05-06-1997 Council Packet - Laserfiche WebLink

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I 1 '1 TO: FROM! DATE: Mayor and City Council Ron Moorse, City Administrator April 30,1997 ^ ■ SUBJECT: Facilitating Redevelopment in the Navarre Area--Tax Increment Financing The Culvers restaurant development project in Navarre, and the planned redevelopment of the adjacent church property, have generated discussion regarding whether those projects will serve as a catalyst for a significant redevelopment effort, or at least a significant facelift effort, for the Navarre commercial area. Although the first step in any significant redevelopment process is to develop a consensus regarding a vision or plan for the area, one of the first questions always asked is how any redevelopment would be funded. Commercial redevelopment is very difficult to accomplish and generally requires public funding —often a substantial level of public funding. Although there are grant programs available, successful grant applications generally include leveraging of substantial private dollars and ciy dollars. Orono does not have funding available or plamied to provide significant assistance to a redevelopment effort in Navarre. Also, looking into future years the city will need to provide funding for other major items such as storm water improvement projects, street improvement projects, and sewer projects. Funding for any new expenditures will need to come from the city tax levy unless other sources are found. One funding source that is specific to redevelopment projects is Tax Increment Financing (TIF). Tax Increment Financing enables a city to use ''incremental" (additional) taxes generated by redevelopment projects in a designated district to provide financial assistance to facilitate redevelopment in the designated district. For example, if a parcel with an existing building valued at $200,000 is redeveloped with a building valued at $1,200,000, the property taxes related to the additional $1,000,000 of valuation, for all taxing jurisdictions (i.e. city, county and school district) would remain in the TIF district. These funds would then be available to facilitate both the specific development occurring on the parcel and other redevelopment in the district. A TIF district can include both commercial redevelopment areas and areas of housing in need of redevelopment or rehabilitation. It is then possible to use the additional taxes generated by commercial redevelopment to assist the redevelopment or rehabilitation of housing. If the City Council determines Tax Increment Financing may be worth exploring, now would be a very opportune time to set up a Tax Increment Financing district in the Navarre area. The reason for this is that the proposal for the church property redevelopment may be brought to the Planning Commission within a fairly short time period. Also, the Rick's Super Valu expansion may proceed at any time. If the TIF district is set up before construction proceeds on these projects, the additional V'.