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HomeMy WebLinkAboutCouncil Information Memorandum 01-20-2000DATE: January 20, 2000 TO: Mayor and City Council FROM: Dwight D. Johnson, City Manager SUBJECT: State Auditor's correspondence on TIF districts Last week, I wrote you a note indicating that the State Auditor's office is questioning the procedural correctness regarding how the City transferred some Tax Increment Financing revenues from one TIF district to another in what is known as a "pooling" concept. Attached is the correspondence between Dale Hahn and the State Auditor's office as well as correspondence from our bond counsel, John Kirby on the subject. Staff met with Mr. Kirby and City Attorney Roger Knutson last Wednesday. We continue to believe that our method of transferring funds meets both the law and sound accounting practices. Mr. Hahn and Mr. Kirby plan to meet with Mr.James Silen of the State Auditor's office on January 24th. They will try to arrive at some reasonable arrangement that will settle the matter at that time. We will let you know the results of that meeting. 01/20/00 THU 13:37 FAX 16123402644 DORSEY WHITNEY DOR.SEY &. WHITNEY LLP MINNEAPOLIS PILLSBURY CENTER SOUTH BILLINGS P41WyoRR 220 SOUTH SIXTH STREET CREAT FALLS 9EATTL$ MINNEAPOLIS, MINNESOTA 554()2-2498 MISSOULA DEN`/ER TELEPHONE: (612) 340-2600 BRUSSELS IWASHINCTON, D.C. FAX: (612) 340-2868 FARCO DIIS MOINES HONG KONG ANCHORAGE P QCHESTETL LONDON JOHN D. KIRBY SALT LAKII CITY COSTA MESA orcuunsci VANCCIWKR (612)340-566.5 Fax (612) 340.7644 kirby.john®dorseylnw.Com January 20, 2000 Mr. Dale Hahn Finance Director City Hall 3400 Plymouth Boulevard Plymouth, MN 55447 Re: Tax Increment Matters - Office of State Auditor Letters Dear Dale: As we have discussed, based upon the recent exchange of correspondence between the Office of the State Auditor (OSA) and the City, OSA is questioning the propriety of certain transfers made between the fitnds of various tax increment financing districts within the City's Development District No. 7 (herein, the Project Area). As set forth in the most recent letter from OSA, dated January 6, 2000, OSA is apparently taking the position that the transfers, in themselves, represent an "expenditure" of tax increment funds. Since the transfers are not specifically set forth as line items in the tax increment plan budgets of the tax increment districts, OSA questions whether the tax increment funds are being expended in accordance with duly adopted tax increment plans. As I noted in our discussions, the City's approach in its tax increment plans relating to the Project Area, going back to the original adoption of those tax increment financing plans in 1988 and 1989, has been to concentrate on the ultimate use of the tax increment funds in determining whether the expenditure was for an authorized purpose, rather than to regard any inter -district transfer as an expenditure in itself. Each of the tax increment plans adopted for the tax increment districts in the Project Area contains a listing of authorized improvements within the particular tax increment district for which the plan was prepared, but also reserves the right to expend tax increment from the district for improvements within any of the other tax increment lih 002 01/20/00 THU 13:37 FAX 16123402644 DORSEY WHITNEY Z003 DORSEY & WHITNEY LLP Mr. Dale Hahn January 20, 2000 Page two districts within the Project Area and specifically lists the authorized improvements within the other tax increment districts. Consequently, if one focuses on the ultimate use of the tax increment funds transferred from one tax increment district to another, one finds that the funds transferred were ultimately expended on an improvement listed as an authorized improvement in the tax increment plan for both the district from which the funds were transferred and the district to which the funds were transferred. So, the position of the City is that the tax increment has, in fact, been expended for authorized improvements in accordance with the relevant tax increment financing plans (and the inter -district transfers are not themselves the "expenditures" which should really count in malting this determination). To illustrate the conclusions of the preceding paragraph, one transfer OSA highlighted involved the transfer of $1,306,997 from TIF District 1-5 to TIF District 7-1 in 1997. OSA is apparently objecting to the fact that the tax increment financing plan budgets for TIF District 1-5 and TIF District 7-1 did not contain a line item for the transfer out (in the case of TIF District 1-5) and for the transfer in (in the case of TIF District 7-1). The City's approach is to look at the question somewhat differently - i.e. for what was the $1,306,997 actually expended? In fact, the funds were applied toward the