments to
the Developer would total $960,000 over seven and one -half years and that the City would retain
approximately $755,000 over eight years to be used to finance other City projects. Since that
time, numerous changes have occurred such that current projections anticipate total payments to
the Developer of approximately $688,600 and City TIF revenue of approximately $459,900. The
reduced amounts are the direct result of the following:
1. The economic adjustment factor for the TIF District was originally estimated at 1.91% per
year based upon preliminary estimates by the Developer and County. The actual economic
adjustment factor for this TIF District is 5.7858 %. Accordingly, more tax base is being
retained for regular taxes instead of incremental taxes.
2. The original estimates anticipated annual inflationary increases of 2% after completion of
the incremental construction. Current economic conditions are such that the attached
projections reflect zero inflationary growth.
3. Each year since 1988/89, the State has reduced the tax capacity ratios for
industrial/commercial property as follows:
TOTAL
Comm./Indust. Class Ratios: 1988/89 1989/90 1990/91 1991/92 1992/93 CHANGE
First $100,000 3.30% 3.30% 3.20% 3.10% 3.00% - 0.30%
Balance 5.25% 5.06% 4.95% 4.75% 4.70% - 0.55%
Percent Change:
First $100,000 0.0% -3.0% -3.1% 3.2% -9.1%
Balance -3.6% -2.2% -4.0% 1.1% - 10.5%
Current TIF projections have been reduced substantially from the original estimates for both the
Developer and the City and are summarized as follows:
Year Developer City
1991 - Actual $30,908 $21,414
1992 - Actual 114,513 76,342
1993 - Actual 107,670 71,780
1994 -Est. 101,326 67,550
1995 -Est. 94,614 63,076
1996 -Est. 87,514 58,343
1997 -Est. 80,003 53,335
1998 -Est. 72,058 48,038
TOTALS $688,606 $459,878
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
May 17, 1993
Page 3
CITY TIF COMMITMENTS
In conjunction with the developer project, the City partially committed its TIF revenue to finance a
street re- alignment project at 58th Street and Osgood Avenue. The primary purpose of this project
was to improve traffic flows and patterns. A summary of construction costs at December 31,
1992 plus estimated final costs is as follows:
Construction
Costs
Description @ 12/31/92
Contractor $114,705
Engineering 25,241
Other 10,132
Total $150,078
The City's financing plan for this project calls for 100% City TIF financing. Accordingly, the
City has already committed its 1991 through 1993 TIF revenues to this project. Thereafter, the
City can expect to have the following amounts available to finance other City TIF projects:
Year Amount Accumulative
1994 $67,500 $67,500
1995 63,100 130,600
1996 58,300 188,900
1997 53,500 242,200
1998 48,000 290,200
As shown above, future City TIF revenue will not be available until 1994. Additionally, these
amounts are limited -- averaging only approximately $58,000 per year for five years. The City
Council has discussed the use of the above TIF revenue to help finance Phase I of the City's
Street Reconstruction Program.
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
May 17, 1993
Page 4
LOST TIF
The TIF portion (50% for 1992/93) of the development property pays taxes at the same rate
(1.24337 %) as any other commercial property. This full amount, however, ja not available for
the benefit of the City's TIF District. The 1988 /89 tax rate on this property was .92031 %. The
TIF District's portion of TIF tax revenue is limited to the .92031% tax rate. All amounts above
the 1988 /89 tax rate are considered to be "excess" and are remitted to the City, county and local
school district based upon state statutes. The following schedule summarizes such amounts:
School
Year City County District Total
1991- Actual $2,473 $2,519 $3,396 $8,388
1992 - Actual 10,472 13,170 16,860 40,502
1993 - Actual 15,037 14,357 33,599 62,993
1994 - Est. 14,151 13,511 31,619 59,281
1995 - Est. 13,214 12,616 29,524 55,354
1996 - Est. 12,222 11,669 27,309 51,200
1997 - Est. 11,173 10,668 24,965 46,806
1998 - Est. 10,064 9,608 22,486 42,158
Totals $88,806 $88,118 $189,758 $366,682
The above estimates for 1994 through 1998 are based upon future tax rates equal exactly to the
1992/93 tax rates. Accordingly, the above estimates are probably conservatively low.
The City Council has discussed the use of its portion of the "excess" TIF revenue to help finance
Phase I of the City's Street Reconstruction Program.
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
May 17, 1993
Page 5
DEVELOPER IM
The City's final commitment to the Developer of this project generally called for the Developer to
receive 60% of the additional or incremental taxes generated by this project with a maximum
amount of $960,000 to be paid over the term of this TIF District. Tax Increment Financing has
been the subject of various State Statute changes over the past several years, most of which has
limited TIF revenue and/or uses of TIF revenue (especially additional or excess TIF revenue).
