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EDA debates capturing development gains for its budget; legal counsel says direct property-specific levy is not permitted
Summary
Members proposed the EDA receive a portion of property-tax gains from projects it helps enable; legal counsel told the EDA that diverting tax from a single property is not legal (except through county-level TIF/TIFF mechanisms), so staff was asked to prepare a value report and consult council and counsel about levy options for 2027.
Commissioners spent a substantial portion of the Dec. 16 meeting discussing how the EDA should be funded as its development work progresses, including whether the EDA should capture some of the property-tax revenue generated by projects it helps to enable.
One member framed the idea this way: because the EDA advances property into taxable uses (for example, the triangular Dayton Parkway parcel expected to support a $10 million facility in the future), the EDA should receive a portion of the resulting property-tax increase to fund further projects. Staff and members debated practical and legal mechanisms to accomplish that goal.
A legal representative told the commission that directly levying a tax on an individual property or diverting property-tax revenue from a single parcel to the EDA is not permitted under local law; the representative said the available legal routes include county-level tools such as a tax-increment financing (TIF) district or asking the city council to adjust the EDA’s separate levy within statutory limits. The representative said the EDA’s levy limit is a small percentage of the city’s market value and that any levy changes must comply with state statute and council approval.
Members asked staff to develop a 'report card' that quantifies the EDA’s value—new taxable value, housing units produced, and other measurable economic outcomes—so the commission can make a case to the council for a larger or differently structured levy for 2027. Commissioners also discussed the political risk that future councils could reduce or rescind any levy changes, and asked the city attorney to confirm legal pathways and limits.
Next steps: staff will consult the city attorney, assemble quantifiable metrics of EDA-created value, and prepare options for the EDA to present to the council and to counsel as part of the January follow-up work.