payment of costs of improvements specifically listed in the TIF District 7-1 budget. Since the TIF District 7-1 improvement budget (along with the improvement budgets of the other tax increment districts in the Project Area) was incorporated into the tax increment plan and budget for TIF District 1-5, the City believes the $1,306,997 was spent for authorized budget items in accordance with the tax increment financing plan adopted for TIF District 1-5, and the inter -district transfer should be viewed as a bookkeeping step on the way to the ultimate authorized expenditure. As I indicated in our discussions, from a legal standpoint I believe the City is on solid ground in arguing that the tax increment funds have in fact been expended for authorized purposes in accordance with duly adopted tax increment financing plans as outlined above, and I am reasonably hopeful the City can work out a solution with OSA which would accommodate . any administrative problems OSA might have while still recognizing the underlying validity of the City's tax increment expenditures in the Project Area to date. rel truly John D. JDK/dep �PIT OR "w �P6'1LE DUry� OY.'•� z; JUDITH H. DUTCHER STATE AUDITOR STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR Dale Hahn, Finance Director City of Plymouth 3400 Plymouth Blvd. Plymouth, MN 55447 Re: City of Plymouth Dear Mr. Hahn: SUITE 400 525 PARK STREET SAINT PAUL, MN 55103-2139 Please respond to: Tax Increment Financing Division 505 Spruce Tree Centre 1600 University Ave. W. St. Paul, MN 55104 January 6, 2000 (651) 296-2551 (Voice) (651) 296-4755 (Fax) stateauditor@osa.state.mn.us (E -Mail) 1-800-627-3529 (Relay Service) TIF Division Phone: (651) 642-0767 TIF Division Fax: (651) 642-0769 Direct Dial: (651) 642-0823 1997-98 Tax Increment Financing (TIF) Reports The Office of the State Auditor (OSA) has received your letter dated December 22, 1999. Thank you for your timely response to our inquiry. Your letter was helpful. However, there remain several concerns which need to be resolved. As was mentioned several times in the GSA's letter dated November 29, 1999, tax increment must be used in accordance with the TIF plan. Accordingly, it is important that the TIF -plan budget be correctly reported. Based on materials and reports which the city has submitted to our office, we question whether the TIF -plan budget has been correctly reported. We also wish to determine with greater clarity the authorization in the respective TIF plans for various transfers made between TIF districts. In this regard, you should realize that transfers, like other expenditures of tax increment, must be made in accordance with the TIF plan. The question of whether a transfer has been properly authorized is resolved by application of the Minnesota TIF Act rather than by reference to the Statements of the Governmental Accounting Standards Board. In an attempt to better understand the City's position and eventually be able to resolve our concerns, I would like to schedule a meeting at your office where you can indicate the budget records on which you relied in preparing the 1997 and 1998 TIF reports. I would appreciate being able to review any notes and workpapers you used in the preparation of the 1997 and 1998 TIF reports. Please call me at (651) 642-0823 to schedule a meeting at your convenience. Recycled paper with a minimum of 15% post -consumer waste "" " An Equal Opportunity Employer OFFICE OF THE STATE AUDITOR Dale Hahn, Plymouth Finance Director January 6, 2000 Page 2 Thank you for your cooperation in this matter. Sincerely, ��)- th, �\- Q --- James Silen Tax Increment Financing Division December 22, 1999 James Silen Office of the State Auditor -T I F Division 505 Spruce Tree Center 1600 University Ave. W. St. Paul, MN 55104 Re: 1997 and 1998 Tax Increment Reports Dear Mr. Silen: I am responding to your letters regarding the 1997 and 1998 Tax Increment Financing Reports. For all TIF Districts, you are looking for the authorization for the transfers out. I believe that the City has the authorizaton for the transfers out in all cases based upon the City's Pooling of Tax Increment Districts Plan for Development District No. 7. The TIF Plan states that the City reserves the right to use tax increment for any project which is part of the Development Program for Development District No. 7 which includes all of the City's districts from No. 1-2 through 7-1. Hence, each TIF Plan authorizes the expenditure of TIF funds from that district not only for activities within that District, but also for listed activities within the other Districts. The individual plans do not have budgets for the transfers, because the transfers are treated as residual equity transfers, which do not have budgets under generally accepted accounting principles. The Government Accounting