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1i-1 Extend Decert of DT TIF CITY OF CHANHASSEN noo M,.rke: Boulevalr! PO 147 MN :J:í317 Administration 952227.1100 952 227.11 Hj Building Inspections 952227 1180 Fax 9522271190 Engineering P'!()I18 9522271HiO LJ52.227.1171J Finance 9522271140 Fnx.952.227.111O Park & Recreation 9522271120 95222!.111O 2310 CUUI!81 BJulev(.lrl PI ()11P, 952227 14(10 Fax 952 227.1404 Planning & Natural Resources PI'()IIP' 952227.1130 Fax 952.227.1110 Public Works 1591 ROnr! PIHll18 952227.1300 952227 131D Senior Center 9:)2.227,1125 Fnx 95222711!0 Web Site j_f¿ MEMORANDUM TO: Mayor City Council Members__ /.f.. ¡) Ai."/'\ , 'X¡!/b \ Bruce M. Dejong, Finance Direct~_V September 6, 2004 W' , 0' " FROM: DATE: SUBJECT: Authorize Application to Extend the Decertification Date of the Downtown TIP District As part of addressing our Downtown tax increment district shortfall, staff proposes to formally request an extension, the end of the year, from the Commissioner of Revenue. This will allow us to collect the second half tax settlement of increment and provide sufficient revenue to cover the deficit in that district. Background In 2003, the state legislature made several changes to the TIP Act. The most important, for our situation, were the items that addressed deficits. We took advantage of a statutory formula to extend our district by one year in 2003. This changed the decertification date from November 1, 2003 to November 1, 2004. The law also provides that if the statutory extension does not cover the deficit, then we are allowed to ask the Commissioner of Revenue for an additional extension of up to two years. Staff is recommending that we ask for only a two month extension of the district. This will provide sufficient funds to cover the deficit between the second half settlement and the Old Village Hall land sale. The Downtown TIP district properties will then be allowed to return to the general tax rolls for 2005 which will spread our tax levy over a larger amount of value which reduces the tax rate for everyone. The extension is desirable because the settlement date that the County Treasurer is required to send the funds to us is after November 1. While he is not prohibited from settling early with us, he has indicated that he will not. Staff and our advisors believe that we would still have an equity argument that since the taxes would be paid prior to November 1, the County is holding them in trust for the city and that we have constructively received the money. However, this is The City of Chanhassen · A (jICWillg wltli CITY OF CHANHASSEN Administration P11CI!8 952227t 1lìCl 1110 Building Inspections 952.2271180 952 22711jO Engineering 952 2271 1 GO Fax 952.227 1170 Finance 952.227 t 140 952227 t 1 Park & Recreation PI1CI'e 952227 1120 952.227 1110 952.227 1400 952227.14D4 Planning & Natural Resources PI'lcilt;- 952.2:71130 Fax 95222711 Public Works 1591 Park 95? ZU 13UU Fax 952 227 1310 Web Site The City of Chanhassen · A Tax Increment Transfers August 17, 2004 Page 2 of2 contrary to the practice that the Office of State Auditor has advised counties to follow. Staff has discussed this issue with representatives from Ehlers, HLB Tautges, Redpath, and Kennedy and Graven. They believe that we should request the extension first as provided by statute. If the Commissioner decides to not grant us the extension, then we should pursue other avenues to get the second half settlement. Staff does not believe that there will be any difficulty proving that we had sufficient class rate reduction. Our increment loss from 1998-2004, without counting the growth in property value, exceeds $10,000,000. The total deficit that we need to clear is $2,332,147.63. This will be covered through a combination of the taxes