The Edina schools want the city to redo its math on a financing proposal for the Grandview development district.
In a letter sent this week to Mayor Jim Hovland and the City Council, the school board questioned whether the Grandview area — a prime 11-acre parcel in the heart of Edina — really needs special tax treatment to encourage development.
The board also expressed concern about the potential loss of future tax revenue for schools if the city creates a tax-increment financing (TIF) district with a life span of 26 years.
“The school board feels the creation of the TIF District would have a negative impact on the school district,” according to the board’s letter.
Susan Brott, a school district spokeswoman, said the letter wasn’t meant to express complete disapproval of the project.
“We’re not going on record opposing it,” Brott said Tuesday. “We’re just asking for some additional consideration from the City Council.”
The council is set to vote Wednesday evening on creating the TIF district for redevelopment of the city’s old public works site in the Grandview neighborhood, near Hwy. 100 and Vernon Avenue.
In a project created with tax-increment financing, a city keeps the new tax money created by the project — the increment — and uses it to fund infrastructure and other costs associated with the project such as parking decks, sidewalks and street improvements.
The idea is that the newly created tax money won’t be missed from the city’s general budget since the project wouldn’t have been built but for the special tax treatment. Edina has created a number of successful TIF districts in recent decades, including one that led to the development of the Centennial Lakes area.
In its TIF proposal for Grandview, Edina says that the value of the development would be zero without the special tax treatment. With TIF, the city estimates that $68 million worth of development would occur.
“It is really a great tax use in the right areas,” said City Council Member Ann Swenson. “The property we are proposing to be in TIF, we have already qualified by the state’s standards. You can’t just pick a spot and say it’s going to be TIF. It’s the Legislature that controls this, because they set the rules for TIF.”
Swenson noted that the city generally has been cautious about using TIF, with only about 4 percent of its taxable areas included in the special districts.
In its letter, the Edina school board noted that the creation of TIF districts can result in higher city taxes, potentially affecting the willingness of voters to approve future school funding referendums. The board also noted that new housing in the TIF district could bring in additional students.
The board questioned the duration of the TIF district, set for the state maximum of 26 years. The board also suggested that the city is undervaluing some school district-owned land in Grandview.
And the board’s letter raised the question of whether development would occur in the Grandview area anyway without special tax treatment.
“We may be able to assume that some development will occur on the project site over the 25+ years which could generate some positive growth to the [school] district without establishment of the TIF District,” the board wrote.
School board Member Regina Neville declined to comment Tuesday on the board’s letter.
“The letter was discussed in public meetings as a board,” she said. “We’re going to let our comments rest with the letter.”