Standards Board's Codification, Section 1800.106 specifically cites that residual equity transfers are "nonrecurring or non rountine transfers of equity between funds." A specific example cited is "transfers of residual balances of discontinued funds to the General Fund or Debt Service Fund." In contrast, operating transfers "reflect ongoing operating subsidies between funds." When the City establishes a new tax increment project we obviously never can "budget" for what the final fund balance will be. Over time we have had more successful projects than unsuccessful projects, as such we have had positive fund balances to transfer out to support other projects. Transfers of equity receive more visibility with the public and the City Council than making such transfers a part of the overall City budget. We have PLYMOUTH A Beautiful Place To Live 3400 PLYMOUTH BOULEVARD • PLYMOUTH, MINNESOTA 55447-1482 • TELEPHONE (612) 509-5000 ®,--*, www.d.plymouth.mn.us Page 2 consistently applied these principles and do not believe it is proper to amend budgets every time there is excess revenue, or a revenue shortfall in a district. Instead, we have adopted a TIF Pooling Plan that includes all project expenditures within the pool, separated only by which district the project expenditures are expected to be made in. Approving amended budgets each time there is excess revenue or a shortfall in any particular district, is misleading to the public, and would seem to be a cosmetic cover-up. We believe that our accounting methods results in a more conservative application of accounting principles. The City Council has approved all expenditures for all districts. With regard to the Administrative fees budget for District No 3-3; there is an error in the budget amount as reported, and this should be changed to reflect the budget amount of $240,500. In addition, the City will review the Administrative fees to ensure that charges do not exceed the budgeted amount of $240,500. For District No. 7-3, we will make the necessary changes in the report this year to reflect the correct decertification date December 19, 2006 that you have noted. For District No. 7-4, the TIF Plan states that "the City hereby elects and specifies that the maximum duration of the TIF District shall be through the year 2001". Based upon this sentence in the plan, the date of July 1, 2001 was wrong also. We will change the reports for 1999 to reflect the correct decertification date December 31, 2001. Lastly, for District No. 7-2; we will review the budget for this District, and look at amending it to properly reflect expected loan costs. If you have questions regarding my responses, please feel free to contact me at 612-509- 5301. Sincerely, Dale E. Hahn Finance Director cc: Dwight D. Johnson, City Manager John Kirby, Dorsey & Whitney Cliff Hoffman, Deloitte & Touche r �ptTOR O 0 ... . t `.;ay JUDITH H. DUTCHER STATE AUDITOR STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR Dale Hahn, Finance Director City of Plymouth 3400 Plymouth Blvd. Plymouth, MN 55447 SUITE 400 525 PARK STREET SAINT PAUL, MN 55103-2139 Please respond to: Tax Increment Financing Division 505 Spruce Tree Centre 1600 University Ave. W. St. Paul, MN 55104 November 29, 1999 Re: 1997 Tax Increment Financing Reports — Decertified Districts Dear Mr. Hahn: (651) 296-2551 (Voice) (651) 296-4755 (Fax) stateauditor@osa.state.inn.us (E -Mail) 1-800-627-3529 (Relay Service) TIF Division Phone: (651) 642-0767 TIF Division Fax: (651) 642-0769 Direct Dial: (651) 642-0823 The Office of the State Auditor (OSA) recently reviewed the 1997 tax increment financing (TIF) reports for the City.of Plymouth's decertified TIF districts. We request that you provide. further information to address several concerns raised by information the city reported. TIF District 1-5: 1997 TIF Authorityport The city reported transfers out on line 43 and lines 50 through52. The city has not reported a TIF -plan budget amount for the transfers out reported on line 43. The OSA has reviewed a copy of the district's TIF plan, as amended on April 18, 1988 and December 19, 1988, and was unable to find authorization in the amended TIF plan for the transfers out. In particular, the OSA was unable to find authorization for the reported transfer of $100,000 to TIF District 1-2 before January 1, 1997 or the reported transfer of $1,306,997 to TIF District 7-1 in 1997. A fundamental provision of the TIF Act is that all revenues derived from tax increment must be used in accordance with the TIF plan. Minn. Stat. § 469.176, subd. 4. Please explain where the district's TIF plan authorizes these transfers of the district's tax increment or what other authorization the city has relied upon to transfer out this district's tax increment. TIF District 3-2: 1997 TIF Authority Report The city