Ramsey lost $75,000 in property tax revenue when the north metro city failed to tell Anoka County officials about four new developments in its downtown tax-increment financing (TIF) district.
And had it not been for a district court order last week restoring those developments to the TIF district, it stood to lose more than $200,000 in additional tax revenue this year.
"It was our mistake not getting those back into the TIF. We should have done that," said City Administrator Kurt Ulrich. "It was an administrative error in the development process. So the [court] action was meant to go back and correct that."
The oversight occurred amid a development boom in downtown Ramsey that began shortly after the properties were kicked out of the TIF district by the state's "knockdown rule."
The rule goes into effect if a parcel in a TIF district remains undeveloped four years after the district is approved. It was enforced by Anoka County for the four projects in 2014.
Ramsey city officials failed to tell county officials when development began, so the $75,000 in tax revenue that should have gone to the city went to the county instead.
For Ramsey, it was the first time a court order had been filed regarding the knockdown rule, which the county didn't dispute and agreed to sign last week.
The estimated total annual TIF revenue for the properties is nearly $202,000, Ulrich said. But county officials said that estimate is conservative and that the TIF district could capture up to an estimated $260,000 this year.
The four properties at the heart of the court order include multifamily housing and a day-care facility surrounding downtown, named the COR (short for City of Ramsey).
Townhouses, market-rate apartments and mixed-use housing with retail space all are being built in the COR, next to City Hall and a Metro Transit station.
Ulrich said that the COR is designed to give people a reason to stop who would otherwise zip through Ramsey on Hwy. 10. He said Ramsey never really had a true downtown corridor until one started to take shape in the early 2000s when City Hall wrapped up construction along with a nearby charter school and retail plaza.
Progress on downtown development stalled during the Great Recession, followed by a fraud conviction involving three bank executives. Ramsey rebranded downtown, then called Town Center, as the COR, and the TIF district was created to subsidize development.
Assistant State Auditor Jason Nord said his office is notified when counties enforce the knockdown rule. Between two and eight counties reported it annually in the past five years, but Nord said it's underreported. He added that it's unknown how many of those end up in court.
Ulrich said it was a learning experience that's now included in procedures moving forward.
"TIF is very important to this project because there's a large public investment. … All that has built a really strong tax base for the community," he said.
Other multifamily housing and commercial projects in Ramsey are underway. Ulrich said the city looks to add a community splash pad and expanded trails, including the proposed Mississippi Skyway, a pedestrian bridge over Hwy. 10 to connect the COR with the Mississippi River.
Kim Hyatt • 612-673-4751