still due to the TIF district which total $1,964,729.29 and the remaining $367,418.34 plus interest will come from the sale of the Old Village Hall property. Recommendation Staff recommends that the City Council authorize Staff to make application for an extension of the downtown TIP district through December 31, 2004. This action requires a simple majority of those present at the meeting. Enclosure: Tax Increment Loss Spreadsheet Balance Sheets for the TIP District Funds .,.... ~ 1:5 ~ ï::::: .Q ~ ~ o CIJ !Lo.. ¡:: § e:O 3: >- 01::::: C æ ~>- o I r-- 0 N N 0'> .,.... U") CD (/) "': "': r-- ~ N .,.... (\") CD (/) () e: 00 0 00 .,.... 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N N N N N ..... .8 0 £ e: 3: 0 0 0 BALANCE SHEET City ofChanhassen Page: 1 9/3/2004 1:06 pm As of: 9/30/2004 Balances Fund Type: 400 Capital Projects Funds Fund: 460 - TAX INCR 1 - DOWNTOWN #025 Assets Acct Class: 100 Cash 1010 Cash Acct Class: 100 Cash Acct Class: 107 Taxes Receivable 1070 Delinquent Taxes Receivable 1081 Current Taxes Receivable Acct Class: 107 Taxes Receivable Acct Class: 110 Accounts Receivables 1190 Notes Receivable 1193 Misc Accounts Receivable Acct Class: 110 Accounts Receivables Acct Class: 120 Special Assessments Receivable 1210 Spec Assessments Rec Current 1230 Spec Assessments Deferred 1245 Spec Assessments Rec HRA 1250 Due From County Acct Class: 120 Special Assessments Receivable Acct Class: 130 Receivables 1300 Investment Interest Receivable 1325 Due From Other Governments Acct Class: 130 Receivables Acct Class: 140 Due From Other 1400 Due from Other Funds Acct Class: 140 Due From Other Acct Class: 150 Prepaid Expenses 1550 Prepaid Expenses Acct Class: 150 Prepaid Expenses Acct Class: 160 Fixed Assets 1601 Land Held for Resale Acct Class: 160 Fixed Assets 768,249.75 768,249.75 270,035.54 0.00 270,035.54 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11,582.51 0.00 11,582.51 0.00 0.00 410.80 410.80 Total Assets 417,600.00 417,600.00 1,467,878.60 Liabilities Acct Class: 200 Payroll Payable 2001 Social Security Taxes Payable 2009 Deferred Compensation Payable 2010 PERA Payable 2019 Due to Other Governmental Unit Acct Class: 200 Payroll Payable Acct Class: 202 Accounts Payable 2020 Accounts Payable Acct Class: 202 Accounts Payable Acct Class: 205 Salaries Payable 0.00 0.00 0.00 0.00 0.00 0.00 0.00 BALANCE SHEET City of Chanhassen Page: 2 9/3/2004 1:06 pm As of: 9/30/2004 Balances Fund Type: 400 Capital Projects Funds Fund: 460 - TAX INCR 1 - DOWNTOWN #025 Liabilities Acct Class: 205 Salaries Payable 2050 Salaries Payable Acct Class: 205 Salaries Payable Acct Class: 210 Due to Other 2460 EXPENSE 0.00 0.00 0.00 0.00 Acct Class: 210 Due to Other Acct Class: 220 Deferred Revenue 2230 Deferred Revenue - Taxes 2231 Deferred Revenue-Spec Assmts 2232 Deferred Revenue - Misc. Acct Class: 220 Deferred Revenue Total Liabilities 270,035.54 0.00 417,600.00 687,635.54 687,635.54 Reserves/Balances Acct Class: 260 Fund Balance 2600 Fund Balance 2699 Change In Fund Balance Acct Class: 260 Fund Balance Acct Class: 270 Control Accounts 2710 Revenue Control Acct Class: 270 Control Accounts 779,844.81 398.25 780,243.06 0.00 0.00 Total Reserves/Balances 780,243.06 Total Liabilities & Balances 1,467,878.60 BALANCE SHEET City of Chanhassen Page: 1 9/7/2004 2: 18 pm As of: 9/30/2004 Balances Fund Type: 300 Debt Service Funds Fund: 349 - 1998F TAX INCREMENT REFUNDING Assets Acct Class: 100 Cash 1010 Cash Acct Class: 100 Cash Total Assets -3,100,397.38 -3,100,397.38 -3,100,397.38 Liabilities Total Liabilities 0.00 Reserves/Balances Acct Class: 260 Fund Balance 2600 Fund Balance 2699 Change In Fund Balance Acct Class: 260 Fund Balance Total Reserves/Balances -336,563.63 -2,763,833.75 -3,100,397.38 -3,100,397.38 Total Liabilities & Balances -3,100,397.38