Review of Bond Regulations and Tax Increment

Purpose:  Provide Input on City Bonding and Tax Increment Financing

At its meeting of July 13, 2016, the Charter Commission had asked questions related to bond regulations in regard to capping debt limits on City bonding, issuing debt through the EDA, Conduit Debt, and the like.   Also, questions were raised regarding how effectively Tax Increment Financing has been used in Ramsey,  and whether it has been effective in other cities.  To answer these questions, they asked that the Finance Director and the City's Financial Advisor (Stacie Kvilvang) be present at their next meeting. 

A brief overview of some of the questions raised:
      Debt limits:  The statutory limit on debt in the City of Ramsey (per MN Statute 475.53, subd.1) is 3% of the Assessors 
      Estimated Market Value of all taxable property within its boundaries.  Net debt is the amount remaining of unused debt  
      that the City still has in its capacity to use.  
              The City's current debt limit is as such:
                     Assessors Estimated Market Value:        $2,116,664,200
                     Multiply by 3% (State Statute)                                      .03
                     Statutory Debt Limit                                 $     63,499,926
                      Less:  Outstanding Debt Paid Solely
                                  From Taxes                                      (25,720,000)**
                      Ramsey's Unused Debt Limit                   $    37,779,926

                   **Outstanding Debt Uses: 
                          Road Reconstruction    $  2,855,000
                          Fire Station 2                $  4,015,000
                          Muni Center                  $14,705,000
                          Ramsey Blvd                 $  2,835,000 (County Reimburses City annually for Debt Service) 
                          Capital Equip                 $  1,310,000
                               Total                         $25,720,000

The Municipal Center (Muni Center) debt was originally issued through the EDA (at the request of the City Council) and refinanced via CIP debt (Subject to reverse referendum) in 2012.  When the bond was issued through the EDA, the EDA leased the building back to the City.  When the City issued the CIP debt in 2012, the EDA lease was terminated and the City became the full owner.

The City has issued Conduit debt on a few projects in the City:  Knoll Properties, Pact Charter School.  Conduit debt is allowed by State Statutes 469.152 to 469.1651 (the Industrial Development Act) which allows the City the authority to issue commercial, industrial and health care revenue bonds or notes to attract or promote economically sound industry and commerce to the City.  State Statute 462C (the Housing Act) allows the City to issue housing revenue bonds to finance multi-family residential housing projects (City has not used conduit debt for this means).  Only government agencies are allowed to issue conduit debt (tax-exempt issues).

The City has four currently active TIF Districts:  TIF 8-Amcor;  TIF 9-ACCAP;  TIF 14-COR and TIF 15-Life Fitness.
The question related to the effectiveness of TIF in other communities will be answered at the meeting from the City's Financial Advisor.




 

No recommendation.  Review only

Review and presentation of bonding authority and Tax Increment Financing.