reported transfers out on line 43 and lines 50 through 52. The city has not reported a TIF -plan budget amount for the transfers out reported on line 43. The OSA has reviewed a copy of the district's TIF plan, as amended on December 19, 1988, and was unable to find authorization in the amended TIF plan for the transfers out. In particular, the OSA was unable to find authorization for the reported transfer of $536,798 to TIF District 7-1 in 1997. A Recycled paper with a minimum of �' 15% post -consumer waste qM An Equal Opportunity Employer w , E OFFICE OF THE STATE AUDITOR Dale Hahn, City of Plymouth October 29, 1999 Page 2 fundamental provision of the TIF Act is that all revenues derived from tax increment must be used in accordance with the TIF plan. Minn. Stat. § 469.176, subd. 4. Please explain where the district's TIF plan authorizes these transfers of the district's tax increment or what other authorization the city has relied upon to transfer out this district's tax increment. TIF District 5-1: 1997 TIF Authority Report The city reported transfers out on line 43 and on lines 50 through52. The city has not reported a TIF -plan budget amount for the transfers out reported on line 43. The OSA has reviewed a copy of the district's TIF plan, as amended on December 19, 1988, and was unable to find authorization in the amended TIF plan for the transfers out. In particular, the OSA was unable to find authorization for the reported transfer of $155,000 to TIF District 1-2 before January 1, 1997, $5,000 to TIF District 4-1 before January 1, 1997, $748,869 to TIF District 6-1 in 1997, and $1,118,406 to TIF District 7-1 in 1997. A fundamental provision of the TIF Act is that all revenues derived from tax increment must be used in accordance with the TIF plan. Minn. Stat. § 469.176, subd. 4. Please explain where the district's TIF plan authorizes these transfers of the district's tax increment or what other authorization the city has relied upon to transfer out this district's tax increment. TIF District 6-1: 1997 TIF Authority Report The city reported transfers out on line 43 and on lines 50 through 52. The city has not reported a TIF -plan budget amount for the transfers out reported on line 43. The OSA has reviewed a copy of the district's TIF plan, as amended on December 19, 1988, and was unable to find authorization in the amended TIF plan for the transfers out. In particular, the OSA was unable to find authorization for the reported transfer of $100,000 to TIF District 1-2 before January 1, 1997 and the reported transfer of $415,000 to TIF District 4-1 before January 1, 1997. A fundamental provision of the TIF Act is that all revenues derived from tax increment must be used in accordance with the TIF plan. Minn. Stat. § 469.176, subd. 4. Please explain where the district's TIF plan authorizes these transfers of the district's tax increment or what other authorization the city has relied upon to transfer out this district's tax increment. If you have any questions, please call me at (651) 642-0823. Your prompt attention to this matter would be greatly appreciated. Please provide the requested information on or before December 24, 1999. Sincerely, a -;A\,— James Silen Tax Increment Financing Division �pITOR:.. t'4'NLL UU ryn+O1:1 '. JUDITH H. DUTCHER STATE AUDITOR STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR Dale Hahn, Finance Director City of Plymouth 3400 Plymouth Blvd. Plymouth., MN 55447 SUITE 400 525 PARK STREET SAINT PAUL, MN 55103-2139 Please respond to: Tax Increment Financing Division 505 Spruce Tree Centre 1600 University Ave. W. St. Paul, MN 55104 November 29, 1999 Re: 1998 Tax Increment Financing Reports Dear Mr. Hahn: (65 l) 296-2551 (Voice) (651)296-4755 (Fax) stateauditor@osa.state.mn.us (E -Mail) 1-800-627-3529Relay Service) TIF Division Phone: ((651) 642-0767 TIF Division Fax: (651) 642-0769 Direct Dial: (651) 642-0823 The Office of the State Auditor (OSA) recently reviewed the 1998 tax increment financing (TIF) reports for the City of Plymouth's TIF districts. We request that you provide further information to address several concerns raised by information the city reported. TIF District 3-3: TIF Authority Report 1. On line 39, the city reported a TIF -plan budget amount of $388,426 for administrative expenses. The original TIF plan, a copy of which the city has previously sent to the OSA, provides for administrative expenses in the amount of $240,500. Please explain the discrepancy between the budget amount provided in the original TIF plan and the budget amount reported on the TIF Authority Report. 