Loading...
HomeMy WebLinkAboutCity Council - 12/19/2006 AGENDA HOUSING AND REDEVELOPMENT AUTHORITY TUESDAY,DECEMBER 19,2006 7:00 PM,CITY CENTER Council Chamber 8080 Mitchell Road HOUSING AND REDEVELOPMENT AUTHORITY MEMBERS: Chair Nancy Tyra- Lukens, Commissioners Brad Aho, Sherry Butcher, Ron Case, and Philip Young CITY STAFF: City Manager Scott Neal, Parks&Recreation Director Bob Lambert, Public Works Director Eugene Dietz, City Planner Michael Franzen, Community Development Director Janet Jeremiah, City Attorney Ric Rosow, Finance Director Sue Kotchevar and Recorder Deb Sweeny I. ROLL CALL/CALL THE HRA MEETING TO ORDER II. APPROVE MINUTES OF HRA MEETING HELD ON OCTOBER 17,2006 III. RESOLUTION CERTIFYING THE 2007 PROPERTY TAX LEVY TO BE $200,000 AND APPROVING THE 2007 BUDGET OF$200,000 IV. PUBLIC HEARING FOR TAX INCREMENT FINANCING(TIF) PROPOSAL FOR WINDSOR PLAZA/TOWN CENTER I(Resolution) V. ADJOURNMENT ITEM NO.: HRA II UNAPPROVED MINUTES HOUSING AND REDEVELOPMENT AUTHORITY TUESDAY, OCTOBER 17,2006 7:00 PM, CITY CENTER Council Chamber 8080 Mitchell Road HOUSING AND REDEVELOPMENT AUTHORITY MEMBERS: Chair Nancy Tyra- Lukens, Commissioners Brad Aho, Sherry Butcher,Ron Case, and Philip Young CITY STAFF: City Manager Scott Neal, Parks&Recreation Director Bob Lambert, Public Works Director Eugene Dietz, City Planner Michael Franzen, Community Development Director Janet Jeremiah, City Attorney Ric Rosow, Finance Director Sue Kotchevar and Recorder Deb Sweeney I. ROLL CALL/CALL THE HRA MEETING TO ORDER Tyra-Lukens called the meeting to order at 7:02 p.m. II. APPROVE MINUTES OF HRA MEETING HELD ON SEPTEMBER 5,2006 MOTION: Case moved, seconded by Butcher, to approve the minutes of the HRA meeting held September 5, 2006 as published. Motion carried 5-0. III. HRA RESOLUTION NO.2006-04 CALLING FOR A PUBLIC HEARING DECEMBER 19,2006,TO CONSIDER ESTABLISHING A NEW TAX INCREMENT REDEVELOPMENT DISTRICT FOR SOLOMON'S TOWN CENTER PHASE I PROJECT Neal said this resolution would fix a date for a public hearing to consider establishing a new TIF District to help defray costs associated with the redevelopment of the several existing buildings located on TH 212 and Eden Road across from the Eden Prairie Center for a new 136,000 square foot office and commercial mixed-use project. The project could serve as a catalyst to begin the Town Center project just west of Eden Prairie Center. MOTION: Case moved, seconded by Young,to adopt HRA Resolution No. 2006-04 calling for a public hearing December 19, 2006,to consider establishing a new Tax Increment Financing Redevelopment District. Motion carried 5-0. IV. ADJOURNMENT MOTION: Butcher moved, seconded by Aho, to adjourn the meeting. Motion carried 5-0. The HRA meeting adjourned at 7:06 p.m. HOUSING AND REDEVELOPMENT AUTHORITY AGENDA DATE: December 19, 2006 DEPARTMENT/DIVISION: ITEM DESCRIPTION: ITEM NO.: HRA I1I. Sue Kotchevar, Office of the Resolution Approving the 2007 HRA City Manager/Finance Property Tax Levy and Accepting the 2007 HRA Budget Requested Action Move to: • Adopt a resolution certifying the 2007 Property Tax levy to be $200,000 and approving the 2007 Budget of$200,000 as reviewed by the Council. Synopsis On September 5, 2006,the HRA approved the proposed 2007 HRA property tax levy and budget. Also on September 5, 2006, the Eden Prairie City Council adopted resolutions consenting and approving the proposed 2007 HRA property tax levy. Minnesota Law authorizes the HRA to levy a tax with the consent of the City Council. This resolution gives the consent needed for the HRA. Attachments Resolution CITY OF EDEN PRAIRIE HENNEPIN COUNTY,NIINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY H.R.A.RESOLUTION NO.2006- A RESOLUTION APPROVING THE HRA 2007 PROPERTY TAX LEVY AND ACCEPTING A PROPOSED BUDGET FOR GENERAL OPERATIONS WHEREAS,the Housing and Redevelopment Authority of the City of Eden Prairie has reviewed the proposed 2007 budget and tax levy; and WHEREAS, the Housing and Redevelopment Authority has decided to accept these recommendations. NOW, THEREFORE, BE IT RESOLVED that the Housing and Redevelopment Authority: 1. Approves the following proposed taxes on real and personal property within the City of Eden Prairie for the 2007 budget contingent upon City Council approval. Levy on Tax Capacity $200,000 2. Approves the 2007 proposed budget totaling$200,000 at this time. ADOPTED by the Housing and Redevelopment Authority on December 19, 2006. Nancy Tyra-Lukens, Chair ATTEST: SEAL Scott H.Neal,Executive Director r HOUSING AND REDEVELOPMENT AUTHORITY DATE: SECTION: Public Meeting December 19, 2006 DEPARTMENT/DIVISION: ITEM DESCRIPTION: ITEM NO.HRA IV. Community Development: Establish TIF Redevelopment District— Janet Jeremiah/David Lindahl Town Center Phase I/Windsor Plaza Requested Action: Move to: • Close the HRA public hearing: and • Adopt resolution recommending a modification to the Redevelopment Plan for Redevelopment Project Area No. 5,establishing the Town Center Phase One Tax Increment Financing District therein and adopting a Tax Increment Financing Plan therefor. Synopsis: The purpose of establishing a Redevelopment District is to help defray costs associated with the redevelopment of a five-acre area located between Singletree Lane and Regional Center Drive along TH212 across from the Eden Prairie Center for a new mixed-use development to include about 137,000 square feet of office, retail, and two restaurants; a 437 space parking ramp, and a new Bobby & Steve's gas and service facility. Staff