City Council Meeting Date: December 6, 2016
To: Mayor and City Council
City Administrator
From: Melanie Lammers, Finance Director
Title
Consider Presidential Commons TIF Loan
Body
Action Requested:
The Northfield City Council consider adoption of the attached resolution approving a $15,000 loan to the Presidential Commons TIF District from the TIF #4.
Summary Report:
Presidential Commons is a tax increment district created in 1999 between the HRA and Northfield WNS Inc. The project was for 84 townhomes, 75 of the units were to be made into affordable housing with income limits for the buyers. The district is not producing enough revenue to cover its bond payments. This has been going on for several years. According to State Statute, we are not allowed to let the cash balance of a TIF district go negative. In 2013, Council approved a loan of $50,000 to the Presidential Commons District, from the TIF #4 District. Another $50,000 loan was approved in 2014, also from the TIF #4 District. Currently, the district is expected to have around a $10,000 - $12,000 shortfall. The 2017 increment will also not be enough to pay the bonds, and we do not anticipate the district to be able to pay its debt without assistance for the next several years.
The bonds for Presidential Commons were refunded in 2007, and go through 2022. The interest rate on the current bonds is about 5.5%. The Presidential Commons District is due for decertification in 2026.
We need to fix the revenue shortage situation for this Tax Increment District. For the immediate future, staff will be requesting a $15,000 loan from the TIF #4 district. This is where the current loaned money is from, and the TIF #4 District is able to take on this small of a dollar amount. For the long term, you will see information on this in January. The bonds for Presidential Commons are callable in Feb of 2017. If the interest rates stay close to where they are at, we anticipate being able to get a lower...
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