April 26, 2016 PRESENTER: Doug Green, Vice President

Proposed Use of Funds Ballfield Improvements $2,709,930 For related development of relocated from Channel Parkway including other funding from sales taxes & other of approximately $2,300,000. Bike Trail Reconstruction $ 120,276 For the reconstruction of two existing bike trail segments south of Avera from South Hill Street to South Bruce Street and adjacent to Holy Redeemer from East Lyon Street to Jean Street. Camden Regional Trail improvements$ 69,794 For new construction, signage, and kiosks for the trail matching other State and Federal Funds of approximately $430,000. Total $2,900,000 2

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 3

Public Hearing on Proposed Tax Abatement Proceeds from existing tax base benefitting to be recaptured from general city debt levy 4

5 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

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. 6

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 7

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) 8

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 – 2015 net tax capacity approximately $10.5M Maximum parcel abatement is subdivision’s tax rate times net tax capacity of parcel 9

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 10

Abatement Bond Specifics Estimated project costs of $2,900,000 –Estimated par amount of $2,900,000 –Abatement would be established in 2016 –20 year term City participation only 11

Proposed Tax Abatement Area 12

Proposed Abatement Bonds Debt Schedule for financing of Public Improvements 13

Bond Rates – 5 year history 14

15 Schedule of Events – Next Steps April 26, 2016 City Council Meeting –Hold Abatement hearing –Consider adoption of resolution approving tax abatement –Authorize the sale of bonds

16 Schedule of Events – Next Steps cont. Week of May 9, 2016 Bond rating call May 24, 2016 Sale of bonds June 23, 2016 Settlement of bonds, receipt of bond proceeds

Questions & Public Comment Recommend motion to close hearing after any discussion Staff recommends Council approve the resolution approving property tax abatement related to baseball field and trail and pedestrian improvements 17

18 Questions Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN