Discussion:
The past several years the EDA has routinely received a transfer from the General Fund in order to fund operations, façade loans and the current downtown improvement project. In essence this transfer from the General Fund comes from a portion of the city's tax levy. The creation of an EDA special benefit levy should be considered a budget neutral change, as the city's general levy will no longer include the transfer to the EDA.
In 1995, the Shakopee Housing and Redevelopment Authority (HRA) transferred its authority to the Shakopee EDA via Resolution No. 4206. This action allows the EDA to levy a separate tax or "Special Benefit Levy", which is not part of the city's general property tax levy. This EDA special benefit levy is subject to a limit of 0.0185 percent of the city's estimated market value. The EDA levy cap for 2018 is estimated to be $768,500.
The advantage of the EDA special benefit levy is that the levy is applied to the market value of all taxable properties within the city including properties that are currently part of a tax abatement or TIF plan. The EDA levy is also identified on property tax statements as a separate local tax outside of the city's general property tax.
Staff is recommending an EDA special benefit levy of $350,000 for 2018. A home valued at $229,100 for taxes payable 2017 would pay approximately $20 towards this EDA levy. A commercial property valued at approximately $1.0 million would pay approximately $93.
State Statutes require the consent of the City Council, prior to the tax levy becoming effective. The City Council will need to act on this item after the council reconvenes the council meeting on Tuesday, September 19. The EDA special benefit levy will be certified to the County Auditor by deadline of September 30, 2017. In addition, the City Council may determine to decrease the Authority's levy when finalizing the city's levy for 2018.
Also, attached is a 2018 preliminary EDA budget. The EDA budget will be reviewed in further detail as part of the overall city budget later this year. The budget includes $143,300 for wages and benefits which includes a portion of the Planning & Development Director's time and an additional position focused on business retention activities. The EDA budget also includes $150,000 for façade loan requests and $25,000 for the Main Street Program.