HomeMy WebLinkAbout5 - TIF Plan Review
Memorandum
To: Members of the Planning Commission
From: Rusty Fifield, Economic Development Coordinator
Date: February 5, 2020
Subject: Tax Increment Financing District #8
Action Requested
Adopt the attached resolution making the finding that the modified Redevelopment Plan for the
Vermillion Street Project Area and the Tax Increment Financing Plan for Tax Increment
Financing District #8 conforms with the general plan for the development of the city as a whole.
Background
The Hastings Economic Development and Redevelopment Authority (HEDRA) and the City
Council are undertaking the process to establish a tax increment financing (TIF) District for a
proposed affordable senior housing project at Schoolhouse Square. The City Council will hold
the public hearing on the TIF District on February 18. In establishing the TIF District, the State
Law requires the City Council to make the finding that it “conforms with the general plan for the
development of the city as a whole”. The Planning Commission is asked to adopt the attached
resolution as the basis for this finding.
Real Estate Equities, LLC is requesting tax increment financing (TIF) assistance from the City to
assist with the financing of a 90-unit apartment building consisting of both one and two-
bedroom units. All apartment units would be affordable to households at or below 60% of the
area median income (AMI).
Several factors demonstrate the conformance of the proposed development:
Zoning. The property is zoned RMU – Residential Mixed Use. The proposed use and
density are permitted under the RMU Zoning District. A Special Use Permit would be
required to construct a building greater than 40 feet in height. The Planning Commission
will consider this request and the site plan at the February 10 meeting
Schoolhouse Square Development Plan Agreement. The City executed a
Development Plan Agreement for the entire Schoolhouse Site on September 3, 2002. It
serves as a master plan for site development by outlining uses, density, parking,
landscaping, and architectural style. The agreement allows up to 84 residential units. 12
units were previously constructed leaving 72 units available for construction. The
Development Plan Agreement will be amended to accommodate the proposed density.
Prior Approvals. In 2006, the City Council granted Site Plan and Special Use Permit
approval to Real Life Cooperative to construct a 58-unit four story building on the site.
The approval has since expired.
A copy of the modified Redevelopment Plan and the TIF Plan accompanies this memo.
Attachments
1. Draft of the Modified Redevelopment Plan for the Vermillion Street Project Area and the Tax
Increment Financing Plan.
2. Resolution for Planning Commission findings.
RESOLUTION NO. ____
RESOLUTION OF THE PLANNING COMMISSION FINDING PROPOSED
MODIFIED REDEVELOPMENT PLAN FOR MODIFIED VERMILLION STREET
REDEVELOPMENT AREA AND THE PROPOSED TAX INCREMENT FINANCING PLAN
FOR TAX INCREMENT FINANCING DISTRICT NO. 8 CONFORMS TO THE PLANS FOR
DEVELOPMENT OF THE CITY OF HASTINGS AS A WHOLE
WHEREAS, the City Council of the City of Hastings, Minnesota has authorized
preparation of modification to the Redevelopment Plan for Vermillion Street Redevelopment Area
(the “Redevelopment Plan”) and a Tax Increment Financing Plan (the “TIF Plan”) for Tax
Increment Financing District No. 8 and has submitted to the Planning Commission for review
pursuant to Minnesota Statutes, Section 469.126 and Section 469.175, Subdivision 3; and
WHEREAS, the Planning Commission has reviewed the Redevelopment Plan and
the TIF Plan to determine its conformity to the general plan for the development or redevelopment
of the City as a whole; and
WHEREAS, the Planning Commission is in agreement with the Redevelopment
Plan and TIF Plan.
NOW, THEREFORE, BE IT RESOLVED By the Planning Commission of the City
of Hastings, Minnesota as follows:
1. The proposed modified Redevelopment Plan and the proposed TIF Plan confirm to
the general plan for the development or redevelopment of the City as a whole.
2. The Commission recommends that the City Council of the City of Hastings hold
the public hearing required by law and adopt the proposed Redevelopment Plan and the proposed
TIF Plan.
Adopted this 10th day of February, 2020, by the Planning Commission of the City
of Hastings, Minnesota.
_______________________________________
Chairperson, Planning Commission of the City of
Hastings, Minnesota
DRAFT
MODIFIED REDEVELOPMENT PLAN FOR
VERMILLION STREET REDEVELOPMENT AREA
AND
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
(SCHOOLHOUSE SQUARE)
WITHIN
VERMILLION STREET REDEVELOPMENT AREA
ADOPTED BY
CITY OF HASTINGS, MINNESOTA
AND
HASTINGS ECONOMIC DEVELOPMENTAND REDEVELOPMENTAUTHORITY
PUBLIC HEARING DATE: FEBRUARY 18, 2020
PLAN APPROVED BY HEDRA DATE: _________,2020
PLAN APPROVED BY CITY COUNCIL DATE: __________, 2020
PLAN CERTIFICATION REQUEST DATE: _____________, 2020
PLAN CERTIFIED DATE: _______, 2020
Northland Securities, Inc.