The City's Agreement with the Developer calls for the City to remit Developer TIF revenues
within 30 days of the actual receipt of such monies. The City will be receiving these monies (both
Developer TIF and City TIF) as part of its normal tax settlement each June and December.
However, the City usually does not receive the detailed allocations (of its overall tax settlement)
until sometime after the monies are received. Accordingly, it may not be possible for the City to
remit these monies within 30 days of receipt. We recommend that the City remit such monies as
soon as possible after receipt of all required information.
The attached schedules include projected computations of Developer TIF for the full term of this
TIF District, including actual computations for 1991, 1992, and 1993. Assuming full and prompt
payment of the 1993 property tax by the Developer, the City should receive TIF tax settlements of
$89,725 (each) in June and December. When this occurs, the City should remit $53,835 (or 60%
of each amount) to the Developer.
We will be available to discuss this report and other matters with the City Council at a later date.
Respectfully submitted,
TAUTGES, REDPATH & CO., LTD.
Robert J. Voto, CPA
c: Mark Vierling
Scott Richards
LaVonne Wilson
Judy Holst
TIF File
Attachment
CITY OF OAK PARK HEIGHTS
T. I. F. PROJECTIONS --ST. CROIX MALL
TAX TAX ALLOCATION -- COUNTY BASIS
COLL. TOTAL TAX CAPACITY VALUE TAX TOTAL REG. T. I. F. FISCAL TOTAL
YEAR F. M. V. BASE INCR. TOTAL RATE TAX TAX TAX DISP. TAX
1989 3,410,300 177,092 177,092 0.92031 164,136 ACTUAL 148,824 0 15,312 164,136
1990 3,480,900 180,683 -6,309 174,374 0.90383 160,304 ACTUAL 140,408 0 19,896 160,304
1991 4,960,700 186,952 56,853 243,805 1.06784 259,655 ACTUAL 159,031 60,710 39,914 259,655
1992 8,384,300 189,225 207,380 396,605 1.11561 444,889 ACTUAL 151,674 231,357 61,858 444,889
1993 8,410,300 198,595 194,989 393,584 1.24337 488,867 ACTUAL 173,166 242,443 73,258 488,867
1994 8,410,300 210,085 183,499 393,584 1.24337 489,370 EST. 183,403 228,157 77,810 489,370
1995 8,410,300 222,240 171,344 393,584 1.24337 489,370 EST. 194,015 213,044 82,312 489,371
1996 8,410,300 235,098 158,486 393,584 1.24337 489,370 EST. 205,240 197,057 87,074 489,371
1997 8,410,300 248,700 144,884 393,584 1.24337 489,370 EST. 217,114 180,144 92,112 489,370
1998 8,410,300 263,089 130,495 393,584 1.24337 489,370 EST. 229,676 162,254 97,441 489,371
TOTALS (1991 -1998 ONLY) 3,640,261 1,513,319 1,515,166 611,779 3,640,264
ALLOCATION OF T. I. F. TAX REVENUE
TAX GROSS NET NET T. I. F. ALLOCATION
COLL. T. I. F. LOST T. I. F. DEVEL. CITY
YEAR TAX T. I. F. TAX "60% " 40 % " TOTAL
1991 60,710 8,388 52,322 30,908 21,414 52,322
1992 231,357 40,502 190,855 114,513 76,342 190,855
1993 242,443 62,993 179,450 107,670 71,780 179,450
1994 228,157 59,281 168,876 101,326 67,550 168,876
1995 213,044 55,354 157,690 94,614 63,076 157,690
1996 197,057 51,200 145,857 87,514 58,343 145,857
1997 180,144 46,806 133,338 80,003 53,335 133,338
1998 162,254 42,158 120,096 72,058 48,038 120,096
1,515,166 366,682 1,148,484 688,606 459,878 1,148,484
NOTES: TOTAL MARKET VALUE BASED UPON ACTUAL THROUGH 1993
WITH ZERO GROWTH THEREAFTER
ANNUAL ECONOMIC ADJUSTMENT FACTOR (APPLIED TO BASE)
PER WASHINGTON COUNTY. 0.057858
LOST T. I. F. REPRESENTS T. I. F. TAXES IN EXCESS OF
1989 TAX CAPACITY RATE OF 0.92031
THE ABOVE DATA REPRESENTS ACTUAL THROUGH 1993;
AND, ESTIMATES THEREAFTER.
TR Co. 5/17/93 11:14 AM MALL -A.XLS