recommends the City Council consider creating a"pay as you go"Redevelopment District with a 25-year term and provide a maximum of$4,500,000 million to close the estimated financing gaps with the proposed project. Background: The Solomon Group, an Eden Prairie development company,has assembled three properties totaling 4.19 acres located at: 11995 Flying Cloud Dr. - Former NTI School 8140 Flying Cloud Dr. - David Hanson Office Building 8110 Eden Rd. - Peter Fisher Office Building A fourth parcel to be included in the proposed redevelopment and TIF District is the former Mark's Amoco site,which will be redeveloped by its new owners to a Bobby& Steve's gas and auto service facility. Solomon's plan is to redevelop the three properties into a new 137,900 square foot mixed-use office and retail center called Windsor Plaza.The project includes a 5-story Class A office building with ground level retail,two restaurants and a significant amount of structured parking. The project is being designed to fit into the City's town center master plan with vertical integration and a structured parking ramp that can be expanded later if and when the Wal-Mart site redevelops. Solomon is representing that there is a$4.5 million financial gap with the proposed redevelopment and that it cannot proceed as planned without TIF assistance. The City retained Ehlers and Associates to perform a complete financial review of the proposed redevelopment and has determined that based on the information provided a financial gap exists. The details of their review, findings, and recommendations are outlined in an attached memo.According to Solomon,that financing issues exist for the following reasons: ■ Structured parking.The density of the development requires a significant amount of structured parking which is expected to cost$15,000 per stall. ■ There are additional costs for the ramp to accommodate another level of parking that could be added later if needed-when the Wal-Mart area redevelops. ■ The property assemblage costs were high -partly due to inflated offers provided by other developers. ■ Demolition and environmental cleanup costs are expected to be high. ■ Without TIF, a reasonable financial return is not possible and therefore the redevelopment would not proceed. A summM of key recommendations for the City Council to consider: 1. Create a"pay as you go"Redevelopment Tax Increment Financing District with a maximum term of 25 years. 2. Provide up to a maximum of$4,500,000 in TIF assistance for the following qualified costs: a. Land Write Down $2,700,000 b. Demo&Environmental $300,000 c. Structures Parking $1,500,000 3. The annual amount of the tax increment paid to the developer is 90%of annual receipts. 4. The city will require a"Look Back"provision so that if projects costs, lease rates or interest rates better then projected in the financing analysis,the amount of tax increment will be reduced. Attachments: Resolution CITY OF EDEN PRAIRIE HENNEPIN COUNTY,MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY H.R.A.RESOLUTION NO. 2006-06 RESOLUTION RECOMMENDING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT AREA NO.5,ESTABLISHING THE TOWN CENTER PHASE ONE TAX INCREMENT FINANCING DISTRICT THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. WHEREAS, it has been recommended by the Board of Commissioners (the "Board") of the Housing and Redevelopment Authority in and for the City of Eden Prairie (the "HRA")that the City adopt a Modification to the Redevelopment Plan for Redevelopment Project Area No.5(the"Redevelopment Plan Modification")and establish the Town Center Phase One Tax Increment Financing District(the"District")and adopt a Tax Increment Financing Plan(the "TIF Plan")therefor(the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047,and Sections 469.174 to 469.1799,inclusive,as amended(the"Act"),all as reflected in the Program and Plan and presented for the Board's consideration; and WHEREAS,the HRA and the City have investigated the facts relating to the Plans and have caused the Plans to be prepared; and WHEREAS,the HRA anticipates that expenditures may be required to be made for certain public development costs of the project contemplated in the Plans,including administrative expenses,prior to receipt of tax increment from the District as projected in the Plans, and the HRA desires to fund such expenditures through and advance or loan of money from other available funds of the HRA; and WHEREAS, the HRA and the City have performed all actions required by law to be performed prior to the adoption of the Plans.The City has also requested the City Planning Commission to provide for review of and written comment on the Plans and that the Council scheduled a public hearing on the Plans upon published notice as required by law. NOW, THEREFORE,BE IT RESOLVED by the Board as follows: 1. The HRA hereby finds that the District is in the public interest and is a redevelopment district under Minnesota Statutes, Section 469.174, Subd. 10 (a), and finds that the adoption of the proposed Plans conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the State of Minnesota which is already built up and that the adoption of the proposed Plans will help provide employment opportunities,improve the tax base and improve the general economy of the State and thereby serves a public purpose. 