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10/25/1983 - City Council SpecialOCTOBER 25, 1983 FINANCE COMMITTEE REPORT A finance committee meeting was held at 11:30 a.m. on October 25, 1983 in the police department conference room for the purpose of further reviewing tax increment financing as it relates to the application that was presented to the City by Minnesota Jockey Club, Inc. Those present at the meeting were the finance committee's chairman, City Councilmember Smith, and committee mem- member Mayor Blomquist; City staff including City Administrator Hedges, Director of Finance VanOverbeke and City Attorney Hauge; the City's special fiscal consultants, Wayne Burgraff and Don Keyser of Evenson Dodge; and Dave Kennedy of LeFevre, Lefler, Kennedy, O'Brien & Drawz, the City's bond counsel; Richard Helde of Faegre & Benson; Ernie Clark of Miller & Schroeder Municipals, Inc.; and Steve Pflaum representing the applicant, Minnesota Jockey Club, Inc. There was further discussion regarding the two options available for tax increment financing which are economic development and redevelopment. All the assumptions that were prepared by Even - son Dodge are based on the establishment of a district during the month of February 1984. It was stated that an economic development district could be feasible if the total bond issued did not exceed $4.5 to $4.8 million. It was further indicated by the consultants that an amount to exceed the $4.8 million number would require the City to consider the redevelopment option. The assumptions that were prepared are based on a general obligation bond issue. The fiscal consultant stated that assumptions would change dramatically if the issue were based on revenue. Reasons for supporting a general obligation issue as opposed to a revenue bond issue were then discussed. Steve Pflaum, representing Minnesota Jockey Club, Inc., stated that his group is prepared to designate a minimum assessed valuation agreeable to the City. The question was then raised as to whether site improvements or other improvements could be included into the special assessable bond, allowing greater flexibility with the tax increment bond issue. The applicant is in need of $4.7 million in capital costs, and with other costs such as capital interest, it is likely that the bond issue will be ap- proximately $6 million. The consultants stated that, more than likely, the economic development and redevelopment options are not feasible as revenue bond issues. They further stated it is also unlikely that the economic development issue is feasible under either revenue or general obligation. There was discussion as to whether the City could include another district within three to five years if the project does not meet its expectations regarding the bond structure. The finance committee discussed the feasibility of considering tax increment financing for the race track under the assumption that a general obligation redevelopment issue would be considered with the condition that the term of the bonds would be approximately 8 to 10 years and the fiscal disparities contri- bution would be required as a part of the bond issue. Finance Committee Report October 25, 1983 Page Two There was some brief discussion regarding the input that would be required from the consultants for the workshop session on Thursday, October 27. The meeting was adjourned at approximately 1:30 p.m. and the next meeting of the finance committee was to be scheduled at the workshop session October 27. TLH OCTOBER 25, 1983 FINANCE COMMITTEE REPORT A finance committee meeting was held at 11:30 a.m. on October 25, 1983 in the police department conference room for the purpose of further reviewing tax increment financing as it relates to the application that was presented to the City by Minnesota Jockey Club, Inc. Those present at the meeting were the finance committee's chairman, City Councilmember Smith, and committee mem- member Mayor Blomquist; City staff including City Administrator Hedges, Director of Finance VanOverbeke and City Attorney Hauge; the City's special fiscal consultants, Wayne Burgraff and Don Keyser of Evenson Dodge; and Dave Kennedy of LeFevre, Lefler, Kennedy, O'Brien & Drawz, the City's bond counsel; Richard Helde of Faegre & Benson; Ernie Clark of Miller & Schroeder Municipals, Inc.; and Steve Pflaum representing the applicant, Minnesota Jockey Club, Inc. There was further discussion regarding the two options available for tax increment financing which are economic development and redevelopment. All the assumptions that were prepared by Even - son Dodge are based on the establishment of a district during the month of February 1984. It was stated that an economic development district could be feasible if the total bond issued did not exceed $4.5 to $4.8 million. It was further indicated by the consultants that an amount to exceed the $4.8 million number would require the City to consider the redevelopment option. The assumptions that were prepared are based on a general obligation bond issue. The fiscal consultant stated that assumptions would change dramatically if the issue were based on revenue. Reasons for supporting a general obligation issue as opposed to a revenue bond issue were then discussed. Steve Pflaum, representing Minnesota Jockey Club, Inc., stated that his group is prepared to designate a minimum assessed valuation agreeable to the City. The question was then raised as to whether site improvements or other improvements could be included into the special assessable bond, allowing greater flexibility with the tax increment bond issue. The applicant is in need of $4.7 million in capital costs, and with other costs such as capital interest, it is likely that the bond issue will be ap- proximately $6 million. The consultants stated that, more than likely, the economic development and redevelopment options are not feasible as revenue bond issues. They further stated it is also unlikely that the economic development issue is feasible under either revenue or general obligation. There was discussion as to whether the City could include another district within three to five years if the project does not meet its expectations regarding the bond structure. The finance committee discussed the feasibility of considering tax increment financing for the race track under the assumption that a general obligation redevelopment issue would be considered with the condition that the term of the bonds would be approximately 8 to 10 years and the fiscal disparities contri- bution would be required as a part of the bond issue. Finance Committee Report October 25, 1983 Page Two There was some brief discussion regarding the input that would be required from the consultants for the workshop session on Thursday, October 27. The meeting was adjourned at approximately 1:30 p.m. and the next meeting of the finance committee was to be scheduled at the workshop session October 27. TLH