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Tax Abatement Bonds Presentation City of Marshall, Minnesota

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Presentation on theme: "Tax Abatement Bonds Presentation City of Marshall, Minnesota"— Presentation transcript:

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2 Tax Abatement Bonds Presentation City of Marshall, Minnesota
May 9, 2017 PRESENTERS: Mikaela Huot, Vice President Terri Heaton, Senior Vice President

3 Proposed Project Components
Bike Path $105,000 Independence Park, parking lot $227,314 Other bond related (financing and issuance) $ 19,296 Total $351,610

4 Financing Ability to finance in several ways
Abatement provides the lowest cost option due to the general obligation repayment pledge One bond issue for multiple projects Creating abatement provides authorization to issue bonds Proposed bonding also combined with other purposes that are not tax abatement

5 Public Hearing on Proposed Tax Abatement
Portion of proceeds used for public infrastructure improvements related to bike paths Proceeds from existing tax base benefitting to be recaptured from general city debt levy

6 Public Hearing on Proposed Tax Abatement
Proceeds used for public infrastructure improvements related to Independence Park parking lot

7 Abatement: What is it? How Does it work?
Economic development tool Not an actual abatement or non-payment of taxes All properties identified pay taxes just like every other property Created by Resolution Benefiting properties are identified and the city tax rate is applied to the tax capacity the maximum annual levy allowed to be pledged to the bonds Fixed levy for the term of the bonds to all properties

8 Tax Abatement Basics Defined in Minnesota Statutes to (as amended) NOT an actual abatement of taxes Permits levy of taxes for application toward development purposes Adopted by resolution at a noticed meeting (does not require property owner consent) Abatement resolution indicates terms: amount, length, public benefit, etc.

9 Tax Abatement Eligible Costs
Improvements to private property Finance or provide public infrastructure Acquire or construct public facilities If bonds are issued, eligible costs only include public improvements that benefit the property, acquisition and conveyance of land or other property, reimbursements to the property owner for the cost of improvements made to their property, or costs of issuance

10 Tax Abatement Constraints
No back-to-back abatements Eight years must pass before a new abatement may begin on the same parcel Cannot be applied within TIF districts, but can be used after TIF decertification Maximum duration of 15 years if three participants (City, County & SD), 20 years if two or fewer (20 years city only for this proposal)

11 Tax Abatement Constraints cont.
If Tax Abatement Bonds issued - principal may not exceed the estimated sum of total abatements Maximum aggregate annual abatement for any taxing entity is the greater of: 10% of the net tax capacity or $200,000 2016 net tax capacity approximately $10.9M Maximum parcel abatement is subdivision’s tax rate times net tax capacity of parcel

12 Tax Abatement – Project Examples
Infrastructure Improvements New Interchange Highway Improvements New Frontage Road Public and private improvements for Development Construction of Community Center/Senior Center Civic Center or Theater Construction of Recreational Facility or Park Improvements

13 Abatement Bond Specifics
Estimated total issue sources and uses of $351,610 Sources Par amount of $325,000 Surface water mgmt funds of $26,610 Uses Project costs of $332,314 Costs of Issuance, Capitalized interest, rounding of $19,296 Abatement would be established in 2017 10 year term

14 Proposed Tax Abatement Areas

15 Proposed Tax Abatement Areas

16 Proposed Abatement Bonds Debt Schedule for financing of Public Improvements

17 Schedule of Events – Next Steps
May 9, 2017 City Council Meeting Hold Abatement hearing Consider adoption of resolution approving tax abatement Authorize the sale of bonds

18 Schedule of Events – Next Steps cont.
Week of May 29, 2017 Bond rating call June 13, 2017 Sale of bonds July 13, 2017 Settlement of bonds, receipt of bond proceeds

19 Questions & Public Comment
Recommend motion to close hearing after any discussion Staff recommends Council approve the resolution approving property tax abatement related to bike path and Independence Park parking lot improvements

20 Questions Mikaela R. Huot, Vice President
Terri Heaton, Senior Vice President Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN


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