2. On line 41, the city reported transfers out of $3,226,737 before January 1, 1998 and $2,407 in 1998 without indicating any budget amount for these transfers. A fundamental provision of the TIF Act is that all revenues derived from tax increment must be used in accordance with the TIF plan. Minn. Stat. § 469.176, subd. 4. Please explain where the district's TIF plan authorizes these transfers of the district's tax increment or what other authorization the city has relied upon to transfer out this district's tax increment. TIF District 7-1: TIF Authority Report 1. On line 41, the city reported transfers out of $1,771,605 before January 1, 1998 and $493,799 in 1998 without indicating any budget amount for these transfers. A fundamental provision of the TIF Act is that all revenues derived from tax increment must be used in ?;yRecycled paper with a minimum of 15% post -consumer waste qft An Equal Opportunity Employer OFFICE OF THE STATE AUDITOR Dale Hahn, Finance Director November 29, 1999 Page 2 accordance with the TIF plan. Minn. Stat. § 469.176, subd. 4. Please explain where the district's TIF plan authorizes these transfers of the district's tax increment or what other authorization the city has relied upon to transfer out this district's tax increment. 2. Please provide the OSA with a copy of the original TIF plan and any modifications for this TIF district. TIF District 7-2: TIF Authority Report On line 38, the city reported a budget amount of $40,000 for loan/note interest payments while reporting $102,414 in actual expenditure for this item ($52,371 + $50,043). It appears that the interest payment relates to a tax increment note reported on line 71. The city may wish to consider modifying its TIF -plan budget to authorize increased amounts of tax increment to be spent on loan/note interest payments which occur after the modification. Any modification of a TIF plan must adhere to the procedures set forth in Minn. Stat. § 469.175, subd. 4. A TIF -plan modification does not have a retroactive effect. Please indicate what corrective action, if any, the city proposes. TIF District 7-3: Municipality Report The city indicated on line 7 that the date of required decertification will be December 31, 2006. TIF District 7-3 is a soils condition district, and its certification request date, according to the city, is February 14, 1995. In the case of a soils condition district with a certification request date on or after May 2, 1988 and on or before June 30, 1997, the date of required decertification is 12 years from approval of the tax increment financing plan. The city reported on line 3 that the original TIF plan was approved on December 19, 1994. Therefore, it appears the date for required decertification is December 19, 2006, not December 31, 200_6 as the city reported. Please reexamine the city's records and indicate the correct required decertification date for this TIF district. TIF District 7-4: Municipality Report The city indicated on line 7 that the date of required decertification will be July 1, 2001. TIF District 7-4 is a redevelopment district, and its certification request date, according to the city, was August 17, 1995. In the case of a redevelopment district with a certification request date on or after June 1, 1993, the date of required decertification is 25 years from the date of receipt by the TIF authority of the first tax increment payment, or 20 years from the date of receipt by the TIF authority of the first tax increment payment if the authority elected to adhere to the provisions of Minn. Stat. § 469.175, subd. 1(b). On line 8, the city reported that it first received tax increment from this TIF district in 1998. The required decertification date of this TIF district must be later than July 1, 2001, unless the city provided an earlier decertification date in the TIF OFFICE OF THE STATE AUDITOR Dale Hahn, Finance Director November 29, 1999 Page 3 plan. Please reexamine the city's records and indicate the correct date of required decertification for this TIF district. If the city believes the decertification date is July 1, 2001, please explain how it made this determination. If you have any questions, please call me at (651) 642-0823. Your prompt attention to this matter would be greatly appreciated. Please provide the requested information on or before December 24, 1999. Sincerely, James Silen Tax Increment Financing Division James Lileks You can't always count on ` math geek' numbers After all, two are letters (i. e., i and e) and others may pass by as you drive gack in late 1999, Mr. George wrote to lament that he'd missed the point where his car odometer read .23,456.7. He wished cars would alert ,ou to key odometer moments — birth - lays, Social Security numbers and 'those math geek numbers" such as pi. Nell, this one is really going to make ,our head hurt, but it contains an inter - ;sting historical fact. From A Math Geek > Re. the odometer column, where someone referred to the three biggest "math geek" numbers: There are five big math geek numbers: 