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I I I Council Meeting Minutes October 14, 1986 Public Hearings, continued In response to M. Jeppson's question comparing New Brighton to other cities, Schmidt stated the Financial Policy Advisory Board, following a review of other cities' policies, made a recommenda- tion to the council that a policy for Tax Increment Financing projects be flexible and that each development should be reviewed for its own merits. M. Jeppson stated that for the last four or five years our school district has been between a rock and a hard spot and was able to pass a referendum, and now the council is acting on a tax increment financing that over the first few years will cost the school district about $30,000 a year. M. Jeppson stated he appreciates long range planning and noted in the year 1994 we will have generated as much tax by the new building as opposed to the smaller building, which is good, but in 16 years the city could come out with a better plan (start with a smaller building, collect the $30,000 revenue each year, and plan in the future to do more development where there are ways of coming out ahead). As a general statement, Benke said a lot of development in New Brighton which has used tax increment financing assistance probably would not have happened without that assistance, primar- ily because it is so easy for developers to go not very far north- east or west to buy land a lot cheaper and without soil problems. Sinda stated something we might want to discuss with Jim Casserly is that there is no loss to the school system in a tax increment situation because state aid fluctuates so there would be a very small difference. Benke stated there is a short-range investment for a long-range payoff . M. Jeppson, in light of federal cutbacks seen in cities, feels it should be considered; Benke stated with the proposed changes, by April of 1987 we could be looking at an entirely different situation for future development, which is something with which we will have to live, and stated the city is concerned about potential changes as well. M. Jeppson asked for a definition of "write-down" as it pertains to this project; Locke explained it is a technique for providing assistance to a project, land has value, you sell it for less as an incentive; Benke stated, in this particular case, the increment is basically targeted at increasing quality which gets into con- struction methods that basically make up the difference between the two- and the three-story buildings. M. Jeppson does not believe the terminology should be used with this project. M. Jeppson also stated that this whole project was based upon the fact that this was an economic hardship because 1.2 acres of the developers' 4.4 acres was under water. M. Jeppson asked if the acquisition of 25 percent more land changes the status of the economic hardship. Page Eight