2. The HRA further finds that the Plans will afford maximum opportunity,consistent with the sound needs for the City as a whole,for the development or redevelopment of the project area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible. 3. The HRA hereby authorizes the loan of money to finance expenditures of the project contemplated in the Plan,pursuant to Minnesota Statutes Section 469.176, Subdivision 4,and the Plans, from available funds of the HRA (the"Loan"). The principal amount of the Loan shall not exceed$1,000,000, at an interest rate of %,which rate does not exceed the greater of the rates specified under Minnesota Statutes, Sections 270C.40 or 549.09,as of the date hereof. The Loan may remain outstanding for the maximum duration of the District as provided in the resolution establishing the District and pursuant to the Act, but principal and interest shall be due and payable in full prior to decertification of the District. The Loan is subject to prepayment, in whole or in part, at any time. 4. The Plans,as presented to the HRA on this date,are hereby approved and recommended to be established and adopted by the City Council. The HRA staff is authorized to negotiate a Development Agreement to achieve the objectives of the Plans,to be presented to this Board for approval at a later date. Approved by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Eden Prairie this 19th day of December, 2006. Nancy Tyra-Lukens, Chairperson ATTEST: SEAL Scott H. Neal, Executive Director CITY OF EDEN PRAIRIE HENNEPIN COUNTY,MINNESOTA RESOLUTION NO.2006-149 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT AREA NO. 5; AND ESTABLISHING TOWN CENTER PHASE ONE TAX INCREMENT FINANCING DISTRICT THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR BE IT RESOLVED by the City Council (the "Council") of the City of Eden Prairie,Minnesota(the "City"), as follows: Section 1. Recitals 1.01. The Board of Commissioners(the "Board")of the Eden Prairie Housing and Redevelopment Authority(the "HRA")has heretofore established Redevelopment Project Area No. 5 and adopted the Redevelopment Plan therefor. It has been proposed by the.HRA that the City adopt a Modification to the Redevelopment Plan for Redevelopment Project Area No. 5 (the "Redevelopment Plan Modification")and establish Town Center Phase One Tax Increment Financing District(the "District")therein and adopt a Tax Increment Financing Plan(the "TIF Plan")therefor(the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.174 to 469.1799, all inclusive,as amended, (the "Act")all as reflected in the Plans, and presented for the Council's consideration. 1.02. The HRA and City have investigated the facts relating to the Plans and have caused the Plans to be prepared. 1.03. The HRA and City have performed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Plans,including,but not limited to, notification of Hennepin and Independent School District No.272 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Plans by the City Planning Commission, approval of the Plans by the HRA on December 19, 2006,and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports(the"Reports")relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Plans. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution including the City's Major Center Area Plan,; a staff reports to the HRA and City; submission by Barsness Consulting. Services on behalf of the developer, Solomon Real Estate Group; a letter and financial review of the need for tax increment by Ehlers&Associates on behalf the City; and a inspection of the buildings and site by LHB Architects. The Council hereby confirms,ratifies and adopts the Reports,which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 1.05 The City is not modifying the boundaries of Redevelopment Project Area No. 5,but is however, modifying the Redevelopment Plan therefor. Section 2. Findings for the Adoption and Approval of the Plans 2.01. The Council hereby finds that the Plans are intended and,in the judgment of this Council,the effect of such actions will be,to provide an impetus for development in the public interest and accomplish certain objectives as specified in the Plans,which are hereby incorporated herein. Section 3. Findings for the Establishment of Town Center Phase One Tax Increment Financing District 3.01. The Council hereby finds that the District is in the public interest and is a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10(a)(1). 3.02. The Council further finds that the proposed redevelopment would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably expected ected to occur without the use of tax increment financing would be less than the increase p in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the Tax Increment Financing Plan,that the Plans conform to the general plan for the development or redevelopment of the City as a whole; and that the Plans will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the District by private enterprise. 3.03. The Council further finds,declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. 3.04. The Eden Prairie Housing and Redevelopment Authority elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3,clause b,which means the fiscal disparities contribution would be taken from inside the District. Section 4. Public Purpose 4.01. The Plans and the adoption thereof conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the City which is already built up,to provide employment opportunities,to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. For the reasons described in Exhibit A,the City believes these benefits directly derive from the tax increment assistance provided under the Plan. The developer will receive only the assistance needed to make this development financially feasible. As such, any private benefits received by the developer are incidental and do not outweigh the primary public benefits. Section 5. Approval and Adoption of the Plans 5.01. The Plans, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved,ratified,established, and adopted and shall be placed on file in the office of the Finance Manager. 