HomeMy WebLinkAbout1993-04-15 NAC Ltr to OPH Re Revised TIF Projections 1991/1992 rt(t;"
F N Northwest Associated Consultants, Inc. --
A C U R B A N P L A N N I N G - D E S I G N M A R K E T R E S E A R C H` "
F! L E Copy
15 April 1993
Ms. LaVonne Wilson
City Administrator /Treasurer
City Administrative Offices
P.O. Box 2007
Oak Park Heights, MN 55082
RE: Oak Park Heights - TIF Plan
FILE NO: 798.02 - 93.03
Dear LaVonne:
I am writing in response to your questions regarding the
eligibility and procedures to use surplus TIF dollars for future
street reconstruction projects. I have a much better understanding
of the project after having discussed the matter with Bob Voto.
Actually, we are talking about two different sources and use of
funds. First, is the approximate $10,000 a year that the City
received in 1992 and receivables expected to receive in the
foreseeable future. The $10,000 is the City's share of
redistributed tax funds that result from the tax capacity rate
above the tax capacity rate frozen by the TIF District. Those
funds are not tax increment funds. The TIF Statutes place no
restrictions on the use of those funds. You have been correct to
deposit those funds to the City's general fund. The TIF Plan does
not need to address how the City will choose to use those funds.
The second source of funds are tax increment funds and do have
restrictions on their use. These are currently uncommitted tax
increments that the City will receive above and beyond that amount
committed to the St. Croix Mall owners. The amount will be
substantial as it will approximate the 40 percent fiscal disparity
contribution rate.
5775 Wayzata Blvd. - Suite 555 - St. Louis Park, MN 55416 • (612) 595 - 9636 -Fax. 595 -9837
Ms. LaVonne Wilson
15 April 1993
Page Two
I understand the City is currently in the planning stages of a
City -wide street reconstruction project. The City may choose to
use those uncommitted TIF funds to write down the special
assessments costs to those property owners within the Development
District boundaries.
Once the engineers have defined the project scope and costs by
phases, we will prepare a TIF Plan amendment. The amendment will
require a public hearing and thirty day notice to the School
District and County. I am not aware of any pending legislative
changes that will limit your ability to obligate these funds for
the above purpose.
Please call with any questions.
Sincerely,
NORTHWEST ASSOCIATED CONSULTANTS, INC.
Daniel H. Wilson
Director of Financial Analysis
pc: Bob Voto
Mark Vierling
#TATGES, REDPATH & CO., LTD. acicolli lkkII-
CERTIFIED PUBLIC ACCOUNTANTS
May 21, 1992
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 - 1991/1992
Attached herewith are the following schedules projecting the TIF calculations and Developer
assistance for the St. Croix Mall - TIF Agreement based upon current (1992) data:
Exhibit A - 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.
Exhibit B - Computations of developer assistance based upon an $8,410,300 final project
value and based upon zero inflationary gmwth of taxable valuations.
=l`he attached TIF•computations for 1991 /1992 Uaia reflect a reduction from prior projections.
