EDSR AGENDA MEMO WORKSESSION 02-05-2001 , / (
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c,
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City of
Elk , River MEMORANDUM
TO: Mayor & City•Council
Economic Development Authority
Housing & Redevelopment Authority
FROM: Cathy Mehelich, Director of is
Development
DATE: February 5, 2001
SUBJECT: Agenda Memo for Worksession
Issue
• This is a joint meeting of the City Council, Economic Development Authority, and
Housing and Redevelopment Authority for the purpose of reviewing two primary
economic development finance tools.
Sid Inman, from Ehlers and Associates, Inc. will be at the meeting to present a
summary of how the Tax Increment Financing and Tax Abatement programs work
and an update on recent statutory changes. Requirements under the Business Subsidy
Law and impacts of legislative proposals will also be discussed.
Background
The City of Elk River currently administers ten active tax increment financing
districts. One of the ten active districts is a housing district, and the others consist of
four redevelopment districts and five economic development districts. For the year
2000 the City's percentage of captured TIF/total tax capacity was 1.06%. This
percentage is among the lowest as compared to area cities such as Monticello (3.85%)
and Anoka (16.45%). Elk River's percentage of TIF/total tax capacity is also among
the lowest compared to similar metro and non-metro cities. Attached is a summary of
tax increment finance statistics among other cities as listed in the League of MN Cities
Magazine(Sept. 2000).
III
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • TDD & Phone (763)441-7420 •Fax (763) 441-7425
Tax abatement is a relatively new economic development finance tool to the City of
• Elk River. The attached Tax Rebate Financing Policy was adopted by City Council
action on April 10, 2000. The City's first use of the tax rebate program was used
shortly thereafter in May 2000.
A Tax Increment Financing Policy was adopted by the City Council in August 1991.
In March 2000, the attached TIF Policy was revised to comply with new state statutes
and to more clearly state the City's position for the use of TIF.
The primary purpose of these finance tools continues to be to encourage desirable
development or redevelopment that would not otherwise occur but for the assistance
provided. Staff feels the tax increment financing and tax abatement programs have
proven to be significant economic development finance tools for the City of Elk River
over the past couple of years. It is appropriate for the City to review its policies for
these two programs on a regular basis to comply with statutory changes and to reflect
the development priorities of the City of Elk River.
It is anticipated that this worksession will last between 60 and 90 minutes.
Attachments
• Tax Increment Finance Statistics
• • Tax Rebate Financing Policy
• Tax Increment Financing Policy
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