5.02. The staff of the City,the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and to negotiate,draft,prepare and present to this Council for its consideration all further plans,resolutions,documents and contracts necessary for this purpose. 5.03 The Auditor of Hennepin County is requested to certify the original net tax capacity of the District, as described in the Plans,and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the Eden Prairie Housing and Redevelopment Authority is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, to ether with a list of all properties within the District for which building permits have been issued Y g p p g during the 18 months immediately preceding the adoption of this resolution. 5.04. The Finance Manager is further authorized and directed to file a copy of the Plans with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. ADOPTED by the Eden Prairie City Council on December 19, 2006. Nancy Tyra-Lukens,Mayor ATTEST: SEAL Kathleen Porta, City Clerk EXHIBIT A RESOLUTION NO.2006-149 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for Town Center Phase One Tax Increment Financing District (District), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: I. Finding that Town Center Phase One Tax Increment Financing District is a redevelopment district as defined in M.S., Section 469.174, Subd. I0(a)(1). The District consists of 6 parcels, with plans to redevelop the area for office and retail purposes. At least 70 percent of the area of the parcels in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 50 percent of the buildings in the District,not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance. (See Appendix F of the TIF Plan.) 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing 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 tax increments for the maximum duration of the District permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the redevelopment proposed in the TIF Plan meets the City's objectives for redevelopment. The City has previously undertaken a Major Center Area Plan which targets the area in and around the District for redevelopment into higher density and mixed-use development. The City also adopted planning principles dated January 2006 which emphasized relocation of lower-density properties, anticipated more intense landuse with multi-story buildings and concentrated public improvements, including the use of structured and shared parking. The development in the District is one of the first steps in the implementation of the Major Center Area Plan. The three major extraordinary costs associated with the development in the District are the high cost of acquisition from voluntary sellers on the parcels currently occupied by substandard and non-substandard buildings, redevelopment costs including demolition and remediation, and the costs of structured parking on the site. TIF will pay for a portion of each of these cost categories. The developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan: The costs of acquisition are extremely high in this area. The City may see limited redevelopment of individual parcels over the next 25 years without the use of TIF. The limited redevelopment, in the experience of the City, would not include mixed-use or higher density development. The land use would be low intensity uses with surface parking and low floor to area ratios. The type of coordinated effort on the part of a developer to assemble parcels and construct commercial and retail facilities of the proposed size and scope requires public assistance for the land acquisition and part of the structured parking costs. Therefore, the City reasonably determines that no other redevelopment of similar scope is anticipated on this site without substantially similar assistance being provided to the development. A comparative analysis of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. If all development which is proposed to be assisted with tax increment were to occur in the District, the total increase in market value would be up to $24,807,400. The present value of tax increments from the District is estimated to be $4,745,498. It is the Council's finding that no development with a market value of greater than $20,061,902 would occur without tax increment assistance in this district within 25 years. This finding is based upon evidence from general past experience with the high cost of acquisition and public improvements in the general area of the District. (See Cashflow in Appendix D of the TIF Plan.) 3. Finding that the TIF Plan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan on December 11, 2006, and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the TIF Plan for the District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Redevelopment Project Area No. 5 by private enterprise. The project to be assisted by the District will result in increased employment in the City and the State of Minnesota, the redevelopment of substandard properties, increased tax base of the State and add a high quality development to the City.