' -This year's reductions is (again) the direct result of State changes to the tax capacity ratio for
Lndustnali'commercial property.. The 1990/91 ratio was 4.95 %. The 1991/92 ratio is 4.75%
representing another 4% decrease. TIF property taxes total $232,077 for 1991/92 and will be
"shared" as follows:
Allocation Amount Percent
"Lost TIF" $40,627 17.5%
Developer (60 %) 114,870 49.5%
City (40 76,580 33.0%
TOTAL $232,077 100.0%
4810 White Bear Parkway • White Bear Lake, Minnesota 55110 • 612/426 -7000 • FAX /426 -5004
To the Honorable Mayor •
Members of the City Council
City of Oak Park Heights
May 21, 1991
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 Md 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 $695,000 and City TIF revenue of approximately $464,000. 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% fa ter 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 CHANGE
First $100,000 3.30% 3.30% 3.20% 3.10% - 0.20%
Balance 5.25% 5.06% 4.95% 4.75% - 0.50%
Percent Change:
First $100,000 0.0% -3.0% -3.1% -6.1%
Balance -3.6% -2.2% -4.0% -9.5%
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 114,870 76,580
1993 -Est. 108,800 72,500
1994 -Est. 102,400 68,300
1995 -Est. 95,600 63,700
1996 -Est. 88,400 58,900
1997 -Est. 80,800 53,900
1998 -Est. 72,800 48,500
TOTALS $694,578 $463,794-
To the Honorable Mayor • •
Members of the City Council
City of Oak Park Heights
May 21, 1991
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,
1991 plus estimated final costs is as follows:
Construction Estimated
Costs Completed
Description @ 12/31/91 Project
Contractor $108,175 $110,000
Engineering 21,766 24,200
Other 9,399 10,200
Total Acuml/Estimated $139,340 $144,400
Projected Interest 25,600
Projected Total $170,000
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 $68,300 $68,300
1995 63,700 132,000
1996 58,900 190,900
1997 53,900 244,800
1998 48,500 293,300
As shown above, fl= City TIF revenue will not be available until 1994. Additionally, these
amounts are limited -- averaging only approximately $58,000 per year for five years.
To the Honorable Mayor
Members of the City Council
City of Oak Park Heights
May 21, 1991
Page 4
DEVELOPER TIF
The City's final committment 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 Statutes over the past several years, most of which has limited
TIF revenue and/or uses of TIF revenue (especially additional or excess TIF revenue).
Accordingly, a formula was devised to guard against future State Statute changes and to insure
substantial compliance with the intent of the City Council.
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 and 1992. Assuming full and prompt
payment of the 1992 property tax by the Developer, the City should receive TIF tax settlements of
$95,725 (each) in June and December. When this occurs, the City should remit $57,435 (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.
1
Robert J. Voto, CPA
cc: Mark Veirling
Dan Wilson
UVonne Wilson
Judy Holst
TIF File
Attachments
CITY OF OAK PARK HEIGHTS MALL92A)IS
T.I.F. PROJECTIONS -ST. CROIX MALL EXHIBIT A
(BASED UPON ZERO GROWTH AFTER 199111992.1 TAX ALLOCATION - COUNTY BASIS
TAX CITY/ CITY / TAX
COLL FAIR MARKET VALUE TAX CAPACITY VALUE TAX TOTAL CTY. ' DEVEL LOST FISCAL COLL.
YEAR BASE INCR. TOTAL BASE INCR. TOTAL RATE TAX SCH. T. I. F. T. I. F. DISP. TOTAL YEAR
1989 3,410,300 0 3,410,300 177,092 177,092 0.92031 164,136 ACTUAL 148,824 0 0 15,312 164,136 1989
