1992-10-27 - Laserfiche WebLink

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I I I Council Meeting Minutes October 27,1992 Page 7 Council Business, continued Council Business The City received from the Internal Revenue Service a technical advise Bond Sale memorandum, The effect of the memorandum is to call into question the tax exempt status of the tax increment bonds which include the development agreements, The City has not done anything unusual, it was a development agreement supported by an assessment agreement which is a very standard type of agreement. LeFevere's office does not feel it can issue a tax exempt opinion on these bonds, given the current status. According to the services memorandum, the aspects of the development agreement which renders the bonds taxable is that they are supported by the development agreement and assessment agreement, So LeFevere's office has concluded that the City can issue the tax exempt opinion if it releases all or a portion of the underlying development agreements. The primary objectives of the development agreements have been accomplished. However, there are assessment agreements in place which require the property be taxed and assessed at a certain minimum level determined by the County, In some cases, there is no continuing need for an assessment hearing, because the assessed valuation of the properties exceeds the minimal value established in the assessment. However, in other cases there may be properties which the assessed valuation is artificially supported by the assessment agreement. If the assessment valuation is lowered, the tax increment generated from the property will be reduced, It could be reduced below the current level, but it may not be reduced below the level that was anticipated at the time the bonds were originally issued. LeFevere is in the process of assessing any potential problems. Possibly, the potential loss in tax increment could be much less than the savings the City would realize in refunding those bonds, Staff is presently gathering information from the City's Bond Counsel. LeFevere said because the bonds will be delivered shortly, Council will need to approve the release of those development agreements deemed necessary by the Bond Counsel in order to preserve a tax exempt status. He suggested a special Council Meeting be scheduled on Wednesday. Childs said the best case scenario is to refund the bonds and remove the assessment agreements, but a worse case scenario is it would be more costly to remove the assessments than to not refund the bonds. The one encouraging thing is that the City can maintain 25 % of those agreements and release about 75%. Benke said it might be advantageous to continue the discussion to Wednesday, October 28, at 6:30 p.m. to review the updated information, Announcements and Uodates Announcements & Uodates The Association of Minnesota Municipalities Policy Adoption meeting will be November 5. LMC Meeting