150 South Fifth Street, Suite 3300
Minneapolis, MN 55402
(800) 851-2920
Member NASD and SIPC
Registered with SEC and MSRB
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 I
TABLE OF CONTENTS
ȃ .........................................................1
Section 1.01 Introduction ......................................................................................1
Section 1.02 Defi nitions .........................................................................................2
Section 1.03 Plan Preparation...............................................................................3
ǧ ..........................4
Section 2.01 Enabling Act; Statutory Authority.................................................4
Section 2.02 Statement and Finding of Public Purpose....................................4
Section 2.03 Boundaries of Project Area..............................................................4
ǧ.........................................................................6
Section 3.01 Statement of Objectives...................................................................6
Section 3.02 Development Activities...................................................................7
Section 3.03 Payment of Public Costs..................................................................7Section 3.04 Environmental Controls; Land Use Regulations.........................7Section 3.05 Park and Open Space to be Created..............................................8
Section 3.06 Proposed Reuse of Property...........................................................8
Section 3.07 Administration and Maintenance of Project Area.......................8
Section 3.08 Relocation..........................................................................................8Section 3.09 Amendments.....................................................................................8Section 3.10 Findings and Declaration................................................................8
ǧ
......................................................9Section 4.01 Statutory Authority..........................................................................9
Section 4.02 Planned Development .....................................................................9
4.02.1 Project Description......................................................................................9
4.02.2 City Plans and Development Program ....................................................9
4.02.3 Land Acquisition.........................................................................................9
4.02.4 Development Activities..............................................................................9
4.02.5 Need for Tax Increment Financing...........................................................9
Section 4.03 Tax Increment Financing District.................................................10
4.03.1 Designation................................................................................................10
4.03.2 Boundaries of TIF District........................................................................10
4.03.3 Type of District..........................................................................................10
Section 4.04 Plan for Use of Tax Increment ......................................................104.04.1 Estimated Tax Increment..........................................................................104.04.2 Project Costs...............................................................................................114.04.3 Estimated Sources and Uses of Funds...................................................12Figure 4.1....................................................................................................124.04.4 Administrative Expense...........................................................................134.04.5 County Road Costs...................................................................................134.04.6 Bonded Indebtedness...............................................................................134.04.7 Duration of TIF District............................................................................144.04.8 Estimated Impact on Other Taxing Jurisdictions .................................144.04.9 Prior Planned Improvements..................................................................14
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ȃ
......................................................15Section 5.01 Filing and Certifi cation..................................................................15
Section 5.02 Modifi cations of the Tax Increment Financing Plan..................15
Section 5.03 4-Year Knockdown Rule................................................................15
Section 5.04 Pooling/5-Year Rule........................................................................16
Section 5.05 Financial Reporting and Disclosure Requirements...................16Section 5.06 Business Subsidy Compliance......................................................16
EXHIBITS..........................................................................................................................17Exhibit I Present Value Analysis ..................................................................17
Exhibit II Projected Tax Increment................................................................18
Exhibit III Impact on Other Taxing Jurisdictions..........................................19
Exhibit IV Estimated Tax Increment Over Life of District ..........................20
Exhibit V Maps of Project Area and TIF District.........................................21Exhibit VI Parcels within Project Area...........................................................23
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ARTICLE I –INTRODUCTION AND DEFINITIONS
SECTION 1.01 INTRODUCTION
This Redevelopment Plan for the Vermillion Street Redevelopment Area of the HastingsEconomic Development and Redevelopment Authority of the City of Hastings is intended tosupersede and alter the activities described in the Redevelopment Plan for the Vermillion StreetRedevelopment Area as originally adopted on October 6, 2008 and modifi ed on July 19, 2010.
Tax Increment Financing District No. 5 and the Tax Increment Financing Plan relating thereto,within the Vermillion Street Redevelopment Area, remains in full force and eff ect and is not modifi ed.
The City of Hastings and the Hastings Economic Development and Redevelopment Authority(HEDRA) propose to provide tax increment fi nancing assistance through the establishment of Tax Increment Financing (Housing) District No. 8 within the Vermillion Street RedevelopmentArea to assist with the fi nancing of certain project costs for the construction of an approximate 90 unit aff ordable rental housing facility, an apartment building, by a private developer.
This document contains the Modifi ed Redevelopment Plan for achieving the objectives of the Vermillion Street Redevelopment Area through the establishment of a Tax Increment FinancingPlan and use of Tax Increment Financing (Redevelopment) District No. 8.
Below is a summary of the municipal action that has been taken in connection with theVermillion Street Redevelopment Area to date and as proposed:
Vermillion Street Redevelopment Area:
January 22, 2008: The Vermillion Street Corridor Development Guidelines were adopted byCity.
September 11, 2008: The Redevelopment Plan for the Project Area was adopted.
September 22, 2008: The Redevelopment Plan for the Project Area was reviewed by the Cityof Hastings Planning Commission.
October 6, 2008: The Redevelopment Plan for the Project Area was adopted by the City.
January 1, 2009: The HEDRA replaced the Housing and Redevelopment Authority andthe Economic Development Commission. The HEDRA operates with the powers of both aHousing and Redevelopment Authority and an Economic Development Authority.
July 12, 2010: The Modifi ed Redevelopment Plan for the Project Area was reviewed by the Planning Commission.
July 15, 2010: The Modifi ed Redevelopment Plan for the Project Area was adopted by the HEDRA. The HEDRA approved the Tax Increment Financing Plan for Tax IncrementFinancing District No. 5.
July 19, 2010: The Modifi ed Redevelopment Plan for the Project Area was adopted by the City. The City Council approved the Tax Increment Financing Plan for Tax IncrementFinancing District No. 5.
February 10, 2020: The Planning Commission is proposed to fi nd that the Modifi ed Redevelopment Plan and the proposed Tax Increment Financing Plan for Tax IncrementFinancing District No. 8 confi rm to the general plan for the development or redevelopment of the City as a whole.
February 13, 2020: The Modifi ed Redevelopment Plan for the Project Area is proposed to be adopted by the HEDRA. It is proposed the HEDRA will approve the Tax IncrementFinancing Plan for Tax Increment Financing District No. 8, subject to City approval.
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February 18, 2020:The Modifi ed Redevelopment Plan for the Project Area is proposed to be adopted by the City. It is proposed the City will approve the Tax Increment Financing Planfor Tax Increment Financing District No. 8.
SECTION 1.02 DEFINITIONS
For the purposes of this document, the terms below have the meanings given in this section,unless the context in which they are used indicates a diff erent meaning:
1. “Authority” means the Hastings Economic Development and Redevelopment Authority ofthe City.