1, 0, pi, i (the square root of negative one) and e. If I may interject: This is why I am not n a math -related discipline. I and a are :tot numbers. They are vowels. Finding rowels in a math problem always both - :red me; it looked as though they'd wan- iered off from a composition textbook I -ould understand why z ended up in math problems; he was chronically un- deremployed, and was just picking up a few extra dollars. But neither i nor e need the work. I'm confused already, so let's just make it worse: > The square root of two is not partic- ularly important in and of itself, al- though it is usually the first irrational number discussed in beginningalge- bra. The proof that it is irrational (i.e., it cannot be represented as a ratio of two integers) is a nice, simple one. Discovering that it was irrational way back when threw the Pythagoreans into a tizzy—legend has it that the fellow who proved it irrational was drowned so that he couldn't spread the word.— but there are an infinite number of irrational numbers, so we don't count it as one of our "special" numbers. Emphasis added. They drowned him? Good Lord. Those were the days when math mattered. Imagine if that happened today. Time magazine would put it on the cover, of course. THE GROWING SCOURGE OF MATH VIOLENCE. Graffiti would spring up around town — strange algebraic scribbles, taunting messages (aVagaDro's dayz are ,NUMBERED). Wor- ried experts would cite the easy avail- ability of powerful, hand-held calculators flooding the streets. "In my day," said Sgt. Hank Fowler, "when two kids had a beef, they settled it with slide rules. Nowadays they have high-powered HP calculators capable of probability calcu- lus, operator precedence with value sub- stitution — well, you're going to see much more dangerous math as a result." But let's return to the unfortunate drowning of the mathematician. It re- minds me of a song we sang at summer Bible camp, which went as follows: What do you do with a drunken sailor? What do you do with a drunken sailor? What do you do with a drunken sailor ear -lye in the morning? The answer was always the same: Lord God, we've got to drown him. (Repeat.) And the appointed hour of sailor -drowning, of course, was ear -lye in the morning. It was nc drowning " for dealing Nor did am was the log souse to Da wouldn't h( Sorryabout really tied c Eh? Why ar way? And v execution c Bible camp I don't r( haps we we or admitte( wuz jokin!. lye in the rr, lowed by th, look so ang no need to morning. A broken boa we've got tc This son "Michael, A know what sailors. Wel Any info be greatly a back to odc > 1 too i Back in had a ca miles. H, few tent) parking circle, in .99. Glac before 21 Cambridge mismanaged funds, report says .A. state auditor's investigation found that the city improperly used more than $1.5 million. By Richard Meryhew Star Tribune Staff Writer The city of Cambridge mis- managed more than $1.5 million in funds generated by tax -incre- ment financing districts from 1980 to 1997, according to a state audi- tor's report released this week The 50 -page report stems from a two-year investigation to deter- mine whether the city was in com- pliance with state tax -increment financing (TIF) laws. It docu- mented 44 cases in which it said the city improperly transferred or spent money from a TIF district. The investigation was initiated by a state audit of the city's fi- nances in 1996 that documented widespread fiscal mismanage- ment from 1989 to 1995. That audit showed that mismanage- ment had cost Cambridge tax- payers $8.4 million and contrib- uted to a long-term debt of about $28 million. City officials have since raised tax and utility rates and cut jobs and services to reduce the long- term debt. "We have a recovery plan, and we have lived within our budget here" in recent years, Mayor Marlys Palmer said Tuesday. The 1996 audit also contended that the city illegally transferred funds from one of its 13 TIF dis- tricts to another, prompting the recent TIF audit. Tax -increment financing is a subsidy, usually given to develop- ers, that is repaid from higher property taxes generated by a de- velopment. Typically, a city sells taxable bonds to cover its costs for baying land or making property improvements. The development increases the value of the property and, consequently, the amount of taxes paid. State Auditor Judi Dutcher said Tuesday that the TIF investigation was„ the most extensive” of its kind conducted by her office, which has had oversight of the state's 1,900 TIF districts since 1996. The report was sent to city offs cials and the Isanti County at torney for review. In all likelihood the city will have to repay th money spent, Dutcher said. "I do want the citizens to bi assured that we are taking it ver. seriously," Palmer said. "We wil approach this very