Post in Minneapolis Pension Levies

Mar 28 17:57 UTC

Cheryl Luger asked:
 >> How much pension money is coming from our Legacy(Hilton) fund?

Carol Becker answered:
 > Answer: None

Actually, the City _has_ used the Legacy Fund for pension debt.  The details
vary somewhat depending on who you ask at the City, but up to $15 million
was transferred from the Legacy Fund for City pension costs between
2004-2006.  The largest chunk was a one-time $12m payment the Council
authorized. BTW, that was the City's first draw against the Legacy's
principle.

Cheryl Luger asked:
 >> Will the city Legacy fund pay back the transfers to the NRP common
 >> project for neighborhood projects? I don't think the state
 >> legislation intended for this use of funds when the Tif's
 >> were established for neighborhood improvement.

Carol Becker answered:
 > The use of the Legacy fund is up to the discretion of the
 > City Council. It is their decision on how to use it.  As far
 > as I know, there are not restrictions on that money.

I think what Cheryl meant to ask was whether the City will replace the funds
it takes from the Common Project, which funds NRP, to pay back money it has
borrowed from the Legacy Fund. The answer to that is, no.

The Legacy Fund was originally set up as a ~$40m investment so that the City
would have discretionary development funds available.  The originating
resolution allowed the City's late MCDA to borrow against interest earned,
but not the principle. Very prudent at the time.

In 2003, the City Council re-ordered the payout structure of the separate
Common Project (pre-1979 TIF districts) to place debt obligations ahead of
NRP, and discretionary development after NRP - the "Lane Ordinance". Twenty
minutes later, they authorized the borrowing of $3.7 million annually from
the Legacy Fund's *principle* for various discretionary development projects
du-jour.  That, as they fully intended, created a new debt obligation, which
of course, gets paid back by the Common Project ahead of NRP. That was the
intended consequence.

This has a large part in why several of the past few years have seen zero
dollars to fund NRP (the other part being the State's 2001 swap in the
commercial/residential property tax liability).

Doug Walter
Nokomis East