1990 3,607,613 - 126,713 3,480,900 180,683 -6,309 174,374 0.90383 160,304 ACTUAL 140,408 0 0 19,896 160,304 1990
• 1991 3,816,342 1,144,358 4,960,700 186,952 56,853 243,805 106784 259,655 ACTUAL 159,031 5 2, 32 2 8,388 39,914 259,655 1991
1992 4,012,630 4,397,670 8,410,300 189,813 208,026 397,839 1.11561 446,274 ACTUAL 152,147 191,450 40,627 62,050 448,274 1992
1993 4,244,793 4,165,507 8,410,300 200,795 197,044 397,839 1.11561 443,833 EST. 164,399 181,342 38,483 59,610 443,834 1993
1994 4,490,388 3,919,912 8,410,300 212,413 185,426 397,839 1.11561 443,833 EST. 177,160 170,649 3 6,2 14 59,610 443,833 1994
1995 4,750,193 3,60,107 8,410,300 224,703 173,136 397,839 1.11561 443,833 EST. 191,071 159,339 3 59,610 443,833 1995
1996 5,025,030 3,385,270 8,410,300 237,704 160,135 397,839 1.11561 443,833 EST. 205,575 147,374 31,274 59,610 443,833 1996
1997 5,315,768 3,094.532 8,410,3011 251,457 146,382 397,839 1.11561 443,833 EST. 220,918 134317 28,588 59,610 443,833 1997
1998 5,623,328 2,786,972 8,410,300 266,006 131,833 397,839 1.11561 443,833 EST. 237,149 121,327 25,74 59,610 443,833 1998
TOTALS -1991 -1998 ONLY 3 1,507,650 1,158.520 243,134 459,624 3,368,928
NOTES: INITIAL BASE VALUE EQUALS THE 1988189 REAL ESTATE TAX VALUE AS FOLLOWS:
BLK 2 / LOT 1 1,140,100 PAR} <JNG / MALL EXPANSION 61402 -2150
• BLK 2 / LOT 2 1,654,700 MAIN MALL 61402 -2200
BLK 2 /LOT 3 438,600 MALL; MALL EXPANSION 61402 -2250
BLK 2 / LOT 4 26,600 MALL / MALL EXPANSION 61402 -2300
BLK 21 LOT 5 150,300 MALL- THEATER 61402 -2350
TOTAL MKT. VALUE 3,410,300
TOTAL MARKET VALUE GRAINS TO SET AMOUNT AT 1992 WITH 0 % ANNUAL INC DIREASES THEREAFTER
ANNUAL ECONOMIC ADJUSTMENT FACTOR (APPLIED TO BASE) PER WASHINGTON COU14TY 0.057858
LOST T. I. F. REPRESENTS T. I. F. TAXES IN EXCESS OF 199 TAX CAPACITY RATE OF .92031
MALL920.XLS
CITY OF OAK PARK HEIGHTS
T.I.F. PROJECTIONS -ST. CROIX MALL EXHIBIT B
( BASED UPON ZERO GROWTH AFTER 1991/1992.)
TAX FAIR MARKET VALUES TAX TOTAL TAX NET DEVEL
COLL ADJUST. TAX INCR. PROP. INCR. LOST INCR. T I F NET T. I. F. ALLOCATION PERC. PERC.
YEAR TOTAL BASE INCRE. FACTOR TAX TAX T I F TAX '60 %' DEVEL. CITY TOTAL DEVEL. CITY
1989 3,410,300 3,410,300 0 01100000
1990 3,480,900 3,607,613 - 126,713 - 0.036402
1991 4,960,700 3,816,342 1,144,358 0.230685 259,655 60,710 8,388 52,322 30,908 30,908 21,414 52,322 59.1% 40.91
1992 8,410,300 4,012,630 4,397,670 0.522891 446,274 232,077 40,627 191,450 114,870 114,670 76,580 191,450 60.0% 40.0%
3 4,244,793 4165 507 0.495286 443 833 213 824 38 483 181
1993 8 410.00 , 341 108,805 108,805 72,536 181,341 60.0% 40.0%
1994 8,410,300 4,490,388 3,919,912 0.466085 443,833 206,864 3 6,2 14 170,650 102,390 102,390 68,260 170,650 60.0% 40.0°
1995 8,410,300 4,750,193 3,660,107 0.435193 443,833 193,153 33,813 159,340 95,604 95,604 63,736 159,340 60.0% 40.0%
1996 8,410,300 5,025,030 3,385,210 0.402515 443,833 178,649 31,274 147,375 88,425 88,425 58,950 147,375 60.0% 40.0%
1997 8,410,300 5,315,768 3,094,532 0.367945 443,833 163,306 28,588 134,718 80,831 80,831 53,887 134,718 60.0% 40.0%
1998 8,410,300 5,623,328 2,786,972 0.331376 443,833 147,076 25,747 121,329 72,797 72,797 48,532 121,329 60.0% 40.0%
3,368,927 1,401,659 243,134 1,158,525 694,630 694,630 463,895 1,158,525 60.0% 40.0%
•
NOTE: THE ANNUAL ECONOMIC INDEX FACTOR HAS BEEN CHANGED FROM
1.91 % TO 5.7858 % IN ACCORDANCE WITH THE FINAL CERTIFICATION
RECEIVED FROM THE WASHINGTON COUNTY ASSESSOR'S OFFICE
NOVEMBER 27,1989.
7