2. “City” means the City of Hastings, Minnesota.
3. “City Council” means the City Council of the City.
4. “County” means Dakota County, Minnesota.
5. “Developer” means the private party undertaking construction within the TIF District.
6. “EDA Act” means Minnesota Statutes, Section 469.090 through 469.1082, as amended andsupplemented from time to time.
7. “Enabling Act” means Minnesota Statutes, Sections 469.001 through 469.047, as amendedand supplemented from time to time.
8. “HEDRA” means the Hastings Economic Development and Redevelopment Authority of theCity of Hastings.
9. “Land Use Regulations” means all federal, state and local laws, rules, regulations,ordinances, and plans relating to or governing the use of development of land in the City,including but not limited to environmental, zoning and building code laws and regulations.
10.“Project Costs” means the cost of qualifi ed development activities that will occur within the TIF District that may be paid from tax increment revenue.
11. “Public Costs” means the costs of the Redevelopment Project funded under the TIF Act,EDA Act, or the Enabling Act.
12. “Public Improvements” means the public improvements described in the RedevelopmentPlan and any future plans for Tax Increment Financing Districts within the Project Area.
13. “Redevelopment Plan” means the Redevelopment Plan for the Redevelopment Project, asthe same may, from time to time, be amended or supplemented.
14. “Redevelopment Project” means Vermillion Street Redevelopment Area of the Authority, asthe same may, from time to time, be amended or supplemented.
15. “School District” means Independent School District No. 200 (Hastings Public Schools).
16. “State” means the State of Minnesota.
17. “Tax Increment Bonds” means any tax increment bonds or notes issued by the City tofi nance the Public Costs as stated in the Redevelopment Plan for the Project Area and in the Tax Increment Financing plans for Tax Increment Financing Districts within the ProjectArea, and any obligations issued to refund such bonds.
18.“Tax Increment Financing District” means any tax increment fi nancing district to be established in the future within the Project Area.
19. “Tax Increment Financing Plan” or “Plan” means the plans adopted by the HEDRA or theCity for any Tax Increment Financing District.
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20. “TIF Act” means Minnesota Statutes, Sections 469.174 through 469.1794, as amended, bothinclusive.
21. “TIF District” means Tax Increment Financing (Housing) District No. 8 (SchoolhouseSquare).
22.“TIF Plan” means the tax increment fi nancing plan for the TIF District (this document).
SECTION 1.03 PLAN PREPARATION
The document was prepared for the City and the Authority by Northland Securities, Inc.
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ARTICLE II –STATEMENT OF PUBLIC PURPOSE AND AUTHORITY
SECTION 2.01 ENABLING ACT; STATUTORY AUTHORITY
The Enabling Act authorizes the Authority, upon certain public purpose fi ndings by the Authority and the City, to establish and designate redevelopment projects within the City andto establish, develop and the administer redevelopment plans therefor to meet the needs andaccomplish the public purposes specifi ed in Statement and Finding of Public Purpose.
In accordance with the purposes set forth in the Enabling Act, the Authority and the City haveestablished the Redevelopment Project comprised of the parcels listed in Exhibit VI and haveadopted the Modifi ed Redevelopment Plan therefor.
The Enabling Act and the approval of the Redevelopment Plan by the City of Hastingsauthorizes the Authority to undertake redevelopment activities within the Project Area and, at adate subsequent to the adoption of the Modifi ed Redevelopment Plan and with the City Council approval, to establish and designate Tax Increment Financing Districts within the Project Areaand to adopt and implement Tax Increment Financing Plans to accomplish the objective of theRedevelopment Plan.
SECTION 2.02 STATEMENT AND FINDING OF PUBLIC PURPOSE
The Authority has determined that there is a need to take certain actions designed toencourage, ensure and facilitate development and redevelopment of under-utilized and unusedland located within the corporate limits of the City. These actions will provide additionalemployment opportunities for residents of the City and the surrounding area, and improveȱ¡ȱǰȱ¢ȱȱĴȱȱ£ȱȱ¡ȱȱȱȱȱȱpublic services, and improve the general economy of the City, the County, and the State.
The Authority has determined that the property within the Project Area is either under-utilized or unused due to a variety of factors, including inadequate public parking to servethe property, small parcels, non-conforming uses, vacant or under-utilized property, possibleenvironmental conditions, obsolete building design and site layout, poor access and parking,and lack of streetscaping and visual appeal that is needed to make this a viable business district.These factors have resulted in a lack of private investment. As a result, the property within theProject Area is not providing adequate employment opportunities, and is not contributing, toits full potential. Therefore, it is necessary for the Authority to exercise its authority under theEnabling Act to develop and implement a program designed to encourage, ensure and facilitatethe commercial and mixed use development and redevelopment of the property located inthe Project Area, to further and accomplish the desired public purposes for the Project Area asspecifi ed within the Redevelopment Plan for the Project Area.
The land in the Project Area would not be developed or redeveloped solely through privateinvestment in the foreseeable future.
The welfare of the City, County, and the State of Minnesota requires active promotion,Ĵȱǰȱȱȱȱȱ¢ȱȱȱ¢ȱȱ
ǯ
SECTION 2.03 BOUNDARIES OF PROJECT AREA
The area within the Project Area is described in Exhibit V. The parcels included in the ProjectArea are listed in Exhibit VI.
The Project Area is inclusive of all immediate adjacent roadways, rights-of-way and other areaswherein will be installed or upgraded the various public improvements necessary for and partof the overall project.
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The Authority and the City fi nds that the Project Area, together with the objectives which the Authority and the City seek to accomplish or encourage with respect to such property,constitutes a “redevelopment project” and a “redevelopment plan” within the meaning ofMinnesota Statutes, Section 469.002, Subdivisions 14 and 16.