carefully." City officials have worked witl the state on the issue since De cember 1998, when the audito sent them a notice of noncompli ance regarding the TIF districts. "We did know this was corrin; out," Palmer said. "We just didn' know when." Cambridge, population 5,300 is about 40 miles north of the Twii Cities. January 21, 2000 CITY OF PLYMOUTH+ «Title» «FirstName» ((LastName» «Address 1» «City», «State» «PostalCode» SUBJECT: COUNTY ROAD 101 IMPROVEMENTS VOLUNTARY PURCHASE OF YOUR PROPERTY CITY PROJECT NO. 9005 Dear ((Title)) «LastName»: I am sure you are aware of the proposed project to improve County Road 101 from Highway 55 to just southerly of County Road 24 to a four lane roadway with medians and the necessary turn lanes. This project is necessary to safely accommodate the traffic within this traffic corridor. Upgrading of County Road 101 has been part of the City's plans for over 20 years, and the project is now proposed for construction in July of this year. Since the city has known of the need for the improvements to County Road 101, the City has acquired the anticipated right-of-way as properties along the existing road were converted to residential developments. Your property along, with a few other properties, existed prior to 1972 when the first planning began. To construct the necessary improvements on County Road 101, the County has identified the need to purchase a portion of your property adjacent to the road. The County's purchase of your property will only involve a strip of land parallel with and adjacent to the roadway. It will not involve the purchase of your home, although there may be impacts from the wider road and the roadway being closer to your house. During the preliminary -design process for this improvement project, the City has heard from some of the homeowners that if they have the opportunity, they may wish to sell their home and move before the construction begins. At the February 1 City Council meeting, I will be making a recommendation to the City Council that they provide the opportunity for you to sell your home and land to the City if you so choose. This sale would be on a voluntary basis. If you do not wish to sell your home to the City, the county would continue to acquire the necessary right-of-way from you. for the project. My recommendation to the Council on purchasing your property, if you so request, would be on the following basis: 1. The property would be purchased at fair market value. To determine fair market value, the City would obtain a qualified independent appraiser. You would have the opportunity to have the appraisal report reviewed by a qualified appraiser and make comments to the City on the appraisal report. The City would allow a cost up to $300 for your appraisal review. C\pw `Engineering\PROJECTS\9005\Ltn\9005_Form.doc PLYMOUTH A Beautifuf Place To Live 3400 PLYMOUTH BOULEVARD • PLYMOU-THi MINNESOTA 55447-1482 • TELEPHONE (612)-509-5000— www.ci.plymouth.mn.us «Title» «FirstName» «LastName» Page 2 2. Taxes payable in 2000 would be prorated between the City and the property owner as of the date of sale. 3. The property owner would be required to pay any existing special assessments that are of record on the property. 4. The City, at its cost, would purchase title insurance for your property. Any defects in the title, which are outlined in the title report, would need to be corrected by the property owner. 5. The offer by the City to purchase the property would be withdrawn when the county begins negotiating with you on the right-of-way purchase. 6. The county would need to agree to this process and share the cost with the City. I am making this recommendation to the City Council so property owners who will have the most impact from the improvements will have the opportunity to move if they so choose. A full copy of my staff report to the City Council will be available on Monday, January 31, at City Hall. If you wish to have any input to the City Council in this matter, you can attend the City Council meeting or submit a letter prior to the meeting. If you have any questions, please do not hesitate to contact me at 509-5501. Sincerely, Fred G. Moore, P.E. Director of Public Works E: Dwight D. Johnson, City Manager James Grube Hennepin County Director of Transportation HENNEPIN COUNTY TRANSPORTATION DEPT. 1600 Prairie Drive Medina, MN 55340-5421 I:\pw\Enginecring\PROJECTS\9005\LArs\9005—Formdoc Cynthia Mills 4020 County Road 101 Plymouth, MN 55446 Robert Hughes 17825 County Road 24 Plymouth, MN 55447 Ken & Ludmilla Phad 17920 — 30th Place North Plymouth, MN 55447 Becky Schuett Frost Jeff & Linda Vicary 3950 County Road 101 3225 County Road 101 Plymouth, MN 55446 Plymouth, MN 55447 Richard Pickering David Porter 3030 County Road 101 17915 County Road 24 Plymouth, MN 55447 Plymouth, MN 55447