CC Minutes 2000 11 16CITY COUNCIL MEETING
NOVEMBER 16, 2000
The City Council convened the meeting at 5:18 p.m. after the EDA meeting completed its
business.
MEMBERS PRESENT: Nancy Mancino, Mark Senn and Linda Jansen
MEMBERS ABSENT: Steve Labatt
STAFF PRESENT: Don Ashworth, Scott Botcher, Todd Gerhardt and Bruce DeJong
FINANCIAL ADVISORS: Rob Tautges and Dave Mol, HLB Tautges Redpath, Mark Ruff,
Ehlers and Associates, Ron Batty, Kennedy and Graven.
PUBLIC PRESENT: Craig Peterson, Councilman-Elect, Robert Ayotte, Councilman-Elect, and
Eric Sorrona and Melissa Gilman, Chanhassen Villager, and Mark Kroskin
CONSIDER RESOLUTION INITIATING THE PROCESS FOR ESTABLISHMENT OF
A REDEVELOPMENT PLAN FOR THE CONSTRUCTION OF A MAINTENANCE
FACILITY AT LAKE ANN PARK:
After discussion, there was a motion to adopt the resolution passed by the EDA to initiate the
process. Jansen moved, seconded by Senn, to approve the resolution initiating the process for
establishment of a redevelopment plan for the construction of a maintenance facility at Lake Ann
Park. All voted in favor and the motion carried.
CITY COUNCIL WORK SESSION
NOVEMBER 16, 2000
The City Council started the work session for the Tax Increment Financing information. Scott
Botcher gave an introduction regarding the process that led us to this evening. The Council
started analyzing the debt service back in 1999. We had Ehlers start a debt study and during the
course of that study we realized that we had a larger problem with tax increment than anticipated.
At that point we asked HLB Tautges Redpath to prepare some regarding the deficit in TIF
District #1 at the end of that district's duration.
Mr. Dave Mol presented four scenarios. He showed each one of the possible situations that we
envision happening. Scenario #1 has the city defease for the maximum grant amount including the
amount of grant estimated for each year and qualified debt on this scenario shows a deficit upon
decertification of $4,030,000. Scenario #2 envisions defeasing an amount of $2.93 million in the
year 2001 prior to April 1st to the expenditures equal to the amount of increment to be received in
2001. That would leave a deficit upon decertification of $2,189,000 but that scenario is difficult
to do from a cash flow standpoint. It would require selling investments and we are not entirely
sure that would be accepted by the State Auditor's Office. Scenario #3 envisions the grant pool
City Council Minutes
November 16, 2000
staying open for one more year - that the legislature would extend that program. We would be
required to defease an additional amount in 2001 in order to receive grant proceeds in 2002. This
alternative suffers from the same difficulty as Alternative #2 in that it impacts cash flow and there
is no guarantee that the grant program will be extended. Scenario #3 would leave us with a
deficit upon decertification of $2,341,000. Scenario #4 was presented under the assumption that
increment received after April 1,2001, can be used to fund deficits that existed at April 1,2001.
That requires no additional defeasances but it is likely to be rejected by the Office of the State
Auditor. This option however would leave a deficit upon decertification of $964,000. The
question is if we can rely on the commonly understood definition of expend as it relates to
governmental accounting.
A discussion followed Mr. Mol's presentation regarding the amount of money left in the grant
pool and Councilman Senn talked about the option to refinance any debt that remains outstanding
at that point in time or at some point after April 1,2001. That was answered in the affirmative
that we can refinance that debt--it is general obligation tax increment debt so we always have the
option to refinance as a general obligation of the City. Mr. Batty discussed likely responses from
the Office of the State Auditor and discussed the penalties for noncompliance. They range from
being forced at District Court to repay any monies that are found to be in noncompliance. If no
settlement is reached at the County level or in District Court, then the Office of the State Auditor
can forward the findings to the Attorney General for possible prosecution. The Attorney General
is required to try to mediate any disputes and they also have the ability to determine
reasonableness of any possible solutions. If the Attorney General does decide to prosecute, the
prosecution goes to tax court and the penalty in tax court is that we would not be allowed to
create any new TIF districts in the next five years. Mayor Mancino discussed what would likely
happen to the growth and the tax base of the city during the course of that time to mitigate the
amount of levy that actually shows up on the individual property taxes. She also discussed other
alternative revenue sources. The meeting ended at approximately 8:00 p.m.
Prepared by Bruce DeJong, Finance Director
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