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ARTICLE III -REDEVELOPMENT PLAN
SECTION 3.01 STATEMENT OF OBJECTIVES
The modifi cation of the established Project Area in the City pursuant to the Enabling Act is necessary and in the best interests of the City and its residents and is necessary to give theAuthority and the City the ability to meet certain public purpose objectives that would notbe obtainable in the foreseeable future without intervention by the Authority in the normaldevelopment process.
ȱ¢ȱǰȱȱȱ¡ȱĴȱȱ¢ȱ ǰȱȱȱȱ ȱȱthrough the implementation of the Redevelopment Plan:
1. Promote and secure the development and redevelopment of property in the Project Areain a manner consistent with the City’s planning, the Vermillion Street DevelopmentGuidelines, and with a minimal adverse impact on the environment, which property is lessproductive because of the lack of proper utilization and lack of investment, and therebypromoting and securing the development of other land in the City;
2. Promote and secure additional employment opportunities within the Project Area and theCity for residents of the City and the surrounding area, thereby improving living standardsand preventing unemployment and the loss of skilled and unskilled labor and other humanresources in the City;
3. Secure the increase in value of property subject to taxation by the City, School District,¢ǰȱȱ¢ȱȱ¡ȱȱȱȱȱĴȱȱȱȱȱȱ¢ȱȱpublic improvements and governmental services and programs required to be provided bythem;
4. Secure the construction and providing moneys for the payment of the cost of publicimprovements in the Project Area, which are necessary for the completion of theRedevelopment Project and the orderly and benefi cial development of the Project Area.
5. Promote a compatible mix of commercial, institutional, and residential land uses.
6. Encourage the expansion and improvement of local business, and enhancing the economicvitality of existing and new businesses.
7.Eliminate blighting infl uences that impede development in the area.
8. Provide for adequate streets, utilities, and other public improvements and facilities toenhance the area for both new and existing development.
9. Create a desirable and unique character within the Project Area through quality landuse alternatives and design quality in new buildings that create a safe environmentfor pedestrians, can be maintained for the long run, and celebrates the historic role ofVermillion Street as the main artery within the City.
10. Support the physical connection to local trails, open space, and other communityinstitutions.
11. Enhance the integrity of residential neighborhoods adjacent to the Project Area.
12. Provide and secure the development of increased opportunities for families to reside inquality owner-occupied housing, for senior citizens to choose from housing options whichoff er a wide array of services without regard to income, and for residents looking for a wide range of multi-family units.
13. Enhance the long term viability of the Project Area by facilitating:
• Land uses that complement and support existing businesses;
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• New businesses that enhance the commercial market;
• Visual quality of the streetscape, landscape, site plan and building types of newdevelopments;
• Mixed use housing development where appropriate; and
• Safe access and convenient parking.
SECTION 3.02 DEVELOPMENT ACTIVITIES
ȱ¢ȱ ȱȱȱȱȱȱǰȱȱȱ¡ȱĴȱȱ¢ȱ ǰȱȱȱactivities pursuant to the Enabling Act, the TIF Act and other applicable state laws, and in doingso anticipates that the following may, but are not required, to be undertaken by the Authority:
(a) The making of studies, planning, and other formal and informal activities relating to theRedevelopment Plan.
(b) The implementation and administration of the Redevelopment Plan.
(c) The rezoning of land within the Project Area.
(d) The acquisition of property, or interests in property, by purchase or condemnation,which acquisition is consistent with the objectives of the Redevelopment Plan,
(e) The preparation of property for use and development in accordance with applicableLand Use Regulations and any development agreements, including demolition of structures,clearance of sites, placement of fi ll and grading.
(f) The resale of property to private parties.
(g) The construction or reconstruction of improvements as described in the Tax IncrementFinancing Plans for the Tax Increment Financing Districts within the Project Area.
(h) The issuance of Tax Increment Financing Bonds to fi nance the Public Costs of the Redevelopment Plan, and the use of tax increments or other funds available to the City andthe Authority to pay or fi nance the Public Costs of the Redevelopment Plan incurred or to be incurred by it.
(i) The use of tax increments to pay debt service on the Tax Increment Financing Bonds orotherwise pay or reimburse with interest the Public Costs of the Redevelopment Plan.
SECTION 3.03 PAYMENT OF PUBLIC COSTS
It is anticipated that the Public Costs of the Redevelopment Plan will be paid primarily fromproceeds of Tax Increment Financing Bonds or from tax increments from the Tax IncrementFinancing Districts with the Project Area. The Authority reserves the right to utilize otheravailable sources of revenue, including but not limited to lease payments, special assessmentsand user charges, which the Authority may apply to pay a portion of the Public Costs.
SECTION 3.04 ENVIRONMENTAL CONTROLS; LAND USE REGULATIONS
All municipal actions, public improvements and private development shall be carried outin a manner consistent with existing environmental controls and all applicable Land UseRegulations.
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SECTION 3.05 PARK AND OPEN SPACE TO BE CREATED
Park and open space within the Project Area, if created, will be created in accordance with the£ȱȱĴȱȱȱȱȱ¢ǯ
SECTION 3.06 PROPOSED REUSE OF PROPERTY
The Redevelopment Plan contemplates that the Authority may acquire property and reconveythe same to another entity. Prior to formal consideration of the acquisition of any property,the Authority will require the execution of a binding development agreement with respectthereto and evidence that tax increments or other funds will be available to repay the PublicCosts associated with the proposed acquisition. It is the intent of the Authority to negotiate theacquisition of property whenever possible. Appropriate restrictions regarding the reuse andredevelopment of property shall be incorporated into any development agreement to which theAuthority is a party.
SECTION 3.07 ADMINISTRATION AND MAINTENANCE OF PROJECT AREA
Maintenance and operation of the Project Area will be the responsibility of the Director of theAuthority, who shall serve as administrator of the Project Area. Each year the administratorof the Project Area will submit to the Authority the maintenance and operation budget for thefollowing year.
