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