The administrator will administer the Project Area pursuant to the Enabling Act; provided,however, that such powers may only be exercised at the direction of the Authority. No actiontaken by the administrator pursuant to the above-mentioned powers shall be eff ective without authorization by the Authority.
SECTION 3.08 RELOCATION
Any person or business that is displaced as a result of the Redevelopment Plan will be relocatedin accordance with Minnesota Statutes, Section 117.50 to 117.56. The Authority accepts itsresponsibility for providing for relocation assistance pursuant to the Enabling Act.
SECTION 3.09 AMENDMENTS
The Authority reserves the right to alter and amend the Redevelopment Plan, subject to theprovisions of state law regulating such action. The Authority specifi cally reserves the right to enlarge or reduce the size of the Project Area.
SECTION 3.10 FINDINGS AND DECLARATION
The Authority makes the following fi ndings:
(a) The land in the Project Area would not be made available for redevelopment without thefi nancial aid sought.
(b) The Redevelopment Plan for the Project Area in the City will aff ord maximum opportunity consistent with the needs of the locality as a whole, for the redevelopment of thearea by private enterprise.
(c) The Redevelopment Plan conforms to the general plan for development of the City as awhole.
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ARTICLE IV -TAX INCREMENT FINANCING PLAN
SECTION 4.01 STATUTORY AUTHORITY
The TIF District and the TIF Plan are established under the authority of the TIF Act.
SECTION 4.02 PLANNED DEVELOPMENT
4.02.1 Project Description
The Developer proposes to build an approximate 90 unit rental housing facility, an apartmentbuilding, consisting of both one and two-bedroom units located at 101 10th Street East. Allapartment units would be aff ordable to households at or below 60% of the area median income (AMI). The parcel is an approximate 2-acre site located with access to Highway 61.
4.02.2 City Plans and Development Program
In addition to achieving the objectives of the Redevelopment Plan, the development is consistentwith and works to achieve the development objectives of the Authority and the City. The TIFPlan for the TIF District conforms to the general plan for development or redevelopment of theCity as a whole.
The proposed development plan for the project in the TIF District has been reviewed by thePlanning Commission and the City Council.
4.02.3 Land Acquisition
The Authority or the City do not plan to acquire property within the TIF District.
4.02.4 Development Activities
As of the date of approval of the TIF Plan, there are no development activities proposed in thisTIF Plan that are subject to contracts.
4.02.5 Need for Tax Increment Financing
In various materials the Developer has demonstrated that the proposed use of tax incrementfi nancing is needed to off set the high construction costs of high-quality low- to moderate-income housing and associated infrastructure required to support the facility. Without theproposed assistance, these initial up-front costs would make it infeasible for the Developer tobe able to charge the aff ordable rents required for low-to moderate-income residents. Thus, it is the opinion of the City and the Authority that the proposed development would not reasonablybe expected to occur solely through private investment within the foreseeable future and thatthe increased market value of the site that could reasonably be expected to occur without theuse of tax increment fi nancing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected taxȱȱȱ¡ȱȱȱȱ ȱȱĴȱȱ¢ȱȱ ȱǯ
A comparative analysis of estimated market values both with and without establishment ofthe TIF District and the use of tax increments has been performed as described above and isshown in Exhibit I. This analysis, which is not required by the TIF Act for approval of a housingdistrict, indicates that the increase in estimated market value of the proposed development (lessȱȱȱȱȱȱ¡ȱȱȱȱ¡ȱȱĴȱȱ¢ȱȱTIF Plan) exceeds the estimated market value of the site prior to the establishment of the TIFDistrict.
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SECTION 4.03 TAX INCREMENT FINANCING DISTRICT
4.03.1 Designation
This TIF District is designated Tax Increment Financing (Housing) District No. 8 (SchoolhouseSquare).
4.03.2 Boundaries of TIF District
The boundaries of the TIF District are depicted in Exhibit V.
The TIF District includes the following two parcels and the adjacent roads and right-of-way:
• 19-66902-00-010 (Outlot A, Schoolhouse Square 3rd Addition, Plat of Hastings, DakotaCounty, Minnesota); and
• 19-66902-00-020 (Outlot B, Schoolhouse Square 3rd Addition, Plat of Hastings, DakotaCounty, Minnesota)
4.03.3 Type of District
The TIF District is designated as a “housing” district pursuant to Section 469.174, Subd. 11 of theTIF Act. For the designation, of a tax increment fi nancing housing district, the Developer of the Project will need to commit to the following:
1.Satisfy the income requirements for a qualifi ed residential rental project as defi ned in section 142(d) of the Internal Revenue Code. This requirement applies for the duration ofthe tax increment fi nancing district. The applicable Fiscal Year 2019 Area Median Income for the County is $100,000. The Developer plans to commit to provide 40% or more ofunits for occupancy by persons at 60% or less of area median gross income. These incomethresholds may change over the life of the TIF District.
2. No more than 20% of the square footage of the building to receive assistance from taxincrements will consist of commercial, retail, or other nonresidential uses. Revenue derivedfrom tax increment from the TIF District shall be used solely to fi nance the cost of the housing project as defi ned in Section 469.174, subdivision 11 of the TIF Act. The cost of public improvements directly related to the housing project and the allocated administrativeexpenses of the Authority may be included in the cost of the housing project.
3. Failure to comply with these income limitations is subject to the enforcement provisions ofSection 469.1771 of the TIF Act.
SECTION 4.04 PLAN FOR USE OF TAX INCREMENT
4.04.1 Estimated Tax Increment
The original net tax capacity of value of the TIF District will be set by the County upon requestfor certifi cation. For the purposes of this Plan, the estimated original net tax capacity is $1,199. This amount is estimated based on the most recent published estimated market valueof $159,800 for property within the TIF District; with net tax capacity value calculated forapartments, under the 4d aff ordable housing program.
The estimated net tax capacity of the property after completion of the project (for taxes payablein 2023, or year two of the TIF District) is $109,080. This amount is based on a total estimatedmarket value of $14,544,000 with property classifi ed as apartment, under the 4d aff ordable housing program. The diff erence between the net tax capacity and the original net tax capacity is $107,882 (for taxes payable in 2023), which is the captured tax capacity for the creation of taxincrement.
The total local tax rate for taxes payable in 2019 is 108.51%. The TIF Plan assumes that thisrate will be set as the original local tax rate for the TIF District. At the time of the certifi cation
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of the original net tax capacity for the TIF District, the county auditor will certify the originallocal tax rate that applies to the TIF District. The original local tax rate is the sum of all the local¡ȱǰȱ¡ȱȱȱȱȱȱȱĴȱȱȱȱȱȱ¢ȱunder Minnesota Statutes section 126C.13, that apply to a property in the TIF District. The localtax rate to be certifi ed is the rate in eff ect for the same taxes payable year applicable to the tax capacity values certifi ed as the TIF District’s original tax capacity. The resulting tax capacity rate is the original local tax rate for the life of the TIF District.
Under these assumptions, the estimated annual tax increment is $117,065 after developmentcompletion (for taxes payable 2023). The actual tax increment will vary according to thecertifi ed original net tax capacity and original tax rate, the actual property value produced by the proposed development and the changes in property value and state tax policy over the lifeof the TIF District.
The City and the Authority elect to retain 100% of the captured tax capacity value for theduration of the TIF district. Exhibit II contains the projected tax increment over the life of theTIF District, including present value of the future tax increments.
4.04.2 Project Costs
The Authority will use tax increment to pay Project Costs. The Authority anticipates the useof tax increment to pay administrative expenses for the TIF District and to reimburse theDeveloper on a pay-go basis for certain Project Costs to provide the aff ordable housing. A contract between the Authority and the Developer will defi ne the means for verifying Developer costs eligible for reimbursement and the means of disbursing tax increments collected by theAuthority to the Developer, including terms for payment.
The Authority may also use tax increments to pay fi nancing costs. The interest rate payable on bonds, the defi nition of bonds includes tax increment fi nancing revenue notes, to be issued will be set pursuant to a contract with the Developer. The Authority reserves the right to useany other legally available revenues to fi nance or pay for Project Costs associated with the development in the TIF District.
The City and the Authority reserve the right to modify the TIF Plan to provide authority toexpend tax increment from the TIF District on other housing projects that meet the criteria forestablishing a housing TIF district. Section 469.174, Subd. 11 of the TIF Act defi nes a housing districts consisting of a project, or a portion of a project, intended for occupancy, in part, bypersons or families of low and moderate income. The requirements for the establishment of ahousing TIF district are contained in Section 469.1761 of the TIF Act. The primary criteria areincome related. The criteria are diff erent for owned and rental housing.
The practical application of this authority includes:
•The use of tax increment is not limited by pooling restrictions or the fi ve-year rule.
• The tax increment can be spent on activities outside of the TIF district, but within the ProjectArea.
• This authority does not extend the maximum statutory duration of the TIF district.
•The tax increment must be used solely to fi nance the cost of the “housing project” as defi ned by the TIF Act. The cost of public improvements directly related to the housing project andthe allocated administrative expenses of the Authority may be included in the cost of thehousing project.
• No more than 20% of the square footage of buildings that receive TIF assistance may consistof commercial, retail, or other nonresidential uses.
Potential applications of this authority include:
• Assistance to other housing projects avoiding the need for a new TIF district.
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• Supplementing the revenues of another housing TIF district.
• Assistance for the renovation of existing housing.
• Acquisition of land for housing.
•Assistance to make public improvements, that directly benefi t aff ordable housing, more aff ordable.
4.04.3 Estimated Sources and Uses of Funds
The estimated sources of revenue, along with the estimated Project Costs of the TIF District, areitemized in Figure 4.1.
The City and the Authority reserve the right to administratively adjust the amount of any of theProject Cost items listed in Figure 4.1, so long as the total Project costs amount, not includingfi nancing costs, is not increased.
FIGURE 4.1ESTIMATED SOURCES AND USES OF FUNDS
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4.04.4 Administrative Expense
The Authority reserves the right to retain up to ten percent (10%) of annual tax incrementrevenues distributed from the County, net of any required fees paid to the State and County.The Authority will use these monies to pay for and reimburse the Authority for costs ofadministering the TIF district as allowed by the TIF Act.
The amount of tax increment revenue planned to pay administrative expense is shown inFigure 4.1. Anticipated administrative expenses of the TIF District include annual audit of thefund for TIF District, preparation of annual reporting, legal publication of annual report, andadministration of the development agreement.
4.04.5 County Road Costs
The proposed development will not substantially increase the use of county roads andnecessitate the need to use tax increments to pay for county road improvements.
4.04.6 Bonded Indebtedness
The total amount of bonds estimated to be issued is shown in Figure 4.1. The City will not issueany general obligation bonded indebtedness as a result of the TIF Plan.
The Authority intends to use tax increment fi nancing to reimburse the Developer on a pay-as-you-go basis for certain Project Costs pursuant to a contract with the Developer.
The City or the Authority may advance or loan money to fi nance expenditures under Section 469.176, subdivision 4 of the TIF Act, from the general funds of the City or the Authority or anyother fund under which there is legal authority to do so, subject to the following provisions:
(a) Not later than 60 days after money is transferred, advanced, or spent, whicheveris earliest, the loan or advance must be authorized by resolution of the City or of theAuthority, whichever has jurisdiction over the fund from which the advance or loan isauthorized.
(b) The resolution may generally grant to the City or the Authority the power to makeinterfund loans under one or more tax increment fi nancing plans or for one or more districts. The resolution may be adopted before or after the adoption of the tax incrementfi nancing plan or the creation of the tax increment fi nancing district from which the advance or loan is to be repaid.
(c) The terms and conditions for repayment of the loan must be provided in writing. The Ĵȱȱȱȱȱ¢ȱȱȱ¢ȱǰȱȱȱǰȱȱȱǰȱȱȱǰȱȱȱǰȱȱ¡ȱǯȱĴȱȱȱ¢ȱȱęȱȱor amended in writing by the City or the Authority before the latest decertifi cation of any tax increment fi nancing district from which the interfund loan is to be repaid. The ¡ȱȱȱȱĴȱȱȱȱȱȱȱȱȱȱȱȱȱspecifi ed under Minnesota Statutes, Section 270C.40 or 549.09 as of the date the loan or ȱȱ£ǰȱȱȱ Ĵȱȱȱȱȱȱ¡ȱȱȱwill fl uctuate as the interest rates specifi ed under Minnesota Statutes, Section 270C.40 or 549.09 are from time to time adjusted. Loans or advances may be structured as draw-down or line-of-credit obligations of the lending fund.
ǻǼȱȱ¢ȱȱȱȱȱȱȱĴȱȱȱȱŚŜşǯŗŝśǰȱsubdivision 6 of the TIF Act:
(1) the amount of any interfund loan or advance made in a calendar year; and
(2) any amendment of an interfund loan or advance made in a calendar year.
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4.04.7 Duration of TIF District
The duration to collect and spend tax increments on eligible purposes is set at the duration of25 years after the date of receipt of the fi rst tax increment for a total of 26 years of tax increment collection. The estimated decertifi cation date is 12/31/2047.
4.04.8 Estimated Impact on Other Taxing Jurisdictions
Exhibits III and IV show the estimated impact on other taxing jurisdictions if the maximumprojected retained captured net tax capacity of the TIF District was hypothetically available tothe other taxing jurisdictions.
The City and the Authority believe that there will be no adverse impact on other taxingjurisdictions during the life of the TIF District, since the proposed development would not haveoccurred without the establishment of the TIF District and the provision of public assistance. Apositive impact on other taxing jurisdictions will occur when the TIF District is decertifi ed and the development therein becomes part of the general tax base.
The City and the Authority anticipate minimal impact of the proposed development on city-provided services. There will be no borrowing costs to the City or the Authority for the Project.A manageable increase in water and sewer usage is expected. It is anticipated that there may bea slight but manageable increase in police and fi re protection duties due to the development.
4.04.9 Prior Planned Improvements
There have been no building permits issued in the last 18 months in conjunction with any of theproperties within the TIF District. The Authority will include this statement with the request forcertifi cation to the County Auditor.
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ARTICLE V –ADMINISTERING THE TIF DISTRICT
SECTION 5.01 FILING AND CERTIFICATION
The fi ling and certifi cation of the TIF Plan consists of the following steps:
1. Upon adoption of the TIF Plan by the City and the Authority, the Authority, or its designee,shall submit a copy of the TIF Plan to the Minnesota Department of Revenue and the Offi ce of the State Auditor.
2. The Authority, or its designee, shall request that the County Auditor certify the original nettax capacity and net tax capacity rate of the TIF District. To assist the County Auditor in thisprocess, the Authority, or its designee, shall submit copies of the TIF Plan, the resolutionsof the City and the Authority establishing the TIF District and adopting the TIF Plan, and alisting of any prior planned improvements.
SECTION 5.02 MODIFICATIONS OF THE TAX INCREMENT FINANCING PLAN
The City and the Authority reserve the right to modify the TIF District and the TIF Plan. Underthe TIF Act, the following actions can only be approved after satisfying all the necessaryrequirements for approval of the original TIF Plan (including notifi cations and public hearing):
§Reduction or enlargement in the geographic area of the Development District or the TIFDistrict.
§Increase in the amount of bonded indebtedness to be incurred.
§Increase in the amount of capitalized interest.
§Increase in that portion of the captured net tax capacity to be retained by the Authority.
§Increase in the total estimated Project Costs, not including cost of fi nancing.
§Designation of additional property to be acquired by the City or the Authority.
Other modifi cations can be made by resolution of the Authority. In addition, the original approval process does not apply if (1) the only modifi cation is elimination of parcels from the TIF District and (2) the current net tax capacity of the parcels eliminated equals or exceeds thenet tax capacity of those parcels in the TIF District’s original net tax capacity, or the City and theAuthority agree that the TIF District’s original net tax capacity will be reduced by no more thanthe current net tax capacity of the parcels eliminated.
Upon approval by the City, the Authority must notify the County Auditor of any modifi cation that reduces or enlarges the geographic area of the TIF District. The geographic area of the TIFDistrict may be reduced but not enlarged after fi ve years following the date of certifi cation of the TIF District.
SECTION 5.03 4-YEAR KNOCKDOWN RULE
Since the TIF District consists of a single parcel, development of the project as planned preventsany loss of value from the 4-Year Knockdown Rule. The 4-Year Knockdown Rule requires that ifafter four years from certifi cation of the TIF District no demolition, rehabilitation, renovation or site improvement, including a qualifi ed improvement of an adjacent street, has commenced on a parcel located within the TIF District, then that parcel shall be excluded from the TIF Districtand the original net tax capacity shall be adjusted accordingly. Qualifi ed improvements of a street are limited to construction or opening of a new street, relocation of a street, or substantialreconstruction or rebuilding of an existing street. The Authority must submit to the County
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Auditor, by February 1 of the fi fth year, evidence that the required activity has taken place for each parcel in the TIF District.
If a parcel is excluded from the TIF District and the City, Authority, or owner of the parcelsubsequently commences any of the above activities, the Authority shall certify to the CountyAuditor that such activity has commenced and the parcel shall once again be included in theTIF District. The County Auditor shall certify the net tax capacity of the parcel, as most recentlycertifi ed by the Commissioner of Revenue, and add such amount to the original net tax capacity of the TIF District.
SECTION 5.04 POOLING/5-YEAR RULE
ȱĴȱȱȱȱŚŜşǯŗŝŜřǰȱȱŘǻǼȱȱȱřǻǼǻśǼȱȱȱ ȱǰȱany expenditures of increment from the TIF District to pay the cost of a “housing project” asdefi ned in Section 469.174, subd. 11 of the TIF Act will be treated as an expenditure within the district for the purposes of the “pooling rules” and the “fi ve year rule”. It is not anticipated that tax increments will be spent outside the TIF District (except allowable administrative expenses),but such expenditures are expressly authorized in the TIF Plan.
SECTION 5.05 FINANCIAL REPORTING AND DISCLOSURE REQUIREMENTS
The Authority will comply with the annual reporting requirements of State Law pursuant to theguidelines of the Offi ce of the State Auditor. Under current law, the Authority must prepare and submit a report on the TIF district on or before August 1 of each year. The Authority mustalso annually publish in a newspaper of general circulation in the City an annual statement foreach tax increment fi nancing district.
The reporting and disclosure requirements outlined in this section begin with the year thedistrict was certifi ed, and shall end in the year in which both the district has been decertifi ed and all tax increments have been spent or returned to the county for redistribution. Failure tomeet these requirements, as determined by the State Auditors Offi ce, may result in suspension of distribution of tax increment.
SECTION 5.06 BUSINESS SUBSIDY COMPLIANCE
The Project is exempt from the business subsidies requirements specifi ed in Minnesota Statutes, Sections 116J.993 to 116J.995 because the assistance for the Project specifi ed in this document, the TIF Plan for the TIF District, will be 100% for housing assistance.
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TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
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EXHIBIT V
Boundaries of Tax Increment Financing District No. 8
within Vermillion Street Redevelopment ProjectArea
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EXHIBIT V - CONTINUED
Boundaries of Tax Increment Financing District No. 8
within Vermillion Street Redevelopment ProjectArea
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EXHIBIT VI
Parcels within ProjectArea
COUNT PARCEL ID COUNT PARCEL ID COUNT PARCEL ID
1 037-190340050010 51 037-194470007190 101 037-198170001011
2 037-190340055010 52 037-194470007200 102 037-198170001020
3 037-190370005011 53 037-194470007210 103 037-198170001021
4 037-190370005081 54 037-194470007220 104 037-198170001040
5 037-190370005082 55 037-194470007230 105 037-198170001060
6 037-190370007014 56 037-194470007240 106 037-198170001081
7 037-190370008010 57 037-194470018010 107 037-198170001090
8 037-190370009010 58 037-194470018020 108 037-198170001121
9 037-190370010015 59 037-194470018022 109 037-198170001122
10 037-190380001081 60 037-194470018030 110 037-198170001140
11 037-190380001131 61 037-194470018040 111 037-198170001230
12 037-190380006011 62 037-194470018071 112 037-198170002030
13 037-190380007011 63 037-194470018080 113 037-198170002053
14 037-190380020010 64 037-194470018100 114 037-198170003031
15 037-190380021010 65 037-194470018110 115 037-198170003050
16 037-191320006013 66 037-194470018120 116 037-198170003130
17 037-191320006051 67 037-194470018150 117 037-198170004010
18 037-191320006062 68 037-194470018160 118 037-198170004030
19 037-191320006081 69 037-195845001010 119 037-198170004040
20 037-191630001010 70 037-197730004020 120 037-198170004050
21 037-191630001020 71 037-197730004160 121 037-198170004171
22 037-191630001030 72 037-197730004191 122 037-198170004180
23 037-191630001040 73 037-197730004212 123 037-198170004190
24 037-191955101010 74 037-197730004220 124 037-198170005040
25 037-191955101020 75 037-197730004250 125 037-198170005050
26 037-191955101030 76 037-197730004252 126 037-198170005251
27 037-192775001010 77 037-197730004253 127 037-198170006020
28 037-192775001011 78 037-197730004260 128 037-198170006101
29 037-192775002012 79 037-197730004261 129 037-198170006300
30 037-193215079060 80 037-197730004270 130 037-198815001040
31 037-193215080010 81 037-197730004280 131 037-198815002010
32 037-193215080040 82 037-197730005030 132 037-198815002040
33 037-193215080080 83 037-197730005040 133 037-198170002052
34 037-193215088040 84 037-197730005060 134 037-190370007013
35 037-193215088060 85 037-197730005070 135 037-190370007012
36 037-193215088061 86 037-197730005080 136 037-196690001120
37 037-193215089041 87 037-197730005090 137 037-196690001110
38 037-193215089050 88 037-197730005103 138 037-196690001100
39 037-193215089060 89 037-197730005121 139 037-196690001090
40 037-193215098061 90 037-197730005130 140 037-196690001080
41 037-194470006023 91 037-197730005140 141 037-196690001070
42 037-194470006024 92 037-197730006053 142 037-196690001060
43 037-194470006122 93 037-197730101012 143 037-196690001050
44 037-194470006163 94 037-197755004010 144 037-196690001040
45 037-194470007033 95 037-197755004011 145 037-196690001030
46 037-194470007052 96 037-197755004050 146 037-196690001020
47 037-194470007082 97 037-197755004060 147 037-196690001010
48 037-194470007102 98 037-197755005010
49 037-194470007130 99 037-197755005030
50 037-194470007171 100 037-198170001010